begins right now. >> good morning and welcome to squawk box here. on cnbc live from the nasdaq market site in times square. i'm mike santoli. >> along. >> with becky quick and robert frank. joe and andrew are off today. plenty to get to. us equity futures at this hour. yes. still looking for a bounce. s&p 500 up a little more than half a percent. let's say 6/10 of 1%. the nasdaq looks a bit stronger up 160 points at this hour. the dow indicated higher by 246 yesterday. an extremely choppy day of trading. the nasdaq swung 3.4% from its highest level of the day to its lowest. it was a pretty big sell off. then a very strong rebound. the s&p swung 2.3% over the

session. actually went green briefly late in the day and then lost that. the dow moved 1.6%. so all three major averages now below where they were when president trump took office in january. in fact, the s&p is a few points below the election day close. so we're kind of testing that level. and really, it was a fascinating action in stock market because, you know, we're in a 6.5% pullback high to low in the s&p. >> and that hasn't. >> happened for a. >> while since late summer. >> yeah right. because every time you get to even. 5% down there's a bounce. >> exactly. has been we've kind of hit some technical triggers. we got almost to the 200 day average in the s&p. the nasdaq 100 got to a 9.8% loss from the high. and it felt like there was sort of this automated let's just buy the mechanical dip. and also some news over the course of the day might have helped maybe some easing of this sort of ukraine logjam after zelensky's post. you also had news from germany. we'll get to

that. treasury yields had been on the decline. they've been pricing in a potential slowdown. you see the ten year yield is now back up to 425. just about it had gone below 4.2. the two year is the one to watch in terms of fed intentions 3.97. still pricing in a little more in the way of cuts germany very interesting action intraday. two parties hoping to form the country's next government have agreed to create a ■k7500 billin infrastructure fund and overhaul borrowing rules in an attempt to revamp the military and revive growth. fredrik merkel's conservatives and the social democrats will put their proposals to the outgoing german parliament next week in a race to pass them before the new parliament takes over. so investors have been cheering this move. they've been calling for germany to reform its state borrowing limits, known as the debt brake, to free up investment and support the economy. german dax this morning is flying. german german government yields also higher. it's interesting. >> the euro.

>> the bund was up by 19 basis points. >> the euro is up. the currency moves yesterday were really interesting. so normally tariffs are dollar support. that's right. right. we saw the dollar weaken yesterday. so some people were saying look that's the growth scare. right. some people were saying this is foreign investors taking money out of the us market. and some of it now is becoming clear. it was the euro strength that's part of that basket that was causing that. you've got the ecb looking to probably cut rates or maybe cut rates again on thursday. so you've got rates going down in europe and you've got government stimulus coming up. could be very strong for the euro market. >> it's been something for growth. >> yeah yeah. >> exactly what you're going. >> to see. it's been something that, you know, economists and investors have wanted forever is for germany's under levered. you know there are two fiscally constrained on almost any measure. and it's interesting because the cyclical stocks in europe have been working really well. the banks have been ripping. so it's one of these maybe i mean, i don't think president trump was trying to revive non-u.s. economies, but it would help the us as well if

europe, china and europe. >> it's been luxury and pharma that's been basically carrying europe. so now to see defense stocks european defense stocks boom the way. >> they well just on the commentary out of europe or out of germany too that they are basically going to do whatever it takes. they're saying for ukraine. so, you know, this is what president trump has wanted to push them into spending more. yeah, we'll see how things tick off. but it is certainly being applauded by the markets in europe. >> it is still you have to keep in mind in terms of our markets, it's still this one of these apprehensive moments where, you know, everyone's sort of waiting for the other one to make the first move. and the traders, you know, it's usually like the second mouse gets the cheese. like you don't want to try to buy the absolute low, but, you know, again, six and a half. >> do you think. >> that's what. >> that's what. caused the bounce yesterday. it was just technical. look this is. >> a buying opportunity. >> because it was hard. >> to figure out what was what. drove that bounce back in the mid day. >> i think there's a sense of okay, we've been sort of psychologically and financially pricing in the tariff move for a while. if you also go from, you

know, the highs of the prior day on monday when president trump basically confirmed that those tariffs were going on, you know, the market was down even more. you know, we're still well below those levels. so you had this sense of okay, maybe we've priced it in in the short term. now everybody's on the growth scare bandwagon. we've you know that that might maybe we've priced some of that in. but yes technical triggers massive short covering. you look at the most heavily shorted stocks. they always lead the way higher after a pullback. and also just crazy rotation within the market i mentioned becky when i was on with you guys in the in the 8:00 yesterday just to watch to see if the mega-cap tech stocks act as defense. and they did. you know they actually kind of because they're not tariff exposed and all the rest. so we'll see if that dynamic continues. >> there's a lot of questions of what's to come. and still questions about whether the tariffs are really going to be in place. there was commentary that came from commerce secretary lutnick late yesterday, kind of suggesting that there could be some sort of an agreement or deal that is reached today. and so i think

there's still this belief among a lot of ceos, among a lot of investors that, look, we're not going to have to deal with the tariffs as they've been described. here's the comments from from lutnick that he made yesterday to fox business. he's going to work something out with them. it's not going to be a pause. this is president trump with canada and mexico. but i think he's going to figure out you do more and i'll meet you in the middle some way. we're going to probably be announcing that tomorrow, that tomorrow being today. so we're waiting to hear what happens. >> and it was right after the close of cash trading. and the futures immediately bounced on that. and so yeah, if you have this, if you want to make the bet that we're at the moment of maximum tariffs and it gets, you know, kind of negotiated back from there, then maybe it doesn't have that much of a growth effect. >> i do think it was very interesting. lutnick when he was here, the commerce secretary on squawk box yesterday was talking about two different types of tariffs. these are the ones that he was talking about yesterday, has to do with fentanyl with both canada and mexico and with china as well. but then the next

month is going to be very interesting. april 2nd is when we're going to see what really happens in terms of tit for tat with tariffs and how you renegotiate your entire global look at trade. >> and in the state of the union last night president trump in talking about that april 2nd tariffs. it sounds like it's going to happen. not just that but he is counting on that for revenue to balance the budget. you know when we heard commerce secretary and even scott benson yesterday talking about their three ways, we're going to help, you know, basically level the budget here. it's going to be tariffs. it's going to be the gold card and it's going to be cutting government. so they are counting on tariffs for revenue. >> and i'm not sure wall street has priced that in to that extent. >> it can't do all of the things they promise. it can't be a great revenue source and also reduce the trade deficit and also encourage, you know what i mean? >> how many. >> times are you going to count that? >> right. >> those numbers. but. >> you know, just just to say that april 2nd sounds like a serious date. the market should really focus on whatever happens with the mexico and canada stuff. >> right now.

>> sure. let's hear a little bit more about that speech last night. president trump delivering that address before a joint session of congress with key takeaways on the economy. eamon javers joins us right now with the highlights from that. hi, eamon. >> hey there becky. president trump. >> last night declaring. >> america is back. >> he delivered the. >> longest address to congress by any president ever. and after two days of sharp downturns on wall street, and in the wake of his imposing tariffs on mexico and china, the president defended the use of tariffs, saying this is something that he needs to get done for the american people. take a listen. >> the tariffs are not just about protecting american jobs. they're about protecting the soul of our country. tariffs are about making america rich again and making america great again. and it's happening. and it will happen rather quickly. there'll be a little disturbance. but we're okay with that.

>> so you heard. >> the president there saying there'll be. >> a disturbance. >> but we're okay with that. perhaps a reference to some of the trading on wall street to some of the disruption he expects for farmers and the auto sector and other industries. the president saying, nonetheless, look, we just have to do this to recalibrate america's trade relationships around the world. he also talked about the idea of inflation going up, saying that his administration is working to tackle it and blaming the previous administration. >> joe biden. >> especially let the price of eggs get out of control. the egg price is out of control, and we're working hard to get it back down. secretary. >> do. >> a good job on that. you inherited a total mess. >> but as you. >> guys have been talking about, the key for this morning might be the comments from the commerce secretary before the speech to congress by president trump, howard lutnick, suggesting in a television

interview that there may be some kind of. >> deal in. >> the works between the united states, canada and mexico. he said they might be announcing something today. >> there you. >> see the transcript of his comments saying they might be probably announcing that tomorrow. so that puts a big question mark over the morning for traders. i think, becky, as you try to figure out, is that jawboning the markets, is that wishful thinking or is there a negotiation that's been going on behind the scenes that's ready to bear fruit this morning? we don't know the answer to that. and we're going to be following that bouncing ball through the day today. >> you know, a big part of what he laid out yesterday is what he plans to do. the first part of the speech was all about what he has done in the first 43 or 45 days, whatever it's been for six weeks. the second part was about what they planned to do. and he reiterated a lot of those promises that he had made on the campaign trail. in terms of the taxes. you're not going to pay taxes for overtime. you're not going to be paying taxes for money you earn from tips. you're

not going to be paying taxes for social security benefits. that is a pretty heavy lift in terms of what it will take to balance those those promises. >> and they're talking about balancing the budget. >> right. >> so right to do. >> how do. >> you balance. >> budget revenue cut. >> right. >> yeah. how do you have that kind of revenue cut and balance the budget at the same time? can they get the votes for that in. >> a very. >> very thin margin in the house of representatives? and then, you know, on the other side of it is the revenue cuts or the spending cuts, i should say that they're getting from doge. they're talking about cutting, you know, enormous amounts of spending in the future from doge, doge, if they can lock those in, maybe that pays for the tax cuts. and then somehow you have to balance the budget on the rest of the federal spending. and that's just a very, very. challenging political thing to do, becky, because every dollar that's spent by the us government has. >> somebody advocating. >> for it, somebody benefits from it. somebody wanted it to happen. it's in there for a reason. and those people will

tend to fight when you try to cut it. so politically, how do they do? that is an open question, but that is the centerpiece of the rest of the legislative agenda for this president is the tax cuts. >> you know, it was interesting that the president saying there there could be some short term pain, which is a language that that was probably realistic, but also we didn't hear in the first administration. it was interesting. also, bessant yesterday in an interview saying, look, we're not the main street administration. we are the main street administration. we are not the wall street administration. so wall street may take a hit. here is what he was implying. what was your sense from the speech last night in terms of how much this administration may care about market reactions, about investors versus main street and jobs and manufacturing? >> yeah, it's a great. >> point, robert. my sense is this is a much more populist administration than trump. one was in trump one. you heard steven mnuchin talking about being a mark to market administration, looking at the dow as basically a barometer for their success. you don't hear

that kind of talk from trump too. and the reason is because they're very much embracing this idea of being a working class administration that needs to restructure fundamental structural pieces of the us economy to benefit working class voters. and they're not as sensitive to moves on wall street. you know, if you were if you were going to blink, you know, yesterday would have been a good day to blink on the tariffs, right? given what we saw on wall street, they didn't do that. the president's insisting here in a speech to the country that we're going to have to deal with some short term pain in order to get the long term gains. >> except for some of that, short term pain could come in the in the form of higher prices for main street americans for what they're paying at the grocery stores. so we will see how that goes along the way too. eamon, thank you very much. >> you bet. >> all right. coming up, rbc's amy wu silverman joins us on yesterday's whipsaw action in the markets. for the last year.

she compared the stock market to a duck paddling on water. now she says that duck has paddled off a waterfall. but don't worry, no animals will be harmed in this segment. we're going to get to her to explain all that. and as we head to break, check out the shares of moderna that's rising. after the company's ceo disclosed he bought $1.8 million worth of shares earlier this week. that's a company where we've seen a lot of insider selling over the past couple of years. we'll be right back. years. we'll be right back. >> after. got eyelid itching, crusties and swelling that won't go away? it could be... demodex blepharitis! and we're demodex mites. we're very common and super irritating to your eyelids... but we love making ourselves comfortable here! oh, yeah...steam time! if demodex mites are partying it up on your eyelids... it's time to eliminate the root of the problem with xdemvy. with one drop in each eye twice a day... you can kill the mites in just six weeks.

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get to use every day. >> stocks look like they're set to attempt a rebound this morning following yesterday's wild market swings. our first guest says investors should watch out for what she's calling a volatility pothole. joining us now, amy wu silverman, managing director and head of derivatives at rbc capital markets. good to see you this morning, amy. >> great to. >> see you. i guess one of the questions once you've seen the market in pullback mode, you see this what looked like a dramatic reversal higher yesterday. you know can we trust what happened yesterday. what are people dealing with in terms of this little uptick in volatility. >> i think. >> not much. >> so far. you know. >> there's. >> been a lot of come to jesus moments year to. date i think last year. you know i can't tell you the number of. >> investors who said. >> to me we think trump's going to manage the market. >> the market. >> is. >> a gauge of. >> his success. >> you know, we've had a reckoning over that. >> and so everything that happens from. >> now. you know. >> to me has. >> actually been relatively.

orderly because there had. >> been. >> hedges in the market. >> the question is. >> if we start to get. >> these gap downs. >> or. >> these volatility potholes, as we like to call. >> it. >> you. >> know, what. >> happens then? >> because the truth. >> is, there's. >> a lot. >> of strategies. >> right now. >> in the derivatives world that just. >> hinge on the. idea that volatility is. >> going to remain suppressed. and i. >> don't know that we. >> can count. >> on. that going forward. >> yeah. the strategies you allude to i mean essentially they're banking on the market continuing to just kind of rotate its way in a smooth fashion. right. so like if certain stocks are down, other ones are up. it suppresses volatility at the index level. you can actually just sort of put on a bet that says that's going to continue. now there's been some interruption of that right. it's been some slippage in that rotation i guess. how are we to tell whether, you know we've just experienced a little volatility burst and now we can repair or or if it's going to get worse. >> yeah i think you'll be able to tell. so it'll look like an august 5th or it'll look like a february 2018. and you know, i feel. >> like. i've beaten.

