The shanghai closed flat. Early trading in europe, markets under pressure. The dax down by 1 , as is the cac in france. Ftse down 0. 6 . Look at crude oil prices. Right now it looks Like Crude Oil is down by 29 cents. Natural gas has been under some extreme pressure over the last week or two. Couple of big stories were watching. President trump is calling china the grand champions of currency manipulati manipulation. In a reuters interview, trump said he has not held back in his assessment that china manipulates the yuan. The China Foreign minister saying china has no intention of using currency devaluation to its advantage. Just yesterday in your interview with mnuchin, he wouldnt go that far. He didnt call it a ma manipulator no, it seems like he stepped back from the trump promises to label china a currency ma anybo manipulator from day one. China has been propping up the currency recently. Well see what happens, but it will be a much more settled but trump will go out there, say it publicly, his cabinet members, same thing with mexico, Rex Tillerson sort of walking back some comments that the president makes. This was an election issue that has fallen by the wayside. I was curious to hear if they would go out on a limb with this. Its happening across the board. Pence goes over to europe and talks about how we love the eu and nato. Right. Trump says one thing and then the surrogates say the other thing. Trump is not a politician, pence is a politician. Trump is a politician. Not really. He did call himself one the other day. He said i cant believe im saying this. One thing his supporters like, hes impolitic. You know that you pointed it out as much as anyone. He is impolitic. The important thing to beckys point is that the chinese are actually propping up the currency right now. Its hard to label them a currency manipulator when they are pushing things up. How are they doing that . Actively selling foreign reserves aggressively. As long as that continues i dont flow you can label them a currency manipulator. Physician heal thyself. If you believe half the world is behind the curve, what would the dollar be right now if the fed had not come along and raised rates . If you look at how many times corporations and ceos have complained about Dollar Strength and how long we stayed at zero, we never is there anyone in the world that doesnt manipulate currency to some extent . Including us. Whats the definition of labeling someone a currency manipulator . I would argue trump labeled them a currency manipulator yesterday, mnuchin didnt. Because the last time an administration officially labeled china a currency manipulator is in 94 under the clinton administration. Germany doesnt manipulate . What constitutes the label . When the president says it, isnt that the label . Theres an official you take an administrative position and think about how beneficial a lower euro has been for the economic recovery of europe. I would argue at some point this year you will hear that the ecb is behind the curve. And they need to reassess and lift rates. Couple other quick headlines. A bit of tech news. Googles selfdriving car company waymo suing uber alleging they stole property. They say a former Google Engineer stole design information before leaving the company and went on to find the uber selfdriving truck company. They believe the actions were part of a concerted plan to steal googles property. January, new home sales and a time report of february Consumer Sentiment at 10 00 a. M. Time. New home sales are forecast to rebound by 6 following a more than 10 decline in september. A few notable names reporting before the open, foot locker, triva dpshgs o a trivago and jcpenney. Some stocks to watch. Gap posting earnings in line with expectations. Revenues slightly beat guidance. Shares pretty much flat this morning. Nordstrom beating the street, earnings in line helped by sales of the Nordstrom Rack stores. On the call, nordstroms copresident was asked about the impact of President Trumps tweet and all the things with ivanka, the brand pulling ivanka trumps line from the stores, the executive called that impact negligible. And Hp Enterprise i think they should have called it enterprises. Maybe theyre so focused now, it is only one enterprise. Focusing on one enterprise. Were an enterprise company. So they theres not Enterprises Businesses . Its like the cloud, youre not part of the clouds. I get con ffused at deer and and moose, moos . So, Hp Enterprises reporting lower than expected sales and is slashing earnings projections for the year after intense competition in its clouds business it didnt really say that just cloud. Programming note. Dont miss hp Ceo Meg Whitman in a cnbc exclusive interview today with squawk on the street. Politicians making headlines at the cpac meeting. Eamon javers has more on that story. Reporter good morning. You dont often get to see steve bannon out in public these days, especially now that weve got the conservative Political Action conference in washington. The first of the annual gatherings since President Trump has been inaugurated. The conservative movement adjusting itself now to trumpism and figuring out what part of the conservative movement is trump and what part of trump is the conservative movement. Bannon said that the president is going to continue to fight for conservative causes. Heres what he said yesterday. Hes going to continue to press his agenda. As Economic Conditions get better, theyll continue to fight. If you think theyre going to give you your country back without a fight, youre sadly mistaken. Every day every day it is going to be a