Shanghai composite was flat. In european trading, things are barely changed the dax and ftse slightly higher cac down about 0. 1 . Italian stocks down as well, but in spain stocks are slightly higher checking out wti, still above 50 a barrel sitting at 50. 84 a barrel were following a developing story out of Northern CaliforniaDeadly Wildfires burning unchecked there. Officials say 23 people have died from those fires. More than 3500 structuring have been destroyed leaving hundreds missing in chaotic evacuations firefighters are battling high winds as they try to contain two dozen blazes spanning eight counties yesterday a mandatory evacuation was enforced in sonoma county. Well get an update from Northern California later in the program. I didnt understand why this had been so hectic why people didnt know to leave and confused they were dealing with winds that were above 70 Miles Per Hour on sunday night when you think about that, that means the fire is moving over 70 Miles Per Hour, getting pushed, jumping over barriers that you wouldnt expect and blowing in Different Directions sounds like a terrifying situation. We were just there two weekends ago, our friends were staying at a house that was rented that has already apparently been in napa you were there. For a wedding there President Trump making the case for tax reform in a speech last night in pennsylvania and House Speaker paul ryan will be making his pitch to conservatives this morning ylan mui has more on that story. Ryan will frame tax reform as a call to action for grassroots conservatives when he speaks at the Heritage Foundation later this morning hell talk about the army of lobbyists already at work on provisions like the state and local tax deduction. Will he say the foot soldiers of the conservative movement need to see this through. Republicans are under enormous pressure to score a win on taxes and trying to energize their base behind this issue President Trump held a raucous last night in harrisburg, pennsylvania his message plasted on eered on 18wheeler behind him. He talked about a conversation he had with bob kraft, owner of the new England Patriots as hes leaving the white house, he said donald, i know youre soon going to be doing tax reform and tax cuts. Give it to the middle class. Dont give it to us. Give it to the middle class. Thats what were trying so hard to do. Many analysts disagree with that the leftleaning institute on taxation and Economic Policy found the richest 1 of households would get a 68,000 tax cut under the gop plan, the bottom 20 would get a 70 tax cut. Back over to you guys. Thank you very much for that. A quick programming note, we will talk taxes with Steven Mnuchin, he will join us at 7 45 a. M. He has been with the president for that speech and more the race for the next fed governor, the chair, seems to be tightening fed governor Jerome Powell is the frontrunner today according to predict it, the betting website. They have his odds at 48 . Followed by former fed governor, kevin warsh at 25 , and janet yellen at 13 . Politico is reporting that treasury secretary steve enough season pushing for powell to take the job well hear more from secretary mnuchin coming up at 7 45 a. M. Eastern. Apparently they worked together on some regulatory stuff. Mnuchin feeling comfortable with powell warsh i thought was a long shot in the journal today, i like this headline, warsh seen as pick for banks leader then i looked into exactly what theyre saying so warsh was at 28 , and then yellen 22 , and powell at 21 . If i wassed ethe editor as w guy, do you think thats a good headline. I would say warsh in the lead thats different than the predictive markets and lets say theres four people in the running and they each get 25 . Race too close to call, youre saying . They talk three here. One got 28, one 22, theyre really that good at the difference between 28 and 22 just shooting just speculating i just think its headlines are often stupid. Right and made to fit a small space. If i was just scanning and i read that, then i went somewhere for lunch, i would say warsh is likely the pick. You cant just read headlines. But its not really the story. We run headlines all day. I wont throw stones ours are much more nuanced we have numbers and stuff here then again it is all economics i talk about the economics ours is Jerome Powell seen as the favorite there you go 48 is better if theres four people running and theyre in the mid 20s, theres not a favorite there you go. President trump suspected to sign an executive order on healthcare while the president has not revealed the full details it will likely relax rules on Small Businesses that band together to buy Health Insurance earlier this week he said he plans to allow people to buy Health Insurance across state lines, a goal of people on the right more than the left President Trump is expected to sign the executive order at 11 15 eastern. I watched that speech, i knew treasury secretary mnuchin would be on. Very populous. Yes, it was but once again, we have to flesh out the details. Didnt mention state and local taxes. Didnt mention is it retroactive . Permanent . A lot of things that i thought it was a good speech it rallies the troops, but well have to hear the devil is always in the details. Theres news that suggests it will be tough to give significant tax break without those breaks going to the wealthier americans because of who pays taxes if you look at it, 45 of all individual income taxes are paid by the top 1 . Top 10 pay 70 ylan said people at the bottom only get a 70 tax break, and people at top get 58,000 nobody