>> this analogy to. >> death. >> but we were in kind of this paddling. >> duck. >> market, right. >> like the. >> smooth on. >> the surface. >> little feet. >> rotating underneath. >> and really. >> all that says is that saying that correlation is going to. >> remain relatively low. >> some stocks are. >> going to zig. >> others are going to zag. but you. >> get that. >> index suppression. >> and that's like a nice way. >> to think. >> about shorting volatility. >> my main. >> concern is. >> this. >> idea that. correlation was so low. >> almost too low right. you're limbo stick. was 12in off the ground. it had. >> nowhere to go but up. >> when that happens. >> it doesn't. >> happen in an. orderly way. it happens. >> in gaps. >> and so you'll. >> see that pothole. >> but you won't have very much. time for correcting the. >> car. >> so to speak. >> i do see people say, yes, we've seen you know, the volatility index is up. got to the mid 20s. but but credit indicators are not showing a lot of macro stress at this point. you know you can kind of make the argument that yes sure 5% pullbacks in the s&p happen all the time for any reason or none at all. or pricing in some economic weakness. can this just

be something that's that's routine and we recover from. >> i mean. >> look. >> i think it's. >> possible. >> and i think. >> you know, when i speak. >> with investors. >> now, they still. >> haven't gotten. >> a good. >> tone on. >> do we mean. >> it or do we not mean it. right. like you. >> think about what trump. >> said, but then what howard. lutnick said. >> and. >> i think. >> there's. >> just this. >> really difficult. >> moment we're in. >> where people. >> have a. >> very difficult. >> time as. >> it is pricing kind of. >> administration risk or geopolitical risk. and then you have something. >> that's sort. >> of unprecedented. coming through. so that's why there are. hedges on. the issue is when. >> you get. >> to certain. >> points. >> certain levels. >> where it's not. >> just you're hedging the macro. economic risk. you're also hedging the idea that there are. unwinds happening. >> from trades. >> that. >> have built up. >> over kind of the last. >> four years of a very, very. >> high dispersion. >> low correlation environment. >> those volatility potholes are. >> we prepared for. >> no. >> we're not. >> at that point yet. >> and i think getting. >> there is something that. >> is. >> very difficult to see. >> because it's just very. foggy

right. >> now when. >> you look. >> at the option tenors. >> what does this remind you of? you sound different than you have in a long time, but what does this remind you of? if you have to look back at another period in your career watching markets? >> yeah. >> you know. >> it's interesting. >> you say. >> that because i do feel that way. and i think that. >> the. >> closest to. >> me is that period of. >> 2017 heading. >> into 2018. >> where. >> you know, we were almost. >> lulled to some. >> degree into complacency. >> we had very. >> very low realized volatility. the correlation environment looked very similar. and when the potholes came again, it wasn't like you got much warning. >> and that's. >> fundamentally the issue, right. you can say, look, there are all. these risks out there. >> you should think. >> about hedges. >> in 2022. >> we had a market drawdown. >> of 20%. the put put. >> the put index, which is the systematic hedging. >> index. >> also drew down because of the way the. path dependency of the hedges. >> so even. >> those can break. >> down in certain environments. and that. >> analogy right now is, i guess. >> what is picking. >> up the nervousness.

>> in 2017, we had the uplift from the tax cuts. and then so we had that uplift that was already in play by the time we had tariffs really starting in 2018. this time around you're getting the bad stuff. first you're getting the medicine without the spoonful of sugar first. right. and so you don't have you know we're going to get some tax extension. we're hopefully deregulation will start flowing. but it's the bad stuff we're seeing first because that's the easiest. >> and maybe that's good i don't know. >> and you know. >> that's sort. >> of what. >> i'm saying. >> and you know. from 2017 to. >> now the structural change is. >> a lot of. >> hedging has gotten very, very short duration. >> so it's like. >> you. already had. >> a gps that was. >> like starting. >> to break. >> from a tenor perspective. >> and now we're. >> over half of. >> all hedging is already kind of one day options. how is that going. >> to tell you. >> how is that going to give you that roadmap that we have historically. >> counted on. >> for these potholes? i think to me, that adds to a layer of. >> uncertainty politically. politically speaking, it's probably better for the republicans if they take the

medicine first and the sugar later. assuming the sugar. >> in terms of the midterms and absolutely. >> what happens. >> you're right. >> yeah. we'll see whether it's whether it works, whether it's a plan or whether it just happens that way. we'll see. amy. >> thank you. >> thank you. see you. >> when we come back. a setback for one of the country's biggest oil companies and a key south american drilling operation. we've got the details on that story next. plus, we will have much more on president trump's new raft of tariffs with former u.s. ambassador to canada bruce heyman. he's got a lot of thoughts. he's not only a former ambassador, he's a businessman as well. and we will speak to him about both how this impacts both of those worlds. stay tuned. you're watching squawk box and this is cnbc. >> this cnbc program is sponsored by baird. visit baird difference.com. on $100,000 margin loan. interactive brokers charges just 5.83%. do you know how much your broker charges?

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learning. >> closing bell over time for eastern. cnbc. >> the trump administration says that it is ending a license that has allowed oil major chevron to operate in venezuela for several years. a treasury department publication says that chevron will have until april 3rd to wind down exports and other operations in the country. that move mirrors one that was undertaken in the first trump administration. the u.s. imported about 220,000 barrels of oil a day from venezuela last year. that's less than 4% of its of u.s. daily imports. but that flow has allowed chevron to recover billions of dollars in pending debt from that country. you can see chevron shares up by about $0.01. this was a move that was first kind of indicated just over a week ago when they said that they would be considering this, taking it into account and then seeing what it does. chevron has responded that of course, it will follow any rules or regulations coming from

the trump administration, but it does make up a significant portion of what they are doing internationally. yeah. >> all right. coming up, why the us is in a much different place than the last time president trump turned to tariffs as a weapon. that story next. and as we head to break look at yesterday's s&p 500 winners and the losers. >> are. >> executive edge is sponsored by at&t business. next level by at&t business. next level moments need the n it all started with a small business idea. it's a pillow with a speaker in it! that's right craig. pulling in the perfect team to get the job done. i'm just here for the internets. at&t, it's super-fast! you locked us out?! and when thrown a curveball... arrggghh! ahhhh! [crashing sounds] we had everything we needed. is the internet out? don't worry, we have at&t internet back-up.

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what i think a foundation should be. learn more at beauty.com. >> good morning and welcome back to squawk box live from the nasdaq market site in times square. checking the index futures. looking to continue. the afternoon rebound attempt yesterday was very volatile. s&p down 1.2% yesterday. down 3% for the week. but it did finish yesterday three quarters of a percent off its low. it is indicated higher by a bit more than half a percent right now. dow looking for a 250 point gain. >> all right. in president trump's joint address to congress last night, he singled out blackrock for a new deal in which the asset management giant

will lead a group of investors buying majority stakes in ports on either side of the panama canal. now, he didn't mention that blackrock didn't mention them by name, but he said the move will help enhance u.s. national security. >> we didn't give it to china. we gave it to panama and we're taking it back. and we have marco rubio in charge. good luck. marco. now we know who to blame if anything goes wrong. marco has been. >> amazing. >> and he's going to do a. great job. >> blackrock and other investors will buy a majority stake in ports on either side of the canal, from hong kong based ck hutchison, that's owned by li ka shing. he is one of the richest men in asia, worth around $30 billion. so that's another chunk of change for him. total price there $23 billion. so that's that's a group of investors buying that. but you know maybe

that's something that ck wanted out. but interesting how political leverage can shape the deal landscape. and for blackrock to get into i mean this is talking about. >> infrastructure of blackrock right. it's a fund that blackrock. >> that's right. and singapore temasek will continue to hold a stake in that. but but there does seem to be quotes in the ft that there was some pressure on panama to shift ownership. >> by the way our intern leah neelakandan has a piece on cnbc.com right now all about this. so you can check it out there too about this deal where she's kind of written up some stuff on it too. she does good work. >> excellent. >> all right, let's get back to tariffs and more from president trump's speech to congress last night. here's what he had to say. >> tariffs are not just about protecting american jobs. they're about protecting the soul of our country. tariffs are about making america rich again and making america great again. and it's happening. and it will happen rather quickly. there will be a little disturbance.

but we're okay with that. >> all right. one big debate surrounding tariffs. do they hike prices one time or could they rekindle inflation. senior economics reporter steve liesman is looking at that debate. hi, steve. >> mike good morning. yeah. president trump making clear higher tariffs are going to be with us for a while. but what about their impact on prices? conventional wisdom suggests higher prices pass through the system without necessarily sparking wider or lasting inflation. but there's another side to this debate the worries that tariffs and inflation could be longer lasting. inflation is now above target. short term inflation expectations have been elevated. and tariffs reduced productivity. productivity keeps inflation down. and companies right now may have pricing powe, ben simmons of fed watch advisors wrote yesterday. businesses are far more attuned to passing costs today because they have pricing power compared to 2018, when inflation was weak and consistently below 2%. in

fact, adam posen from the peterson institute tells me that protecting domestic companies with tariffs can give them more pricing power by reducing competition. he says big national companies have protected markets, tend to get fat and lazy. a lot of economists mention those lousy cars from the 1970s in the united states. now, new york fed president john williams, he spoke to bloomberg yesterday talking about tariffs. he said much of that tariff cost passes to the consumer. and inflation can add months later because you have these intermediate tariff goods that get included later into finished goods. and the inflation effect and the fed's response is going to depend on how long and how big and what products are tariffs. markets more or less embracing the conventional wisdom of this benign tariff effect that will allow the fed to cut rates. three cuts now priced in for this year 1st june, 1st september, 1st december. that's a sign traders think growth and not inflation that is weaker growth and not higher inflation will be the fed's more important

concern. but all the fed can do is wait and watch to see how price hikes work through the economy. remember, it got burned last time by signing up for team transitory on the last round of inflation. probably going to be a little more reluctant to sign on this time when it comes to tariffs. mike. >> yeah. and steve i guess if that's the case you wonder if the correct lesson to be drawn from the last war is never trust the idea that inflationary impacts will be transient transitory on the other hand. it could just be look be open minded about how this stuff plays through and whether the economic growth, you know, he's going to demand your attention more quickly. it's something that i agree, they're going to wait for the numbers to come to come and tell them what to do here. but i don't know that it's necessarily a matter of we need to be super vigilant on inflation because we weren't last time. >> exactly. and you know, i think becky has something to add to this conversation, which is

when do those orders for christmas goods. when are they made. imagine an intermediate good in a christmas good gets ordered. now it gets input into that good in the summer. and then you have the price hike happen in december. and the contract with the supplier from china or canada or mexico is contingent upon that tariff being there. you don't get the price hike until later this year. >> right. and those orders are probably finalized by around july for most of the retailers that are looking for the big christmas items. look, i was surprised to hear cornell told us yesterday, brian cornell from target told us you could see prices rise even this week for things like produce things, because we rely right now, this time of year, so heavily on mexico for vegetables and fruits, bananas, avocados, lots of different things that you're going to see through the supermarkets. that would be an interesting test because again, as robert was saying earlier,

this administration, scott bessent, the treasury secretary, said this is a mainstream administration, not a wall street administration. and you can see it. they may not care if wall street panics a little bit, but the question is going to be what happens with main street and with other consumers, too, robert. >> yeah. and steve, i wonder there's. >> been some. >> good. >> robert. >> yeah. no, i was just wondering, there's been some research by tariff proponents saying that, yes, tariffs are a one time increase, but they don't actually cause inflation. what would need to happen for it to become systemic inflation? does it have to feed through the labor market beyond goods? or what's your view of that that position in the first place? >> certainly the labor market will be one way that it would feed through. and again, the administration is relying upon some of that research which showed there wasn't a broad increase in inflation. you did have specific increases in goods that were tariffed. a lot of the counter to that is that this

time the situation is different. the context is different. we just had this rise in prices. and we've also shown that companies can exhibit pricing power. that's really the issue that's out there. in the example that becky just talked about. you're passing them along. they just they rose already even before their prices rose. the prices went up from the tariffs. that suggests pricing power. the other thing is that whether or not it gets embedded into the psyche of the consumer, and that's an issue also people are going to see their wages go up. one other thing to talk about, and maybe this is another day to talk about it, is this combined with the immigration policy and the deportations, if you do have tighter labor markets, that's going to give employees more bargaining power to argue to offset the price increases from tariffs. >> there's so much to try and figure out. it's so complicated. between the regulatory overhang

being kind of cut back, the doj's pushing for more efficiency in government, meaning fewer workers there. what that's going to mean to the jobs number. we do get our first look at this, steve at 815 with adp. that will be the first month of full employment month for the president's economic numbers. so it's something to look forward to coming up in just a little bit later this morning. and we'll see you then too. when we come back, we're going to talk about the potential for a deal between the united states and canada to avoid the worst of a trade war. former u.s. ambassador to canada bruce heyman will join us next. right now, though, as we head to a break, let's take a look at shares of applovin. the company reportedly in talks to sell its gaming unit to triple dot studios for $900 million. applovin disclosed last month that it was considering a sale of that unit to focus on its ai ad platform, but it didn't name the potential buyer. you can see the shares of applovin right now up by about 2.3%. squawk box

