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tv   Squawk Box  CNBC  March 2, 2018 6:00am-9:00am EST

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♪ live from new york where business never sleeps. this is "squawk box. good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. yesterday we saw a huge drop for the stock market this morning futures are in the red once again futures down by 163. s&p off by 12. the nasdaq off by 32 what's most significant about this is the steady drops that we've seen all through the course of this week. >> except for monday >> except for monday we have seen declines that have continued day after day. yesterday big surprise market had been up by as much as 156 points at the time it was down by as much as 587.
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ending the day down by over 400. it's been a rough week for the dow and a rough start to march >> flat for the year again >> yeah. >> given back all the january gains. the ten-year is down to 2.80 or something. >> the nikkei was under pressure as well. continuing its declines from the day before down by 2.5% at the close. hang seng down by 1.5% shanghai composite down by 0.6%. we'll talk about these potential global trade issues and what those implications were yesterday. right now the early trading in europe you see red arrows across the board. the dax in germany is off by more than 2% the cac down by 1.8% the ftse down by 1%. treasury yields, if you're looking for a little bit of potential -- even below 2.8% for the ten-year now 2.799. our global story, top story
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of the day, of the week, maybe the month at the moment, the global response to president trump's tariffs on steel and aluminum imports we'll get a live report from beijing on the china reaction which is playing a pivotal role in this. before that, we want to get to kayla tausche in washington. good morning the president won't sign the tariffs until next week but his announcement overriding a fierce internal debate that he would seek global tariffs stricter than any recommendation stunned investors, cabinet members and influential republican allies on capitol hill >> surprised whoever advised him on this ought to be reprimanded. it will cause higher prices and make us less competitive in the world marketplace and certainly in this hemispheric marketplace
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the backlash was swift and wide ranging you had business lobbies coming out against the decision and u.s. allies like canada requesting exemptions. the world trade organization said the tariffs would break its rules. in march 2002 george w. bush slapped 30% tariffs on foreign steel that was met by retaliation from europe. a year after the tariffs were enacted, the wto said they violated international trade agreements and a year and half after taking effect bush reversed them. this morning the president tweeted that a country losing billions of dollars on trade with virtually every country it does business with, trade wars are good and easy to win when we're down $100 billion with a certain country and they get cute, don't trade anymore. we win big
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>> reports out in the past week or two that gary cohn threatened again to resign over this? >> there is some speculation that this is an issue that he has been arguing so vehemently for, the lack of tariffs rather. he's been arguing against the implementation of tariffs. this is sick that could bring his frustration to a fever pitch. on a different plain than the charlottesville situation that caused him to draft a resignation letter in the summer it's clear he could resign quickly if he decides to do so that's one other issue that rocked the markets he's seen as a stabilizing and moderating force within the white house and reports of his potential resignation is certainly unsettling to
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investors. >> rona barrett of washington will be on with you, andrew. supposedly the navarro -- peter navarro has gotten more power, and it's a navarro/cohn faceoff that is supposedly happening in the white house. you can ask your buddy nick. those guys at axios, all they do is say tell me some gossip >> what does this mean for the broader business industry? >>dan ameek ico will be on >> larry kudlow will be on he's against this. i understand the rational, i think you need to connect all the dots >> the bigger problem is now it's out of our control. retaliatory efforts are out of our control.
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>> boockvar is unhappy we are joined now by peter boockvar ryan dietrich, he thinks the market can handle this i guess senior market strategist at lpl financial. peter, you doe thin't think it'a security risk, tyou don't think it's an effective tool do you think he'll do it who knows. maybe you say this and expect now and when he signs it -- >> what do the guys in the steel industry do now if you pull it back >> it depends on if you get promises from the perpetrators >> a few weeks ago when wilbur ross talked about national security, when we get most of our steel from canada, mexico, south korea, i don't know what the national security issues are there. it hurts more industries than it
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helps. i don't understand the economic rational >> if you look at the auto sector, thir faey're facing ris rates, plateauing of sales, now higher cost inputs >> explain to people worried about retaliation what does it look like? in the form of currency? >> people by finished products from somewhere other than us >> does china decide the next auction we're not doing -- >> maybe the security concerns so anybody we're a traying partner with, they can say we're outside the trading partners >> i think the retaliation will come in many forms >> canada can find some product that they say we'll slap a tariff on you. in the aggregate it can still be damaging >> farm equipment, agriculture >> ryan, you're not -- just in
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looking the looking at the stock market, you don't think this will derail that though yesterday wasn't pretty you think the economy and the stock market can take this in stride >> we do 15 consecutive higher months for the s&p 500, an all-time record, we pull back in february we don't know what will happen we know in the fourth quarter we saw extremely strong earnings. at the start of the year, earnings were supposed to be up 10%, now it's up to 19%. our personal opinion is we can withstand some of these tariffs, tick and tack and back and forth. the underlying pinnings that has been running the bull market is still there. >> maybe this is just the damper
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the stock market needs to keep rates low. >> that the way we should think about this >> trying to be positive about this it's friday, raining >> good news used to be bad news, now bad news is good news? >> i'm not saying that but people who don't like anything that the administration does, you know sometimes -- this would -- the notion that we have done too much to stimulate an already -- >> what's different is the number of allies affected by this >> if you're ever going to do tariffs, this is the moment. >> when you have gary cohn, rob porter, all these folks, and the ball -- >> rob who >> porter was out screaming about this >> rob porter? is that the guy? portman. >> i thought you meant the i go who just left. wow. you're still talking about the guy -- >> rob portman has been out there screaming about this >> i wuas wondering why you wer
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bringing that guy up >> oddly there's been enough democrats who want to protect the steel workers. >> so is rob, if you watched what he said yesterday he said we don't know the details. we don't know who gets exceptions he has not been totally opposed to it. you saw sherrod brown, he's like this is the greatest thing that ever happened to our state we'll see. i don't know boockvar, do you think -- is 3% -- every time we think we'll hit it, we don't now we're turning back down again. it's always a weird reason why it happens always some reason why rates don't act like they're supposed to act >> eventually we'll probably go above that this will be inflationary as well it's raising prices of a variety of goods >> that couldn't affect the kul numbers, do you think? >> the thing with inflation, we had sticky services inflation
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for many years, led by rent and medical care it's always been goods deflation that offset that i'm not saying this in itself is going to lead to goods inflation of substance but it could turn goods inflation higher because it touches aluminum and steel. the trend in interest rates is higher we will get above 3% at some point. whether it's in a month, three months, six months, i don't know but the trend is up. any dip in rates is temporary. >> ryan, in terms of what investors would do, you think the market ends, the s&p ends 2018 with a double digit return. so we're back to zero basically. so you think 10% from here >> we do think so. building on what peter said, we agree. rates are going higher we think 3.25, the ten-year could get that high. we did a study, s&p gained 19
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times out of 23 periods. usually rates and the s&p go the same direction, they're correlated until you get to a 5% ten-year yield we understand things are different this time, but higher yields when you come off throw inflation years, yes, there would be some volatility it's all about the earnings, which drive long-term gains. they're still strong we're still positive >> when you say another 10%, 10% from here? >> yeah. 10%. we could have another 10% drop the 200-day is 4% away we're in a positive seasonality time frame but later in the year, we wouldn't be shocked to have more volatility >> so we're at zero again for the year you're saying 10% versus -- >> that's correct. on a total term basis up 10%
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right now. we think small caps will outperform relative to large cap an grow and growth stocks will beat bonds for the seventh year in a row. >> after all that upward bias with very little volatility, now it's like, you know, jowl -- >> more normal >> jay powell talks, that could be worth 700 points. the slightest thing is worth 400, 500 points now. bullard comes on, no, we're not going up we go up 500 >> 500 points is not what it used to be but these are the types of things where it felt like we were coming back out -- >> friday, saturday -- friday, monday, tuesday, wednesday, thursday, every day was 300 points or more >> we're so sensitive to the
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smallest changes in interest rates. the ten-year went from 2.40 to 2.70 and it blew up the short vol trade on this modest rise in interest rates >> thanks to you both. >> thank you in corporate news, american outdoor brands reporting a 33% drop in sales for the fourth quarter. the largest u.s. gunmaker and parent of smith & wesson is warning of weaker profit and refr knew this year. the company says the flagging consumer demand is expected to last at 12 to 18 months. outdoor brands has a market capitalization of roughly 500 million. on the earnings call, the ceo commented on the shooting ingin parkland, florida. >> we open the call i want to comment on the horrific tragedy in parkland, florida we share the nation's grief over this incomprehensible and
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senseless loss of life we share their desire to make our community safer. through our membership and work with the national shooting sports foundation, we will continue to support the development of effective solutions that accomplish that objective while protecting the rights of the law abiding fie i firearm owner. and georgia lawmakers striking down a proposed tax break for delta air lines. this after the airline decided to cut ties with the national rifle association in terms of the discount that it had been offering nra members delta is georgia's largest employer with 33,000 workers stateside. you are seeing all of this back and forth. we have more changes -- more companies changing policies on guns l.l. bean raising the minimum age to buy rifles to 21. the company saying it only sells firearms in maine and only guns specific to hunting and target
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shooting it does not carry assault style firearms. outdoor supply retailer rei is halting its relationship with vista outdoor. the decision comes after vista failed to issue a statement following the mass shooting in florida. the brands include savage arms rei itself doesn't sell guns, it says it has a hold on future orders of other products that vista sells, including the camelback hydration systems, the backpacks, water bottles so lots of corporations taking sides on this. and the tweet last night and the associated press this morning saying any movement on legislation to gun control skidded to a halt in congress. trump said he had a great meeting in the oval office tonight with the nra >> chris cox >> the associated press saying
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hopes are still there for gun legislation. >> it was said the president doesn't want gun control >> something reversed. >> we don't know if we got to the point it was being reversed. everything was being thrown out there. >> i think the point he was f focusing on, chris cox, talking about due process. that might be -- >> it's pesky, that due process. >> maybe frying ing ttrying toe lines on these two tweets. >> you have someone that says something or does something that's so blatantly threatening, and then you have to go through the courts to do anything.