at the bottom you couldnt give the people at the bottom a 58,000 tax break, because this would put them at a tax credit of whatever 57,000. Yeah. Its like you cant say it theres commentary from someone who is a tax analyst in the Obama Administration saying its hard to have a tax benefit not go to someone in the top 11 of the group because they also pay taxes. Now the question is who adam looney its numbers strait straight numbers. We do have treasury secretary mnuchin joining us at 7 45 a. M. Eastern. President trump is expected to make a major announcement on the Iran Nuclear Deal tomorrow sources tell nbc news that the president will refuse to serlt fi th certify that iran is completely adhering to the deal but that the United States will not pull completely out of it President Trump making headlines on another deal. He says hes open to bilateral trade talks with canada and with mexico if the naft da taa talksl apart. He made those remarks at a meeting with Justin Trudeau at the white house. Trade representatives from canada and mexico are in washington for a fourth round of nafta negotiations wilbur ross saying late yesterday that the Trump Administration does not want to walk away from the deal, but he has said that the president has been open to that approach from time to time General Motors warning leaders of canadas uniformed labor union that it will wind down production at an ontario factory unless workers call off a monthlong strike. This has been fueled by opposition to nafta. The shift in production would take place if the walkoff was not stopped. Joining us now on the markets is Jurien Timmer and lisa ericsson. Ill ask both of you a similar question do either of you differ with what were hearing just about every day, thats risk on and the market this trend is likely to continue unless theres a shock or policy mistake. While valuations are high theyre not out of control do you differ with anything i said we do, actually generally agree with what you just said. As you say, thats a consensus view the two things that we would point out in addition to that are, one, the fact that actually when we look at the Economic Indicators globally, were seeing some signs of deterioration. And even though the absolute readings on those indicators look good, its important to monitor that rate of change. While we dont see sustained trend yet, we want to keep our eyes on that the other thing is around the complacency levels in the market if you look at the vix or pe or do emotional sentiment indicators, they are definitely at highs so we think thats another risk within the market. I think jurien will echo some of that in terms of sentiment. Sentiment has gotten more bullish, and also i think you make the point that earnings while strong, the warate of chae is a second derivative, and thats starting to come down a bit. Yeah. For the last six quarters or so when this global inflation began in 2016, the markets have had the best of both worlds. Earnings growth has been double digits, financial conditions have eased even though the fed has been in tightening mode. When you combine Earnings Growth, easing liquidity conditions t drives valuations higher if valuations go up and earnings go up, price will go up a lot. Thats whats happened the s p is up over 40 since february of 2016 we are at an inflection point, not that the market will go down, but that that very powerful twin tailwind will blow a bit less strong. As you indicated, Earnings Growth went to plus 11 in the second quarter, right now at the cusp of earnings season, the consensus estimate is about 3. 5 usually that number will drift higher during earnings season. Companies tend to underpromise and overdeliver. If that goes up to 6 , 7 , we have come down to the longterm trend growth rate for earnings which is about 6 . Still a positive story positive Earnings Growth is good for the market its not theyre not the numbers that will push evaluations higher now with the fed presumably on board to hike in december, and with this still lingering disconnect between how little the market is expecting the fed to hike and how much the fed is suggesting it will through its dot plot and Balance Sheet, chances are they may tighten moderately, then you have still the two tailwinds, but certainly softer as a result i expect a much more twosided market with a more normal risk return distribution than what weve seen over the past six quarters. I wish someone would have told me. You know, weve done 25 in the last year, i was under the impression that all we would get were mid single digit returns in the stock market thats what everybody has been saying now youre back to that, youre saying the multiple stayed at 20, but we were getting Earnings Growth that was much higher. So the 25 might make sense. Now in hindsight now youre back to what they told me last year, mid Single Digits is all youll get thats what they were saying a year ago two years ago, three years ago. Why didnt anyone tell me that earnings would grow like they did in the past year that they would grow 25 did you tell me that i was pretty bullish. 25 is hard to call. Few people including myself could have found it hard to predict that the fed would hike three times this year and liquidity would ease up. Usually its called tightening for a reason the fed is tightening to tighten up conditions. So i was talking about earnings but the fed is part of this whole equation you can never forget that. The fed is a huge part. All right think about this, over the longterm as policy normalizes in the years ahead and the Balance Sheet is expected to come down 1 1. 