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veteran of the federal government. it's a huge bet on america. passion matters. >> today. >> the united states launched a trade war against canada. their closest partner and ally. their closest friend. at the same time, they're talking about working positively with russia, appeasing vladimir putin, a lying, murderous dictator. make that make sense. >> that was canadian prime minister justin trudeau yesterday as he was speaking about what's been happening with the tariffs. he was announcing 25% retaliatory tariffs on $155 billion worth of american goods. joining us right now to talk about all of this is bruce heyman. he is the former us ambassador to canada in the obama administration. he's the ceo of asset manager firm power sustainable. he's the author of the art of diplomacy strengthening the canada-u.s.

relationship in times of uncertainty. long-time, business leader at goldman sachs, as well. and ambassador heyman, thank you for being here today. >> it's good to be here again. >> so i love hearing your perspective on this because you come at this not only as a former ambassador to canada, but also a us business person who has done a lot of work on both sides of the border. what do you think is happening here? >> so let's take a step. >> back just a minute and. >> look at this. >> from the. >> from the lens. >> of friends, neighbors, allies. >> when you have. >> friends in your. >> personal life. >> you know, you think of that list. and at the very. >> top of that list are your best friends. >> and for the united. >> states, the very top of our list in. terms of. >> best friends. >> in the world is canada. >> and it's not just. >> because they have. >> an. >> amazing trading relationship. >> which they do, but. it's everything. >> else. >> that you'd expect from a best friend. >> they've been there for us in thick. >> and thin in. >> our deepest, darkest. >> times here in. >> new york. >> and nine over. >> 11. >> they. >> were here. >> with the planes being. diverted to gander. they were here. >> in article. five under.

>> nato in. >> supporting us in afghanistan. they were here. for us in iran, helping get our. >> diplomats out. all of. >> these are almost. storybook kind of. sets of relationships. and so the. >> relationship is. >> based. >> on trust. >> and so what. >> is happening. >> here this. >> week is. >> a challenge. >> to that trustful relationship. >> and so. >> tariffs at. >> this level. >> shouldn't happen. we shouldn't. >> happen because we have. a trade. >> agreement that. >> donald trump. >> negotiated and usmca. but it shouldn't happen because of a friendship relationship and a trusted relationship that if we have. >> differences we can easily. >> deal with. >> those behind closed. >> doors diplomatically. >> and that's what's not happening. and so as a result of. >> that, this relationship. >> is being challenged in a. >> profound way. >> are there is there a trade imbalance? first of all, if you strip out oil and second of all, are there tariffs that they place on things like dairy and

beef and other things that are not reciprocal? because that's the case that donald trump has been making, that we're getting the raw end of the deal on some of this financially. >> so think of think of this. >> trillion dollar relationship that we have in which we buy and sell together. and the price of oil moving up and down does have a factor in terms of the. >> level of deficit or surplus. >> between our relationship. >> but at $50. >> billion on $1 trillion relationship, you're talking 5%. it's insignificant in terms of the scheme of things and the challenges that we face globally with. >> larger trade. >> deficits, with. >> countries like. >> like china. and so in the scheme of things. >> it's really small. >> and it taking away oil insignificant and non-existent. >> well, that's what's been so interesting. why canada like of all the countries that you would pick on, why do you think this happened? you've got more insight than we do. >> you know, i just think donald trump must have some other issue

here. and those issues are either personal with canada or the. whole other issue is i personally think he's. >> short cash. >> and i think he's trying to pass this big, giant, increasingly large. tax cut in the us. and we have a number of republicans who actually are budget conscious. and so. >> the way. >> to make ends meet. >> for. >> this next. tax cut is one doge. you're going to. >> cut costs. >> but i don't think you can cut. >> enough costs. >> to make. >> up. this large. >> tax cut. and so i think he's looking for revenue. peter navarro has told him this is the place. go put a sales tax. that tax. tariff on. >> all the. >> goods that come in the united states. they don't vote for us. it's easy. let's go get them. and that's why you did china, canada and mexico. those are the three largest. and 40% of our trade. >> willie sutton that's where the money is. >> that's where. >> the money. that's the case. the market better sit up and pay attention. because if they think that these are temporary, are going to get rolled back off, it's not going to yield the money they need. if that's the

reasoning. >> if that's the case. >> and so it may very well be that the right level. >> is a. >> lower level than where we are. so when you have that as your issue, then you begin negotiating rate and exclusions and other things. >> what's your sense of canadians willingness to kind of just go down this path and, you know, retaliate and deal with the hardship that might come along with that? because it's been a pretty a pretty aggressive front from that side at this point. >> look they're hurt. >> yeah. you know, you take your best friend and you violate that friendship. >> and they say you should be a 51st state. >> it's rough. >> you know, it's rough. if you go to somebody and say, this is your spouse, i. want i want your spouse like, this is your country to do that is deeply offensive to the canadians and to slap tariffs on, you know, uniformly across the country is also deeply offensive. and we shouldn't underestimate the impact that this has having on the average canadian. and i would just say to the canadian

public, there are millions of americans that value this relationship. two thirds of our state, the number one export market is to canada. we have tourism and trade and travel, and we do things together. we do sports together, and we value that relationship. tens of millions of americans. and i know this is a difficult moment, and i hope we get through it quickly. >> they have an election coming up. it's interesting to see how president trump has, in a strange way, perhaps helped the left in canada. what do you see coming up in the elections? how will that affect their economic policy? >> well, the polls have moved pretty dramatically once prime minister trudeau said he was stepping back. and so we have a leadership race in the liberal party, which will take place this weekend on march 9th. and it. looks a close race between chrystia freeland and mark carney. and mark carney is somebody we know pretty well here as a result of his business dealings. and goldman, as well. as bank of canada and the bank of england.

>> could that relationship between carney and trump perhaps mitigate some of this? >> you know, it's all together. >> it's all better. it's all together. >> possible. i know mark, he's talented and he'd be an exceptional person to sit down across the table from any number of people in washington. that being said, if donald trump short cash and he needs it for his tax cuts, then that's a whole different issue. >> it's just the retaliatory stuff they talk about. ontario's doug ford, the premier there, saying that he would charge a surcharge on canadian electricity exports to the three states that pick it up michigan, new york, minnesota. i think there's 1.5 million americans that get their power from there. and he said they would even consider cutting power off if things get ugly enough. so we'll see how this plays out. >> slippery slope, these things. and it's very dangerous. and you know, i think the negotiations like this should be done behind closed doors. and hopefully we'll resolve this very quickly. >> ambassador heyman, thank you. it's great to see you. >> good to see you as well. >> all right. foot locker just

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the most recent owner is adtech sales firm buy sell ads. rose said that he reached out to ohanian and they started chatting about their old rivalry, which led to a discussion about how they could use ai tools to help solve some of the biggest issues that plague digg, including curating quality content. the purchase price was not disclosed, but that's a happy make up story for you. yeah, i wonder if you if you could see that happening with other rivals in tech today. >> yeah, the other kind of disused parts of the early internet. >> yeah, well i just i'm thinking of rivals who. >> get. >> to be. business partners, come back together. >> we want. >> altman and elon musk again. right. >> we want myspace back. >> myspace. >> all right. coming up inside the tariff tuesday. wall street selloff and nerves among tech investors. the nasdaq swinging more than 3% from high to low more than 3% from high to low just yesterday. squawk only servicenow connects every corner of your business so people can do all their work on one platform. no more mindless swivel chairing between platforms.

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pro. never miss a moment with exclusive access to market moving interviews and stock picks. become a smarter investor with the power of cnbc pro, go to cnbc.com now. >> it is 7 a.m. on the east coast and you're watching squawk box on cnbc. i'm mike santoli along with becky quick and robert frank. joe and andrew are off today. among today's top stories president trump covering a wide range of topics in last night's address to congress, including tariffs. he says tariffs are about protecting american jobs but acknowledge they will cause, quote, a little disturbance. we'll talk more about his remarks in just a bit. president trump saying ukrainian president volodymyr zelensky had written to him to say he appreciates u.s. support and that ukraine would accept an agreement on minerals in order to help facilitate peace between ukraine and russia. trump paused u.s. military aid to ukraine on monday following a white house argument last friday, in which trump said zelensky hadn't shown

enough gratitude to america and china, setting a target of around 5% annual growth for 2025 and laying out stimulus measures to boost its economy. china's number two official saying the goal underscores resolve to meet difficulties head on as the country braces for rising tariffs from the us. >> all right. let's take a look at the futures this morning. we are in the green. we're not as high as we were an hour ago when the dow was up by close to 300 points. now it's indicated up by about 170. s&p futures are up by 26. the nasdaq is indicated up by 124. it does come though after a couple of days that were really pretty harsh for the overall indexes, a loss of close to 1300 points for the dow and similar moves for the s&p 500 and the nasdaq. nasdaq, down by almost correction territory, down by about 9.8% over at this point from the high. let's go to dom chu. he's got a look at this morning's pre-market movers. and dom what are you seeing so far. >> all right good morning becky.

good morning mike. good morning robert. let's start off with shares of crowdstrike which are falling this morning on the back of its earnings report. they're down about 7.5%. the cybersecurity software provider offering disappointing earnings guidance. crowdstrike adding it sees more costs ahead in the aftermath of last summer's big service outage. so crowdstrike shares down about 7.5%. meanwhile, shares of palantir are moving higher as analysts over at william blair upgrade that stock to a hold from a prior sell. the stock plunged earlier this month as government cost cutting weighed on the outlook for palantir. but analysts at blair wrote that ai opportunities and potential government contracts down the line can still drive revenue growth for palantir. so those shares up roughly 2.5% in extended trading. and we're going to end on shares of nvidia, which are moving higher this morning as the chip maker shakes off some steep losses off president trump's announced tariffs. now analysts at bernstein are saying that after the pullback, the stock's valuation is looking increasingly attractive. bank of america also adding nvidia to its global contenders list. the

stock is still down about 7% since its earnings report. but still, you can see here up about 1.5% so far this morning. now for more on that and other top analyst calls of the day, just head over to cnbc pro subscribers. get full access to the detail and analysis behind all those big calls and stories becky. so nvidia getting some steam back. we'll see if it can hold that momentum. i'll send things back over to you guys. >> how how is that kind of playing out for the semiconductor industry overall when you also had president trump saying yesterday that he wants to roll back the chip act, which had been helpful to a lot of other chip stocks at this point, how does that balance out overall for the sector? >> so for the sector overall, first of all, we should say that mathematically, quantitatively speaking, the sector overall and the indices that track them, the etfs that track them are driven extremely, extremely high by names like nvidia also broadcom and others. right. and so if you take a look at the way that the sm that vaneck vectors semiconductor etf has shaken out, it's been trading in a sort

of downward range bound kind of area for the sm for a while. the problem right now is that if you have those mega-cap chip names that have seen their valuations soar, start to lose a little bit of steam. now it has an outsized effect on what's going on. this range here has been broken a little bit to the downside. over the course of the last couple of weeks. the question becomes whether or not that becomes that buying opportunity. if people are saying and analysts are saying that nvidia is now a buying opportunity, then perhaps you start to see that whole index move higher because it has such a big influence on what's going on. >> so that's going to be the more important one to watch. >> i think. >> it's probably going to be that one. yes. >> don thank you. we'll see you a little later. >> all right. >> from one dom to another, let's talk more about tech in light of yesterday's market sell off for insights on the mega-caps and more, let's bring in dom rizzo, portfolio manager of the global tech fund at t rowe price. dom, thanks so much for joining us. good morning. >> good morning. thanks for having me guys. >> yeah i want to pick up where dom and becky just left off

there with nvidia calls for at least maybe some opportunities in terms of valuation. do you think nvidia is more attractive right now at this valuation, or do you think there's still some legitimate concerns out there about ai, deep seek and lower priced models? >> well. >> you know, i. >> really think nvidia is quite attractive here. and there's. >> a couple of. >> reasons why. but let's take. >> a look. >> at the valuation. >> first the stock is trading. >> in line with the stock's. >> index now. >> and is trading at only a slight premium to the s&p 500. if you look at. >> it. >> historically that's historically. >> where the stock's. >> bottomed on a valuation perspective. >> but more importantly we have improving. fundamentals from here. you know gross margins for nvidia should probably bottom in the. april or the june. quarter and improve to that mid 70% level as we head throughout the. >> rest of the year. >> and then if you look at the supply. >> chain, things. >> are actually looking really positive. >> for nvidia. >> so you know it's. february numbers this morning. >> they're the. >> biggest you know partner for

nvidia. >> and the. >> february numbers were up 56% year over year in terms of revenue. >> and then if you look. >> at the. >> fundamentals. >> of other parts. >> of the supply. >> chain. >> january prices are starting to increase for both. >> dram and nand, both up. >> mid-single digits off the bottom. and then finally, probably. >> most. >> importantly. >> if you look. >> at nvidia's. >> revenue growth from here, we're. going to just keep seeing sequential acceleration. >> so i kind. >> of put. it together and. >> i like. the setup of the stock. >> yeah. we had that raid in singapore where it turns out that the chips being sold to singapore were finding their way in china. do you think the administration here and what they could do with nvidia further restricting chips, even perhaps the cheaper chips, the chips that they're allowed to sell to china right now, is should that be a concern for investors at all? >> well. >> looking at the. >> fundamentals. >> what's happened since deep seac. if you look. >> what's actually. >> happened. >> since deep seac. >> is. >> nvidia demand has gone through. >> the. >> roof both in. >> china and. >> in the us. >> right. >> so if you look at the supply. >> chain h20's, those cheaper chips, you were referencing those. >> the demand for that has really. >> surged since the deep sea.