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it's pesky, but that's the way we do things but there's downside to it >> no question >> it seemed, based on some comments that the president made -- >> especially saying to republican lawmakers, you're afraid of the nra. >> then he's having the meeting, not to say that he shouldn't have the meeting, but then seemed to turn the opposite way. >> yeah. >> it's another question we can talk to our friends at axios about in a bit when we come back, the markets reacting sharply to president trump's imports tariffs yesterday. this morning we're looking at futures under pressure up next, a live report from beijing on the global response to the new trade action what that might look like "squawk box" will be right back.
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yesterday's closing price. it's already been moving up. gap's fourth quarter earnings and revenue beating the streets. same-store sales in the holiday period rose 5% analysts were looking for just a 1.2% rise. gap expects profit to come in above expectations this year sales growth will be flat. nordstrom's fourth quarter earnings missed forecasts. revenue beat as same-store sales rose 2%, that was propelled by the online business during the holiday season stocks sold off yesterday after details of president trump's import tariffs were released let's look at the u.s. equity futures. you will see that this morning after those declines there are still red arrows those losses have increased. dow futures down by close to 180 points s&p futures are off by 14.
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the nasdaq down by 46. stocks in asia followed suit overnight. the nikkei is down for another day after some big declines the day before it closed down by 2.5% hang seng off by 1.5%. the shanghai composite down by 0.6% joining us now for the global reaction is our own eunice yoon standing by in beijing that's the big question here, not so much this particular tariff, but what this will mean, what other countries will do in response what is the thought there? >> well, absolutely. there is a lot of concern that we could see retaliatory action around the globe first of all when it comes to the chinese reaction, the chinese were critical of trump's actions saying global trade would suffer if all countries were to take the u.s.'s example.
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that was coming out of the foreign ministry the tone was softer than you would expect compared to other remarks out of the government. that could be because there'sa a widespread belief that the tariffs this time will have little impact on china we were speaking to steel companies as well as aluminum companies, they were saying the reason is they don't sell a lot into the u.s. market directly. in fact, if you look at the numbers, less than 3% of u.s. steel imports are from china china's aluminum makes up about 6% of u.s. aluminum imports. and the chinese iron and steel industry said that the one that would be most hurt by this action is the united states. the official said this was a stupid trade protection measure that would raise costs for industries that consume steel and make them less globally competitive. so it's for this reason that
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there are a lot of people who believe that china won't retaliate against this particular action. and instead is waiting and seeing a more important issue for them, intellectual property theft and issues there >> so china makes up only 2.2% of the steel imports to the united states. eunice, thank you very much. when we return, a lot more to come. president trump's announcement on tariffs yesterday marking that segoflloff. we'll get the latest from axios. and as we head to break a look at yesterday's winners and losers
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♪ welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning itself equity futures at this hour, down over 200 again. down 215 on the dow. the s&p indicated down by 17 and the nasdaq indicated down 55 volatile trading for a week now.
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a powerful coastal storm is churning up the northeast coast. forecasters are warning of significant and potentially life threatening coastal flooding, damaging winds as well up to 40 miles per hour for the winds. in some places heavy snow. in other places heavy rain 70 million americans are tracing for the storm. in boston for people living along the coast, this is a life or death situation we'll bring you forecasts throughout the morning i don't know how much rein weair looking for. it would have been 15 inches of snow >> right snow is fluffier >> i don't like rain either. >> it will be better >> march >> you know what they say, like a lion some gop senators and ceos blasting trump's announcement to
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put tariffs on steel and aluminum and saying that he is breaking with gary cohn, steve mnuchin and rex tillerson. other officials like wilbur ross and peter navarro agree with the move joining us now is nick johnston, editor-in-chief at axios how did this go down >> this is the same battling we've been following since inauguration the war between the globalists and nationalists the war between cohn and bannon when he was still there. freed traders and the american firsters what we knew is that trump at his heart was an american firster. we knew it was only a matter of time until tariffs -- on one side it was like what took them so long. in that meeting the other day
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where he said i'll just say it, 25% on steel, 10% on aluminum what we're reporting this morning is now we're playing by trump's rules. he will start calling these shots despite staff trying to stop them. >> so what will happen to the staff. there are some reports that say gary cohn may have suggested or threatened that he may resign over the issue other reports about girs first a fisticuffs between him and navarro. >> there was a brief calm when kelly arrived, that's breaking through now. the fight between kelly and kushner, and then the new tariffs this might be the last straw for gary cohn. there's lots of reports about general mcmaster, the national security adviser may be on his way out the door the latest episode of the trump
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show is marked by turmoil. >> what do you know about the meeting that took place last evening between the nra and the president? >> an extraordinary meeting. the nra said it went great president trump said it went great. that's an incredible thing to juxtapose against what the president said during that meeting between republicans and democrats. he told the republicans they need to go against the nra and espoused a bunch of democrat ic thoughts now the pendulum has swung back the other direction after the nra meeting. efforts to get gun control legislation on the hill are completely stalled because nobody knows where the president stands what do you make with what happened to delta? the retaliation that the political class in georgia took against that company
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has that chilled or changed the way companies will step out or not on this issue? >> we call it the tightrope that ceos have to walk flou the pressure on social media is so great they probably never would have faced this before. i never saw before where people would go after companies affinity programs for certain groups and it's a slippery slope. we talk to lobbyists who are very worried and warning their clients about the dangers of this if all of a sudden if you're pulling these programs from the nra, could you see social media campaigns do the environmental groups or planned parenthood >> nick, back to the issue of the morning. the trade issue. when you think about the rob portman's of the world or look at the editorial in the "wall street journal." what kind of meetings, calls,
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conversations do you think will happen from the senate, from the house into the white house on this issue what can be done one way or the other? >> trump is set on these trade policies the people you would be calling is gary cohn he may be on his way out the door what is telling is the market reaction to that the entire board was red when we sat down in the chair and saw the sharp drop one thing they were using for trump to push away from tariffs is stock market highs. we know how trump likes to talk about stock market highs this could be the thing that gets the president to step back. >> do you have any other reporting about calls that might have taken place overnight not inside the beltway in washington, but frankly from foreign leaders or others that i
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imagine are watching this potentially in horror. there's been some statements put out, canada put out a scathing statement about the retaliation that canada might want to take >> as you were reporting earlier, mops of tst of the for steel in the yeeunited states ce from canada. canada is furious. the european union is furious. a trade war is the big concern now. >> south korea is 10% of our imports. we need their help on other issues, too. that's the huge issue rattling the markets, what comes next we can control things we put out, but we can't control the response >> markets hate uncertainty. i covered a lot of trade negotiations during the bush, obama and now trump administration the way tariffs tend to be
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announced is not the president saying the top line number in a meeting in front of television cameras. there's tons of background information and the exceptions the department of defense said these tariffs may be okay if they make allowances for military purchases we don't know any of that yet. the uncertainty around that is driving the market turmoil >> i wanted your thought on this, the story yesterday about jared kushner and his relationship with the banks. is that reverberating in any way now? >> part of the same story we've been seeing in the trump administration for a long time every administration has wealthy businessmen who have to untangle business interests, but never an administration like the trump administration where there's so many businessmen with complicated business interests, and who have not fully divested themselves if you read those kushner stories, they make a plausible argument the that these were separate the appearance of that of impropriety hangs over the town.
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we're wondering when people in the west wing are saying when will they go back to new york? when we come back, more reaction to the selloff yesterday. we'll talk to mark grant he's out with a new warning, don't underplay the italian election. and we'll talk with robert holleyman at 7:15 a.m. eastern time. and dan dimicco will be here to give us his thoughts. you're watching "squawk box" on cnbc s overseas serving. it was my very first car accident. we were hit from behind. i called usaa and the first thing they asked was 'are you ok?' they always thank you for your service, which is nice because as a spouse you serve too.
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right now it's time for the executive edge we will start with stocks to watch this morning splunk reporting better than expected adjusted earnings revenue for the data analytics company rose 34% the company's also raising its outlook for the year shares of pure storage are lower today despite the company reporting its first profitable quarter.
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fourth quarter results topped forecasts and the revenue outlook for the year is slightly above street expectations. it's down 4.7% >> the instruction said toss to putin. we don't really have him we have sound, but it said toss to putin sound russian president vladimir putin unveiling a host of new nuclear weapons during his annual state of the nation address yesterday. i don't know how much is bluster and how much is real but supposedly our "star wars" defenses are no longer -- >> according to mr. putin. >> did you see these are the worst relations with russia since the cold war i thought we were supposed to have good relations. >> according to him. >> no, according to everyone >> it does feel like it. >> all that collusion was for
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nothing? we're getting nothing out of this we're not friends? it's like very frustrating any way, after his news conference, nbc's megyn kelly, who is on assignment in moscow, sat down with the russian president for an exclusive interview. >> several analysts in the west have said this is the declaration of a new cold war. are we in a new arms race right now? >> translator: my point of view is the individuals who have said that a new cold war has started are not really analysts. they do propaganda if you were to speak about arms race, then an arms race began at exactly the time and moment when the u.s. opted out of the anti-ballistic missile treaty >> some analysts are suggesting you tested it and it's failed, and that's why you only showed animations of it today and have not yet produced any actual videos >> translator: are you talking about icbms? >> yes, the one that you claim renders defense systems useless.
