Transcripts For CNBC Squawk On The Street 20170216

Legislation. Our roadmap begins with signs of confidence and optimism, those are the words of the president as stocks notch their longest record setting streak in a quarter century. Plus, trumps cabinet trouble. The president s top pick for labor suddenly withdrawing from a nomination with nearly half of his cabinet and Administrative Team still yet to be confirmed. Snap valuing itself between 19 billion and 22 billion as the owner of snapchat prepares for one of the most hotly anticipated ipos of the year. First up though, the historic runup in stocks getting the president s attention. This morning he tweets, stock market hits new high with longest winning streak in decades. Great level of confidence and optimism, even before the tax plan rollout. Hes referring, guys, to the series of record highs set by all three major indices for a running number of days. And if you look back at the first month performance on the s p, jim, hes got the best record. You got to go back to lbj to see an incoming president with a better first month in stocks. Its funny to go back to lbj for that. We go back to the philly index 84, Ronald Reagan get these numbers. I got to tell you, look, im not a Sports Illustrated jinx guy, but when i saw donald trump talking about this is me and the way we get to the taxes and this is the rollout, its like dont change it. Its been going higher. David, youve got to address this. Talk about even before the tax plan rollout, david, every day the tax plan rollout seems to disappear on the horizon. Yeah, well, theres a lot of other things that seem to be coming before the tax plan rollout. I dont even know what that means, rollout. So theyre going to rollout their version of what theyd like to see, i guess. Thats what i guess we can assume, right, jim . Thats what rollout means. Because its not as though its going to happen. This is not an executive order that you get to sign and suddenly it happens, right . This is something thats got to be worked on with the house, with the senate and has then got to be voted into law which is likely not to take place until later this year if not 18. So im as curious as you are what that means and the timing of it of course as you bring up, jim, given all the other turm l turmoil, and i dont think thats an unfair word to use here thats going on in the white house. Yeah, the idea theres a c p queue and a rollout almost as if theres one branch of government. The rollout is the one where there really has to be a team jawboning trying to figure out what the tax plan looks like, try to make it as simple as possible. I think its good that the president mentions things are going well, but in order to get to the next level at a certain point were going to have to have 2018 numbers be driven by much bigger repatriation and of course obviously Corporate Taxes. And, david, no ones even pushing it. Its only you cant legislate by tweet. You can have fun with twitter, but you cant legislate with it. Yeah. Times this morning says congress is on a legislative elliptical trainer gliding toward nowhere because of such little progress on aca. We havent heard a thing about infrastructure really. Obviously the complications about taxes, which well get to. And yet heres the times this morning, jim, finally taking a crack at what we talk about every day which is why stocks just dont care. Investors tune out the worrying headlines as david just referenced, what is essentially allout war now between the white house and the Intelligence Community. Well, look, in the end were stuck with Companies Like cisco that reported last night. And the quarter was really very, very good. Major turn in Business Post the election. Literally one of these things where you say to yourself, okay, i read this quarter, trump isnt involved, obviously they have 71 billion overseas, what a windfall, they can bring it back. But the fact is business is strong. And when you have strong business, we tend to overlook what could propel it to be even stronger. You know what, it is remarkable when youre out here. No one is talking about trump. Maybe theyre talking about trump away from me, but most of them are talking about why business got so strong and where its strong. And a lot of its worldwide. Worldwide can obviously not be hostage to what the senate and house do. Now, guys, there is also this story thats been around for the last few days. And, jim, id love to get your take that theres been this massive shortdated upside call buyer in the s p futures. About 10 billion of delta bought in february and march calls. Ive been hearing this from a number of hedge funds, you know, that there is some fairly large mutual fund, part of their strategy was to buy a call and sell two to three times a higher strike call to finance it. That gets hurt on a rally, that kind of a strategy. So theyve had a recently cover their upside, essentially. The fund apparently whatever fund this is could be down a lot. But that may have also been contributing to why we kept seeing futures in particular but s p move up. This very large buyer out there needing to basically cover. Yeah. Upside thats a strategy from hell in a rally like this. You know what, david, that is a terrific piece of information because what i saw yesterday and what i see over and over again is every time this market flags someone comes in but not in a lot of volume and does some buying. You let up for a second and theres that buyer. That makes sense that it could be the call buyer because you dont really see them in the averages. The volumes very light, but the market just goes up. And the sellers dont seem to ever appear. It creates a kind of virtuous circle because we dont really see that buyer. We dont know when that buyers done. But we also dont have a lot of supply. No one seems to want to put out some 3m, theres no ibm for sale, no cisco for sale, not a lot of microsoft for sale but we do see buyers underneath. We cant figure out where theyre coming from. Thats a nice call. Yeah, apparently its an open ended mutual fund. Again, i want to do a little more reporting on this because it is interesting. And may in fact be having an impact, at least in some the way whats been this incredibly bullish move all week. All week. Very ill advised strategy. One buyer that we do know by name of course is berkshire, charlie monger spoke in l. A. Yesterday about the firms bets on airlines and apple. Take a listen to what he said. Think of over the years about hightech, we dont understand it, its not competency, worst business in the world is airlines, what do we appear in the press with . Apple and a bunch of airlines. I dont think weve got weve gone crazy. I think the answer is were adapting reasonably to a business thats gotten very much more difficult. I dont think we have a cinch in either one of those positions. I think we have the odds a little bit in our favor. Youve got to love that line. I dont think weve gone crazy. Jim, i think munger was once quoted airlines marginal costs with wings. But clearly they dont feel that way anymore. Well, look, when you decide youre going to have you see they generate a huge amount of cash. When they generate a huge amount of cash, thats a very different from the industry for all the years the industry has been alye. So, i mean, look things do change. Were always told dont ever say this times different. But holy cow the cash generation is so huge that its almost ridiculous that these stocks sell at these low multiples, particularly without a lot of addition of planes in 2017. Lets move onto some of the cabinet drama weve seen. You probably know by now the president has to make a new choice for labor secretary. Andrew puzder withdrawn his nomination for the post. Home of carls jr. And hardees lost support from senators on both sides after being hampered about questions about his business. We already know what democrats are calling for regarding special commissions, select committees, pressure now on intel and judiciary, jim, is this the equivalent of shoving a wide receiver at the line . Is it just an initial pushoff or is there something more to it . Well, i think things are coming to a boil in terms of who trump wants versus who he can have. And the vetting process. It just seems like i mean, it was really interesting a lot of coverage this morning was there was fake news hurting puzder, but in the end youve got the situation where you have social media working so quickly on these people. You have a vetting process that was not necessarily done by traditional people within the republican party. So youre going to make mistakes. I dont think that the labor secretary is as important as whats happening with National Security, but it does once again come back to this notion of disarray and if theres disarray, how are we going to come to an infrastructure plan . How are we going to come to lower Corporate Tax rates . Youre going to have to do it all on earnings. So far earnings good, but puzder, wow. I think uniquely not qualified. You know, jim, to what extent does the market just continue to ignore and perhaps it just does because its not of importance this ongoing question about National Security . I mean, the lead story in the wall street journal today, spies keep trump in dark on intelligence in sign of mistrust. Does the market simply not care about Something Like that . I think say we dont have trump, we have pence. The market doesnt care which guy is leading. Look, thats a far afield jump, the president of the United States, the president , but i think theres a sense, hey, listen, it does really matter. Weve got all republicans, republicans arent going to come out and attack the stock market. The tweet this morning from the president is like, hey, all systems go. Again, like look at last night. We had Applied Materials much better than expected quarter, cisco a much better than expected quarter. So when you come in and look at these quarters, say why should i sell them off the fact that every conversation was recorded . I cannot rationalize those two. I got the philly fed so strong, the possibility of three to four rate hikes, these are all the things we want. We cant shoe horn what is going on with flynn with what is going on with ciscos pricetoearnings multiple. One wrinkle to that though, the president did say a year ago this month that the stock market was a, quote, big fat juicy bubble. Nasdaqs up 30 in 12 months. So line up a lot of different factors here. When we come back, bankers lining up for one of the biggest tech road shows in recent years. Well talk to Jeb Hensarling about philly, and a lot more. Jim mentions philly fed, the best number since 84 and pretty much the biggest beat versus expectations on record. Well talk about that when squawk on the street continues. W . Ur mher . M. He doi goo ne carthough. Nts to stay hse dot ow en