>> and then if you. >> look. >> at. >> what's happening in the us. hopper pricing and. >> all the. >> pilots has gone up. so nvidia is clearly. >> the. >> biggest negotiating leverage tool that. >> donald trump. >> and the administration. >> have with china. >> it's one. >> of a few, and. >> i think it will probably. >> be part. >> of a grander. >> bargain in terms. >> of. >> the. >> china deal. don, when you look at the companies that are doing all of this spending and, you know, obviously the customers of nvidia like the cloud platforms, really interesting divergence in terms of how the market is treating them. you have alphabet right now trading at a 10% discount to the s&p. rarely seen that through history. meta on the other hand has seemed like it's gotten it all figured out. are there opportunities you see in those divergences, or how do you think about that group in general? >> the issue with all. >> the hyperscalers. >> right now is that. >> capex intensity has. >> to continue. >> to. >> increase, right? >> and frankly. >> speaking. >> nvidia is going to capture a. >> lot of that economic. >> value from. >> that. >> capital intensity increasing. >> you know, i. >> think the reason alphabet struggled so much is really a function of its search business more than anything else. right?

just think about your. >> personal day to. >> day experience. >> how much more are you using chatgpt and perplexity relative to google search? my gut. >> is probably a lot. >> and so. >> that search business is so big. >> and if you look last. >> quarter that. >> grew 12%. >> year over year. >> i'm not sure. >> that that search business can. >> continue growing at 12%. so yes, i. >> like youtube. >> yes, i. >> like the. >> cloud business. >> but it's really the search. >> business that. >> is under. >> attack, which has. >> historically been. >> one of. >> the best businesses. >> of all. >> time, frankly. and if you. >> look at. >> microsoft and. >> amazon. >> you know, all three of the hyperscalers. >> are capacity. constrained this quarter. they actually would have sold more in. >> their cloud. >> business if they had. >> more. >> more chips. >> from nvidia. and i think that's partially the blackwell delay, which. >> should improve. >> in q1. >> and so of. >> all those three, i. >> personally think. >> amazon is the most attractive. >> we have a. >> few different moving pieces for amazon. but most importantly, i think. >> operating margins. >> continue to. >> improve throughout the year for amazon. >> all right don, thanks so much for joining us. we appreciate it. >> thanks for having me guys. >> see you soon. >> all right. coming up

president trump covering everything from egg prices to immigration. last night's address we're going to get reaction from gop policy chair kevin hern. plus the business of hockey. nhl commissioner gary bettman is going to join us for an exclusive interview. you're not going to want to miss. stay tuned. you're watching squawk box. this is cnbc. >> at ihg. >> hotels and resorts. you can stick to the agenda. >> or experience. >> something unexpected, all. while earning points for. >> free. >> nights with ihg. one rewards. >> with ihg. 19 hotel brands, you can guest how you guest. >> explain 17. years of outperformance in 30s. >> it can't be done. >> we can tell you that we founded. >> origin investments. >> because investors like us deserve a better.

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>> and counting. >> get started today at framebridge. com. >> andrew, my fellow citizens, america is back. six weeks. >> ago. >> i stood beneath the dome of this capitol and proclaimed the dawn of the golden age of

america. from that moment on, it has been nothing but swift and unrelenting action to usher in the greatest and most successful era in the history of our country. we have accomplished more in 43 days than most administrations accomplished in four years or eight years. and we are just getting started. >> that was president trump during last night's address to congress. joining us right now is republican policy committee chairman, congressman kevin hern. and, chairman, thank you for being here today. that was president trump kind of laying out what his administration has done in the first 43 days. the second half of the speech was what he anticipates to come, what the agenda is. and that's probably the most important to us. what's what's your big takeaway about what comes next? and if you want to maybe put it in baskets for what the policy initiatives are going to be.

>> well, first of all, i met with the president before he did the speech, and he was very confident going in that he was going to be able to deliver a message that all americans wanted to hear. then i talked to him personally after he left, and he was feeling really good about what the response was and what we saw. the democrats not standing. for anything to do with the border. yet afterwards, in their response, they said, we need to come together on the border. well, they sure didn't demonstrate that when. >> they were. >> sitting in. >> the room with all of us when we talked about, you know, the atrocities that's happened by illegal aliens that's come in and killed our people and then not even stand up and applaud for the victims that are up there that are coming forward in a very painful moment, you know, various, you know, issues like that across the entire conference. and then the president talked about, you know, the things he's looking at going forward, like making sure eu, the eu stands up its own military to protect itself so that the american people are not spending u.s. taxpayer dollars all the time for every little skirmish while they're wasting money on social programs in the eu. you know, the president announced and talked about the

importance of bringing peace around the world. he was tired of seeing people die. while they're not americans, ukrainians and russians. it's time. >> to. >> bring peace in the world, just like he did when he was in his first term. >> chairman, you are a former business owner, i think 24 mcdonald's franchisees that you franchises that you had owned before. you know very well what it takes for businesses to get by. and i know you've spoken out pretty strongly about how the tax cuts from 2017 are very important to have extended. you're worried that higher taxes, if that bill wasn't extended, would really crimp businesses and americans across the board. one of the things the president laid out last night, though, was his thoughts on extending those tax cuts even above and beyond, doing things like not taxing people for the overtime pay that they receive, or from any tip income that they bring in, not taxing social security benefits. and while it would be great to see those things, it does come with a

heavy, hefty price tag. you're on the ways and means committee as well. you know this full well. what do you think of all this? how do you think it's going to play out? >> well, we're starting to work on monday now, moving forward with the reconciliation package and ways and means to get really close to everything that we've been talking about. we have to remember, had president trump not won the presidency, none of this would be even be talked. >> about. >> right now. we would still be under joe biden's policy of appeasement around the world wide open border that the democrats say they want, you know, wanted to close now, and we would see wars everywhere that's costing literally trillions of dollars of taxpayer dollars. so it's important for us to come together on ways and means and as republicans to pass this reconciliation bill, get it over to the senate. and so we come together and get this done for the american people. and again, president trump is feeling very confident that he's moving down the road. you have to remember as a business person, he's been negotiating deals for 50 years. while many in the house and the senate have been maybe 50s worth of negotiations, the president. has all the information he's moving forward. i think it's going to be great. the american people

are going to love it, and we're not going to see the largest tax increase in american history come january 2026, which is what the democrats want. >> well, chairman, you pointed out yourself, the division in the in the house yesterday, just the staunch division between the two sides. it's a very tight minority or majority that you hold. there's only a number of votes that are on the line for this. it's just as the president adds more things to this, more things he'd like to pay for. it means that some people in your party are going to be very concerned about making sure there are pay for, for all of those costs as they add up. it does make it a little more complicated. are you confident that your party will be able to pass the tax cuts with all of the additional sweeteners that the president would like added in? >> i do. i think we demonstrated last tuesday as we sent the initial resolution language to the floor and then passed it with only losing one vote, and that vote was again, we didn't cut enough. but, you know, again, we wouldn't be having

this conversation or get the opportunity to address the waste, fraud and abuse that the president has talked about. and every person in congress, both sides of aisle, have talked about ever since bill clinton, the last president, to ever do anything like 273,000 jobs and do the welfare to work program that gave us four years in a row of balanced budgets. the president trump has seen this. he's talked about it. he knows what needs to be done. he understands he only has about three and a half years left to get it done. and, you know, you look more like 18 months the surety of having us in the house and in the majority, which i think will defy history and win the midterms because the american people see we're moving forward and restoring order and financial order and national security. so all this plays in to us moving forward, because if we're not in the majority, we can't pass these great policies and get america back where it needs to be, which is back, you know, make america great again. as the president said time and time again. >> congressman, just to put some numbers behind becky's question. so extending the tax cuts is about 4 trillion. if you talk about tips over time, social security, that could be an additional 3 to 4 trillion depending on how that's

structured. so you're talking about somewhere could be 6 to $7 trillion. where are those offsets are going to come from. and do you think tariffs should be considered a revenue offset. do you and congress see them that way? >> well, i think not only tariffs should be seen as a revenue offset. we're getting cbo's ruling. >> on that. >> but also what the end result is. do we see you know, do we see tariffs removed as the president is doing is reciprocal tariffs. do we see tariffs removed in other countries that are put on our imports so that we have even more goods being produced and the economy even growing faster. you know, in our budget reconciliation package going forward. and the resolution language, you know we i know you know, scott bessent, the new secretary of treasury, put in there 3% growth. we only used a modest 2.6% growth. and when you look at this, the gdp, our economy is so big that even moving at a 10th of a percent has a tremendous impact on revenue over the years and unleashing this economy. we know we have tremendous

entrepreneurs, business people in america. you know, we have you know, president trump's been in office 43 days, and he's already got $1.7 trillion of committed asset development in the united states. the policies worked when we did the 2017 tax cut and jobs act. the premise of doing that was to make sure the inversion stopped. there has not been a single company in the united states. inverted company moved its headquarters anywhere else in the world. the tax policy works. we need to codify it, make it permanent and get us back on the road to a financial security that we need and every american deserves, regardless of party. >> chairman hern, thank you for your time today. >> great to be with you. >> hi. before we head to a break, housing market news weekly mortgage demand jumped 20.4% from the prior week. that's according to new data from the mortgage bankers association. applications to purchase a home are up 9% and applications to refinance were up 37% during the week. the average 30 year fixed rate

mortgage rate dropped from 6.88% to 6.73. very quick response to that drop in rates. that's the lowest level in mortgage rates since december. >> it's amazing how many people are refinancing at just under 7%. you wonder what they were. >> there's not that. >> many before. yeah. all right. coming up. ceo of manufacturing company snap on joins us to talk about how imposed tariffs would impact business at home and overseas. we'll be right back. >> time now for today's aflac trivia question. what is the oldest professional sporting trophy in north america? the trophy in north america? the answer when squawk box ♪ (action music) ♪ woah! i can't do it! agh! cut! this gap! it's just too big. bring on the double! aflac! after my hospital stay, aflac helped close the gap by paying me cash for expenses health insurance didn't cover. nothing covers gaps better than the aflac duck. aflaaaaac!

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nick pinchuk. nick, great to see you. >> nice to see you. how you doing? >> so obviously you're a manufacturer now. you tend to make what you sell in the markets where you sell it. do you actually have a lot of things flowing across borders or not? no. >> no we're not we don't import a lot but we import some things. so you know versus. >> tariffs we're. >> kind of we're not immune but we're resistant to it. and that kind of. >> thing because we make in america we make 80% of what we sell off the vans. >> i should have had one pulling up here. by the way. 80% of what we. >> sell. >> off. >> the vans we make. >> right here in america, and it was. >> 50% labor. >> so it's possible to. >> do that. i think if. >> you speak for the national association of manufacturers in general. >> they would say they. support directed. >> tariffs. >> where alexander hamilton said this in 1791. >> you have. >> to. >> have tariffs to. to. >> attack countries. >> which will try. >> to do things. >> specially for their. >> country. to penetrate your own markets. and the national association of manufacturers supports that. but broad tariffs are not necessary. >> actually they're not. >> necessary to protect the american worker. >> why not.

>> what what. >> needs to you look at the manufacturing jobs that are lost. what does need to protect. this is one. >> of the it kind of upsets me. the whole construct of the idea we need tariffs is wrong. it says the american workers are questioning the american worker is not the question. the american worker is the answer for america. but they need employment. they need upskilling. they need to be encouraged. to go. >> into these jobs that are. >> not dumb and dirty. >> after the pandemic. you know. >> when xi jinping closed the closed. shanghai for like six. >> weeks and the supply. chains were disrupted and everybody was. >> making just in, just in time supply. >> chains. >> they realized how long they were and. >> how disruptive they. >> were and how. a foreign country could disrupt. disrupt. >> american's prosperity by happenstance or by by intent. and people wanted. >> to bring. >> us manufacturing back. i met with many industrials in chicago, where i'm from, and they said, we're going to bring the plants back. we couldn't find workers. >> and couldn't find workers or. >> couldn't find.