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>> translator: as a matter of fact, every single weapons system discussed today easily surpasses and avoids an anti-missile defense system. >> but you've tested it? >> translator: the test was excellent. some of them still have to be fine tuned and worked on others are already available to the troops and already are battle ready >> for the record right now, do you have a workable icbm that's powered by nukes that you tested successfully >> translator: all of those tests were successful. it's just each of these weapons systems is at a different stage of readiness one of them's already on combat duty it's with troops. >> and megyn kelly will have more reporting from russia in the coming days. okay we'll look for that in the meantime a female-led investor group has agreed to purchase assets of the weinstein company. the small business chief under
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president obama says she will use the majority of the female board to rebuild the studio tarnished. billionaire ron burkle is also behind that deal they struck a deal finally with new york attorney general eric schneiderman who filed a suit against the weinstein company saying they failed to protect female employees a victim compensation fund would be created one point of fact, because you will see lots of news about this today and eric snichneiderman's group taking credit for a $90 billion victims fund prior to his involvement there was a $50 million victims fund, but it also -- the way they have done the math on this fund, it includes the insurance that they had, which was always $30 million. >> so he got an extra $10
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million. >> he did not get an extra $40 million. according to some things they were trying to put out, it started at 10 million and got to 90 million i say that because i've done enough work on this to watch these press releases go out, you start to do the math and you're thinking there's something amiss. >> when we come back, italians are going to the polls this weekend. market watcher mark grant says the vote has been flying under the radar but warns of an italian insurrection as we head to break, a quick check of what's happening in the european markets they are under pressure. the biggest decliner is the dax, down 2.3%. "squawk box" will be right back.
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all right. welcome back to "squawk box," everybody. for more on the global response to yesterday's selloff and the potential impact on this weekend's italian election, let's bring in mark grant. let's talk about what happened yesterday. what are the impacts did the market have the right move when it sold off? we're looking at futures down
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again this morning >> becky, i think we're in the corrective phase and this was another nudge, if you will mr. trump -- president trump's comments on tariffs, which has been mostly directed to the chinese, it was very odd in a sense because china's only the tenth largest exporter who this really impacts is canada, the european union and now it's a question of who's going to be exempted from the tariffs, and i think we're going to see that over the next few days but i think we're in a corrective phase and this was just one more push, if you will, to go true the rotation that we're in right now. >> if we see exemptions to the steel tariffs or the trade issues does that back things down or the idea that our biggest trading partner, canada, are the ones that we're going to
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be hitting the worst with this what does that mean for potential retaliation? >> they're going to back this down i think they came out with a general broad statement. then the way these things work, becky, carve out some exemptions and i expect those to be done in the next few days. the issue is with these tariffs, for instance, cars and some other things will go out and then of course what no one knows is what somebody might do in retaliation and what they might put a tariff on if we put a tariff on this i do not expect, rye peat, do not expect some large global trade war. i think there are some adjustments that are going to be made. >> so you think we need to be looking at the italian elections. why is that? you're right, it's flown beneath the radar. >> italian elections are sunday. i think they're much more important than the market thinks they are in america we're used to looking at parties, but in europe what you have to look at are the
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coalitions it appears as if bur leer less e any's right wing coalition is leading the left wing. the five star movement is on the left and then the centrist party governed or led by mr. renzi is the third leading candidate, but both of the two leading coalitions are euro skeptic. being governed by brussels they want to bring power back to italy and i think this is potentially very problematic as the third largest economy in europe becomes more national and less european. >> what would you be telling people as we head into this weekend, to beware >> well, i've told them they don't want to own the banks in
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the way they've behaved. i certainly wouldn't want to own european equities, italian equities especially going into what could be a difficult result for the european union i'm saying be very cautious. >> how do you feel about u.s. equities >> u.s. equities are in a corrective phase i like what i said to you before, becky, cash bonds, closed end funds yielding over 10%. i'm happy to get the money every month and that way you can adjust to whatever the market's doing. i think if you're doing nothing but, you know, long tech stocks, as an example, you're having some difficulties right now because we are going through a correction >> when we're going through a correction, we're about 650 points away at least on the dow from being back in correction territory. you think this is something that's going to be a lot of
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turnover, a lot of ups and downs along the way, mark? >> i do, becky i think 2017 was a singular kind of year where there were virtually no corrections and now we're running into a more normal phase where we have corrections as far as the process. in fact, it's normal over the past 20 years that there's a correction every seven months that's at least 5% so i don't view this as a time to throw up your hands, i just say we're in a correction and you have to deal with it and you have to try to have a decent strategy to deal with the markets when they react like this. >> mark, thank you for your time today. always appreciate seeing you. >> thank you, becky. good to see you. coming up, we'll get you caught up on this morning's biggest stock movers and talk strategy with a technician, katie after yesterday's big selloff in stocks. plus, former deputy u.s. treasury rep robert hellma hoey
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breaking news. a tariff on steel. they're lashing out against president trump's tariffs, but the president says trade wars are good, in his words, and easy to win reaction from around the world is straight ahead. plus, what does this all mean to the u.s. economy the biggest stock winners and losers and what u.s. exports could get slapped with retaliation by other countries second hour of "squawk box" begins right now.
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s&p 500 looking to open down about 11 and a half points we have full cnbc team coverage about the global fallout jackie deangelis is in steel country in wheatland, pennsylvania steve liesman is joining uswit a bigger look at the impact. we have mike santoli in the house tackling the market impact eunice yun is live in beijing
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with a look at how china may retaliate. we want to start with karen "charlie hebdo" stacho. karen. >> andrew, thank you shock waves are being felt across the stock markets after president donald trump said united states would impose tariffs on steel and aluminum imports. europe is not a top five steel exporter to the united states but it could feel the impact of a supply glut. e.c. president said the move represented a blatant intervention and that the e.u. will react the economy minister said the tariffs would distort world trade adding europe would respond appropriately if the u.s. went ahead with the plan. here's the reaction. these are the steel makers selling off sharply. don't forget halfway through the
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session they residential released a statement saying they're addressing the issue of over capacity assessing the impact of u.s. tariff's on its business when it comes to automakers from car to truck makers dropping sharply. don't forget, they rely on an open global supply chain in terms of other big stories in europe, don't forget brexit is still in the agenda. u.k. prime minister theresa may spelling out what it could look like this is a stark reminder of an impact with a trade war. euni eunice, let me toss it over to you on that note. >> china criticized president trump's tariffs saying that global trade would suffer if all countries follow the u.s.'s example. the foreign ministry statement was a little bit softer in tone and it's probably because there's widespread belief here that the trump tariffs aren't going to have much of an impact on china at all. we spoke to several steel companies as well as aluminum
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producers who said they just don't sell that much directly into the united states if you look at the numbers less than 3% of u.s. steel imports are from china chinese aluminum makes up 6% of u.s. aluminum imports. the china steel association told us they thought this was going to be more detrimental to the united states. they said this was a stupid trade protection measure and it's for this reason that a lot of people here believe that china isn't going to retaliate for this issue but instead is going to keep its power for the issues more important to the future such as i.t. and intellectual property rights protection. >> eunice, thank you we're going to keep moving here. karen as well. mike santoli, steve liesman are here looking at the impact on the u.s. economy this is why we moved to this new set, one, two, three, four, five, six, seven -- eight. i think we've got eight people.
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>> there's room for four or five more. >> we have chairs over there if we need them let's start with you, mike, and get the reaction as you see it in the market. >> yeah. >> the market is down 400 on tuesday and wednesday. >> yeah. >> or close to it. >> no, i think that context matters a lot, joe i was here yesterday saying the market was sort of fighting this battle around this 2700 mark it was halfway between the recent highs and lows. it was right around that level when this tariff news hit yesterday. i think it represents a market that's been trying to heal itself, trying to find the right way to price in these risks that are now foregrounded for the moment so all last year if you forced somebody to say what are the -- let's say there are risk factors to this market what would you have to throw out there? >> the trade. >> trade war also potentially the fed gets more aggressive, who knows maybe even mid term elections or something like that. in other words, it wasn't about corporate fundamentals i think this is a contributor to the corrective phase that we've had right now. i do think it's probably good
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rebuilding this wall of worry. i thought one of the problems a couple of weeks ago with this nice rebound is too many people were able to say this was this glitchy volatility fund. this wasn't the market telling us anything. now you maybe have the makings for more of a base all the good policy stuff already happened and got priced in >> right >> maybe the policy stuff becomes the head wind. >> when we were backed up down only 3 1/2% it was like, hey, we finally got our 10% correction that's out of the way. >> back off to the races. >> let's start going up again. >> it's no longer a v on the chart. it doesn't have to be a w. you don't know how it's going to go right now the market is trying to sort this out >> all right thank you, mike. you'll be here for the continuing discussion. >> stick around. >> this is going to get to be -- there's going to be shouting because we have so many people here we're all the going to argue. >> mike and steve want to stay with us. i want too bring a couple more voices into the conversation ed morse, global head -- i'm sorry, global head of citi
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research chris renseller, what do you do about this >> you sit and wait. we don't know whether he's going to realize at some point that he's shooting the u.s. economy in its own foot rather than starting something with china. china has almost no exposure to the u.s. market when it comes to steel. they have 1% exposure. the company with the most exposure, about 8 to 10%, this hurts u.s. companies and it hurts the wrong trading partners. >> and the market goes where from here as a function of this? >> that's the open question. >> that's why we have you here. >> that's what we've been waiting for. the underlying market is not going to have any direct impact immediately. certainly makes you wonder go the energy side of things because infrastructure is a big thing. energy is part of u.s. infrastructure buildout. pipe is imported to the u.s. that increases the cost of
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energy i think what we're looking for is a reaction at home and how it gets back to the top of the person in the white house. >> walk us through the personal mutations with which you're thinking about this this morning. >> look. as an investor you get out and talk to companies right now. i don't think this is something that they're all that much concerned about. we are probably going through a corrective phase in the market. >> you don't think -- you don't think detroit is sitting there, the folks in seattle are not sitting there going, oh, my goodness >> i think what you're going to see is some change as to who's going to be affected by the tariff i mean, is canada going to be affected by -- that's probably much bigger than china i think you have to watch that over the next couple of weeks, but outside of, say, auto, oil and gas where they're using a lot of steel, i think companies are still continuing to execute on their business plans and this is just a blip it adds volatility to the market but as an investor i'm using this as an opportunity to -- >> you're buying >> yeah, i would be.