ere m. Ta with at. Fit, lake look fcila ansee at we cado so we. Li. Lk. L pland. Were opening more xfinity sostores closer to you. Visit us today and learn how to get the most out of all your services, like xfinity x1. Well put the power in your hands, so you can see how x1 is changing the way you experience tv with features like voice remote, making it easier and more fun than ever. Theres more in store than you imagine. Visit an xfinity store today and see for yourself. Xfinity, the future of awesome. Snapchat parents snap amended ipo filing is out, expected range 14 to 16 a share. Value up to 22 billion which is below the companys earlier target. Still, this would be the biggest u. S. Tech ipo since alibaba, jim, and weve talked about the challenges theyre going to have in conveying their Business Model to the street, especially in a time where twitters trying to defend their own model. Compared to twitter i have anthony noto on today both for squawk alley and for mad money. I think twitters skewing too old. And i think snapchat skews exactly for who people want. I know that they can tighten the supply than is going to be offered and the deal can pop very big. I keep hearing the same thing out here which is, yes, facebook cut into snap when they did their stories, but the fact is that snaps got that illusive demographic that everybody wants. So as much as you may want to say the story is not as good, its a heck of a lot better than twitters. What are you going to be willing to pay for this thing, jim, once youve had a chance to really digest the Growth Numbers . That has been the concern at least amongst the investors ive spoken to who have read the initial s1. Growth is just slowed in terms of at least some of the ways you want to measure it. Now, they may want you to measure it in terms of engagement, but those who look at daily average users or monthly, its not looking as good as they might have hoped. You know what im afraid this is an early 2014 story, david, where you get a small amount being offered. You got a lot of people whose kids are on snap. They want to put it away. They think its going to be the greatest investment. Theyre not going to look at valuation. Stocks going to pop big ala twitter and then meander First Quarter out of the shoot for exactly what you said. Do i think of value . I dont think any of these deals have been of value. None of these deals has truly worked except for the ones that people really dont like. So i got to tell you, david, i think its an accident waiting to happen. We just dont want to be part of the accident. We do want to explain why people would like it though. Hey, guys, jack dorseys watching us right now. He tweets about 60 seconds ago. Hey, cnbc, i didnt sell 125 million worth of stock last year. I gave a third of my stock back to our employee pool. So keep that in mind. So good thing to remember. He did speak at the goldman conference yesterday hey, jack jim, he talked at the goldman conference okay. Go ahead. Go ahead, im sorry. [ overlapping speakers ] i understand that. Im just reading what he just tweeted to cnbc. But he did talk about emphasizing the users they have, which if you will talk to noto later on today, but that would mark a turn acosta used to say want to get twitter in the hands of every person on the planet. Well, i think that they should stop well, i love that theyre paying attention to cnbc. That makes me feel terrific. At the same time what i want is revenue. I mean, you know what, if you give us Revenue Growth, then what happens is this, we say twitters stock is a good stock. If you give us no Revenue Growth or declining Revenue Growth, then we make a determination otherwise. I would love to be about karma per share. That would be fabulous, but were stuck with the darn revenues. Nothing you can do. Yeah. Noto emphasized Machine Learning yesterday, making the tool less mechanical, more smart. Maybe that means changing the chronology of the timeline over time. One question yesterday was other than the hundreds of improvements youve made, whats going to bring user growth higher . Wow. So challenges i know youll discuss with anthony later today. Look, you could argue 2016 was a year where they had to make a lot of changes. What you want to find out is they make a lot of changes and a lot of people left, people like adam bain. I think twitter had a huge hand in twitter, so how could you write them off, but i want to know if youre a young advertisers are you reaching a young demographic with snap or with a device that has the president who may not exactly be who a 21yearold wants to read. So i think in the end it could be huge, but maybe its niche. We got to find out. I cant wait to talk to anthony. All right. Well get cramers mad dash and count down to the opening bell in a few moments. Later on well talk to kate upton making her third appearance on the cover of the s. I. Swim suit issue. Im sure well talk a bunch of other things. And potus on the cover of time today. Take a look at future squawk on the street continues in a moment. On intel . Nofe lcloud. At drirlca ard ha seeit all. Tes g. The future trafc ligh, r. Nofe lcloud. At drirlca ard nesss on the cloudanthe oud run. Wohat the other 2 runs on. cahorn future obusiness i wi the helhe low worlcllin tsrgh,ons. Oreross them whst advce sptaon ialread utand orning, ere futu is daat. Ngovnt helgrowoucos all right. Little less than eight minutes before we get to the opening bell for this thursday. Lets head Cross Country one last time, at least for this week, jim. All right. Cisco of course reports numbers. What do you think . Okay. I think that this was the beginning of cisco as an ecosystem. I think this is Chuck Robbins saying, okay, look, we didnt always have the greatest platform but now were going to be software with service carrying revenue up 31 , it was a very Strong Quarter from the point of view not of what the headlines were which people traded off of that sent the stock down, but from the notion that cisco has gotten away from just being a Hardware Company. It is a Software Company therefore gets a higher valuation. Dont forget 71 billion overseas. Theyre not even talking about that possibility. What theyre talking about is a series of acquisitions that have radically changed the way we view cisco. The analysts have to catch up. Theyre still talking about switching and routing. Meaning what . Well, theyre still talking about a Hardware Company that sells at 13 times earnings. Da david, 13 times earnings, and yet this is a company thats got some parts of its business growing double digit. Parts of the business that are growing double digit will overtake the part that was just plain old cisco. And i think the analysts are just beginning to realize, wow, this is very much like what happened with adobe when adobe switched from an on premise boring model to a software is a Service Cloud model and you suddenly got a gigantic multiple expansion. That will happen with Chuck Robbins. Thats why the stocks headed dramatically higher. Wow. All right. So youre looking for significant multiple expansion as a result of the underlying change in the business . Yes. Exactly. I just want to point out jack dorsey was referring not to what were saying right now, which is unfortunate, but to something that was graph in fast money, i dont know anything about the graph but i think its great they are uniquely focused on cnbc. Yes, we always appreciate every single viewer. Every one of them. Even the ones who send us hate tweets, right . Oh, yeah, but those guys, i love those guys i love those guys we love them all. All right. We got an opening bell coming up here in just a few minutes. Stay with us on squawk on the street. To sayictable,the other its or. Ivour ns ake, arenectly bancd espe from to our ar racinas. I kn ts isudn, but if y loomhing. Seree. Seyoarougiulia youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in about two and a half minutes. The Economic Data continues to roll in hot. Well go over this philly fed number once again. When it first came out, guys, people wondered is that really the number 43. 3. We were looking for 23. 6. The highest since 1984. And as santelli said just to our discussion a few moments ago, the turmoil is one thing but its hard to look past the confidence thats in the market right now, jim, not just in the u. S. , not just because of the white house but breaking out in europe and china. Things youve been saying for months. Yeah, look, im from philadelphia. Im happy to see people a little less depressed. Remember its a health care based economy down there because a lot of industrials left. But i think this is in sync with what im hearing from small and medium size business which is they are so hopeful deregulation is going to hope. Its funny its not like the president has deregulated anything involving the small and medium size Business People but he has been very warm to them. David, i got to throw it to you, it does feel like just because there are republicans running the house, running the senate and running the white house, people willing to suspend judgment and say dont worry about it, its all going to happen. Yeah, i think there is still that. And, listen, it is very early, jim. And there is still a great deal of focus, as there should be, on tax reform and how thats going to move. But momentum is going to start from the house, from brady who was on our air yesterday talking about it, from ryan and then going to move towards the senate. I mean, again, back to this rollout idea from the white house. It will be interesting to see if and when we get their plan how it differs from the house ways and means plan that we have right now. But i dont think anybodys abandoned the idea were going to get tax reform. I do think however the focus on the border tax adjustment and the opposition to it raises the possibility that you dont get nearly as much as youd hope for. So you dont get the full pan appellee, what do you end up with . Maybe just a lower rate and repatriation, but that could still be very good. Right, it would be. Again with the cisco, absolutely. Its looking much more lets say atherial than it is empirical. Brady saying this morning we are going to continue to push forward with border adjustment. Talk about a showdown, theres the s p at the bottom of your screen at the big board this morning canadian gold miner celebrating its recent listing. At the nasdaq, nutrition and dietics doing the honors. Couple calls to get to, jim. Downgrade of wells today out of credit suisse, they say target is realized only at 56 and theyre only calling for one fed hike in 17 and one in 18. Right. If you think there are going to be fed rate hikes, wells fargo could lose customers and still have a huge base thats going to make a lot of money. My travel trust got caught in wells fargo buzz we talked about it every day, was frozen, we