>> workers, but couldn't find workers at the right price. that's why nafta started, because there was cheaper labor. okay. >> i don't really think that's true, though. i the thing is, right now, the american manufacturing has 426,000 jobs that are open. it's not just the price. there are two things now. maybe the. >> price is a. >> factor, but i can assure you that people want when. >> they. >> want to go to work, they want to be able. >> to keep their family. >> warm and safe and dry, and have pride and dignity in what they do, and pride and dignity and. >> the ability to keep your warm, your. >> family, warm and safe and dry exists in. america manufacturing, especially at snap-on. but what it is, is. >> is we. >> don't have the skilled workers to fit those jobs. and but more than that, manufacturing has a pr problem. people think that. >> if you go. >> to manufacturing, if you're a welder and a snap on factory, which is a great, great, great thing. >> you've settled for. >> the consolation prize of our society. if you talk about it in polite. >> society, they think. >> these people, in huxley. >> terms. >> are the gamma minuses of our

society. >> it's a welder. >> making a welder can make $100,000. you know, in this kind of situation, you know, it depends. i mean, factory workers, i think national association of manufacturers will say the all in numbers is $98,000 on average. but one of the things that that impedes manufacturing and is things like skilling, the appearance of what that job is, does it bring respect and dignity. and that's why president trump has a great following. among the factory workers and mechanics i talked to. we call on 1 million mechanics. >> every week. >> and they are very enthusiastic about the president, because at the center of his policy is look at the economy and other things through the perspective of the american worker. they like that. but what they're seeing now is they're like on space mountain. they're going left and right, left and right. and they believe they're they believe they're going to end up. being a good place at the end, but they don't know where they're going. they get dispatches from the front, and they're worried that he's not going to be able to do it. but

they like the general direction because he's looking at things and saying, we want to make the american worker better and stronger and restore them to the center of the american economy, where it always has been. >> well, but i guess the reality is, is 25% tariffs on canada going to do that? >> no, no. you know well it'll. help i suppose. but the thing is none of those things i think the i think what. will do it is the lightning of the. >> load of. regulation on manufacturing. >> the, the. >> nom will say. >> that the average. >> manufacturing company pays $25,000 in per employee, per year in regulation costs, and the average small company manufacturing company pays 50,000. now, i don't know, these numbers could be a little bit, you know, hyperbolic, but but they are pretty big, i can tell you that snap on. and so one of the things that needs to be done is that needs to be lightened, but it also needs to promote upskilling and need to talk like the american worker in manufacturing is not necessarily a sector. it's a profession. and they are what they have always

been, the american heroes. they saved us during the pandemic while everybody was sheltering in place. the manufacturers, the people in the garages were at their posts keeping our society from disintegrating. and the president starting to. >> talk about that. >> and if he does, that's the kind of things he can do for manufacturing. >> that's great. nick appreciate it. got the message out. good to see you. >> all right. >> nice to. >> see you. you too. when we come back. financials taking a hit in this week's sell off, the kbe bank etf is down almost 5% in two days and down more than 14% from its november high. leslie picker will join us with a closer look at the banking sector. that's next right here sector. that's next right here on squawk box. you know what's brilliant? boring. think about it. boring makes vacations happen, early retirements possible, and startups start up. that's why pnc bank strives to be boring with your money. the pragmatic, calculated kind of boring.

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regain his lunch break. try now for free. visit otter.ai or download the app. >> on. >> all right, welcome back. financials were the worst performing sector in yesterday's sell off leslie picker joins us now with more. good morning leslie. >> hey good morning robert. yeah. higher in pre-market this morning. but xlf decline. >> was. >> the biggest we've seen in two

years. and that was. >> when we were in the middle of. >> a regional bank crisis. now. >> the. >> recent performance, putting. >> both morgan stanley. and bank. >> of america in the red. >> year to date, it's a round trip of sorts. >> since the election in november spurred investors to pile into the. sector on the prospects of deregulation. and a pro-growth agenda. but lately, the whole sector has really just seen this sentiment shift over concerns about the economy as well as the trade war. wells fargo analyst mike mayo putting out a report yesterday summarizing recent meetings he's had with european investors about us banks. and in it he says, quote, there are near-term investor concerns about the degree of fiscal, regulatory and political change. and he said the, quote, talk now includes recession versus almost. >> no mention. >> 2 to 3 weeks ago, he said the quote, worry is that rapid change causes paralysis on corporate decisions and capital market inflection. that's why the bank's levered to such an inflection. guys think goldman sachs and morgan stanley have been some of the hardest hit over the last month, according

to dealogic, global mergers and acquisitions have declined 15% in the year through february 25th compared with the same period last year. so analysts have warned that march needs to be a busy month for many of these firms to meet market expectations for q1. guys. >> leslie, that that number is fascinating, that it's down 15%. obviously, it's only two months of the year. it's we're just starting out. but what's your sense when you talk to the investment banks about the pipeline right now we haven't seen many ipos, although maybe they're more in the pipeline. m&a down 15% at a year, where we're expecting the unleashing of animal spirits and deals. what do you hear about the next six months? >> yeah, it's a great question. and i think that's the biggest question mark of all in this community is what are the next six months look like? because to your point, the year is early and it was off of a pretty low base last year. but the key problem for a lot of these c-suite executives is not so much how the current environment

is affecting their business, it's that there's so much change and there's so many headlines and so many executive orders and so much news that could affect them in the future. they're too nervous. and as mike mayo said, to use the word paralyzed to really make big decisions, like to do big m&a and to do an ipo. so whether that kind of settles down is the big question that would ultimately potentially unleash these big pipelines that investment banks talk about. >> yeah, absolutely. predictability is a key for any kind of deal. and we're not seeing much of that right now. leslie, thanks so much. >> all right. still to come this morning, president trump touting his achievements and reiterating the biggest to do list items in last night's address to congress, former house majority leader eric cantor will join us to break down his key takeaways. to break down his key takeaways. that's next. business. it's not a nine-to-five proposition. it's all day and into the night. it's all the things that keep this world turning.

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eric cantor who is the former house majority leader. eric, so great to see you this morning. so many great questions for you. what did you make of the speech last night? and more importantly, for markets and companies and ceos in the deal landscape, what was your takeaway? >> well, robert. >> i think, you. >> know, it certainly. >> was. >> an extravaganza. >> in the. >> house of representatives last night. >> i think. >> the longest speech. >> of any. >> president to a joint session. so it certainly people got their fill. and i think certainly. both sides. >> certainly my side. the republicans. were very. energized about. >> the power with. >> which trump came in and. >> sort of captivated the agenda. and is. >> you know, unilaterally, i think, worldwide setting. >> the discussion agenda. >> you know, interestingly, i was in canada. yesterday of all days in toronto and, you. >> know. >> enemy lines, right? >> you know, listen, i do think, you know. they their reaction. >> is what i think president. >> trump wants. i mean. he has now i think reset sort of the

discussion around working people in this country. and unlike trump 1.0 where, you know, i think it was he. >> would himself. >> mention the markets, the equities markets. and i think now. >> i'm not so sure that. >> that's going to be. >> the day to day gauge for what. >> he's doing. >> so we saw scott in an interview yesterday make that point explicitly saying we care about main street. this time wall street will do fine. or maybe they won't, but we are the main street. do you think investors should be concerned about that? because we could have days like yesterday where tariffs disrupt markets, but the administration doesn't respond to that. >> well, look, i. >> can tell you this. you know, our clients certainly are taking all this in. >> you know. >> there's a lot. >> coming in. >> every hour right now with the trump administration. but i think the direction. that people are witnessing is one of. deregulation and. >> one of tax. >> reduction, or at least no tax increases. and that that. >> is those are.

>> two really big inputs to an individual, whether in the c-suite or on a board, when they're thinking about doing an m&a transaction or doing something in the financing markets. and again, that's that's sort of the business that we focus on. >> just be a function of timing where we're seeing the bad stuff. first, we're seeing the tariffs, the immigration, the job cuts that things that companies really don't like to see or that could jeopardize the economy. the good stuff, the deregulation and the tax cuts are probably going to be a third fourth quarter event or even in the years to come. what do you see from ceos right now on deals? leslie picker was just saying that m&a is down 15% the first two months, just the first two months. but ipos deals, does the pipeline reflect the optimism that you're seeing? or are people sort of saying there's not enough predictability right now to press the button and say. >> compared to the. >> lows where we were at over the last couple of. >> years in the m&a world, we certainly are seeing a lot more dialog and a lot more willingness because, you know. >> you. >> have other.

>> sort of inputs going into the decision as to whether to pull a trigger on a transaction and a process, certainly in the in the sponsor community, there is there are other sort of dynamic dynamics. at work which are pressing sort of sponsors. to step up and say, hey, we want to go ahead and engage in a process. now, listen, financing is available. the equities markets, as we can see, have certainly been moving. but in relative terms more constructive. >> and so that. >> plus you've. >> got sort of this technological innovation with ai and the extreme investment in infrastructure. i mean. >> these are. >> all the things that sort of go into a decision making on the part of a ceo and a strategic or in a sponsor situation. so again, i think directionally, if you look at what's going on in washington from the trump administration, deregulation, tax cuts, now look, we've got nine days and there may be a big to do next friday because that's the cutoff of the spending bill.

and if you think about the speech last night, he didn't do anything to sort of reach out to the other side and say, hey, i need your help on this because he'll need democratic support to get that spending bill passed next week. >> on that point, i mean, as a former leader in the house, how do you feel about members not necessarily standing up and saying that doge is kind of stealing the power of the purse? they're impounding funds, and this is going to be the contentious issue, right? democrats say, you know, you cannot just withhold money that's been authorized by congress. >> well, again, they've not done that yet. and certainly there's been a record setting number of court challenges. >> to. >> what elon musk. >> and doge. >> are doing. and the courts have come down on both sides, because i do think some of what doge is about is certainly consistent with what other presidents have done. there's some in the gray area where the courts are stepping in and opining, even against the administration in some instances. and there are some in which the executive orders have gone way too far. and i think

it's purposeful, because the president wants to reverse a precedent that may be established. and one of those is impoundment. we haven't gotten there yet, and i can't imagine a court undoing the power of the purse coming from the congress, because that's the foundation of the separation of powers. >> the president can imagine it. >> right. so but again, this is, i think. what i think the country over the last ten years has gotten to know about donald trump. he's a he's a business guy. he's a real estate mogul from new york city. i mean, just push. we're going to go to the limit until he's told he can't. >> so all right. >> eric, thank you so much. i was curious a little bit just about your perspective on this current policy baseline, where they're going to use the magic of accounting to get rid of the $4 trillion. would you have supported that when you were in the house? >> oh. >> listen, this has been an age old discussion about whether it's current. policy or current law. well, i mean, it's you'll you'll have some real. budget hawks in the house because there are some left that. will really,

really make this an issue because i don't think you can hide this from being a real issue. the bond markets are not going to let. >> you that's that's where i think it's going to catch up with. >> right. the bond markets are not going to let you hide this. and so we'll have to see how that's the reconciliation discussion though. and as robert, as you rightfully say i think this is definitely a second half towards the end kind of resolution year. so we're not getting to that yet. first we've got to get over next week. and i think the markets haven't yet begun to look to next week. we could very well have a shutdown. and because you haven't seen the democratic party step up with an ask. yeah. you know that that's really where i see either there's political malfeasance unfolding or they're going to spring something next week that will galvanize their side, because that's usually how it works. they don't even have an ask right now. >> eric, thanks so much for coming in. >> we appreciate it. >> thank you. >> thank you. >> all right. coming up, nhl commissioner gary bettman joins

us with the latest in the world of hockey and the most recent success of the four nations face off. that is next. and foot locker out with quarterly results in the last hour. earnings coming in at $0.86 a share. that was $0.14 better than estimates on revenue of $2.25 billion. that was below expectations. comparable store sales grew 2.6% during the quarter, also better than the 2.3% increase analysts were looking for. the stock is just about flat right now. we'll be right back. >> no matter why you. >> started your business. your goal is to keep on growing. and with the help of financing. >> from capital. >> you can meet all of your business. >> goals. because at capital. >> we finance. >> the legacy builders, the creators, the freedom chasers, the opportunity seekers. at capital, we finance.