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what are you going to buy? >> i'm a long term investor and i'm looking for my price points and i'm willing to put money to work there's good opportunities good companies growing way ahead of gdp which gets us excited. >> it's possible the market could see another 10% correction, does that make sense? >> it certainly could. i think as the fed continues to raise rates -- >> if that's the case, why would you be buying this morning >> because you're looking for opportunities in specific stocks i'm an active manager, i just don't buy the overall market those opportunities only present themselves at certain times. specifically in small cap companies, you trade by appointment. i see opportunities, we're putting money to work. >> has the baby gotten thrown out with the bath water? are there certain areas people are focusing in the wrong place. >> are you talking about has the market done a careful job of pricing in -- >> it's impossible. >> yesterday had nothing to do with that. >> how can you say that, mike?
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when you look at what happened in the market cap. steel stocks, we looked at 16 of them yesterday up by $2.3 billion so in eye da day of a big down , there was a big different ensheation. >> that's the problem. it's a calibration. >> no, it's probably an over reaction from an economics point of view, the idea that a very small number of companies will benefit at the expense of the rest of the economy, that differentiation is a terrific display of what the economics of this are. >> no, but if you tried to go back through and say where will the potential retaliatory strikes hit, that's a little bit harder >> how do you trade a trade war? how do you trade retaliation how do you know retaliation doesn't come through some of the international tech companies and some of the services they provide over seas?
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how do you know where they strike a lot of what happens is they don't look at the -- you know, the equal products, they're going to do something that will hurt america. >> right the places we're anticipating are places in agriculture -- >> places where mcconnell is >> right. >> places that hurt trump specifically, like, for example, you might think of something in pennsylvania -- >> running for election. >> the politics of this are mind blowing in that you think he's doing this to help his prospects in some of these states, but i have to think some of those states they have more workers at steel using companies than steel manufacturers. >> when he put tariffs on in 2002, there were 200,000 american jobs lost and 30,000 were in places like michigan, ohio, pennsylvania that's what you don't know. >> the steel move yesterday was not that fascinating everything else you could attribute some to the potential overall trade war worries and on
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the s&p. >> right. >> some of it is an extension of tuesday and thursday's 400 point drop the down side -- >> you were -- no, but you were up you were up in the day you had powell being a little bit more dovish. >> we were up the day before, too, on tuesday and then some stuff came out on tuesday. don't overdo on a 1 1/2% move. >> it helps the steel companies but i don't think you can say the s&p is going to be affected by a trade war yet. >> we keep asking this in the context of equities and companies. where do you see this landing? how does it affect the currency market could the retaliation be in the 230r78 -- >> let me take a minute. joe's right -- >> could china decide at the next treasury auction we're either not showing up or we're going to be lax i daze zikal. >> the numbers are honest. u.s. production is 0.5%.
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so i'm just acknowledging, relative to the science of the economy, this is small now i wouldn't say it's a blip if you were a steel manufacturer and your prices just went up -- steel user and your prices went up by 25%. >> you could find good stuff, ford, gm. >> maybe not for no reason. >> right because of this, definitely. >> right >> i think i would like to broaden it out and say you've got to know what kind of market you are in last year, we heard, wow, nothing bothers this market. >> now every single day. >> last year it has callouss, this year it has blisters. this year everything annoys it >> davos top. >> and we didn't have the policy stuff that was the carrot ha hanging out there. >> futures fell another 100 points this morning after the president tweeted trade wars are good they're easy to win. the markets don't like this, and investors don't like this. >> they want to think --
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>> to move 100 points and absolutely attribute premarket trading to a tweet, maybe, maybe not. >> at the exact time -- >> people are watching the markets in the morning >> 55. the tweet came out 55, the market dropped. >> steve, we were up 400 on friday. >> okay, it didn't happen. >> we were down 400 on tuesday down 400 on wednesday. >> it probably didn't help. >> these are 700 point swings. you're talking about 100 points premarket. >> even if you decide the futures are thin and it's i irrelevant, europe's not thin. >> they took it as an excuse to thin. >> last time it was jay powell >> so nothing matters. >> no, it all matters. >> it does it does. >> they're callouss not callouss. >> they're blisters, not callouss. >> we're going to leave the conversation there though we're
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going to continue so much of it. >> we're going to talk to an ambassador holleyman is going to be there. >> coming up, our trade conversation is going to kick into even another level of over drive. this is like seventh gear. next we'll be joined by ambassador robert holleyman. he's focusing on three big implications of president trump's new tariffs. stay tuned, you're watching "squawk box" on cnbc where we know the cause and effect of every ten-point move in the market today, smart planning is helping the new new york rise higher than ever. as the world leader in unmanned aerial systems,
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choose by the gig or unlimited plus for a limited time get a $250 prepaid card when you buy any new samsung. xfinity mobile. it's a new kind of network designed to save you money. click, call, or visit an xfinity store today. welcome back to "squawk box," everybody. let's take a look at futures we've been watching this all morning long you know about yesterday's selloff. this morning we are continuing to see the futures under pressure dow futures down by 183 points s&p off by 13. the nasdaq off by 47. we are talking trade this morning following president trump's tariff being imposed on steel and aluminum joining us is robert holleyman he's president and ceo of c&m. it's an alphabet soup, ambassador i wasn't surprised, but you are
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yo' not ready, even as a member of the last administration, you're not ready at this point to just knee jerk this and say there will be a trade war. there's things that still have to happen even if we institute these things, right? >> that's correct. one, i think we have to start by acknowledging the problem in all of this is china china has massive excess production of steel and aluminum that is hurting not only the u.s. but global markets. but what we've done in firing this volley, firing this rockets to all of these new trade taxes is essentially we have turned our traditional allies away from us and caused them to become allies of china, which is the problematic country in all of this secondly, we have started something that will and is shown to be dividing the american people so if we are attempting to start a war, we're doing it without
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allies and with a very divided country and with people who will clearly lose in the united states as a result of this >> you make some great points though because, you know, china gets 7% growth a certain way i mean, it's like a statused economy, and now the rest of the world has to deal with the adverse implications of making too much stuff just to keep everything running and so our response is a blunt instrument which doesn't really hurt the person or the individual country that we're trying to hurt but we're not -- are we left with some -- a scalpel? is there a way to do this with a scalpel. the challenge with that is because china is such a small part of what the u.s. imports that -- >> but they're bad actors, ambassador >> they are. frankly, everybody agrees with
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us that china is a bad actor but what we've now done is we've taken that bad actor and aligned our traditional allies with them and then ultimately the problem becomes in this is that we are siding na-- citing national security as the reason we are doing this the country that is going to be hit the hardest by this is canada, and congress has defined canada for decades as part of the u.s. defense industrial base along with the u.k. and with australia. so it doesn't ultimately withstand the scrutiny because we're invoking a rarely used principal of essential national security, but the inclusion of a country like canada completely shows that this is not about national security, this is about national economics and that is not the justification for
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separating our friends and our neighbors, hurting american consumers nor will it be sufficient to withstand the inevitable challenges that will come to the u.s. in the world trade organization. >> the president is a nationalist and america first guy and he may not be -- all the things that you're saying may not have gone into his calculus, but navarro knows this, doesn't he do you expect some cooler heads to sort of -- over the next week to narrow the scope of this so that it becomes more targeted like you would have happen or is it going to mess up nafta and it's going to -- it could seep into calculations for everything >> well, look, i think where you're going to hear the most concern is by members of congress who are concerned that this is overly broad, it will not accomplish the objective the u.s. will lose, and i think from allies and neighbors like canada, you will hear that this is really directed at them in
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the broad sense. the president has some off ramps on this. he can narrow the scope of countries that are affected. he can make it more precisely targeted, but even then it may postpone some of the immediate harm to our neighbors and allies like canada and mexico but, in fact, it is unlikely to withstand ultimate scrutiny at the wto because this is not a case where it is a national security matter. >> right. >> so we're trying to use a tool that was created for one thing and apply it in the case of -- >> this is the strategy of all time didn't we know this? do you think viewers had to have it tested? >> no, i think we did know this. i think we are testing it. i think it's a risky move. we'll have to see what happens, but in the meantime we have the risk of displacing more jobs in the u.s., pushing our allies
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into the arms of china, which is the problem in this and, third, potentially creating a crisis in the world trade organization if there's a ruling against the u.s. or retaliation against the u.s. in ways which we may not win because this is not a national security issue. >> ambassador, we had a trader who -- investor who pointed out to us earlier that he would expect to see some exemptions put into this over the next week or so before it's actually implemented. what would that look like? would we be able to do exemptions for canada or for other trading partners along that line? how would that impact things >> well, i think everyone expected that there would be exemptions for partners like canada the president's statements yesterday seemed to indicate that there were not likely to be exemptions, but hopefully there is time to think through this for key allies and partners. there will also ultimately be an
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opportunity for particular exemptions for certain types of products that are essential to the u.s. where the -- to the u.s. broadly where the taxes would make those prohibitively expensive. there are a couple of opportunities. right now it looks like they're taking a broad-based approach and that will ultimately not be successful. >> thank you we're back in just a moment right here on "squawk box. thank you. time now for today's aflac trivia question. what is tholst fe deilm company in existence the answer when cnbc's "squawk box" continues liberate your spine... aflac! and reach, toes blossoming... not that great at yoga ya but when i slipped a disc, he paid my claim in just one day. so he had your back? yup in just one day, we process, approve and pay. one day pay. only from aflac
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be the readiest. now the answer to today's aflac trivia question. what is the oldest film company in existence the answer, gaumont, founded in 1895 in france never going to guess that. when we come back, we have a live report from steel country in pnsvaenylnia. we will talk about the economic impact of tariffs. "squawk box" will be right back. we use our phones and computers the same way these days.