havent been able to get rid of it. It will be a great performer if you get all those rate hikes. I always find its interesting that buffett doesnt really talk much about wells fargo the franchise, but wells fargo the franchise is a killer. Not as good as bank of america when a rate hike comes or j. P. Morgan, but number three. I think thats going to be dramatic. Already pays out big dividend and expensive stock on pricetobook, but earnings explosion if they get three rate hikes absolutely. Yeah. The other call were watching ubs reiterating a sell on tesla, jim. Their target is still 160 even though the stocks up 48 since election day. They talk about slowing growth, model 3 uncertainty and then this cover story musk is on the cover of business week in which they highlight private meetings hes had with steve bannon and how to a large degree the white house is increasingly looking to tesla as a model for the innovative part of our economy. As is everyone out here. Tesla comes up quite a bit. Not as much as amazon, but tesla comes up as why dont you guys give them more credit. Not unlike what jay leno said on our show. Why dont you give them more credit . No one else has been able to come up with a new car. When you speak say people involved with selfdriving cars what they say is tesla is really far ahead of everybody but look out because alphabet wemo is coming on. But i want to emphasize that tesla and musk are just on top of mind here for everybody. Jim, changing industries quickly here to kraft heinz. Of course the 111 billion market cap company. That is part controlled by 3g and also has a nice holder in warren buffett, reported earnings looked pretty good. Stock though was actually down almost 2 this morning. Even though, again, i think the sales number was above what analysts at least had been anticipating. And they did put up some decent i think even some organic growth there. No, it was terrific. But you know what, david, the stock ran up in anticipation. I think had they said we are about to do a 10 billion to 20 billion deal, which would be really stupid if they said, but had they done it the stock would keep going up. David, this is all about takeout. Its all about taking out somebody else. And when we get what theyre doing, which is trying to grow the business, everybody yawns and people sell. It is a vehicle set up for its next deal. And even though i felt that they improve the fundamentals, its almost as if nobody cared. Yeah. Of course youre right, the focus when it comes to kraft heinz is on what the next deal will be after of course the huge kraft heinz deal itself. Theres been a lot of speculation about mondelez, although that doesnt seem as likely these days, frankly. It will also be interesting in the current environment given the Trump Administrations focus on jobs how kraft heinz approaches that. Remember, zero base budgeting is a key part of what they do. Every year you look at your expenses and start from new and say why do we need this, cutting people is also a part of 3gs strategy. When you think about them making an acquisition here in the u. S. , you do have to think about how they will go about moving through the political dynamic. And i have heard this is interesting, guys, that when they think about a synergy number for any future deal, theyre going to be cutting it by what could be as much as 20 to account for the givebacks theyre going to have to do to make things happier with the Trump Administration. Meaning maybe we keep a factory in place that we might have closed. Maybe we add jobs. And so theyre working from synergy numbers. Not just at kraft heinz but a lot of other companies thinking about deals where it comes to efficiencies are thinking about how they might have to cut their synergy numbers in order to make things work on the political front, jim. Interesting, right . Well, without takeout we would rather own parker hanefin or ingersoll rand, wed rather own any industrial. Because when you get the Food Companies that have reported, unless you have a Consumer Products companies, unless you have a Proctor Gamble with nelson peltz in there motivating something, you end up with pepsico, which had a fabulous number. And at one point was down a 1. 80. It did rally, but i mean, pepsico reported the best organic growth and people said thats not enough. So when kraft heinz reports organic growth thats better than it had before, people yawn. And, david, what you just talked about would be a cap my travel trust owns it because its very expensive, but yeah, you have to have a takeout. And youre not going to be able to fire people, i mean, wow, that really does limit things. Well, they still have an excellent ability to find costs to take out. Certainly thats their way at 3g, and also seemingly they bring in a lot of young people to do jobs and have a new approach. Thats also interesting to note. Well see. Who knows what the name is, jim, but theres going to be no shortage of speculation as this year moves along as to what theyre targeting here in the u. S. Because they are not stopping even with some of the political winds perhaps moving against them a bit. Right. We have too many Food Companies. We have too many Consumer Product companies. You want to sell into the supermarkets, what do you want to do . You dont want to have to drive the stuff to the door. Look at that kellogg quarter. Kellogg didnt end up moving. Campbells has been obviously going higher because people think thats going to be a takeout. But, yes, there still needs to be more consolidation, not unlike the old days when there was a general foods and a pillsbury, theres too Many Companies delivering too much product to the supermarkets. And General Mills they have partners with nestle, but nestle interestingly said theyre not interested in acquisitions, after they reported some numbers as well. So well see. If anything comes to bear there. By the way, real quick, and important to mention, 3g, which raised a fund recently, is pursuing a different area, different vertical. Theyre not going to roll into whatever that next kraft heinz deal would be if in fact there is one. They are going to be doing a separate deal, if they choose to with the money they raise there and the ability to raise a lot more money from whomever it might be they would approach. Warren buffett might want to throw in with them, perhaps another operating company. You know, jim, when it comes to this world generally these guys out of brazil, theyre going to be busy, even if again they may face more resistance than theyre accustom to. Theres a lot to do whenever you read the trian white papers, realize unallocated corporate just waste, call it waste, at these companies tends to be pret pretty legion. People always seem to be able to find something to cut. I think thats an important story to watch. But i think kraft heinz were not going to announce what people wanted. I dont know why they took the stock up to 91. It was just stupid. Guys, couple other moves were watching, wendys down about 3. 5 . They were a penny shy although revenue and comps were above forecast. Trip is down about 9 on their earnings. And then cbs 1. 11 beats by a penny. Ad revenue down 3 because of fewer nfl games. Speaking of the nfl, les moonves was asked. Clearly its been a hot button question, it does bear repeating that nfl is and we feel good about our longterm partnership. Its also fair to say this seasons declines as well as having three fewer thursday night Football Games affected our advertising revenue. So, jim, the premier property in all of media. Well, lets look at how many places that you can get it. Lets look at tired night football on thursday how dreadful those games are and lets talk to anthony noto, once the cfo of the nfl, and the nfl has been the bright spot for twitter, when i speak to him during squawk alley. I think you can find the nfl everywhere and the product of the game other than the super bowl and one of those Conference Games just not up to snuff. And i think people are trying to figure out what do we do. We also didnt have the big draft kings Fourth Quarter fandom that was so important when it comes to fantasy football. But i know noto think ths is a great product and cbs wants more and more football. I think Everyone Wants better games. I think the commissioners, the owners know this. They just know that the players are too tired to play thursday. They dont know what to do about it. I know youll be talking about that with anthony noto later on this morning. Meanwhile, guys, 12point gain for the dow but record highs for the dow and the nasdaq. Lets get to bob pisani, bob. Hi, guys. Important thing is about even on the advance decline line. Mixed market, asia mixed, nikkei down a bit. Take a look at the sectors sort of indeterminate, but tech is leading, thats the important thing. Banks which have been a Market Leader are down but only fractionally. I would say that rally in the banks is very much intact right here. The important thing people weve been talking about for the last 24 hours is the trump agenda may be stalling a little bit. No sign at all thats happening, at least the stock market doesnt believe it. Look at the new highs weve been hitting here. Others have been noting for the last 24 hours 8 of the s p 500 is at an alltime high, not 52week high, alltime highs. But its very lopsided. Banks, tech and Consumer Staples is where all the new historic highs are. Look, almost 30 of financials are at new highs, tech almost 10 , Consumer Staples almost 8 . Thats an enormous lopsided move in the financials were seeing. Banks weve been noting historic highs all along. Theyve had a great run, pnc, comerica, wells fargo got a downgrade today but you can see thats not halting momentum overall in the group here. So the important thing is we are doing fine. No signs of deteriorations in the market. We talked about the snap ipo. Lets not belabor it too much. Price range out 14 to 16, it would be 230 million with the overallotment but 200s the official. We dont have an official trade date, but my understanding, my sourcing telling me it will price the night of march 1st for trading on march 2nd. Fracking ipos are going to come out too, more important is what will happen after this. A lot of stuff in the pipeline here, some big frackings. Remember king came out a while ago, thats been doing all right. We have other ones sitting out there, liberty, fts, propetro out there as well. A lot of stuff in the pipelines besides energy in the pipelines, j. Jill, womens apparel still out there, flooring decor, flooring company, hamilton lane which is a private equity company, canada goose, which sells parkas and outer wear, theyre out there as well. So theres many, Many Companies as you all know its been a terrible year in 2016, was a terrible year for ipos and a lot of companies are eager to go public depending upon how the next few weeks go. Finally, i would note even the existing ipos are doing well. There is an etf for that, ipo is the symbol there. And that is at almost a twoyear high, but thats a 52week high as you can see. And that too has popped up in the last several weeks as weve seen a spate of companies announcing to go public very soon. Right now the Dow Jones Industrial average up nine points. Back to you. All right. Thank you very much, bob. Been a busy day for Rick Santelli at the bond pits in chicago. Lets check in at the kr, me. Hey, rick. I like it busy. You know, we are seeing a lot of interesting aspects to the credit market. Look at oneweek of twos, definitely see bias to the upside. Same thing in oneweek of tens. Consider this tens closed at 2. 