fight. President ial counselor Kellyanne Conway was also at the conference. She made a joke that had some serious undertones in terms of whether or not this is the conservative Political Action conference taking place or the President TrumpPolitical Action conference. So, let me ask you, how do you believe President Trump has impacted the conservative movement . Well, i think by tomorrow this will be tpac when hes here. No doubt. So, conservatives figuring out where trump stands on issues that they necessarily vent always been comfortable with, including things like foreign policy, a whole post of issues in which donald trump doesnt necessarily align with the conservative movement, but now hes the president of the United States, he is the leader of that movement, well watch and see what the president says today when he goes before the conservative Political Action conference later on this afternoon. He will clearly lay out his agenda and try to make sure he keeps that wing of the Republican Party firmly on his side. Heres a question. Bannon said whether youre a populist, limited government conservative, libertarian, economic nationalist, we want to have you back. In terms of how theyre trying to i think he said we want you to have our back. Yes. Right. How big is the tent, when you think about that room there . Well, its pretty big. You have seen a whole different range of people coming to the conference over the years. Every year theres a headline fight over who should be invited and who should not be invited who gets include and who is not included. For conservatives, some issues theyre focusing on is protectionism. A lot of conservatives and republicans in this town for a generation have advocated free markets, globalization. This president doesnt necessarily feel that way. A lot of conservatives said we shouldnt have a robust executive at the top of the government who tells businesses what to do, we want the government to lay off of business. Yet you have a president here now who feels comfortable lecturing individual companies on what he wants to see from them in terms of building plants and creating jobs. So some of those things dont square with what conservatives have been saying for a generation, thats what this conference is here to do this week. Eamon, the people like bill kristol, even mcmullen, the never trumpers, the ranks are thinning. He didnt even speak at cpac last year. These guys, maybe theres a couple of holdouts still, but a lot of people in that room down there are smiling because Everybody Loves a winner at this point. You cant govern mitt romney, what a great candidate for the cpac. Loved him. Yeah . He couldnt beat barack obama when he was running for reelection. The ranks are thinning. I would argue the tent has gotten big and a lot of people there look at whats happened in the house, senate, state legislatures, governor ships, and how can you look a gift horse in the mouth when youre there . A lot of happy people in that room. I think youre exactly right about conservatives. I think you have to look right at the supreme court. The neil gorsich nomination goes a long way. Thats one thing they were concerned about on the campaign trail. Now they checked that box. As you see this administration unveil certain things, theyll go and check boxes for their constituency. You have to dance with the girl that brung you, and President Trump is doing that. Ted cruz says he has no inside information on ginsburg or kennedy or anything like that but he says could be by the summer. I dont know. I think thats just pure conjecture. They have great healthcare at the supreme court. Those guys seem to be able to live forever. But nobody does live forever. Right. Right. Not yet, any way. Right. Were working on that. The dow hitting its tenth Straight Record high for the first time in 30 years, joining us is james liu and joe joe terranova. A lot of things change but a lot of things stay the same. We were talking on the way in. I know you have read stock operator, confessions of the stock operator, jesse livermore. Was that written in the 20s . I think. The diabolical motivation for the market is to advance itself as far as possible without anyone believing it, with as few people on board as possible. And the wall of worry, every time theres Something Like this, there are individual bricks put in by the majority of people that dont believe the rally until its almost ready to stop. They dont get on board, they dont get their clients on board, they moved too far, they are unable to pull the trigger after its already moved too far, they never get in. Its happening again. What is going on, the industry is recreating itself and how we transact. Fees are compressing, the ability to be that star manager is so uniquely important to attracting assets under management. When you think about performance, who expected emerging markets would lead global assets right now, 10 . Nobody. Who expected the european recovery . Theres not euphoria in the marketplace right now. I keep hearing sell. Come into the market and sell. Take profits. The question becomes, number one, what are you selling . Are you selling high yield . Investment grade . Theyre all up. The only thing down year to date is crude oil. Are you going to sell . When you do sell, whats your expectation on that sell . Are we going down 5 and getting back in again . I talked to daniel before we came on. His thesis, and someone says it every day, dont chase the rally. I said how long have you been saying dont chase the rally. You said since the election, and you dont believe it at this point, and eventually youll be right, but