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every friday they play this. at cnbc we are in the nasdaq market site in times square. today's story, the global market reaction both in the markets and the president's announcement on steel and aluminum we lost 400 yesterday. s&p down 12 and nasdaq down 43 the european union warning of retaliation if president trump's planned steel tariffs are applied to europe. they say they are discussing different response measures d e depending on what the final numbers are. better than 2% earlier still the case in germany and downward moves on the rest
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in other headlines this morning, georgia lawmakers have followed through on their threat to remove a tax break for delta airlines they have passed a provision without a tax on jet fuel. general motors is planning to cut 5,000 jobs at its money losing south korea unit acco according to a reuter's report, it would be 30% of the work force. the automaker is planning to keep production steady back to our top story, president trump's tariff on steel and aluminum imports jackie deangeles is joining us in the heart of steel country in pennsylvania hey, jackie. >> reporter: good morning to you, andrew. here in wheaton, pennsylvania, employees have been praising and
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applauding president trump's tariff they're saying this is the game changer they've been waiting for and it really will revive the industry they're the largest pipe producer they employ 2300 people and primarily use north american steel. that includes some steel from canada that could be a challenge from the company but current thinking is nafta could create the exception for that canadian steel. either way employees feel president trump is living up to his promises to revive the industry they say between the tax cut and the tariffs that level playing field is going to give them the opportunity to finally grow. for those worried about a trade war, guys, you're still going to need imports to meet demand. price hikes are inevitable prices for the consumer are going to be nominal as a percentage of total cost
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this country imports the littlest steel stocks yesterday, they did get a lift the company told me as a result of this they'll be able to ramp up idol facilities, create hundreds of jobs just at this company alone. imagine that across the board when you bring into the steel manufacturers in the united states, guys. >> jackie, thank you very much we're going to talk more about this with the ceo of nucor in a bit. we've already seen more volatility in the dow this year than all of last year. we're only two months into it. ten years out from the great recession our next guest is sounding the alarm in a new op ed joining us is dan arvis. he is the ceo at zerion investments. you have a big op ed out warning about what people have been quietly talking about. it's not receiving as much
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attention as you might expect before we get into this. this is the u.s. deficit. >> the circumstances aren't receiving as much attention because people are focusing on today's headline i appreciate you taking a pause from the trade wars, but it's the same thing we're living in a world of abundance of information, abundance of manufactured product. technology is making everything cheaper so we've got supply and supply but we've got limited demand because people need jobs to demand stuff. >> the argument is the jobs picture looks pretty fantastic jay powell was talking about this if you look at the numbers historically, we had jobless claims that came in that hit the lowest level we've seen in decades. >> yeah, we did. the unemployment rate is down, headline rate. if you look at the metrics that
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really matter in the labor market, the participation rate is at the lowest that it's been in 40 years. it hasn't budged at 62% and the unemployment rate, the u 6 unemployment rate that takes into consideration people that have given up looking for work and are long out of the market is 8.2% so the jobs picture doesn't look as good we've got the fed chairman giving us a happy narrative talking about the positives in the economy. we've got other guys talking about the onset of inflation and wage inflation i don't believe any of that is happening because i believe that we're living in a deflationary world thank you to technology and this concept of wanls ages
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going to go higher, we're going to have better productivity, labor productivity, but the reason for that is that we are getting more output per employee thanks to technology. >> what you just mentioned though, things like the participation rate in u 6, that kind of points directly to what president trump is talking about with these tariffs, trying to reach out to people that are being being left behind. >> while the conventional view is certainly that trade wars are bad, we live in an interdependent war, i agree with that, i think what you're seeing is very characteristic of how the trump administration has proceeded. they start with a bang that's how they negotiate. they drop a bomb on syria. they show syria they mean business this was a bomb that came out yesterday. let's see what the details look like on tuesday or monday next
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week and i think at the end of the day the administration is going to understand that we can't live alone in the world. >> hey, dan. one of the criticisms about running up deficits is that there's an excuse to do it when -- like in '08 or '07 when you need -- you know, when you don't have the demand for things so you maybe run a deficit because the economy is not doing well the criticism today about the tax cuts and the budget is we're already really doing well. don't deficit. it sounded like you're making the case to still stimulate, and that would be-- and are you more worried about the public sector debtor the buildup in the corporate and private sector >> i'm worried about the buildup of debt across the country my fortune piece said the
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economy looks good but it's all been paid for. >> does it >> sure. sure. >> 62% -- >> yeah, unemployment, inflation -- >> let's keep priming the pump until we get full employment. >> i don't think we're going to get full employment, that's the big problem. that's driving a demand. in a world of abundant everything we don't have enough demand because we don't have enough employment and enough wealth distribution to consumers. there's only so much stuff that the super wealthy who are in the stock market can be interested in, will be interested in buying and my focus in this op ed piece which becky raised, and i'm grateful to have the opportunity, is to basically say, look, we've solved the problems of debt, household debt from a mortgage crisis ten years ago by essentially transferring that debt to other places in the economy, most importantly the federal balance sheet where debt to gdp has gone from 62% to
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100%. >> what is the inflexion point where this turns into the crisis and maybe this is part of it, is there a moment which the chinese or whomever you think are supposed to be buying it debt decide no mas. >> i think that's already starting to happen in other words, it's all about supply and demand. we all talk about is the fed going to raise rates or not raise rates. it doesn't matter what the fed does what matters is what's the price of our debt for people who want to buy it. while the ecb is raising rates and while china is buying oil from our 13th largest holder, saudi arabia in oyuan, saudi arabia has less to buy our treasuries the fed isn't buying it had 4.5 trillion. foreign buyers own 6.2 trillion.
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china and japan are the largest foreign buyers they're both more focused on buying their own debt to support their own economy. we just talked about saudi arabia before. then you've got u.s. banks that own another 6 plus trillion. who knows what they're going to do because they're going to have other alternatives as well it's the question of where are the alternatives priced in the credit markets, and i see demand for treasuries starting to dry up and what could become the trigger. i'm not suggesting that it will, but it's theoretically possible is if cryptocurrency adoption in the real world to settle real transactions starts to gain some traction -- >> are you a believer in that? >> i'm a believer in virtual settlements, in cloud-based distributed ledger settlements because they create efficiencies things that create efficiencies get done the cryptocurrency is a way of
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paying for the computing power that's necessary to fund the settlements. the guy who created it or the group who created it, sitos sitoshi nakamoto back in 2009, i think he thought the cryptocurrency was the dog and the ledger is the tail i think the ledger is the dog and the cryptocurrency is the tail you could have distributed ledgers and pay for the computing power that's necessary with dogs. >> before we go too far down the cryptocurrency trail on this -- >> i'm sorry. >> -- what do you think we should do? if you think we're in this potentially dangerous situation, what would you recommend is done to try and address that? >> okay. i think what we really need to be focused on is employment. the future of work what i have been saying since before the election, and i've been talking to people in the administration about it as well is, it would not cost the
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administration anything to convene some real thinking from thought leaders, technologists, not well we're going to have autonomous transportation, 2 million drivers are going to be put out of work, but thinking through which industries are being disrupted by robotics, by autonomous activity and in what time frame realistically we're not going to wake up tomorrow morning and see all the cars automated, i promise you. tesla is ramming into the back of dump trucks in san francisco. >> job training for those people >> what we do is we say, okay, first what we do is we say, okay, what is a reasonable projection of job displacement what are we up against that's step one. step two, let's imagine what kind of new jobs will emerge from this transition if you have a network of
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autonomous taxies, there's a whole network of people who have to watch that. number three, what kind of training and education do those people need to have? what role cangovernment play i ensuring that they get that kind of education so that government is not redistributing wealth and getting directly involved in the economy but -- >> it's redistributing jobs. >> it's not even redistributing jobs, it's defining and helping to define the contours of opportunity and changing conditio conditions, which is what government's role should be. >> thank you it's a lot to think through. >> thanks, always, guys. >> thanks, dan. coming up, hang on to your hats if you have one or your hair if you have some. if you don't have that, i don't know what you should -- anyway, the volatility is back in the marketplace. in times of turbulence, investors turn to charts for
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guidance and other technical analysis our guest is one of the best in reading them katie stockton is here we'll be right back on cnbc. we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 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 we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.
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welcome back to "squawk box," everybody. joining us right now to talk about everything we've seen happening in the markets is kalty stokal katie stockton she is the founding manager of fair lead strategies she was chief technical strategist at btig thank you for being here with the new company. >> of course. >> sorry >> i'm here. >> i had to get my egg you say we go to where what was your projected low? we went through it. >> initially i thought it was 5%. >> 27? what was your number on the s&p? >> i didn't have a down side number i was thinking in percentage terms. we didn't know where it would peak, but the 200 day was secondary support, which captured that correction low earlier -- well, earlier in february
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now it seems like we're undergoing a retest. that's very common in a corrective phase to see a retest of that support. >> and how much damage has been done how do you know whether the retest holds >> right. >> how do you know whether or not new lows are needed to really, i don't know, to make the point that the point the market wants to make is it's too complacent a simple 10, 12%, we're going to make you think it's 20. >> there's been a loss of momentum and market prep it's not at the stage of what we saw in january to me, not a lot of damage has been done. quite the contrary, the correction has been constructive in some ways sentiment in january was the biggest risk to the market sentiment went from overly bullish, which is a contrarian
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negative to overly bearish. >> i don't want to talk about this in this context let's say i've had a mild heart attack. >> sweating. >> why don't you go with mike santoli's blisters versus callouss. >> things are looking good i feel like i'm out of the woods, right i've come back what are the chances that it s was -- that i need a stent am i out of the woods? >> not quite yet. >> really? >> no. >> have a burger. >> a bit more of the market internal measures and being registered on the down draft i think it's days, not weeks that we'll have an opportunity to add exposure. >> is it time or depth of the -- >> it's a little bit of both we want it to be more fast and furious, believe it or not, because that's more indicative of a counter trend move. see more than 3 days of declining of the s&p 500
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so it's a pretty big deal. as much as that's painful, it's actually constructive from the longer term perspective. >> okay. what's a number on the s&p that if it gets there, this is more than what everybody -- >> for me it's about 2465. i know that's somewhat random. >> that's a long way off that's 200 more points. >> it is it is. >> another 10%. >> another support level that would be secondary support relative to the 200 daily average which is so wildly lost. >> more likely that it bounces off of what? >> i think more likely that it dips briefly below the 200 a day moving arge. >> what's that >> 2560, 4% below yesterday. >> 2560. >> that's almost back to correction. >> territory. >> that's right. it could happen very quickly. >> that should be the watershed
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that the market needs. >> has there been any reach of the ten-year yield to indicate what's happening >> ten-year yields have broke joan out. >> now they're back down. >> relative to a long term down trend channel. near term there's room for deeper pull back 265 is the level that it had broken out above that becomes potential support in real terms for the ten year i think it's likely to see that. and then we'll see both resume higher. >> do you see anything in terms of commodity inflation to indicate that there's something to worry about there in the charts >> looking at wti crude oil, for example, it's advancing from what appears to be a long-term basing phrase. the up trend is it's not too steep. i think it's gradual i think it's here to stay. i wouldn't say it's an issue right now. certainly not yet.