44 at the end of last year. Their range on a closing basis is roughly 2. 30 to 2. 60. Midpoint 2. 45. Keep that point in mind. That is great pivot as you can see by the way its been acting just in the last several days. But if you were to look at something more in the middle to the front of the curve, and i always like to use the fiveyear, its closing year 1. 80 to 2 , its midpoint is 1. 90, hovering at 1. 98. The buy is for higher yields on the shorter part of the curve and the flattening it brings even though its reversed as of lately is something to Pay Attention to. Its a quasi barometer on the fed, maybe better than fed fund futures because nobody really knows whats in janet yellens, stan fishers heads. Well have to wait and see. Lets get back to the charts. Lets take a long view. Lets go to september of 2014 for tens. Want to know why 260s there . Youve seen that top. Weve talked about it a zillion times. September 17, 2014, thats your goto level for the year. Pay attention to that. Look at oneweek of the aforementioned dollar index. It had a nice spike popped over 101, but it has regrouped a bit. But that, listen, the micros important. This could have been one of those rallies that took you to 108. It didnt play out that way. It stretched out farther, but on a micro view of fiveyear chart you can see how significant this trade is going to be between 98. 5 and 100. Now right around 10 15 eastern were going to have chairman of the Financial Services committee, chairman hensarling on the show. And we are definitely going to talk to him about all the policies and legislation that weve been talking about everyday. Carl, david, jim, its all yours. All right. We cant wait for that, rick. Thank you very much. When we come back, what the future holds for twitter. Jim will have an exclusive with c. O. O. Anthony noto. Dow is up nine but record highs across the board including the s p ticks above 2153. 30. Back in minute. You tod ur braewnobodys hurt, you tod ur braewnobodys hurt, buthere wie pa it chen yo insurance y sa thely quters of whitakesace it. Wh areupsesetoo . Thequarte ofa w you lty mutlneca™ ugeyour whoack. Quters of whitakesace it. Wh areupsesetoo . Thequarte ofa lirty anith. Fullaround on thres r reem™, t. Lutl ubertalanwhoack. Quters of whitakesace it. Wh areupsesetoo . Thequarte ofa isar is av 2 s hour. Inevllisdr nand thsaesesy. T help oft,ed blour. Inevllisdr re. Reritical ation ouy inchf cacaomiral brakes are getm. Cderstoode bk 2clic. Inevllisdr re. Reritical ation ouy inchf cacaomiral becausnone kno ike p to whata sketllos14ike . Tal . P to whats team spiritor ches sketllos14ike . Tal . P to whatatst rttoiritor ta to . At the val ofs14ike . Tal . P towan e wos . Value of tal crte, at the vt ltfs14ike . Tal . P t tter. Wos . Value omorgan staey tal crte, whuftft supreme perfornce. Aninteigen. Thecla jusfor u. Sis,ecio leasthe e ed f 389 nt rcbz. Henoththfor aler u. Sis,ecio President Trump ramping up his rhetorical fight with the u. S. Intelligence community about these russia leaks. Today the secretary of state Rex Tillerson held the highest facetoface talks between the two countries meeting this morning with his russian counterpart. Tillerson making no mention of the swirling intelligence questions facing the white house but vowed to work with russia going forward. Take a listen. Foreign minister lavrov and i had a productive meeting. We discussed a range of issues of mutual concern. As i made clear in my Senate Confirmation hearing, the United States will consider working with russia when we can find areas of practical cooperation that will benefit the American People. Where we do not see eyetoeye the United States will stand up for the interest and values of america and her allies. As we search for new common ground, we expect russia to honor its commitment to the minsk agreements and work to deescalate violence in the ukraine. Lavrov is quoted as saying, quote, you should know we do not interfere in the domestic matters of other countries. One thing we know, jim, is if you bought russian stocks youd be doing even better than if you bought u. S. Stocks. I think thats absolutely right. The rubles up. A lot of it is from basically the fact oil that saudi arabia is taken so much oil out, oil doesnt seem to want to go down. I didnt hear anyone talk about that speech helps exxon, put that behind it. I take issue with the goldman piece in Financial Times that gary cohn is somehow an embarrassment to goldman. When i got to goldman sachs, the great larry said to me what are you doing for Public Service . Gary cohn has completed the arc of what you must do. Theyre so proud of him. You know what, its a cheap shot. Not unusual. And wrong. Yeah. That oped making the rounds today. When we come back, well get stop trading with jim. Dows made its way back to the flat line. Back in just a moment. E ininus tra trae tre, ere t t on a tramark tradeplrm thal th trae tre, ere t t wot. F mputer titor n d a tramark tradeplrm thal th biliryimant me. Trae tre, ere t t s whe e admobile. N d a tramark tradeplrm thal th s ally bileevesant me. It sumy mile ste ere t t s whe e admobile. D iteeps mments lly. N d a tramark tradeplrm thal th s ally bileevesant me. It sumy mile ste ere hm on sigs n jt car,. Com t upo itsiltr headur. Esnds hy. E im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. Its time for cramer and stop trading. Look, the president can meet with all the retail heads that he wants to, but the customers havent met with the retailers. J. P. Morgans matthew strikes again slashes numbers very big on nordstrom, slashing them on jps. And most important macys, remember macys supposed to be taken over, but as the fundamentals go down does the price for macys go down . I have to tell you the boss piece is chilling about the mall. You just dont have the traffic you used to. Yeah. Im looking at, you know, jim, we just got some info from s p. A quarter of the s p is down since january 20th. Even though weve got these record highs. And among the big laggards are, i think under armours number one, but its followed by other names like ralph lauren, mattel, along with a slew of transoceans and hesses. Oh, just dreadful. And yet meanwhile theres Companies Like mcdonalds and ibm, big Cap Companies that reported and nobody really liked and then boom they keep going higher. I keep talking about how even these, you know, the anfs, the gap stores, the l. B. S, these are no place to be. We are in a bifurcated market. And if you are reliant on the consumer, the consumer is going to amazon, staying home, playing video games, using their apple iphone, thats where the money went. It did not go to the stores. Its dreadful. Those stocks are dreadful. So we got a tease both mad money tonight, jim, but also your 11 00 a. M. Eastern chat with anthony noto at one market. You know, anthonys willing to go anywhere. He always has ever since he was the banker for the street. Com back in 1999 when he was at goldman. Most straight shooter around, a guy thats been on mad money before. Cannot wait to talk to him about twitter. Its a no holds barred. I think this guys willing to talk about any aspect of twitter. And that is going to clear the air for a lot of us who are trying to figure out why its not making a ton of money. Jim, i want to get to eamon javers this morning in washington, d. C. Eamon. Reporter hi, carl. Good morning. Nbc news has confirmed that Steven Feinberg is going to be president Donald Trumps pick to lead a broad review of the u. S. Intelligence community. Thats something that will be greeted with some consternation in the Intelligence Community who view donald trump with some suspicious, but thats an appointment thats been rumored now over the past 24 hours, now confirmed by nbc news. Its something we havent seen before in the Intelligence Community in recent years, an outsider from private equity to be brought in to run the nations spy agencies or at least overview and review all the spy agencies with their relationships and one another and this is a president whos had a contentious relationship with the Intelligence Community over the past several months. And this will be seen in the Intelligence Community as continuing that. Well have to wait for more specifics from the white house on what exactly the president hopes that feinberg will do in this role, but a striking new position here from the white house on Capital Management being involved now in overhauling the nations spy agencies, carl. Thats going to be a story. The collision between the intelligence apparatus and obviously cerberus veteran. Eamon javers, thanks for that. Eamon javers in washington. When we come back differing views on the fed. Well talk to former vice chair alan blinder about yellens big week. Record highs but the dow has settled briefly here into the red. Back in just a moment. Henicole. For wag me thr my fir oions trade do it for everyone well, i feeltty smart. Ll, e abg. I wolet t omplisenttgo to d. My , donworry, mugrias. T ooptiontradth thinwim,onlyt aritr. Anr w mobing. Anette fstg paidas toh. She got icks e invoicwh theeddd ice tfo siquickboodc. T happeningeforour es. Ift in humanto e vi er. Gim elinorsopsee thplplt g te megatrends oiinpar with pinorsopsee thplplt ofaptu alpin real estate,s the global investmenmanagent good thursday morning. Welcome back to squawk on the street. Aisle Carl Quintanilla with kelly evans and david faber at the new york stock exchange. Saras on assignment this morning. Record highs briefly for all major indices as these policy delays, concerns about narrowing breadth are giving way to some killer Economic Data, namely from the philly fed. Everything this morning seemed to be better than expected. Jobless claims, those came in great. Lets get to our roadmap this morning as well. It starts with another day and as carl said another record. The dow, nasdaq, s p all hit fresh highs this morning. Things are kind of mixed right now. And ske ceo andy puzder is out as labor secretary designate. Who will the president nominate and whats at stake . Thats straight ahead. Bankers getting ready for the snap ipo road show, the latest on what