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competition regulator, says it doesn't consider there to be a change of control by microsoft from material influence to de facto control over openai. as a result, it will not launch a formal investigation. that review was launched in december of 2023. microsoft says it welcomes the regulator's decision to close the investigation. >> we have been talking all

morning about tariffs and the us economic relationship with our neighbors to the north. no industry is immune from this discussion, including the big business of sports. canada is very important to the national hockey league with seven clubs that are based in canada. joining us right now is nhl commissioner gary bettman. and gary, thank you for being here. good. a lot to talk about with you this morning. the revenue numbers that are coming in with the nhl, what you just saw with the face off of the four nations. but i think we need to start this morning with the news of the day. and that's the tensions that are rising between two great partners, canada and the united states. i think the nhl has unwittingly kind of played the public face of the bad blood that's been growing. between the looming trade dispute between these two nations, we've seen it play out with some canadian fans booing the national anthem, with some americans getting kind of fired up. and you've had an american president and a canadian prime minister who have all been weighing in all around the games

as they've been playing on these things, too. how do you how do you see it from where you sit? >> welcome to my life. >> yeah. >> the it's really unfortunate that these two great countries, great allies for hundreds of years sharing, you know, a long border together. and i think most of the tension isn't addressed at either country or at the people, because i spent a lot of time in the last 30 years in canada. and canadians love the united states and love americans. but there's a policy issue that's going on, and it's unfortunate that the two countries. >> the people. >> of the two countries that are sort of caught in the middle of it. >> it's an important part of the nhl. i think 25% of the nhl revenue comes from canadian clubs. in the nhl. everything's combined and mixed and blended so beautifully. you even pay all the clubs and all the players in

american dollars. what what are you dealing with right now? how does it play out? >> the issue in that regard is all players were, no matter which country they play in, get paid in us dollars. so if the impact of. >> the. >> tariffs is. >> to see the. >> canadian dollar. drop relative to the us dollars. >> it will make it more. >> difficult and more painful. we have revenue sharing, but a lot of our canadian. clubs do quite well, but that's. >> going to be. >> impacted by what happens with the canadian dollar. we're we're hoping i'm hoping that this is a moment in time and both countries find a way to work through this. >> have you had any conversations with anyone from the administration? >> not yet. we were with the florida panthers a couple of weeks ago with the president, but the issue didn't come up. and, you know, in terms of understanding it from our standpoint, we're not really privy to all the discussions that are going on at the highest

levels of both countries. so we get to be affected observers as. as i guess you can. >> say. >> i assume you have sponsors that sell goods in both countries. what are you hearing from sponsors right now? >> i mean, to the extent that there's uncertainty, to the extent that there's pressure on the both economies and pressure on the dollar relative to each other, it's going to cause some difficulties that are going to have to be adjusted for. >> i guess i would put you in the group of many, if not most executives who are kind of hoping that this is things that are used as negotiation tactics, but then go away. >> well, that's why i'm hoping this is a moment in time and whatever has to be sorted out gets sorted out. and if i guess we can be a microcosm of how this works, we're happy to play any role that we can. >> let's talk about the nhl business in the background for all of this. the business itself is at its strongest ever. i think the revenue came in for the 2024 2025 season expecting to exceed $6.6 billion. how did

you get there? what's happening? >> well, we actually i think we're going to exceed 7 billion in mixed currency. and that's a function of the fact that the game keeps growing. our attendance is strong. as strong as it's ever been. our engagement with business partners is the highest peak it's ever been. i think we have 73 national partners between both countries. our clubs are executing in terms of their business plans and their connectivity with their fans better than ever before. our ratings. are strong and we have great media partners in canada and the united states. whether it's disney and turner in the states and rogers in canada. and we're in a good place because the game has never been better. we saw that, particularly with the four nations tournament and what interest that generated. i mean, we had record ratings in really both countries in terms of watching the canada us games, the two of them. and it's great

to see. and i think our fans and sports fans in general have been. >> energized by what they've seen. >> and in sports rights, i mean, this is the moment. it just keeps getting richer and richer for the sports rights. when you have money that's coming in from the streamers at this point to every one of the leagues, looks a little differently at these negotiations. what, for you is the sweet spot in terms of what you want to make sure is available to the most viewers as possible, but also making sure you're getting as much money as you can for it. >> by the way, those are the two issues that we're most focused on. we want to be widely distributed, which we are espn and turner, tnt and abc. are doing a great job for us here. particularly over the last few years since we've reengaged with them. rogers in canada doing the same thing. in fact, we're currently in exclusive negotiating period with rogers with our contract coming up. and we think that the. >> broader the.

>> distribution, the better our fans are going to be served. plus, we're using technology in unprecedented ways to bring more of our games, whether it's the connectivity that you can get with more data than. what we can do. >> with. >> the visualization. >> of the game. >> but use. >> of player and puck tracking, which. >> we're. >> using. >> using that to create. animated games for young people. >> these are. >> all the ways we're looking to connect, and. >> we have our outdoor events. >> i mean, last weekend we had 94,000 people in columbus, ohio watching a hockey game. i would have told you ten years ago that would have happened. you would have thought i was crazy. >> so when you say broader, broadest distribution, do you mean broadcast or do you mean where it's free for everybody or do you mean broadest meaning? okay, a streamer that is international, even though they're charging people to get there? well. >> it's a combination and i think it's going to continue to evolve, particularly because of the difficulties we've seen with

the regional sports channels. and so i think you're going to continue as contracts come up, you're going to see a mix. we've been, you know, digitized, if you will, and streamed for ten years in canada. rogers from our last deal has always had the digital rights as well. and when you look at our presence on espn plus, we've been streaming, you know, since we went back to the walt disney company. so the combination of the two things, i think linear is still important. that's still your most viewed distribution for most people, particularly people my age or your age, younger people who are cord nevers or cord cutters, they're going to look for alternate sources of getting their content. >> so you got to be everywhere. >> you got to be agile. >> yeah. gary bettman, gary, thank you very much for joining us today. always appreciate having you in person. lots to talk about. so come back soon. >> great to be with you. thank you for having me. >> thank you. all right. it is 8 a.m. on the east coast. and you

are watching squawk box right here on cnbc. i'm becky quick along with mike santoli and robert frank. joe and andrew are out this morning. adp private payroll. that data is due in just about 15 minutes time. we've been watching the futures ahead of that and our gains that we had seen this morning just two hours ago, up by about 300. that's eroded down to up 70. at this point s&p futures are up by 15. the nasdaq up by 100 points. if you're watching the treasury market the yields have been quite a bit lower. in fact this morning the two year still below 4% at 3.95. the ten year is at 4.24. oil prices falling once again this morning. back to levels we haven't seen since the beginning of december of last year. this morning wti is below or just at $67 a barrel. ise brant is at $70.10. the democrats protesting the president's address to congress and holding up signs congressman al green was removed from the house chamber for interrupting the president's address. joining us right now with reaction to

last night's joint session of congress and the president's remarks, is virginia democrat senator mark warner. he's the vice chair of the intelligence committee. and, senator, thanks for being here this morning. thank you. there was a pretty stark contrast between the two sides of the house chamber yesterday. what what happened from your perspective? >> well, listen, i. >> showed up. because i. >> respect the office. >> of the president. >> i disagree. >> with this. guy on virtually everything. >> you know. >> we're already seeing the effect. >> of. >> his policies. >> he is with his. >> new tariffs. we've seen all the trump. stock gains put aside. >> we see huge. >> uncertainty in. >> the markets. you're talking about this just before i came on. >> i can tell. >> you. >> allowing elon musk and his. >> doge boys. >> to come. >> in and. >> randomly go out and fire. workers is going to have. >> it's have a huge effect already in virginia. >> it's going to have a huge. >> effect across the country. >> you can't you. maybe when. >> you fire guys. >> at twitter, you can. replace them with another coder. but

when you fire, you know, faa folks on airline. >> safety. >> when you fire. >> folks. >> national park service, when you fire cia or expose cia spies to their identity because people. >> don't understand. >> classifications. >> that's not a. >> good place for america to be. couple that with the combination that we have reversed 70 years of alliance with democracies around the world, and he has realigned with authoritarian regimes, whether it be russia or iran, north korea, in terms of his votes in the un against ukraine, for example, or for that matter, if you. >> don't think president xi. thinks trump's actions. >> on ukraine, give him a green light to go for taiwan, that all means, particularly as a former business guy. >> i can't imagine. >> a more uncertain period. you may like the deregulation, the tax cuts, but the level of uncertainty and the kind of reckless abandon. >> he. >> takes on with some of these other policies, i. >> think. >> is going to be reflected in the market. and i think it's reflected. >> in that. >> down going of consumer confidence. >> do you think the

administration cares about that? president trump did signal yesterday that it's not necessarily the market that he's watching on this. this is something first of all, there could be some. >> pain if, you know, the one. >> thing that. >> i don't want to try to protect donald trump, the one thing that i think we anyone who knows and knows, he watches the market. and i think the market is going to, you know, has already put out a verdict. there were a lot of trump gains right after the election. those have all declined. >> since then. >> i'm hearing people and the notion and maybe i'm a little biased. my mom's family came from ontario, but the idea that somehow the. canadians are our enemies. >> i mean. >> that doesn't. >> pass the smell test or the idea that somehow mass amounts of fentanyl are coming from canada. frankly, there's more fentanyl going from the us into canada than vice versa. so i think this. >> combination of. >> you know, a tariff attack against. >> our, our. >> best partners. unwillingness

to kind of collaborate with our traditional allies like europe on china and then, frankly, walking away from our commitment to ukraine. that gives a level of international uncertainty. it gives market uncertainty. and that doesn't even count the kind of almost cruel way that federal workers have been fired. >> that at the end of the day, i think. >> it's. >> going to just. >> cost more money. you can't you've already seen on like the price of eggs has gone up so much. a lot of that was due to the fact they, you know, ignorantly fired a bunch of federal workers that were working on avian flu that's causing some of the increase of the price of eggs. i mean, at some point, and i'm starting to see from my. >> republican friends, i get caught up in the egg prices. i'm not sure that that's the most productive way of looking. >> at it, but this is the guy that said. >> he was going to lower food prices. >> didn't he. >> come in saying he was going to lower food prices? food prices, you know, in his 42 days are not down. now, listen, i would like there to be a more positive report for our country. but this is a.

>> you know. >> we've got chaos on steroids. and we have, you know, if musk had come in and i helped mr. musk a dozen years ago break into the space oligopoly, at that point, space x was a great success. but to come in and kind of run. >> it through the federal. >> workforce, you don't replace an nsa coder, you don't replace someone who has been a researcher on medical research overnight. you want to stand up against innovation, technology, advance in china, don't cut research randomly the way they already have in terms of nih grants, for example. >> senator, let's just ask about what the democrats are doing in opposition, because i think last night, watching a little bit of the ruckus and the chaos that probably didn't land the way some of those democrats were thinking it was going to kind of lays out, what are you doing about this? is there a united front from the democratic party?

there's very close majorities, particularly in the house. and yet it doesn't feel like the democrats really have much of an opposition plan or an alternative plan. they don't plan on working with the president. that's pretty clear. but what what is the alternative plan? >> well, again. >> i supported some. >> of. >> the president's. initial appointees. i thought this would be like. trump one. >> i have not. >> since then, since this has been so far, i expected a flood. i didn't expect a tsunami in terms of some of these actions. there was nothing. >> in. >> the president's speech last night that had any unifying theme that called anybody to any kind of common cause. >> listen, i. >> think the theater that has. >> gone on. >> in the last member state of. >> unions from both. >> sides, we can all remember the shouting. >> out at. >> obama's state of the union. i don't think that i don't think that ought to go on. but this didn't start with the democrats in 2025. you know, the state of the union. i've never heard a speech that had a darker vision

for kind of the world and. >> and a less even. >> feeble attempt to try to say, hey, we may have disagreed. >> on the. >> election, but we got to work together now. instead, we heard this, you know, campaign rally reports. >> of, you know. >> joe biden's worst mistakes that may play to the base. >> for, i think. >> for a business community. i say this as somebody who spent longer in business than in politics. you want somebody that's going to say, how are we going to maximize value for our country? how are we going to maximize value for our people? i didn't hear a lot of that last night. >> senator. one of the arguments we're hearing democrats make right now is that these tax cuts or tax extensions only benefit the wealthy. in fact, as you probably know, almost all americans would see a tax hike if these were to expire. and that's because of the standard deduction doubling under under the 2017 tax changes, the child tax credit doubling. so what is

your view of the tax extension. how do you think that's going to play out. >> if you. well first of all, if you look. at who receives the vast majority of the benefits. >> on a dollar basis. because the wealthy make the most and pay the most. >> you asked me a question. let me let me respond. i mean, you know, were there some things that hit middle class folks? yes. the vast majority of the benefits went to the folks at the very top. and if the price of that and there is no way you can get to these numbers without cuts on medicaid, without cuts in areas that i don't think americans are ready to stand up for in terms of like research, which we've already seen. and again, as somebody who spent years working on the simpson-bowles plan, when we were concerned that the debt was at 16 trillion and might go to 17, and now we're double that, the accounting trick that some of my republican friends are going to use, that they completely thought was illegal, to which called around the baselines. i don't want to nerd out here, but changing from your

baseline to current policy baseline, this would be an accounting. if you were an accountant signing off on this charge, you would lose your license in terms of suddenly making the tax extensions appear not to cost money. these tax cuts were set up for a fixed period of time to not blow the debt even out. further. they are not under what some of the republicans are proposing. they're not going to be paid for. you can call it whatever you want into the day. this will put, you know, minimum of another 5 to $6 trillion on our debt levels. and you and i both know we've had interest rates as they as they approach back to normal. you know, that is going to mean interest payments, which are already in excess of our defense budget, are only going to go up higher. >> senator warner, thank you for joining us. we look forward to hearing more from you. >> thank you so much. >> all right. coming up, breaking jobs data february. adp payrolls data will be released. futures right now still