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i would say the same about yield. really, everything's so positively correlated. it's wild to see eti, s&p 500, they're tracking each other. >> do you have an overall objective, positive objective on the s&p for this marked, the whole phase that we're in? is it 3,000 still or not >> i think we could get to 3,000. >> on the s&p? >> i've been thinking as a low single digit for the year with a lot more volatility. not last year. more of a digestion year that really stems from the fact that we have now long term over bought conditions as having been in place for quite a while that differentiates this year from last year. >> katie, thank you. you need to be in tune with your body you need to stay in shape. >> you do. >> if you get signals, any signs about any occlusion or any type of -- watch your cholesterol you shouldn't be afraid of it, to talk about these things. >> and you -- do you carry aspirin with you >> as an emergency
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>> chew aspirin quickly. >> really? >> in a moment. >> get the clot out. >> you're 30 years old >> i'm just saying, that's what you're supposed to do. >> the millennials. >> carry aspirin >> thank you. >> i hope you don't need to carry the aspirin. coming up, steel makers north of the border sounding off in a very vocal way about president trump's tariff 'rgoto head to vancouver to hear their view stay tuned you're watching "squawk box" on cnbc at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. and at $4.95, you can trade with a clear advantage.
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coming up, larry kudlow calls president trump's tariffs a bad omen and warns that they could cause a major calamity larry is here on set with us we'll talk with him in a moment about this take a look at the futures the picture has gotten worse as the morning's gone on. dow futures down by 260 points after the decline of 400 points we saw yesterday we'll be right back. obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪
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the trade selloff. stocks in the red after president trump slaps tariffs on steel and aluminum. doubling down. new this morning president trump tweets trade wars are good and easy to win. reaction from the former ceo of steel producer nucor. plus, international fallout. a live report from canada, number one supplier of steel and aluminum to the u.s. the final hour of "squawk box" begins right now live from the most powerful city in the world, new york. this is "squawk box.
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good morning and welcome back to "squawk box" here at cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin today's top stories, president trump's decision to impose tariffs on steel and aluminum imports. global markets reacting. what's happening here now down at another 270 to the 400 plus point yesterday -- loss yesterday along with the losses on -- >> 300 the day before. >> 400 the day before that 400 up the day before that a lot of movement in the markets and the nasdaq indicated down sharply down 75. the s&p down 21. europe is in the red has been all morning long and some of the losses were above 2% they are again 2.5% germany, france and italy. footsie down 1%. treasury yields have come down
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recently 280 now. cnbc team has full coverage of the fallout of president trump's tariff decision. larry ckudlow is here steve liesman here and then we have reaction from our neighbors to the north, canada number one supplier of steel and aluminum to the u.s. david bosa is live in vancouver. and we have scott nations live -- >> we have the white house there. >> and we have the white house waiting for the president. maybe he's going to join us. in the meantime, scott, we want to start with you. what is the view from the pit this morning >> it's surprise i think everybody was surprised by the news yesterday, and if you believe joe kernen's favorite new hampshire, "the new york times" this morning, even his closest staff was surprised he made the announcement traders don't mind being confused a little bit by what mr. trump is doing, but they don't like being surprised i think that that was the
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problem. and obviously it's not just steel and aluminum, it's what does it mean for every other thing that we import and what about the stuff that we export and so how are companies, principally china, going to respond? >> by the way, we should tell you mr. trump, the president, just out with a new tweet. we must protect our country and workers. our steel industry is in bad shape. if you don't have steel, you don't have a country seconds ago joining the conversation we did have him in a box but meanwhile we should continue this conversation. scott, your sense though of to the extent the traders obviously are concerned, how does it manifest itself? we keep sort of talking about the different trigger points of whether, for example, the chinese retaliate not necessarily in the form of some other form of tariff but whether, frankly, they decide, you know what, next time there's an option for our treasuries,
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maybe we're not going to play. we're playing in a different way. >> that's a very real possibility. china owns about 20%, not quite 20% of all the u.s. government debt that's held by foreign countries so they're obviously huge players and i think that what we see going on in treasuries, the prices are actually rallying right now. that makes a tremendous amount of sense it's the reflexive flight of quality when people exit in a hurry. s&p futures are near their lows. they're down more than 20 points we would expect a pretty ugly open i think we'll see some of it bleed over to implied volatility more than 10%. that's the way for traders and investors to hedge themselves, protect themselves we'll see some sloppiness in the equity open. we'll see implied volatility bid it up. the important is the low, 2581 2560 which is the 200 day moving average is going to be important
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as well. >> all right thank you very much. we will talk to you more very soon. in the meantime, president trump's decision to impose tariffs on steel and aluminum sending shock waves. it's so bad on trade larry, we've talked about two sides of this. that stuff is boothsing the economy. the things you did in a tweet. he's protecting steel workers.
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it's a whole lot bigger. steel and aluminum steel alone is about 140,000 jobs so, look, it becomes -- >> the trouble isthere are 6.5 million companies and employees that use steel. >> that's correct. it comes down to understanding that tariffs, particularly across the board tariffs like this damage the users of the commodity, in this case, steel it's a tax now data's throwing around caught 6 million some such industries that use steel, you know, the car business as i said, what are you going to do about cars? all manner of transportation buses, trucks, suvs. the energy business. airplane they all use steel
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believe me, i know it was pushed over yesterday theory dictates the price can rise by 25%. if it's a little less than that, call it 20%. that is unhelpful. you've got also 155 million americans who are working. it's uncalculable but so many of them the middle, lower middle income are going to be hurt by this tax i noticed yesterday one of the steel spokespeople was on cnbc it will just be $35 a car. first of all, he doesn't know that because they haven't made their pricing decisions. i think it's going to be higher than that but, you know, 50, $100 a car over a period of time, infrastructure costs, energy costs, higher home heating. anything that damages the consumer outlook, it will be a lot more than that it will be painful tariffs are taxes and the ones who suffer most are the users. >> what are the odds that the president is going to hear this message based on the tweets
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we're seeing this morning, he's probably hearing some of the blow back that comes on this do you expect exemptions to be put into this between now and next week? >> i don't know. i was talking to some people this morning i don't think -- let me make another point. tariffs are a very blunt weapon, okay this is an across the board tariff on steel and aluminum that's really blunt. u.s.a. has in the past and did under ragan occasionally use temporary small tariffs on specific items to make a point, then you negotiate it out. trump did this across the board, very unusual, and that's why he's getting so much opposition from congress. >> we have had people say, look, this is the way that trump negotiates you see the big strike that comes in and then you roll it back. >> this is an executive order. i mean, there is -- people are exploring the white caps in the
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white house, the good guys, the free traders in the ragan years we called them white caps and black caps pretty bruising arguments over motorcycles, for example, and i believe semiconductors but whatever the white hats are trying to -- >> the globalists as steve bannon would call them. >> the global lists. not the imf, not the un, not the world bank, i don't like them. i like free trade. it's called comparative advantage. i spoke with david ricardo. >> let's grant the president that, it's a method that could help foster a domestic industry. is there any history of these tariffs helping to revive or otherwise protect? >> no. no look, george w. bush, a certain commerce secretary today bought up a lot of bankrupt steel companies -- >> wilbur ross. >> i don't want to name names. he's a very dear, personal friend of mine, he and his wife
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hillary, he did a great job. he went right to george w. bush who gave him protection and when you look at the -- >> in 2002. >> after a couple of years -- right. '02, '03 prices went up employment was flat. it didn't do a thing see, what you do here, users of steel will go into foreign countries to buy final products and thereby avoid the price hike in the u.s. so you're not going to win there again, users of steel are so damaged by this. i didn't hear anybody talk about that we interviewed the steel guy and never mentioned the users of steel. car industries, all those, 6 million jobs at stake but, again, the broader issue is consumers. you have 155 million people in this country that work do you drink diet pepsi or diet coke >> allthe time. >> there you go. >> aluminum cans. >> me, too
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aluminum cans. get ready for a grossup on this. my final point is this, i am very worried about the impact on nafta. now canada is our biggest importer we import the most steel from canada. >> 16% of our steel imports are from canada. >> yeah, i think that's about right. they're our friends. >> they're also the place that we export the most. >> we do >> of steel and aluminum. >> by the way, the car traffic between the three countries, by the way. >> we have a surplus with canada for the record. >> you ask on that. >> no, there's a debate. i looked it up on which -- if you use the u.s. figures or the canadian figures. >> if you use it on current account, including goods and services, i think steve liesman is absolutely right on this. if this impacts the nafta talks, which are kind of hanging on its own, and it turns out we cannot renew nafta, all hell's going to break loose. steel will not destroy us, it will hurt us, it's not a
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prosperity killer. nafta is so important to all three countries. so what you saw in the stock market yesterday will be a tiny drop compared to what will happen if the nafta talks break down and if retaliation comes in because of this steel and aluminum thing that's really my biggest concern. and, again, somebody talk about the users of these commodities what is it it's like single entry bookkeeping. now i've had this conversation with the president, okay i've had it for two years plus. >> and >> i've won a lot of discussions on taxes -- on regulations and other things i have not would any on trade. >> even when you're there talking to him on these things, it's not like he agrees with you. this is his belief >> right his instincts have always been in this direction and we're going to have a group go into the oval and see him i guess probably next week to try to talk it through. you have a vicious battle in the white house. it's hand to hand fighting in the white house.