missing 13 that doesnt help. I dont know if the people who took your advise cadvice, if th happy they took your advice. The problem with the current dynamic is the fundamentals have shifted. Weve been bullish on the market cycle. Bearish since november 8th. Exactly. The things that have driven the rally, a lot of people are focusing on the wrong factor. Oil prices rising, Interest Rates backing up. Also earnings recovering. Were seeing at this point a lot of enthusiasm in the shortterm sur surges are due to promises. So what could cause this rally to be sustained is an actual concrete tax reform package that may come out. That doesnt look like it will come out until august. So we need Something Like that to help drive the fundamentals which have already become stretched. Do you ever try to gauge consensus and realize if its too crowded t will probably be wrong . I can tell you the most common theme we hear is that the markets move too far without knowing what the tax reform package will look like. Every person says that. And the market has hit ten straight new highs. Just look at market fundamentals. Fundamentals what if the fundamenta fundamentals many times fundamentals are not what you should be looking at, but momentum. Im okay being wrong a few months. Alan ableson was wrong 25 years. Theres only one factor that predicts returns, and thats longterm fundamentals, like the forward pe ratio. Were at the highest levels of that pe ratio since early 2000s. We shouldnt be chasing returns here. Back in november f youre investing for 5, 10 years, you should have buying, you would have gotten 13 and you wouldnt be worrying about shortterm pullbacks. Its great if you can catch every 1 , 5 you should stay fully invested. James, listen, theres a Movement Towards indexing. Were not supposed to Pay Attention to corrections. Sounds like you think a correction is coming. What is actionable in that . What is someone supposed to do liquidate equities and get back in again . Im not a trader, im talking about longterm positioning. Im talking about whether you should be overweight or neutral weight equities here. We think that because of where weve come in terms of the market rally, were at record highs, the highest level since 2004, we should pare this back. You are making an assumption that most people are overweight equities now. Im not giving customized advice here. If you are overweight equities, we say pare that back. We thought coming into the year we would see a solid single digit return number. At this point the market is up 5. 5 . Only about 1 of that is an acceleration is in earnings potential. The rest of that is entirely valuations and sentiment. I see a scenario where you can get a double digit return, but things would have to be incredibly rosy. I disagree that sentiment and fundamentals that are present now, profit margins, 8. 1 a year ago, guidance given in this quarter, 35 , raised above consensus expectations, 5 is normally what the average is for that. Oil prices at a twoyear high. These are fundamentals in a moment. Were seeing a european recovery that nobody expected. I think those are lagging indicators. We came into the cayear expecti 11 12 earnings full year. The market already priced that in. In order to see further upside from here, you need to see further acceleration. We think that 11 12 Earnings Growth has to come down. The average has been 6. 5 . We think should much is built into the market. Yeah, we could see a continuation of the rally, but if youre a longterm investor, now is a great time to start paring back to a neutral weighted portfolio. 13 , your correction wont get you back to where you werent in in the first place. Thats because the cycle has been long. Were at the later stages of the cycle. Im trying to get people out there listening to us, weve had a lot of people since november every new high telling them to not chase the rally. If they listen to the people saying that, theyre out. Now can you get in . Now its even more now you might get in. Lets remind ourselves of where we were a year ago. Everyone was convinced there would be a global recession within six months. Everyone. Then we had the bottom and everyone became bullish again. Lets not look at sentiment or what the market is doing, thats always a lagging indicator. Look at how expensive the market is if youre a trading expert. What im looking at are things over the course of years. I hope youre smart enough when we get a pullback, if we do, know when to buy. A lot to of times it doesnt pull back enough and youre still not in. Thank you, james. Youll stick around . Yeah. Thanks. When we return, Jeff Sessions sent a memo about the use of private prisons and shares of correctional contractors are on the move. And this coming monday Warren Buffett will join us for the annual ask warren show. Three hours. Send your questions you have using askwarren. We have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 6. 95 per trade . Uhhh and i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 6. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. Welcome back. U. S. Attorney general Jeff Sessions sent a memo yesterday rescinding an order by the Obama Administration that would have ended the use of private prisons. The move would have had little impact as most federal inmates are housed in state prisons. The original order also didnt apply to people being detained by immigration and customs authorities or the marshal service. Shares of two private prison operators rose on that news. These shares got hurt badly when the Obama Administration first sent that executive order out. It looked