Transcripts For CNBC Squawk Box 20170321

I might have met one yesterday, patrick harker. The new philly fed president. Has a business background, academic background. Went to the university of delaware. Interesting guy. Has a Civil Engineering degree and a master in economics. He was trying to be a homer. I know. I got it. I was ignoring it. Thats your first meeting with this guy . Yeah, it was. Hes not as hawkish as charlie plosser. Much more down the middle. Love charlie. Hes on board with a few rate hikes, but not in a hurry to do more. Three more or three total . Three total. Two more. We had kashkari on yesterday. I know. I saw that. You did . I read the transcripts later. You did . Yeah. Some people with that viewpoint like the interview, my viewpoint. You heard, if you read you know what i was saying to him, i think hes crazy. Right. Because youre close enough to the statistical Inflation Numbers to where if youre at all forward thinking at all, now is the time. He just kept trying to defend that position. I thought what maybe was interesting is how people look at the participation rate, its everything to all people, to people that think the labor market is tight. Its the reason its down is because of i mentioned you. Did you see your name in there . I did not. I thought you said you read the transcript. I read his answers, joe. I said you thought the demo was older people retiring. I said half of the retirees. Okay. Some of them are there are people and Research Shows they are coming back. Ill tell you off camera who i heard from and they said they loved it. The way you questioned him. Yes. And that he was left in shambles. You dont always get that in a transcript. Right. Exactly. You needed to actually watch it. You should be dvring the show. Probably on the acela. No excuse. Lets check the u. S. Equity futures. You will see right now it looks like things are indicated higher. Dow futures indicated up by 37 points. S p 500 up by 5. Nasdaq up by 14. Can i interrupt . This tells me that the markets just dont care about what happened yesterday. I have a different take. Okay. Yesterday markets did get weak. You could see during comey . I dont know if it was during him. I think if the markets believed there was some right now were back to where theres smoke, there must be a fire. Right. Theres smoke. We know clapper and morrell both said it goes back to july, as recently as a month ago, they were saying they didnt have anything. I think the market is saying that comey is eventually going to come out he has to eventually. If theres nothing, he has to come out with a hillarytype exoneration, and hopefully not come back two weeks later saying we found Anthony Weiner talking about russia. I think the market is assuming i really do think if the market thought that this presidency was in jeopardy in a serious way, i think the market would go off. Just because its tumultuous but also the tax hikes. The market doesnt trade with a moral bend. Are you implying something is wrong . No, no, no. I dont know that it would be a leading indicator. I dont know the market knows more than we do. I have no idea. You have flynn the market is only trading outcomes. The only outcome i think that matters to the market is whether theres two. One is the potential for an end to this president circumstances the worst possible outcome for the Trump Administration. The second one is whether this weakens his presidency and his ability to get through the policies the market so far the market doesnt seem to think that either is happening. I dont know that the market knows anything more than we do. I think what we see when we look at the market is the way it bets on different outcomes here. It doesnt seem to be incorporating much weakness in the Trump Administration into the outlook from this, even though some editorials i read say this will go on for years. Either that or the ignored story yesterday, how well gorsuch performed. Thats giving strength to the markets to get that ninth fifth on the right side. On the conservative block. Correct side you mean. Right. No, right side. I have to read something. Here are the big stories were watching today. House republicans releasing a package of amendments last night to their healthcare bill. The two key alterations exc accelerating the engxpiration o the affordability care act taxes. President trump saying the goal of the changes is to bring down costs. Well have a great Competitive Bidding protest. Medicine prices will be coming way down, way, way, way down. And thats going to happen fast. Were just adding that to the bill. I said we have to add that to the bill. We were going to do a bill later. Well try to add it to this bill. If we cant, well have it right after. We have some crazy laws in case you havent heard. President trump will meet with lawmakers on capitol hill this morning to push for support of the American Healthcare act. The bill will be voted on on thursday. In washington, Supreme Court nominee neil gorsuch will head back to capitol hill for the second day of his hearing. And secretary of state Rex Tillerson plans to skip a meeting of flat to fnato foreig ministers scheduled for april 5th and 6th going russia later. I heard two different things. Ian bremer said he is doing this to meet the chinese president and doing russia later. I have to get to the bottom of this. This was a reuters story. If you go with nato versus china, go with china now. Thats right. Because of whats happening rush thsia is late. With everything happening with north korea now, you would be crazy not to focus on the chinese meeting and make sure were looking at the most important problem right now. Russias big, but north korea is a much bigger issue now. The only way we can deal with that is go through the chinese. President xi jinping is expected to visit President Trump at his maralago resort that week. And Rex Tillerson is expected to attend that meeting. No confirmation from the state department. Reuters reports that tillerson will visit now e. Momoscow on a. That is what was conflating, that he will visit moscow before china. But i personally would like to see china number one. For more on the political stories, lets get to eamon javers, hes been watching all of this from washington. What do you think . Good morning. First, something to bring you up to speed on thats breaking at the top of this hour. New flight restrictions for aircraft coming into the United States from certain countries. U. S. Intelligence is saying theyre concerned that terrorist groups continue to target aviation, possibly with explosives hidden in electronics. So that means passengers on flights from ten overseas airports will be affected by these new restrictions. They cant carry on Electronic Devices larger than smartphones, that affects things like tablet cameras, laptops, dvd players and the like. A they have to go into the checked baggage. Nine overseas airlines have 96 hours to comply. Jordan, jiptd, tuupt, saudi ara could wait, morocco, qatar and the uae. And we learned a couple of things from fbi director comey, y there is an investigation into the 2016 leelection meddling in it, and any relationship