could be the biggest tech ipo since 2014. And the dow, nasdaq, s p all hitting fresh record highs again this morning but the markets a little mixed right now. Its all turned a little weaker as you can see dows down 13 points. And the president getting in on the enthusiasm about the rally weve seen here. Tweeting out, stock market hits new high with longest winning streak in decades. Great level of confidence and optimism, even before tax plan rollout. Thats the president this morning. For more lets bring in john sylvia along with jeffrey chief Global Investor at charles schwab. Is it because of tax reform were a bit up here . Im not so sure yet. You can see in the currency markets maybe the difference between brent and wti oil prices, and even in the sectors leading this market higher. Remember that a number of these proposals would hurt some sectors and benefit others. Were not really seeing that breakdown in the market, so i think the markets have been moving higher on the reality of better Economic Data like you were talking about and better earnings revisions and not the hope for infrastructure or tax reform. John sylvia, everything in the e con data seems to be better except for actual real gdp and real wages. Are we going to start seeing this feed through into real improvement . Well, i certainly agree the retail Sales Numbers have been really good. The philadelphia survey was excellent. Employment numbers have picked up pretty strong. Wages tend to lag the business cycle, and the problem with overall gdp is now youve got stronger domestic demand, but at the same time it means stronger imports and with weaker export markets particularly with mexico trade deficits subtracting a little more from gdp. So when you look at domestic final sales, thats where you see the strength in the u. S. Economy. And that being said, jeff, we need to see that data keep improving for the market to keep doing better here . Because every time you see that surprise index climbing, you just keep wondering how much higher it can go. Thats a great point. The surprise index is very high. And its climbing near fiveyear highs and brings the question how much more surprising can the data be. I think it does need to be sustained. The bigger risk i think is politics and not a weakening in the Economic Data. I know i just said its been all about economics and not politics, but look, weve got not a big trump risk ahead. I think weve got a big risk from the french elections. This weekend well enter the window of 45 trading days before the first round of the president ial elections and thats the window where in the past with the u. S. Election and the brexit vote stocks started to selloff, 5 to 10 ahead of those votes of course only to rally once votes took place. I think the markets going to be increasingly distracted from the Economic Data and focused more on this risk emanating from europe. John, if its europe in terms of politics, it could be a distraction. Maybe its china in terms of the inflation picture we had Larry Lindsey the other day saying, look, globally he thinks inflation has turned because its now moving up there in the producer and Consumer Prices index and maybe that means the fed has to take that into account when its looking at raising Interest Rates even though we dont have that real gdp growth here yet. Yeah, the chinese inflation problem, the global inflation problem seems to have turned upwards. That may lead to more restraint abroad as well. That is, again, a significant challenge for us because it shows the price of our imports will tend to rise. And as you know and im sure most of the viewers appreciate our relations with china, especially with respect to trade, are pretty significant. I thought the market and maybe jeff wants to comment on that, i thought the market did fairly well when they heard President Trump had talked to the chinese premier. That seemed to be a positive in terms of weve done our yelling and screaming and now were going to talk to each other. Jeff, you agree . Johns absolutely right. Certainly the idea this wouldnt be an acrimonious and abrupt change in policy, but we might work together. It will be interesting to see how wilbur ross takes this forward once hes confirmed. Hell be leading a lot of these conversations. Youve had him on many times, hes a thoughtful man, measured in his discussions and somewhat different from trump in many ways. I think the market will take comfort in that as it relates to trade policy. John, finally talk about how growth could look, inflation, all that stuff if tax reform happens and especially as a House Committee chair told us yesterday especially if the border adjustability tax is included. Certainly the adjustment in terms of lower Corporate Tax rates and business expensing will certainly show up in the business equipment and commercial real estate areas. That might be much stronger than other. The challenge with the border tax is that youre talking about redistributing tax burdens between imports and exports. You dont know about how responsive some of the prices will be. And also the complication is that other countries are going to react. So the argument that the dollars going to automatically adjust to offset ignores the fact that Foreign Countries have an incentive not to let the dollar react in a way that would hurt their exports. Right. Jeffrey, quick, final comment on that. Yeah, johns once again exactly right. It is a complicated and, you know, you can only analyze trade policy in a circular way because theres constant reactions and responses to what we do. So very complicated. Remember, businesses have complicated logistical supply chains based on the current regime. It will take a while to reestablish those. There will be a bit of an air pocket there as it relates to the cost of manufacturing businesses around the world. All right, jeffrey, john, thank you both this morning. Thank you. With the president s pick to head the Labor Department andy puzder abruptly withdrawing from the confirmation process late yesterday, just who might the president now tap for the top cabinet position . Cleveland attorney and former nlrb member Peter Kirsanow a leading contender on the short list. Joining us is former deputy secretary chris lu. Despite scrutiny puzder was under there were people in business looking forward to the way he would revamp the agency. Is that an opportunity lost . Lanny . You know, i do think in particular you know, i was very supportive of andy puzder. I thought he would have been a terrific labor secretary. Ive worked closely with him. I think his sort of ideological disposition in terms of looking how to use the agency as a lever point, a point to help create more jobs, to create a more business friendly environment, i think those were absolutely the right approaches. So im hopeful that the president will pick someone with a similar orientation. My guess is that going into this process hes going to be looking for somebody who maybe has been a little less high profile, somebody who can make it through the confirmation process more easily. So well have to see. Ideally the person he picks will have the same disposition and the same ideas about leading the department. Chris, you go along with that, can the president come back with somebody who aspoespo the same views but just not well known . This was a perfect storm of problems with this nominee. It was not only the selection of an inappropriate candidate, it was obviously some poor vetting issues. The fact that the nomination was pulled reflects the president s diminished standing on the hill at the moment. You know, clearly they can find another nominee. My hope is they would find somebody who is more in the mainstream of thinking of where our country needs to go not only in terms of growing jobs but lifting up wages as well. Yeah. Who might that be in your view . You know, i dont profess to know the candidates. And im not going to give advice to donald trump on who he should choose. I would simply say he won election based on appealing to working class americans. I would suggest that if hes serious of living up to that pledge he would take a look at some of the policies that we have put forth during the obama administration. You know, lanhee, its interesting, we have had Union President s on, head of the steel workers, theyre all very warm to the manufacturing agenda that the president s trying to bring to the country. It was this particular appointment though that they were just baffled by. It seemed to clash with the circumstan circularity of trumps support even among some of the Bernie Sanders world. I just wonder, it seems like it might make sense to try to im is the interesting thing, carl, about the president s agenda is there isnt a whole lot of consistency necessarily if you look at some of the different elements of Economic Policy hes talked about. Certainly we know about the antitrade rhetoric, we know the degree hes decided hes going to move in a more mercantilistic direction there. Tax reform on corporate side he said some things i think were favorable toward certain businesses. And yet on the other hand youre absolutely right. Hes had these interactions with Union Leadership that suggest he might be more focused and attuned to their needs as well. So its very difficult i think at this point to say with any consistency that there is one particular profile hes looking for for labor secretary. I think hes going to be looking for somebody who understands the issues, potentially as ai said someone who has lower profile and that might be the direction he heads in. As with anything with donald trump, its really hard to predict. Yes, a lot of people have given up predicting anything. Chris, one last question. With flynn and puzder in the same week, do democrats, are they justified in feeling more empowered to resist not just pruitt at epa or mulvaney at omb, mccains support seems soft on that but do you see them getting more resolute in resisting candidates . I think they are going to be more resolute. I think this nomination and the withdrawal of this nomination shows the importance of organizing. There was an unprecedented effort by not only organized labor, by advocacy groups, womens groups against puzder, this was a unique candidate who had a long history, a business record, controversial statements, personal record that was troubling to many people. You know, its my hope that the president finds somebody whos more in the mainstream of where most American People are. But also who doesnt bring this baggage that andy puzder had. Well be looking for names to drop. Obviously puzder was a longtime supporter of the president from before the election. Guys, preerappreciate your time. Chris lu, lanhee chen, thank you. When we come back preparing for the snap ipo roadshow. And next, republican congressman Jeb Hensarling will join Rick Santelli. Well get his take on the future of dodd frank, age of trump, maybe something on fannie and freddie, im just asking. Of course rick has it all with hensarling coming up. Yourroge fe whatid you have mind . Dont know. Hher trade . 