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gary cohn, kevin hassett, steve mnuchin on one side. peter navarro and wilbur ross and robert lightheiser, he's been utterly con sistent for 30 years. he's the guy that does all the antidumping stuff. i don't know what that means most economists don't agree with that rob porter, the cabinet secretary, left, right, because of all of the allegations about his marriage okay porter was very good at his job. he was the head of paper and messaging and key memos. he also organized meetings and he also tended to keep the protectionists at bay because he, himself, is a free trader. his father and i worked together very closely in the ragan administration so porter is out and peter navarro, who's a friend of all of us i think on this network,
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he was on my show repeatedly, peter navarro is getting a promotion. that was a real bad leading indicator and as i say, the president's instincts are what you see. >> it has to do with china. >> china. >> it has to do with china he's mad at china. >> not on this china's not a player. >> i know. we just had holleyman on who said china continues to be a really bad actor. >> it's 2%. >> i agree. >> this is sort of a knee-jerk reaction it's a way of appearing to be tough with china >> i just don't think china plays here on intellectual property rights, you're 100%. >> not in reality. i think we should go after china. >> what does the retaliation look like both economically and in terms of foreign policy >> well, look, you could slap on farm tariffs our farming industry, which is the best in the world. >> you could go after equipment. >> you could go after
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manufacturing, you could go after equipment. it's going to go to the wto. eventually it was ruled bad -- ruled against in the steel tariffs. now president trump may have wanted to make a statement, okay because i haven't heard this directly we saw him a couple of weeks ago. i think he's been itching to say something because he campaigned on this. i understand that, so have, if you must, a temporary targeted tariff, not across the board, with i is an unbelievably blunt weapon better yet, i don't think -- i'm trying to find this out. i don't think there is any negotiations with our major steel trade partners i don't think they negotiated, they just went -- >> two quick questions first of all, why are you here and not on a plane to washington that's my first question. >> i'm on "squawk." >> he's on "squawk" working the phones all morning. >> he should be in the oval office now
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the other question i have is is the market overreacting? we had that and it showed 3.5 billion decline in the s&p market cap with plus 2.3 billion with the rise in steel market caps is that an over reaction >> i don't know. >> it depends on if nafta -- >> the user stocks went down the steel stocks went up they won't for long. look, think of it this way, competitiveness is the key, and the president's been great on that lowering our tax burden, rolling back regulations, making america more competitive we are open for business, as he said, in davos he's 100% right. he's done such great work on that, okay now unfortunately the steel companies are not satisfied with a drop in the rate from 35 to 21 they're not satisfied with 100% expensing. they're not satisfied with easy ways to bring their cash home to the u.s.a. now i want another tax called a
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tariff you know, those guys should be held to account on this. past history is not kind to that industry not only are they shrinking and not competitive, profits tend to go to the executive suite. i'm not a class warfare guy, but that's the history the work force continues to shrink this is just bad of all the things to go after, i wouldn't have chosen steel sorry. >> real quickly, again, what are the odds that any of this could get wount back before next week? you don't seem to think it's real likely. >> extremely low if not nonexiste nonexistent. my biggest worry is nafta that's what the stock market's worried about. you get these trade war periods. during the campaign whenever trade wars became headlines, the markets sank nafta is a key we're going after a major nafta
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ally, even canada. even withdraw do trudeau >> the war inside the white house, how does it manifest itself >> the white caps and the black caps. >> meaning are people going to leave over this? >> hard question i'll tell you, personally, i am urging gary cohn to stay and fight for another day. he's done a great job. he and mnuchin have been terrific on this, including the opposition to tariffs. he's got a great staff and i want him to stay and fight for another day because nafta is the big thing. >> it's opposed to the end run issues likely.
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jcpenney quarterly profit coming in at 57 cents per share. ten cents above estimates but bad news here. revenue comparable store sales were slightly short of forecast. retailer gave it a weaker than expected earnings. we have the senior managing director at guggenheim what happened here the stock is now down 8% in the premarket. >> i think the biggest thing is they had preannounced holiday at
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3 point 3.poi 3.point point -- 3.4 and it came in at 2.6. there was a weaker first quarter outlook. >> are they kicking themselves from coming out and preannouncing? they got ahead of themselves on that. >> i think they thought january would have been a little better, too. i think they were optimistic that january would have made it better than 3.4. most retailers do give you a good look at holiday, early january. >> is this just an expectation problem here or was there an operational issue? >> generally department stores are doing better than they were. >> right. >> jcpenney was a better comp than some of the previous, but i do think the consumer is healthy. i think that, you know, the rising tide lifted all boats and -- but the stocks have moved a lot, too. >> where do you put jcpenney in the pecking order of the retail
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stocks you like and don't? >> so in department stores, you know, i would put macy's and kohl's are buy ratings macy's is much cheaper than the other ones kohl's also really executing nicely, great holiday season up pretty positive outlook for 2018 nordstrom's in this wait and see mode around do they go private how are they executing they also had a good holiday season. >> jcpenney's at least four down on top of the list. >> i think they're in a tough place. they're really in a tough place but they're taking initiatives cost initiative this morning >> appreciate it we will be right back. numbers at 8:30. stay with us you're still here? we're voya! we stay with you to and through retirement. i get that voya is with me through retirement, i'm just surprised it means in my kitchen.
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coming up, canada is the number one supplier of steel and aluminum to the u.s. we'll tell you how our neighbors to the north have responded to president trump's tariffs. they didn't win like five more medals than us, right? >> that was -- >> yeah, we probably shouldn't retaliate. still not happy about it a live report from vancouver, but it's cold up there they should be better in the winter olympics, i guess plus dan dimicco not holding
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back about his thoughts of president trump's tariffs.
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well, it's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade. we need to be ready for my name's scott strenfel and r i'm a meteorologist at pg&e.
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good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. among the stories that are front and center this morning, shares of foot locker getting hit hard as we watch. the athletic footwear retailer beating averages by a penny. revenue was below forecast dropped 3 poich point point -- 3.7% just one economic report on today's calendar the university of michigan's february consumer sentiment index. it will hit at 10:00 a.m. eastern time it is expected to be down very slightly and two chip makers are joining forces in an $8.3
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billion deal microchip technology is buying microsemi. it had risen earlier in the week after news of the two stocks in talks. a lot of tease coming up here back to today's top story, the trump tariffs. >> you just got it >> obliterating. >> deidre bossa joins us live in vancouver. wow, is it wet there, too, deidre really wet here. anyway, take it away >> reporter: for once, it's not. you guys said it, canada is the number one supplier of steel and aluminum to the u.s. the country is bracing itself for the impact of the tariffs at the same time holding out hope that it could receive an
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exemption given the closs cross border ties. last year canada had received some assurances that it wouldn't be impacted by such tariffs, but as tensions have arisen over nafta negotiation that exemption has been thrown into uncertainty. i've talked to a few industry players who say it doesn't boy here's what's at stake. canada manufactures 16% of all u.s. steel imports and 43% of all aluminum imports if a trade war breaks out though, there's a lot at stake here for the united states as well canada is the largest market for american goods having purchased more than $260 billion worth in 2016 the biggest exports to canada, they include things like vehicles, auto parts, machinery like semiconductors, agricultural products. so those industries in the u.s. would certainly suffer if canada retaliat retaliates, which, guys, it has already said that it would yesterday the country's foreign
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affairs minister warning that canada, quote, will take responsive measures to defend its trade interests and its workers. guys, back to you. >> deidre, leave your earpiece in joining us is dan dimicco. president of nucor he's chairman of the bipartisan trade organization coalition for a prosperous america we've gone back and forth over the years, dan i used to dismiss you out of hand and slowly i listened to you and i can certainly see the merit in some of the things that you're saying, but you've got a -- you need some broad shoulders today. you've got to represent president trump, wilbur ross, peter navarro and yourself there's going to be a lot of questions lobbed your way by just about everyone. you've seen the coverage this is almost universally thought to be sort of cutting off our nose and helping maybe a few steel workers but a lot of collateral damage to a lot of
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other industries that make it not worth while. why is that not true >> good morning, joe. >> good morning. >> how the heck are you? >> i'm good. you got your story -- imi mean, it's the same one you've been saying for a while if china is such a small supplier, it seems like it's a big blunt instrument that could have some negative consequences, right? or is it worth it for just the steel workers? >> false argument. >> okay. tell me. >> phony, phony argument the biggest culprit in the global steel over capacity, which impacts our market through a number of different avenues, is china, china, china the world recognizes it. everybody files cases against them they win china is a trade mercantilist, trade cheater. out to undermine national security they're out to destroy what this country has stood for for numerous years throughout our
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history, all right so the issue is china. everybody's missing the point. they want to narrow it down and talk about things that -- i listened to larry kudlow on your show a few minutes ago he was wrong on so many levels you and i don't have enough time to correct all the things he said. >> it's 2.2% of the supply >> it's not 2.2% of the supply, number one, that's wrong because they trans ship. they ship through other countries, in through canada, through vietnam. they've already been found guilty of that they know how to -- they ship through korea. it's not 2%. it's significantly more than that that's not even the point. the point is here this is not something that should be a surprise to anybody. president trump made it a corner sto stone of his four point economic plan, trade reform, tax reform,
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regulato regulatory reform. he talked about this the entire time what this is saying to the world, this action, which is what everybody's missing, we can come back and talk about the details which are totally ridiculous anyway, we can go back to the details in a minute, but the main message people are missing is president trump is saying what he said all along, we are no longer going to be taking advantage of by the trade cheaters of the world of which china is the biggest by far. he's sending a message to the world, we're open for business you better play fair you better abide by the rules or we're going to hold you accountable. we're done losing a trade war that we didn't start, that we have not engaged in, that you've waked against us. >> dan, speak to this. mr. trump seems to not yuchd stand that the steel using industries in the u.s. employ some 6.5 million americans while steel makers play about 140,000.