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>> yeah, mike, you know, of course, it's been a pretty quiet m&a front. but activism continues at pace. and certainly we've got a big number of big names, including starboard, that continue to press campaigns that a few companies got a settlement this morning. we first reported it on cnbc.com a few moments ago. it's been confirmed in a press release that just came out. it is with ken view that company of course, stock of which has moved up a bit of late. not because necessarily of improving fundamentals, which is sort of at the heart of the dispute here, so to speak. but because it's a defensive name, mike, you know that better than, better than anyone. and they've been getting some money moving in there of late. the settlement itself, mr. smith will go on the board, along with two new independent directors, and the focus has been on what essentially is a belief amongst a number of investors, not just mr. smith, that there is a lack there's an underperformance here for great brands. you know, we're talking neutrogena tylenol. viewers may well remember this was spun off from j&j not that long ago. ceo not

really chosen by the board so much. and so you do wonder and i this is based on reporting as well with mr. smith moving on to new directors as well. he is going to be held to account perhaps. and so we'll see how it goes for them. but i think there is a belief that these brands need to be reinvigorated. they need to have reinvestment that has begun to a certain extent in terms of these assets. but again, sort of disappointment with their overall performance thus far. and if you go back, you can see in terms of since it has been a public company, mike. but we did want to sort of alert people. it'll be interesting to see, you know, if it's a name as well at $50 billion market cap or so, that could get batted around a bit as a takeover candidate. not clear to me that there's anything at all on that front brewing. the first battle will seem to be in the boardroom now about leadership and whether they've got the right leadership in place to sort of bring about that bit of a turnaround. i'll

send it back to you guys. >> yeah. david. thank you. yeah. a company spun off less than two years ago has has declined from that initial initial price. we'll see where it goes from here. david faber thank you. >> by the way. >> congratulations, david. >> for the. >> award last night. >> elliott award winner. yes. >> well deserved. >> congrats. >> very wonderful. >> lifetime achievement. all right. the february adp employment report just now being released steve liesman joins us with the numbers steve. >> hey mike a big miss on adp coming in at just 77,000 for the month of february. that's the smallest monthly gain since july. and a sharp comedown from the 186 in february. and in january. total private payrolls just 178. the estimate was 148,000. but good balance there between goods producing sector, which did quite well up 42,000. that's a good number for that. for that index service providing up 36,000. and there's that non-farm payroll estimate looking for a pretty robust

170,000. so we'll see what happens to that estimate by the end of the day. as economists think about whether adp is telling them something about maybe weaker numbers. again, adp revised up from 183,000 to 186 for january. now the small business was a place where they lost jobs. now that sector has been doing pretty well, so don't know if this is a one month blip in february or maybe some other issues that are going on. we'll get to the economist nila richardson in a second. medium and large business both doing okay. up 46 and 37,000 respectively. interesting movements in the sectors here. leisure, hospitality up 41,000. that's been a place we've seen a lot of job growth there. so that continues professional business services up 27. financial activities up 26. but there's education and health services down 28,000. and that i believe is the first decline in that sector since june of 2021. or as we came back from the pandemic. so we don't know if perhaps

that's some a government spending issue showing up in private sector hiring there, or again, perhaps a one month anomaly. trade, transport, utilities had also done well, but now down 33,000 on income or on wages, something followed closely by the federal reserve job stayers 4.7%. that's flat and job changes 6.7%. that is down a 10th. so mike, a big miss there. some economists will factor this into their estimates for friday. others will ignore it because overall adp has been running plus or minus. big difference with the bls private sector 108,000 over the course of a year. it's just a 23,000 monthly difference. but if you look at the monthly differences on an absolute basis, it's been pretty wide. >> yeah. well, the treasury yields have actually taken this a little bit of a step down on the news. so we'll see how the markets do it as well. steve

stay with us for more on this adp data. let's bring in neil richardson adp chief economist. it's good to see you. so definitely a shortfall relative to consensus. it kind of feeds into this idea of a further slackening labor market. how do you read it. >> well i read it in. >> a number of ways. >> first of all this. >> is a look at the. >> private sector. it does. >> not include government jobs. but what we do see is the same kind of. >> hesitancy in. >> hiring that we saw. >> in july. now. >> a couple months later, we saw this unleashing of hiring over the fall and winter months. >> and so for the. >> last three months, the bls and the adp numbers have been tracking strength. >> 188,000 posted. >> the last three months. >> in the adp. >> 209,000. in bls. >> this month. >> represents a step down from that. >> but steve was absolutely correct to highlight. >> the. >> good strength. this is. the first. >> time and i look through the data last night. actually. >> this is the. >> first time. >> that goods have outperformed.

>> services since 2018. so that could be. >> the bright spot. >> in a rather. >> downbeat report. >> is there any way of trying to discern whether that is partially pulled forward of people trying to produce for getting ahead of tariffs, or if that seems like something that's more of a tidal shift in the economy. >> well. >> it matches up with the survey data from manufacturers, the ism. manufacturing survey, which. >> showed strength. >> in january. and i think what we saw is strength in new orders in that survey, strength in employment, strength in a lot of different dimensions of the manufacturing sector. and i think that is. >> reflected in the hiring. >> that we. >> saw in february. the unfortunate. >> part of that survey is that the next february survey didn't see the same strength. so i'm not sure about the persistence at this moment, but it was definitely reflective of the optimism coming from the sector in january. >> steve, you wanted to add to that? >> yeah. first of all, mike, i want to point out that you're

right about the movement in the ten year and the two year, which is kind of interesting to me, which is whether or not economists take it seriously. the market takes it seriously. so they see this as yet another sign of weakness. and i'll update in a little bit the fed fund futures and see what's happened there. we had been banking on three cuts. but i want to point out there are two parts to what's happening with doge when it comes to employment. the first is federal employment. the other thing is the cancellation of contracts and the impact on the private sector. that's what will show up in the overall headline jobless claims numbers. the federal workers will appear and we'll talk about this on thursday morning, will appear separately in a federal worker claims index. but but the private sector appears in the jobless claims. so my question to neil is whether or not education and health services, two areas that do rely on government spending. do you think we could be seeing early impacts there from what's

happening with doge and the cancellation of contracts, the decline in federal spending and the knock on to private sector federal contractors, either in washington or even indeed around the country? >> it's you're. >> right. >> steve, to highlight the. >> education and healthcare drop. >> in job gains. this is. >> a sector. >> that could be responding to federal policy around funding. >> so in the sector. >> we have health care, we have. social assistance, we have education. and all of that bucket is impacted by a grant. and so yeah this could be a little. >> preemptive on the. >> part of these organizations. >> we don't know if it's long term. >> there seems to be some. uncertainty in that sector. >> but if. >> you look. >> at professional. >> business services, where you would. >> think that a lot of federal contractors would show up, we're. >> seeing a pretty good number, 27,000. >> jobs posted. so my takeaway from all of this is that it's not just policy driving these different sector gains. the

economy has changed. if you look at consumers over the past two months, you've seen a decline in spending that shows up in the lack of hiring in the retail, that trade, transportation and warehousing. that is the biggest negative we saw in the january report. so there is no wholesale policy or part of the economy that we can point to in terms of this report. but what we. >> do. >> see is some rebound in manufacturing. >> and. >> some sluggishness in those consumer facing sectors like education, healthcare and retail. >> interesting. it's a context neil. thank you steve. thanks a lot. all right. coming up, new comments from commerce secretary howard lutnick saying an announcement is expected this afternoon on tariffs. and they're looking at usmca compliance including for auto makers. phil lebeau joins us with this news and more. squawk box will be right back.

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comments from secretary of commerce howard lutnick saying an announcement is expected this afternoon on tariffs. this could be important. and they're looking at usmca compliance, including for automakers. phil lebeau is going to join us that with that news and more. and later reaction to last night's address to congress, to congress from republican policy committee chair senator shelley moore capito. squawk box will be right capito. squawk box will be right back. your clients look to you. you look to t. rowe price. (♪♪) because we stay agile... actively managing investments to uncover opportunities... and build etfs designed to outperform the index. (♪♪) that's the power of curiosity. (♪♪) better questions can lead to better solutions. t. rowe price invest with confidence (♪♪) car, this isn't the way home.

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us mexico canada trade agreement, including for the auto sector. lutnick also saying that trump is aiming to renegotiate the usmca agreement next year. we were watching the markets on this. and robert frank was pointing out that, yeah, initially on the news of the adp numbers coming in, the jobs coming in less than expected. we saw the markets dip. they rose a little bit based on these comments from lutnick. and we will see how this plays out. but right now the dow futures are basically flat. same story with the s&p futures nasdaq indicated up by about 40 points. phil lebeau joins us right now with more on this. phil, we know what the auto makers would like to hear that they will not be penalized for having followed usmca. >> and we. >> know that the trump administration said yesterday that there were number of phone calls between trump administration officials. and auto executives for the big three, no doubt not just with the big three, but for the other auto industry players. a lot of

suppliers are going to be massively impacted by these tariffs. if there's not some type of an exemption there. take a look at what we're looking at in terms of auto production. >> on a daily. >> basis between the us, canada. and mexico. this is according to s&p global mobility comes out to just. under 70,000 vehicles. >> yesterday. >> s&p global mobility put. >> out a forecast saying we. >> think that if these. >> tariffs stay in place. >> you're looking at 30% daily production going away in some fashion. >> and that's the that's the expectation. >> about 20,000 vehicles would not be produced. and it's understandable why the choices for the big three. they're not real good here. they can either move the shift or the mix of the type of vehicle. in other words, build a more high content, higher priced vehicles. in the. united states, if there's a lower price version, build it in mexico. that's one example of what they might be able to do, but their options are extremely limited. that's why you expect many expect to see them cut shifts in mexico and canada. and

then if the tariffs are still. >> in place. >> you'll see the auto makers lower the incentives that are out there and they're going to have to cut their margins. there's just no way around it. even as they pass along some of the cost increases to consumers. as you take a look at annual. auto sales, these estimates are likely going to come. down if the tariffs stay in place. most believe that we're going to be a little bit better than last year, maybe 16.2 million, the average. incentive on a new vehicle. in other words, if you go to a dealer. on average, they will say to you. >> you know what? we're going. >> to give you another $3,500 off a particular vehicle in. >> some. >> form, whether it's rebates, whether it's financing, whatever it might be. that's likely to come down as the automakers look to preserve their margins as much as possible or limit the cut impact. and there you see the comments from the commerce secretary having an impact on what we're seeing with the shares of the auto makers pre-market. so we'll watch, guys. we'll see. because the auto makers, they don't have a

whole lot of good options here and especially the suppliers. i mean, they're. >> locked in. >> the supply chain is locked in there. it's not like you can. >> say, let's build. >> a plant in indiana, have it up and going in. >> about a month, right. >> so how quickly would this happen? are we talking next week they would pull off incentives. are we talking this quarter. you're going to see a big cut to margins like how. >> i think. >> you would. >> start to. >> see it. >> and there'll be nibbling around. >> the edges. within the next week. and then you. >> really start to see it happen over time, that most people in the industry point to the chip crisis. becky, as an example of what you saw happening with. prices and with incentives, and between march. >> of 21. >> and the end of 21, the average transaction price for a new vehicle in the us went from just under 40,000 to more than 46,000, and now it's at about 48 five somewhere in that range. >> so if this. >> sticks. >> if. >> these tariffs stick. >> that's what. >> many people believe you're going. >> to see. >> from the automakers.