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Theyve got that right in times square and helping pitch it. Of course the key is going to be the pitch that snap makes during the road show which will begin soon to investors both overseas and here in the u. S. Theyre going to be talking about themselves as a Camera Company, camera first seems to be their theme. Okay. Let me just ask you this, would you have ever put that on the top line of your s1 . In 2017 we all know what happens to kodak and everybody, would you have said we are a Camera Company . I dont know if i would have done that. No. Yeah. Its really interesting. They want you to be thinking about thats what they want you to be believing that the changes, the ability to do so much with the camera. But i thought the whole the mobile environment. Isnt the value these days in having a powerful social network and not necessarily in just having the technology or the hardware to produce this stuff . Not in this case. I think well be hearing more about that as they do the road show. Its not about the size of your network, so to speak. Its more about the degree you chat with the people already in. And the robust conversations in that relatively small group what the engagement is like. About 158 million daily average users right now. That is up 48 year over year. But that growth has slowed and that is certainly going to get a lot of attention and a lot of questions as they go on that road show. 2. 5 billion snaps a day, i guess. Wow. Thats a lot. Are you snapping . I am not. You snapping . I try. Its hard to keep up. Lets get to Rick Santelli in chicago. Got a very special guest. Good morning again, rick. Good morning and thank you, carl. Yes, we do have an important guest in so many ways, chairman Jeb Hensarling, chairman of the financial house Financial Services committee. Chairman, thank you for taking the time. I know how busy your schedule has been. Happy to do it, rick. All right. Listen, you were in the big chair yesterday listening to all the questions and the second day what used to be referred to as Humphrey Hawkins, i want to put a little primer on this, were going into seventh, eighth year where rates are pretty darn low. There was a time early on when the fed was almost begging the government to get involved with some fiscal horsepower hence i see markets have moved dramatically to the upside, stock market doesnt necessarily need the fed to hold it up on helium, there seems to be underpinnings of investors like, i ask you, chairman, you were there yesterday. Is there any observations you would like to share with us especially considering all the questions on regulation and this notion the fed seems to be distancing itself from what it wanted the most now that its arrived in the form of potential fiscal stimulus. Well, i dont know, rick. To some extent going to these Humphrey Hawkins hearings is a little bit like groundhog day. I think one of the job requirements to be fed chairman is to talk a lot and say very little. So im not sure a whole lot of light yet. Unfortunately what i didnt hear from chair yellen is any real plan to unwind this Balance Sheet that has represented this unconventional Monetary Policy. And after eight years there is zero evidence that zero Interest Rates and near zero Interest Rates have returned us to a health think econo healthy economy. And notwithstanding the fact we have a new administration and that the Old Administration never appointed a vice chair for supervision that we still have our fed essentially negotiating International Agreements for our banks and our institutional our Financial Institutions on their regulatory side. And thats separate and apart from their Monetary Policy side. That needs congressional supervision. They need to wait until President Trump appoints a vice chair for supervision to engage in those negotiations because our economy as you well know in 2016 1. 6 economic growth, half of our potential, half of our historic record. And thats unacceptable in america. Let me stop you right there, chairman. You just nailed it. You know, all the questions about, oh, dont roll back regulations, dont raise rates too much because theres these things arent going to work. But in the end what theyve done has given us subpar growth. We need some change. Real quickly on the runoff to the Balance Sheet that was brought up by chair yellen yesterday even though she didnt give a timeline, that is a good place to start, is it not . Well, i appreciate the commitment to unwind the Balance Sheet. But there was simply no plan. Its basically ill do it when i feel like doing it. And ill recognize it when i recognize it. But we want a Federal Reserve that is dedicated to a Monetary Policy that is predictable, that is strategy based rules of the road, chairman, yes, we need somebody to write rules of the road. They can make it in color form with wax crayons because it doesnt need to be that complicated. No. Listen, chairman, im holding a bill. Im holding a bill, s370 brought by mr. Cruz. It reads to eliminate the bureau of Consumer Protection by repealing title x of dodd frank wall striet reform and Consumer Protection act commonly known as consumer final protector act of 2010, tell me about this bill, chairman, and how its going to proceed. Well, the cfpb is a rogue agency. Number one, the Second Highest Court in the land has ruled it unconstitutional. We would be derelict in our duty if we didnt do something about it. And senator cruzs plan is certainly a valid plan and that is simply get rid of it and start over. One of the options we can look at is rolling our federal Consumer Protection enforcement into the federal trade commission. Theres a good argument it belongs there. Theres another argument that says perhaps it should go to the office of the controller of currency, the fdic, the fed, our bank regulators. Im not offended by having Consumer Financial protection in one agency, but not an agency that is unaccountable to the president , unaccountable to congress, unaccountable to the courts, unaccountable to the American People. This is a rogue agency. We have set up basically a dictator. Now, some would argue hes a benevolent dictator, but no one person in america, particularly an unelected person, should have the power unilaterally to decide what credit cards go in our wallet, whether or not we can have a mortgage and whether or not if we like our banker we can keep her. So this agency is just out of control since they have come on to the scene. Free checking at banks has been cut in half. Bank fees are going up. Many auto loans have increased 500. Credit cards 200 basis points more, 15 less accessible. I could go on. This Consumer Agency is hurting consumers because its hurting its damaging the most important Consumer Protection areas and that is competitive innovative transparent markets that give americans the freedom of choice. And so it has got to either be done away with, its got to be functionally where he formed and taken care of. It has to enforce the rules, not make up the rules. Today it is legislature, judge, jury and thats got to stop. There are no checks and balances on this agency. You know, chairman, what a great place to end this discussion. Checks and balances. You know, i see congress, i see the judicial branch, they all seem to be a lot more awake than theyve been the last several years. Thank you for taking the time out of your schedule, chairman. I sincerely hope that you will come back soon if you have updates on all the issues the house is dealing with. Now im going to turn it over to kelly. Thank you. And thank you, rick. When we come back, the ceo of u. S. Foods is with us, his take on tax policy, earnings, Consumer Sentiment and more. And taking a look at stocks this hour dows now fighting to turn positive once again up by two points. Squawk on the street will be right back. Cmon , pop pop hay hday i ed a heart attack. Anm ki brilint to keep froe fohoe been alizedor a heart attack. Eep froe no more an one hundd milligms asfehow it work h kee ple from sticking geernd fng a c brilinta red the chance h kee ple orng from ea attack. From sticking donstop taking brilinta out talkto yr doctor from sticking siop itoo soing brilinta ineases yo risof siosometime, in you bedg,y,t takeriliif likechlcers, a story bleeng in ti or se lir ms. Tellr or abolnew orxp shoress , any annesurgy, teland l medicineyou take. Ress , talkyor about brinta. Idog alcan. Includeilinta. Ifouant affor ble to h hp. Neat on rte atert is. Rad pg1 it hgreat ll americas number two food distributor u. S. Foods growing since its ipo last may. The Company Announcing its acquisition of all american foods in an earnings beat, but with a new white house and talk of a border tax, how will the company fare . Joining us this morning is pietro satriano, the u. S. Foods ceo joins us once again. Good to have you back. Welcome. Hey, its great to be back. Thanks for having me. You know, in the past few months weve seen pretty resilient consumer, good spending although traffic and restaurants has been mixed. Hows that been affecting your business . Ill use the line jim cramer just used. Its a bifurcation of markets. The independent restaurant is doing very well in america. You know, in the last two years theyve outperformed the chains and the outlook is for them to continue to outperform the chains. And were focused on restaurants because they want what we have to offer, the margins are better and, you know, just last year we had 6. 