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>> yada, yada. >> all will have to pay higher prices making them less competitive globally >> here's the -- here are the facts, guys. that's all chicken little the sky's falling. we did it at 201 back in bush era, all right what the i.t.c. found out from that action is, a, maybe 50% of the consumers saw an increase in pricing. the economy did not show a blip on the radar screen and gdp or inflation due to steel when you take a look at how -- what the actual impact on individual products are and individual products that the consumer would buy, the magnitude of the increases they experience are insignificant one example, one big example, now larry kudlow popooed the aluminum steel guy
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larry doesn't know about that. i'm very disappointed in him he's trying to tell you that the ceo of an aluminum company does not understand his customers and how much it's going to impact the cost of his car. let's talk about steel, something i'm an expert on, okay >> dan, let's not make it personal we want to make it impersonal. it's a family show >> the average cost of a car in this country is $36,000 a year it has one ton of steel on an average unit if the price of steel was to go up $160 a ton, if it went up 25%, which it will not do, if it did, what you have is 0.44% in pact on the cost of the car. $160 a car. >> hey, dan -- >> so how does that create that you're trying to blame the markets on this. >> all of the finished products
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that's the ear thing people are talking about. all the finish products that use steel, it won't cause people to buy those from somewhere other than the united states because we're priced out of the market that's the other thing you're saying is not true is that -- >> i'm not saying to you that there won't be impacts like that, i'm saying the magnitude of those impacts are minimal if almost nonhe existent our customers need to join the steel industry which we've been trying to get them to do and fight back on the products down the street using products made out of steel that are dumped on in china so they can dump their parts in this country, what have you, whether it be fabricated structures, auto parts, what have you they need to join in to stop the trade cheating trump is saying we're done being
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a sucker for you. >> even the canada side of these things with steel, you trace that all the way back to some of the steel coming from canada is from china, is that why you think it makes sense to pick a fight with our northern trading partners that are on the same side security wise >> trump is not specifically picking a fight with canada. there are issues of steel from china coming into the united states through canada. it happens in mexico auto parts made in china, they bypass through that needs to be work out in nafta. the issue is president trump is saying you have decimated our middle class our economists have supported a failed -- a real world failed model called free trade that nobody in the world plays by except us. everyone else out there is
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looking out for their own interests except us. we bank our whole economic future on the concept of free trade which doesn't work in the real world the economists have been dead wrong. even the people who came out and coined the whole theory of free trade would tell you it doesn't work against trade mercantilism which is what china and other countries including germany has practiced. the president is saying, wake up, world. we're no longer going to be your doormat. we're going to make sure our nargs n national security is there one thing he's said time and time again, you don't have national security without economic security. you cannot be a world power if you don't have healthy manufacturing, healthy steel industry we support our customers we want them to join us in this fight against the trade
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mercantilism in the world and we may need to do that. >> dan, can i just ask you, let's talk about the impact this will mean with the steel companies. bank of america came out and downgraded u.s. steel, not nucor. they think that there's a limited benefit to this for the 2018 learnings because so much has been locked in they think the situation will change and they think it's pretty sure that the wto challenges this. potential demand will degrade, too, as downstream products containing steel content could be imported. how do you respond to steel analyst's thoughts on this >> the first thing i would say is what i've already said. the magnitude of the impact is being way over blown it's already showing -- >> it's not going to help the bottom line of the u.s. steel? >> i'm not going to speak about u.s. steel's bottom line.
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>> i'm asking if it will help your bottom line. >> here's the deal, listen, the guys that run these companies should be smart enough to know what's going on in the world, what the possibilities are trump has been telegraphing this issue for two years. this is not new. >> so nucor doesn't have contracts left in like this in. >> nucor has contracts with numerous suppliers i'll guarantee you that how those contracts have been negotiated are taking into account what's going on today. >> all right i guess that's it. i mean, there can be a way of narrowing this that won't hurt your side, dan, if it were -- is there a way of not making it quite as broad a cut with such a broad stroke and make it more targeted at china, do you think? do you hope nafta falls apart?
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there are people that say that would be bad overall if this causes nafta to not be renegotiated. >> you're asking me a lot of questions there. last thing first nobody wants nafta to fall apart, but i agree with the president, that if we can't negotiate a better deal, then we should be willing to walk away what does that mean? the world is going to come to an end? absolutely not people need to stop overreacting with this chicken little story it's not going to be the end of the world, but the idea is negotiate a better deal. you don't do that from a position of weakness, you do it from a position of strength. the message of the steel tariffs is not the issue that people are focusing on. the president is saying, enough is enough. stop your cheating stop taking advantage of us. we're not going to be your doormat anymore. >> we appreciate your side of
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things today appreciate it. when we come back we will anlk to former fed vice chair al blinder stay tuned, you are watching "squawk box" right here on cnbc. models can be simulated... nothing compares to the real thing. experience the command performance sales event for yourself, now through april 2. experience amazing at your lexus dealer. when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.
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welcome back, everybody. princeton economics professor alan blinder and professor blinder, thanks for being here today. >> good to be here. >> you want to wade into this debate we've been having all morning long which side do you come down on i can imagine, but why don't you
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lay out your thoughts. >> i come down on the side of david ricardo 200 years ago. all of these arguments that you heard are completely bogus for example, take the argument that this is not going to wreck the whole economy. well, of course not. steel is a small part of the whole economy. nobody ever thought this can wreck the whole economy. you do worry about the trade war burgeoning in other directions maybe that will happen maybe that won't but the point is, this is a classic case of a small minority grabbing something from the majority you cited numbers, someone did, about the millions of steel jobs and steel using -- >> 6.5 jobs versus 140,000 in the steel -- >> you almost don't have to say more than that. >> you heard what we just heard from our steel guest who was just on. dan had a lot of things to say about this
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he didn't think larry kudlow knew what he was talking about as an economics professor. what would you say back to that? >> i don't want to comment on that. >> his point is the economists don't know about these things. the people working in the trenches understand this better. >> the big, big story with is saying >> the big story with many deviations of 200 years have been moving towards freer trade. we are not add free trade by any means. that has been good for almost every nation in the world. trade has grown over the decade much faster than gdp that helps improve efficiency and helps get more competition in the domestic economy. remember automobiles before japanese imports >> they were not very good they were over priced and under quality. now american cars are much better one of the main reasons is the
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competition in japan, it is a big factor >> you are arguing the greater good factor. >> the greater good. i would not argue against the proposition that this is going to be good for the steel industry i don't argue against that >> yeah, what that brings up is what happens to those industries and the people who work in those industries that have gotten left behind because that seems to be the problem and created so much strikes going back to 2008 >> that i agree very much. i have been saying and writing for decades that we should do more with trade adjustment assistants and other programs. absolutely it is kind of pathetic how little we do for these people. i have no quarrel with that. doing it through protectionism is incredibly in efficient he was making the correct point that this is going to be a small
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income of a price of a car and everything else that uses steel. all these itsy-bitsy increments when you add it up america comes to a tiny sum. >> you think through sort of the impact in terms of retaliation putting aside the steel industry, how do you see it manifest itself? >> well, you could and we don't know, you could have retaliations from over a variety of country, including canada so there is a threat of retaliation. even without the retaliation, we are hurting ourselves by doing this >> yeah. would you call it sort of a misdirected attempt just to bring china. it is almost seeing how china
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operates, it sorts of feels good to do something to finally strike a blow but it could be cutting off your nose, right >> that's a classic. that's what i was going to say you are cutting off your nose despite your face. if we want to do a dig against china, at the beginning of the trump administrations, we should have stayed at the ttp china is out of the ttp, they have no voice. >> i don't know what comes of that >> first president trump told you this in davos and you followed up that they are reconsidering this >> i don't know what the make of these people and neither do you, probably >> professor blinder, quickly, larry kudlow made the point that
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it is not this that concerns him but it is the broader issue of nafta in a fragile state right now. what do you think of that? >> nafta is a bigger deal. if you give me the choice of these tariffs against deals or dropping nafta, i would not hesitate to pick the steel tariffs. go back to the autoindustry that we are talking about, that's integrated itself for economic reasons, not because the government told it to. across canada and the united states and mexico. things are trucking across those borders constantly everyday and every minute probably. we break nafta, i cannot imagine how much disruptions it causes just in the auto industry and many others, too >> professor blinder, thank you, we appreciate it
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a lot of people writing in, how is it bad to get steel below market prices. >> if they are going to give you stuff for ree, take three of them >> exactly >> you may well ask that >> lets g's get down to jim cra, he joins us now. there is perception, jim, and what happens with this it can be much worse than what we see or does it add up to a real problem down the road >> um, no. it does not. i did a piece last night on "mad money" and reiterate today, there is a chicken little way to do this whole story, i think the orthodox of free trade is such that people think thatwe are starting a trade war i am going to play it, dan is my
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friend for years they come on "mad money "every quarter. i don't see how it is going to be so impactful. everybody in the steel industry knows this stuff have been going on what it costs for u.s. jobs. i am not going to go down chicken little what am i going to do? should we really make a strong case so that bank of america is not going to get clobbered >> i am not an economist, although if you ask alexa who i am, she says i am a economist. if we want to make this really big and dump coca-cola because they are a big buyer of cans, be my guest, i don't want to go
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into panic mode. it disnjust does not intrigue m. >> all right , we'll see you ina few. i think we should do that meeting tomorrow. well wait. what did you think about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data-
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out ahead of the storm to minimize any outages. during storm season we want our customers to be ready and stay safe. learn how you can be prepared at together, we're building a better california. president trump just jumping back into the conversation on twitter writing when a country
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taxes our product coming in at 50%, we tax the same coming into our country at zero. not fair or smart in we'll start with reciprocal taxes so we'll charge the same thing they charge us each 800 billion trade deficit-have no choice make sure you join us, "squawk on the street" begins right now. ♪ >> good friday morning, i am carl quintanilla with jim cramer and david faber. stocks look to add to yesterday's losses s&p 500 is now down 1% three days in a row. europe is feeling the pain down to 2%. we'll get michigan sentiment in about an hour.


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