>> so phil presumably, you know, the us automakers are likely to say look we're in compliance with the usmca. what types of exemptions in particular do you think they have a shot at getting? is it just as part of the manufacturing process, as parts go across the border or something bigger than that? >> great question. i think all options are on the table. i mean, look, the automakers will take anything they can get. they would like it to go back to what it was before president trump was sworn in. i don't know if that's going to happen or not. and remember the steel and aluminum tariffs when those. >> kick in. >> and that's going to hit the auto industry. >> as well. >> so they are under the gun right now. >> yeah. no doubt about it phil appreciate it. >> you bet. >> all right. let's get to dom chu with a look at this morning's other pre-market movers. a lot moving right now, dom. >> a lot of moving parts for sure. robert. so there's a few names reporting earnings this morning as well that are kind of moving things around. let's start with shares of footlocker which are right now jumping higher after beating earnings expectations. comparable store

sales also growing by about 2.6% for the quarter. that was better than expectations. the footwear retailer continues its turnaround efforts currently, but the revenue is falling short of estimates and full year guidance is also softer than expected as well. foot locker ceo noting uncertainty for the remaining first half of 2025. so foot locker shares right now are now down about 2%. shares of campbell right now plunging after earnings as the food brand lowers its full year forecast as well, seeing weaker demand in its snacking categories. the firm now expects full year net sales to rise between 6 to 8%. the previous forecast was a 9 to 11% range. they do note, however, that the forecast does not reflect any impact of potential tariffs, so that's still an uncertainty. campbell shares down about 7%. and we'll end on shares of abercrombie and fitch which are also falling as earnings guidance comes in well below expectations. growth of just around 3 to 5%. the retailer noting that its full year operating margin guidance of 14 to 15%, includes the

impact from announced tariffs on canada, mexico and china as well. so abercrombie, one of those stocks that's feeling the tariff impact or forecasting it will already. becky i'll send things back over to you guys. >> okay don thank you very much. still to come president trump laying out his vision for the nation's future and saying tariffs are about making america rich again. republican policy chair and commerce committee member shelley moore capito will join us to talk about last night's address and the president's economic plan. we'll be right back. >> for 32. >> years. >> red chip. >> has been discovering. >> tomorrow's blue chips. today, with early research on starbucks, celsius, zachtronics. winnebago and more. now we bring you red chat, an innovative ai solution which gives you answers in seconds on over 2000 small cap stocks listed. >> on. >> the new york. >> stock exchange and. >> the nasdaq. visit redshift

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donkey. >> you mean. >> a smart. >> find an advisor at smart asset com. >> commerce secretary howard lutnick saying that the white house is considering certain sectors on which the united states could give candidate tariff relief, including in the auto sector. he said he expects an announcement this afternoon. and he also noted that president trump is aiming to renegotiate the usmca agreement that new nafta next year. joining us right now is west virginia senator shelley moore capito. she chairs the senate republican policy committee. and senator, thank you for being with us this morning. i want to get your reaction to what we are hearing

right now from the commerce secretary. how important are the tariff acts? and how important might it be for them to be rolled back to some extent, or at least find some ways for workarounds for sectors that have been complying with the usmca? well. >> i think the president made clear last night that he wants an even playing field. he wants fentanyl to. >> stop flowing across. >> both our. >> our our northern. >> and southern border. but he also made clear, i think, that that. >> the tariffs. >> are a negotiating item for him to be able to achieve his goals, which is. not just parity. >> but also. >> prosperity here in. >> the united states. so i would imagine this is going to be. >> very fluid as we move through. >> the next. >> several months, particularly with. mexico and canada. i think that we obviously. >> import a lot of energy. >> from canada and that that's being treated differently already. the automotive sector. >> there's a lot. >> of free flow between both borders. i think on the supply chain.

>> side, but also on the. >> assembly side, we have a toyota. >> plant in west virginia that sends our transmissions. >> and engines to. >> canada, for example. >> so i think all of these things. to be. >> need to be made consideration. >> but i. >> think he's. >> got their attention. both countries, and i think he's. >> asking them to come to the table. >> to make this a. >> better, a. >> better deal for us or. >> a more fair deal for us. and i think that's better for the american worker. >> senator capito, i don't i don't know if you heard the report we just had from phil lebeau, our auto reporter. he was saying that, look, the big three and the auto parts suppliers are kind of between a rock and a hard place with this. there's not a lot they can do if additional tariffs are placed on this and said that they may have to do things starting as early as next week to roll back some of the auto incentives that are offered to consumers. right now, some of the deals to get them to come in and buy cars, that it would also hurt profit margins almost immediately, and they would have to do things to try

and make up for those profit margins. i just wonder, how much pain do you think we are willing to feel to get to the place that the president was laying out last night? is it short term pain if that's in the form of higher prices and potential layoffs? is that something you think is worth it to get to what the president has laid out? >> well, i will say a couple things there. >> first of all, the president. >> did say to us sitting there. >> last night. >> you're going to have to. >> be a little patient. so that, to. >> me signals. >> some short term pain. >> however, i. >> will say. >> a vehicle, a car. if you. >> look at why the president. >> was elected. >> it. >> was food prices. it was just the most basic expenses in every family's life. >> and a car. >> is one of those. and so i think. >> to be make it more affordable and to also keep our workforce. >> as vibrant in this. >> automotive sector as, as we want it to be and watch it grow. >> i think. >> you know, there. >> has to be some care given here. we did negotiate and we did pass.

>> under president trump's past. >> leadership, the usmca. and if there's. compliance there, i think we have to be very careful. >> that we're not breaking. >> agreements that we. >> made in the past. so, as i said earlier, i think this is a negotiating tool. i think automobiles. >> are essential in life here. >> in this country, and we don't want to price our consumers, particularly at the lower end, out of the market. because that's. >> joblessness and. that's other strains. >> on an already strained. >> family budget. >> i hear what you're saying. you're you're saying the same thing that a lot on wall street. investors and business leaders have been thinking, too, that this is a negotiating tactic, that it really is to get us designed to a better deal. it's not necessarily higher tariffs that are here to stay. but we did have bruce heyman, the former us ambassador to canada, on with us earlier this morning. he's worried that this is going to be permanent and that because that's because he thinks the administration needs money to pay for all of the extension of

the tax cuts and the additional tax cuts that have been promised by the president that they need money to do that. and that's why he thinks they started with the united states, canada, with canada, mexico and china, because those are the three big biggest trading partners. if this is a situation where this is permanent, you're going to see higher costs that come through. would you still be on board with that? well. >> i think. >> we have to look at it in the whole and i think we have to look at what the president's trying to do. i think he's trying to right. >> the ship here. >> in terms. of where. >> he sees an even playing field or a fairness quotient. these are obviously. >> our friends in mexico and in canada. so i think it's important. >> that we. >> keep those alliances as. >> strong. as we possibly. >> can in the in the global situation. >> so. >> you know, one thing we've learned with president trump, you know. >> what can happen today. can happen tomorrow. >> and some of that uncertainty, i think, plays to. >> his strength to be able to negotiate. >> and renegotiate the automotive sector is very important. you saw what

happened. >> in this past. >> election, talking about the. >> ev. >> mandate and how it was troublesome in michigan. >> and other areas. >> where there was job loss. ohio would be another good example. >> so i think. what he said it is speech. have a. >> little patience. he's not the most. >> patient person, but. >> he's asking us for a little patience. it's going to change a little. >> bit today. >> it'll probably change a little. >> bit tomorrow. >> what that does to the markets only the market's going to be. >> able. >> to. >> react to that. what it does. >> to the american worker and the american consumer is where i think is the most important thing. and i think that's what the president has his eye on. >> and senator, another thing the president has his eye on is balancing the budget. as he talked about last night. he also talked about adding more tax cuts to the extension of the 2017 tax provisions. how do you think they're going to pay for it? i guess elon musk is expected to appear before house republicans today. the savings at d.o.j. are getting headlines, but don't add up to that much when you compare it to the $4 trillion that extending the tax cuts would take. where do you

see more potential for tax savings or the need to pay for the tax extensions and additional cuts? >> i think. >> we all recognize that what we have is a spending problem and not a revenue problem. we have a lot of revenues that have grown, and a lot of this. >> was as result. >> of the. 2017 tax relief. >> that was passed. >> under president trump's past leadership. so we're going to be very. strategic and look for those savings to bend the arc. >> we have. >> way too much debt. >> we are headed in in. >> in a direction that. >> could has been characterized. >> as possibly catastrophic. >> we've got to. >> prevent that. now is the. time to do it. so all of these things are. are in play. i don't think that personally. i don't think that the reason president trump is moving. forward on the tariff. >> item is to pay for his. >> for the tax relief. i don't think that's his motive. i think he sees the american worker as disadvantaged in certain circumstances and the consumer, and that's what he's going for.

so in the greater, in the greater we are looking now in the greater package that we're going to be putting together where we. >> can achieve these savings. >> what dodge is doing, what, you know, the federal workforce looks like. >> in the next 6. >> to 9 months. and what the tax structures are. the president campaigned on no tax on tips. we've got to. >> consider that. >> as part of what he. >> said to the american people he was going to try to achieve. >> that may mean that there's a push and pull in some of the other areas. we're going to look at the ira and pull out some of some of those incentives. so, you know, we got a lot to. >> look at here. >> and i think. it's an exciting time because i think we're going to see big shifts. >> senator capito, thank you very much. >> thank you all. >> thanks. >> all right. up next, a new direct to consumer pharmacy announced within the last few minutes. shares of that company on the move in the premarket. on the move in the premarket. we'll sh as your host, i have some rules. two flush maximum per bathroom visit. no games. no fun.

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com. >> we're counting down to the opening bell. joining us now is ashish shah, cio of public investing at goldman sachs asset management. ashish, it is only wednesday, but it feels like it's been a month and a week here. given all the wild swings even this morning we're seeing the adp report revive concerns

about a growth slowdown. and then we're seeing bond yields sort of move around. what should investors be doing right now. >> yeah. >> so. look this kind of environment creates a tremendous amount of opportunity. so i think the first. >> thing is. >> that investors have to look back at their portfolios and remind themselves that they're in it for the long term. the opportunities that we're seeing, which we've been talking about since really the end of last year, are broadening equity markets, you know, year to date. the us may be down, but europe is up. and it's up double digits right. hong kong is up like 15%. so you're seeing tremendous opportunities there. and there's also opportunities to generate income in your portfolio. >> how do you do that. generating income. so talk about bonds equities and their role what the mix should be like right. >> sure thing. >> so i. >> think one. >> of the most. >> important things. >> when it comes. >> to. >> generating income. >> is you can't. >> simply rely on your. bond part of your portfolio to

generate an income. there are a lot of other opportunities. so take for example, the volatility we're seeing in the equity market. vix is you know. in the. 20s today you're going to see volatility. this is a great opportunity to sell options against your s&p positions or to you know go into an income generating dividend heavy type of equity portfolio. on the other side when it comes to, you know, bond markets you know look at today you're seeing german bonds sell off at the same time the us is holding in really well. and that's because relative growth is very different across the world. that's creating great relative value opportunities for bond. active bond managers like ourselves. and you can take advantage of those by going into kind of an unconstrained dynamic bond fund. >> we're hearing the word stagflation reappear again. we heard a bit of that when rates started going up. it's one of those 1970s ghosts that comes back once in a while. if that does happen, to whatever degree,

how should your portfolio look? yeah. so. >> i think that what worked back then is making sure you were generating lots of income because it allowed you to reinvest back into your portfolio, making sure that your income was generating a lot of after tax income, because at that time, taxes were really high. this time may not be quite the same. and so i think either way you want to be really diversified in your portfolio. but remember that income piece of your portfolio, which a lot of people as equity markets have been going kind of up and to the right, they've forgotten about and they've been afraid of bonds. you know, i think this is a good reminder, year to date, that bonds are actually your friend in volatile markets. >> ashish, you mentioned the outperformance of europe and hong kong relative to the us so far year to date. and it's been pretty stark in terms of what's happening in the economies. right. we just were talking about earlier germany kind of taking off the fiscal restraints, going to borrow and spend a lot more. at the same time, the us is actually kind of

tightening things up on fiscal, at least trying to. and us consumers seem to have had a bit of a hang over coming into this year. is this sustainable and can it actually operate smoothly, or is it creating some kind of tensions with these growth divergences? >> look, we've. >> seen this. >> dynamic since the pandemic, where the us has been kind of a year ahead when it comes to the growth cycle relative to europe. right? so last year europe had a rough year growth wise and the us was gangbusters. we started to slow. then we had re-acceleration we're calling for or concerned about a re igniting of inflation. you know. >> now you're seeing. >> the reverse. you're seeing the us cutting. that means you're going to see deceleration in the us, maybe some fed cutting later on this year, which is actually going to be a good thing because you know, as we've seen with lower interest rates come housing demand. >> could that could the fed cuts come sooner rather than later. if the jobs picture weakens we

don't see immediate increase in inflation. even if you're worried about additional effects to come down the road. >> look. >> i think it's important to remember that the fed already cut 100 basis points. and so but if we were at the start of this year, we were starting to price out any fed cuts and talking about fed hikes. so that's why i think it's really important when you get these big kind of overshoots in markets, that you have to be willing. to step in and play the long game. and, you know, we think that interest rates are going to head lower over time. you know, as the us economy decelerates. >> and. >> as inflation gets back into the right zone. >> and lastly, the retail investor holding in there right now. >> you know. >> i think the retail investor is taking a pause. we've seen through our you know i and you know quantitative analytics that that the retail investors really kind of pulling back. and that that that isn't surprising to us

given how kind of forward leaning that investor had been. it's time for like the meme stocks and other things to take a break. this is an environment for long term investors, and that's why i'm really excited about it. >> ashish, thank you very much for joining us today. i also want to thank mike santoli and robert frank for being here. it's been a pleasure gentlemen. make sure you join us right back here tomorrow. right now it's time for squawk on the street. >> good wednesday morning. >> welcome to squawk on the street i'm carl quintanilla with jim cramer. david faber at post nine of the new york stock exchange. futures steady on guard for anything. after yesterday's roller coaster. the commerce secretary again hinting there could be some tariff relief announced this afternoon. meantime, the biggest drop in adp payrolls in two years, a road that begins with this roller coaster ride in the markets. nasdaq falling in and out of correction territory. major averages wiping out their post-election gains. >> president trump t