4 growth with independent restaurants. And that is concentrated in various parts of the country, isnt it . Independent restaurants, you know, are doing well pretty much across the country. Its driven by a couple of factors. One is i would say consumer preferences. You know, consumers when they like to eat out they like to try different things. Thats really driven by millennials. Ill give you a statistic, when millennials go back to a restaurant they have been at before, 40 of the time they want to try something different. So our great food made easy strategy which is about offering Innovative Products really hits the sweet spot with independent restaurants and the emerging consumer. Yeah, weve seen some chains, some nationwide chains like panera try to revamp their menu make it more organic and take out artificial sweeteners and so forth. Does that make it harder on you as sourcing more difficult now . We have 5,000 suppliers. Some of them we work with nationally, some of them we work with locally. What we do is we offer choice to our customers, the independent operator. Again, weve developed these capabilities in terms of innovation, in terms of sourcing, in terms of food safety, so i would say to the degree it makes it harder for other distributors its an advantage for us. Pietro, speaking of sourcing, how would a border adjustment tax affect your company . It shouldnt have much of an impact. You know, around 5 of the products we sell are imported. Typically its categories like produce. You cant really grow bananas in america. And if you want grapes in the winter, youre going to have to bring them in from latin america. So we believe from a non from a border perspective we really wont be affected as an industry. And what about, you know, we know in the past you guys obviously look to do a tieup with cisco. Now that the Trump Administration is now in power, any sense of being able to kind of come at that again . Youve done another acquisition obviously recently, so is that still kind of big one out there for the doing . So with respect to our largest competitor, they havent called me. And im not about to call them. Our m a strategy is focused on small, tuckin acquisitions where we can strengthen our geographic footprint, bring in new capabilities. Last year we did five acquisitions and we integrated them seamlessly into the country and thats our strategy. It supports our great food made easy strategy of going after the independent restaurants. When we see good numbers regarding from nfib or university of michigan, i wonder, are you seeing any kind of inflection in new restaurants cropping up or existing restaurateurs adding another location . Is Small Business really perking up on that front . So, again, focusing on the independent restaurant were seeing growth both from new customers and from existing customers that are, you know, growing their sales. So its coming from all the places you would imagine. And, you know, we have a chart that we put in our Earnings Call yesterday that shows the growth of independent restaurants relative to chains. And you can see it really is a tale of two cities. Yeah, we have that chart right there. Thats a fascinating look at the difference between the two worlds and the restaurant business. Pietro, its good to see you again. Come back soon. Its great to be on. Thank you. Pietro satriano of u. S. Foods. Lets send it over to sue herera give us a news update from hq. Sue. Good morning, david. Good morning everybody. Heres whats happening at this hour. Secretary of state Rex Tillerson meeting with Russian Foreign minister Sergei Lavrov in germany, the highest facetoface talks yet between the two countries since President Trump took office. Separately, defense secretary jim mattis telling nato ministers in brussels that the u. S. Is not ready to collaborate militarily with russia. North korea marking the 75th anniversary of the birth of former leader kim jongil. Thousands of people laying thousands and bowing before giant statues of his late leader and his predecessor. Meantime, in kentucky a Deputy Sheriff and a deputy jailer got into a fight in front of inmates. Thats obviously not the correct tape. It was all caught on camera. There it is. The deputy tried to hand property of an inmate over to the jailer who allegedly threw it back. The jailer was then arrested. And on a lighter note, a wedding proposal going viral on the internet. Take a look at that. Chris hiltons girlfriend loves Chicken Nuggets so much he proposed to her by putting the ring in the box of nuggets. She said yes and mcdonalds says it will cater the wedding. Thats the news update this hour. David, back to you. Okay. Deep fry your engagement ring. Yeah. Deep fry your engagement ring. Yesterday it was taco bell. People are getting married at taco bells and theyre catering the wedding. Today its mcdonalds. News you can use, david. News you can use. What will ilt be tomorrow . Thank you, sue. Youre welcome. When we come back, the fed in the age of trump. Were going to speak with former vice chairman of the Federal Reserve alan blinder. And later on squawk alley, dont miss an exclusive interview with twitters c. O. O. Anthony noto. He will be joining jim cramer from our bureau in san francisco. A lot more ahead on squawk on the street. Ousmetheyt opn. Uns art e grp can lp y ne glob markepounwe e reach and drive rwarwith broar poibilien. Uns art cme grp how the rlvances is car is traving over 2 miles ur to w, y llisondmaer bothe trk iand nds miles ay. Ver 2 miles ur to w, y llisondmaer tp of at,lcing c s critiformat akreettingconfir diel you n. Giving thee ag hespeed isioat clicks. Cae ono ik welcome back. House republicans pressing fed chair janet yellen over the feds performance and potential dodd frank reforms in day two of her testimony on capitol hill. For more were joined now by the former sli former vice chair of the fed alan blinder, good morning. Good morning. It seems like shes preparing everybody for a rate hike, the question is are we even back to anything like the old days when they used to hike rates every time they met . Well, i think were a long way from that although we may be heading in that direction. You know, i think what shes doing is trying to get the thought into the markets minds that this might happen. I wouldnt interpret it as kind of a preannouncement of a march hike, but the market probability of a march hike had fallen so, so low that i think shes trying to boost it so theres not a big shock if in fact the committee does go up. Alan, i wonder, we had this discussion yesterday whether or not the market has unfairly talked itself into the idea that any meeting without a press conference is not live. Do you think the market wrongly believes that . No, i think so far the markets correctly believe that. But at some point the feds going to want to get away from that. As you know she has said repeatedly and other fed members have said that every meetings live, but nobodys believed that. And i think nobody will until theres a hike at an off meeting. That will happen at some point. It seems these days, alan, that the rates everyone is talking about are tax rates and the person everyones focused on is the president and not the fed chair. Is that a mistake . Probably. You know, the lord gave us two eyes so we could look at two things at once. Markets have a hard time doing that, i understand. But they really ought to be looking at two things at once. For many reasons not the least of which is theres an interplay between these two. The more irresponsible, if youll pardon the term, the Trump Administration is with congress, the budget, the tax cutting, the fed is going to go up on Interest Rates. Thats not a secret. Janet yellen is not going to say that in so many words, but Everybody Knows that. So just to be clear what youre saying is that the bigger the deficit gets under President Trump, the more the Federal Reserve will raise Interest Rates . The bigger the deficit gets because of fiscal actions. You know, we could have a slump. I dont think we will, but we could have a slump and then the deficit would go up. In a world like that the fed is going to try to help by cutting Interest Rates. But all were talking about in this context is deliberate increases in the deficit largely through tax cuts. And that would almost certainly illicit a tighter Monetary Policy from the fed. A lot of discussion about the trend of lending in this country, alan. People point to cni loans, that chart looks pretty good depending on your timeline from the lower left to the upper right. But yellen made the point that its all those Small Business owners who relied on home equity lines of credit that dried up after the crisis, which is true . Well, i think whats true is that lending dried up actually in the late days before the crisis but especially after the crisis because banks were sick, regulators were cracking down and business was terrible. So the businesses didnt want to borrow. And all of that almost all of that has reversed. Some business is good. The regulators may still be a little tough, but despite that lending going up at quite rapid rates. You know, ballpark double or more the gdp growth rate. So when people say banks arent lending, i dont quite understand what they mean. Part of the question i guess is the demand there for these loans. Is the economy fundamentally kind of pulling itself along here or does it need more of a push . No, i dont think it needs anymore push. You look at the recent data that are coming in and i dont mean just yesterday but several months and everything is coming in at or stronger than expectations. And this is in an environment where were pretty much at full employment already. So the economys looking very good, consumers are spending, businesses are preparing for that or reacting to that. And theres a significant demand for credit, as there should be in i dont know what to call this kind of a mini boom. Alan, greg ip with a nice piece in the journal last night. He looked at growth breaking out all over the world essentially. China, europe and one of his points was that populism which people thought would be a deterrent to growth has been what he called a wet fire cracker that hasnt had the negative effects some expected, at least not yet. Do you agree . Yes. I do. And i think the most important words are your last ones, at least not yet. Leaving aside other countries we have i dont know i never know what kind of adjectives to apply to our current president , but erratic would be a mild one. I think like you i wake up every morning not knowing what im going to hear about what was tweeted overnight or what the white house did. Theres a huge, huge amount of uncertainty, but so far that has not cast kind of a wet blanket over the economy. Who knows whats coming. Yeah, no, if anything it seems to have reinvigorated the economy. Final question, alan. The border adjustment tax, what do you think the effects of it would be . I think the effects would not be as simple as some of my economics colleagues say. What some people say, especially the tax specialists, the Public Finance specialists, is the Exchange Rate will adjust exactly to offset the border tax. So it really doesnt do anything much except change the local of taxation, where youre based the tax base, so to speak. But if youre involved in Financial Markets and in macroeconomics, i think you cant believe that. And you see every day that the Exchange Rate dances to Monetary Policy and other financial influences and a bunch of other things that have nothing to do with the tax system. So i wouldnt count at all on the Exchange Rate moving to exactly offset the effect on domestic prices. Thats what john silvia was saying this morning as well. Could be a fascinating experiment. Alan blinder, thank you very much for joining us this morning. Very welcome. As we go to break today, take a look at shares of marriott beating on top and bottom line. Were going to talk to ari sorenson in a few moments. David, apologize for that thats okay. Why dont