5 trillion over te next three years, what is that going to do to financial conditions what does that do to the tenyear treasury . What happens there will feed into the valuation of literally every financial asset on the planet that is an existential question. And the fed looms large on that discussion so, okay. Does that make sense well give you the last word, lisa now were back to mid single were back to the same thing that weve been saying so mid Single Digits for the next year. I wanted anoth another 25 how will we get there, probably not, right yeah. Were more cautious as well. Sorry for that the fed is an important factor to watch that being said, were probably more positive than that. The reason why is while we are agreeing that theres likely continued rate hikes, and then not looking just at the situation in the u. S. , but also globally, well see some easing being taken off the table in the eurozone as well these things are gradual we still see all of the Central Banks being data dependant and giving communication because of those gradual paces of how that Monetary Policy will be unwound, i think were a little bit more optimistic that things will go right on that front. All right great. Thanks when we return, cyberthreats we will talk to the ceo of a Security Firm who says the companies are not just doing enough to protect customer an employee data. Thats next. And later our newsmaker of the morning, treasury secretary Steven Mnuchin will join us to talk taxes and a first on cnbc interview. Squawk box will be right back. The equifax data breach compromised information like Social Security numbers and as many as 145 million americans. A new report says that breach may have compromised the driver license data for 11 Million People joining us now to talk about data and privacy is james foster of privately held cyberSecurity Firm zero fox. Thank you for being here thank you equifax has by blood boiling, but it seems like every day were opening the newspapers, turning on reports, reading about another firm that has been compromised, that has compromised our information, not theirs i think thats right. Weve seen more high profile breaches in 2017 than the past years combined why . I think its simple economics. The number of new types of targets available is going up. The costs of attack is going down outcomes are improving attackers are flooding the market outcomes are improving because hackers have gotten better or companies are not doing enough to protect data i think both. You heard stories about Artificial Intelligence getting built into tools to attack companies. Attacks are faster now than before Companies Need to change Companies Need to become more agile and they have to be more proactive. What are they not doing . I realize its hard to paint everybody with one broad brush some companies i feel like, okay, maybe they got taken advantage of and nation states may be attacking their information. But lately are the Companies Just not rising to the occasion . You hit the nail on the head one of the problems is theyre still working on the basics. I talk to tons of security officers, i say how are things going . What projects are they working on they say were getting our arms around the basics. What does that mean . Patch management, installing end point security, firewalls. If joyoure just doing those things what are you not doing . Attacking the new attack surfaces out there what are those . Social media a lot of new entryways into the company. Exactly if you are working on the basics, you have not covered those. Where would you grade equifax . Its hard to say. Theyre not alone. When you say theyre not doing the basics, so deloitte is not doing the basics im not sure i said that. But a lot of companies arent i think theres two levels here there are fortune 500 or fortune 1,000 companies who may be doing the basics but are playing against an actor who is in a different world, and then people who truly are not doing the basics, and the question is are there Massive Companies, truly Massive Companies that youre aware of not doing the basics are truly Massive Companies that are still grasping with doing the basics well. I think youll start to see a shift in the types of companies out there. Those who have masters cyber and those who havent. You put these companies into two categories. Companies who have specific information, than other Companies Like whole foods, if somebody rips off my credit card, the bank will take care of that. I think thats right. Part of the challenge is will you put regulation around that yes do you think thats required i think they have to have regulation around companies that hold Sensitive Information europe is taking that charge with gdpr. What is that. General data privacy. They say if you want consumer information, we will hold to you a higher standard. Point blank. That makes sense. You will get fined and theres real financial ramifications if someone breaches that data i think it should be more than fines, thats not even my money im paying with. Heres the question what should the liability be for a company that loses the information where its unclear at first instance what the true loss is to me. If my account was breached at equifax, my data may be stolen, but unclear its been used, so theres a monetary liability, yet could be a monetary could be a liability coming five years from now, maybe somebody could use a piece of that information to somehow do Something Else terrible to me how from a regulatory standpoint, if thats the direction you think were going, should we be the fine could either be too much or too l