we take the break or do you want to get to it now, guys . We did have a little breaking news to get to, carl. And squeeze it in here involving a story thats been e vvolving the futures market over the last few days. Namely what Market Participants have pointed to at least have been the futures market that may have helped serve to provide a bit of buoyancy to the overall Broader Market over the last few days some commentaries had a massive short dated upside call buyer in the spus. That is expected to have been this catalyst fund, which we just put that up there, but can we wait a second, guys . There it is. The catalyst hedged future Strategy Fund is what weve been talking about. This is a fairly large player in this marketplace, to give you some sense as to what were talking about. Back in june of 16, for example, they were 210 billion of gross outstanding, about 58 of the calls on futures back then. Im going to get to the statement in a second, guys, can you give me a minute here . But they had a smaller gross and they were likely running more delta as the market rallied through the their strikes they were buying a lot to cover. And that has been putting a bid in the marketplace. Now lets get to the statement we got. My producer got from their ceo at catalyst saying, consistent with the Long Term Strategy of the fund, we did have a number of short call option positions for the february expiration this week and those were acquired over the last several months. And with this market run up and what they call hes calling the trump bubble, they did go into the money and they have caused us some losses to the fund. We bought back those options. Were out of those positions and so we no longer have that type of short position at this time. Went onto say consistent with our overall Risk Management strategy we have had some drawdowns, that means people withdrawing money from the fund of course. We decided to take action. Were pretty neutral with our positions at this point. And they say we finished, this is very important, adjusting the portfolio. Also went onto say hes seen some things about the stress of the fund. We have no margin issues. The fund is under no duress or anything like that. We werent forced to sell. Catalyst hedge future Strategy Fund did have a rough go of it of course given the strategy it had been following, its expectations not met in terms of what was going on and therefore having to do that big buying which apparently, kelly, has now concluded. But thats what i was going to ask is the argument this buying has been so large its contributed to the run up in the market. Yes. Wow. And that has been something discussed by a number of Market Participants recently. I have a few notes here written by those who advise on this kind of trading. So certainly an undercurrent to get to and important statement from catalyst. See how that affects trading which by the way is muted today. Dow up 19 but the s p slightly in the red. As we said marriotts Arne Sorenson coming up. Back in a minute. Compans acssregrowg e economy, with t help of the low s in decad anwos innovations. Ke ipltsbuh, e dvan ansptation ialad ke cngtsbuh, e dvan anspthe smaalizg. Us help granystomo ke cngtsbuh, day sd. Nv anspthe smaalizg. Am benarno thmousra and owhing aboutradi anspthe smaalizg. Rah e ere ue trars tra cnon soun r rah e ere ue trars tra weroinin infmaon. Wh il of this, is sff that tters . Thstak are s rah e ere ue trars tra w olve ts . Yodt. Ururaon. You partr th firatadvises govs thfoun500,t tters . Thstak are s rah e ere ue trars tra w olve ts . Yodt. Ururaon. According to one Market Strategist stocks are becoming overbought and overloved. Does that mean a big drop is ahead though . Find out at tradingnation. Cnbc. Com. More squawk on the street coming up. Chicago mayor rahm emanuel speaking to our john harwood. He of course was president obamas first chief of staff. He weighed in on what policies he thinks will stay and go under the Trump Administration. John joins us now with the highlights. John. David, no democrat has a greater interest in the survivability of president obamas legacy than rahm emanuel. I asked him about three elements in particular and was surprised that he thought there was greater durability when you looked at the dreamers, the deferred action from deportation, obamacare and also the dodd frank Financial Regulation law. I dont think the president will touch the dreamers. Dodd frank i think they are going to try to fundamentally undermine. And i think not just in the consumer office, but the volcker rule, how much cash banks have to have that kind of checkup to make sure theyre healthy. Of the three youre talking about, i think thats the one thats most vulnerable. Theyre finding out that this is a bad metaphor so i apologize, that the president president obamas Health Care Plan is a puzzle that if you take something out, its not that piece. Each of these changes begin to expose fault lines within the republican party. This is just not that easy. Theyre going to look at the politics in time and cost around regulations and theyre going to realize, you know, theres only so much you can do. Do you see them having to choose between a goldman agenda and a joe six pack agenda . How is that going to work . Every president always has tensions in the Electoral Coalition they put together. If you thought of his coalition there would be more unity around an infrastructure set of ideas both from business who think its good for the economy and more of the blue collar because its going to put blue collar people to work building these roads, building these schools, building these mass transit systems, the airports, et cetera. We dont know the contours of the tax deal. And as for why those dreamerl noted theres bipartisan support for protecting them. Republicans want to do better with latino voters. And he also said he reminded the president elect in december in a meeting in trump tower, you are an investor in sanctuary cities, including chicago. Cities are the major engine of American Economic growth, guys. All right, john, thank you. John harwood speaking there with chicago mayor rahm emanuel in speak easy. Now jon fortt has a look at whats coming up on squawk alley. Reporter you should stick around. Its quite a show. We have twitter chief operating officer anthony noto. We have a digin on the snap valuation with that ipo coming up. Marriotts Arnie Sorenson and supermodel and s. I. Odd cover girl kate upton coming up on squawk alley. Thats a lot. Dont go away. New bi selnguy. W about we pump re . Inmotion h. Elsebout we pump re . Inmotion at if we hire re sal r t se . Iwe digitize ole pphain . . So pillial itk. Pte bibiore buy ye, dialck. So pillijust a le. Bibiore buy livewhen le,edy yole. En youav 7. 95 line u. Uita reiz e smtestnvesa whertoif o oy the sis weas oiou. Delitys aivtrader pro help y fin arter entry and exitnts ann proct ottial prots welcome back. These markets have been fluctuating since the open. The dows now down 27 points. The s ps down 7. The nasdaq down 13. Coming into today, obviously, were on quite a win streak for everybody here. Yesterday, 100point gain had us closing above 20,600 for the first time, but today everybody seems to be taking a step back at least for the moment, kind of in lockstep, guys. Tax, the debate continues, in this case centering around kevin bradys comments saying theyll push forward on border ad yu adjustme adjustment. In that case it makes sense that coke is one of the better dow components. How much of a portion of your business is going to be exposed to this if it happens . And if it doesnt, where does the Corporate Tax reform ever go . Meanwhile, were awaiting a Senate Floor Vote for Mick Mulvaney at omb, needs a simple majority, although john mccain indicated he would be voting no, seeing mulvaney week on defense spending. With that, mnuchin at treasury, cohen and mulvaney, the triad of advising to the president in place. A lot of important things get run through omb, including the aforementioned tax reform in terms of being budgetneutral and dynamic scoring and if they do it under reconciliation, that becomes very important. But this is a great point, because as alan blinder was just mentioning, if this does increase the deficit and perhaps by a wide margin, depending where that piece of it thats going to fund it, the border adjustability comes from, how does a Mick Mulvaney, whos made his career as a deficit hawk, react to that . Great question. It will be a key question. Good discussion on squawk about what other tools you can play it, whether statutory rates, whether or not you just score it differently, the socalled magic wand effect, and come up with the number youre looking for. The magic wand effect. Yes, okay. If only i had that in my life, wave the magic wand. Get what you want. It will all come together. I do that with my bank account all the time. Seems to be going fine so far. Well, ive got a role for you in the administration. All right, weve got a lot more ahead, of course, including model kate upton. Shes making her third appearance on the cover of the Sports Illustrated swimsuit issue. We have a lot more ahead. So tngare mply imposso igno. The kilyesxus nxurbo a hri drien amazing. Th iwe ded tures, gefoli i ha access to oilmas and goartk m plugd tre nfirmed and i halobacess4 7. Meang i can dowhat i ned and ith c foc on4 7. What w t ar see what addim futus can do you. Welcome back to squawk on the street. Im dominic chu. Scots are pairing their gains now in the negative territory mark here after more than 20 names at record highs hit the opening bell. Many of them were in financials. Prudential, chub, jpmorgan, visa all record highs at earlier trading, moving lower now. One name not in the rally, avon, down double digits after the cosmeticsmaker fell short of estimates. Revenue missed as well. Sales were lower in most of its Global Markets overall. Shares of wendys lower as Quarterly Earnings shy of estimates. Sales, however, beat forecasts and its Comparable Store sales better than expected. Wendys announced a Share Buyback program and raised the Quarterly Dividend to 7 cents a share. Kate spade shares are surging after announcing its reviewing strategic options, this after much speculation about the brands future and pressure from activist firm scarice investors. Kate posted higher revenue and profit in the Fourth Quarter amid a weak handbag market. Now to carl and the gang at squawk alley. Back over to you guys. All right, dom, thank you very much. Good morning. It is 8 00 a. M. At snap headquarters in venice, california, 11 00 a. M. On wall street, and squawk alley is live. Good thursday morning. Welcome to squawk alley. Jon fortt, kelly evans and me at post 9. Good to have you, kelly. Thanks for joining us. Good morning. Breaking news, the president announcing a News Conference in about an hour from now