between the Trump Administration and the medd meddlers. And james comb my saey says theo evidence to back up the president s accusation that he was wiretapped by former president Barack Obama Barack obam and then we saw this fascinating moment. You had a hearing going on about an investigation into the president s campaign. And then you had the white house live tweeting that hearing as it was going on. Then the fbi director asked to respond to those tweets in realtime. Heres what they put out from the white house from the official white house account. They said the nsa and february fib Tell Congress that russia did not influence elelectoral process. Congressman jim hines saw that tweet and had the opportunity during the hearing to ask fbi director comey what he thought of that tweet. Its not too far of a logical leap to conclude that the assertion that you have told the congress that there was no influence on the electoral process is not quite right . Right. It wasnt our intention to say that today. We dont have information on that subject. Thats not something that was looked at. So, comey there saying that the white house simply got it wrong in that tweet, and that thats not their intention at all. So, we had this wild meta media moment here. Bottom line is this a story, as you were talking about, that is going to be causing problems for this Trump White House, possibly for months to come. Because once this investigation gets started, its going to have to run its course. As you say, were headed to one of two possible outcomes. One is a full exoneration, in which comey, you would expect, would be forced to come out and say we did a deep dive and found nothing. Or some other legal outcome here that would be significantly adverse for the Trump White House. So, something that will really take a lot of their time and energy in the coming months. Its like a rotest where everybody sees Something Different. Even in your language you said we found out there is a investigation. That implies to me that we assumed there was an investigation and it was confirmed. Had beethere had been a lot reporting that there was an investigation, but they never said yes. But if comey came on and said we are not investigating russia ties to the Trump Campaign, the fbi is not that would have been a huge story. That would have been a huge story. When i heard it, it confirms it. The other thing you said, the investigation has started, we have to see where it leads. It started in july. As far as i can tell. I dont have any sources in the state department leaking things to me. Right. So i have no idea whats there. According to clapper and others, i dont know. Its been going on since july. As of a month ago, if i believe clapper from july to a month ago there was no smoking gun. Right. I dont know. Right. We have to wait and see what they come up with. Even msn, you tell them there is an investigation of ties, its just like, well, youre telling me theres ties. Youre telling me theres ties. If theres an investigation, theres ties. Thats the knee jerk reaction. I watched gloria borjer say this is the most perilous day in the Trump Administration. Its like you dont know anything more than you knew the day before about whether theres any fire to this smoke. Watch any other cable network, you will see hyperventilating among democrats and their enablers and it would be Law Enforcement malpractice for the fbi and u. S. Intelligence not to look at this. One of the outcomes here is we could get a full exoneration, very much the same way we did with Hillary Clinton and the emails. You remember how everybody leapt to a conclusion when the fbi came out and said publicly in a letter to congress we found more emails. Well look at that. Then this incredible moment before the election where everyone thought, wow, there must be something here. Then the fbi had to walk back off the edge of that cliff and say we looked, we didnt find anything remarkable there. This will take longer than that because its a much more complicated story. It involves overseas intelligence, multiple officials within the trump camp. So all of that will take more effort to unravel. Its not something that can be done in a few days. It will be distracting for the Trump White House for a period of time to come. They are so mad at comey because Anthony Weiner. Its nice to see god, they love him again. Comey is hes in the hot seat. Hes unbelievable. Now theyre back they love him again. Hes trapped in a logic box. Hes trapped in a box he created himself. He did. Typically fbi directors say we will never comment on an fbi investigation. He femt lt he had to about hill clinton last year, so he did so he broke that cardinal result that is in the fbi director handbooks. Now we understand that rule why that rule is in the handbook to begin with. Now he has to break it again like he did yesterday. Now the question is will he break it a third time and talk about leaks . Is there an fbi investigation into leaks . He didnt go there yesterday. Republicans pressed him hard. Theyre frustrated by what they see as unprecedented leaking from the federal apapparatus. Comey did not say whether he will be investigating that. He will be forced to break the Cardinal Rule a third time . Once you start doing it, becky, as you say, you have to keep doing it. Hopefully he doesnt exonerate him and then some russian stuff turns up on Anthony Weiners laptop. With that laptop where its been, anything is possibility. Just dont touch that thing. Yeah. Sticky keys. Thanks, eamon. You bet. Lets get back to the broader markets. Joining us now is jack caffrey, equity portfolio manager. Chris retzler from neidum fund. We were kicking it back and forth earlier about when the market starts thinking about the general news. I read the notes from both of you gentlemen. I didnt see the word russia to be found in your notes. At this point thats not on your radar screen . Its on the radar screen, but it is you dont know either. I dont know either. If i had my own counterintelligence operation, maybe i would have a stronger view. I think stocks are trying to anchor themselves back to where we will see earnings develop. Are we continuing to see better Economic Data . That gives us more confidence in the earnings story which gives us more confidence in the valuation story. Chris, the only thing you delved into as far as things is rates and the fed. So the fed and rates are more important than putin and trump. Were certainly watching the rates. Its a positive indicate their things are doing better so they can raise rates. What i did hear yesterday listening to comey was the need for cybersecurity. As an investor im looking for opportunities. I think on a bipartisan basis they will be investing money to protect data. That aside, thats a great area for equities. You see you felt the need, jack, to comment on the transportation sector. Has it been weak . Theres been a breakdown in terms of what youve seen. Dow transports is the older technical indicator out there. Right. If the transports are not doing well, i do have a bigger problem . Response to some thinking about that, i just added that we see more seasonality being injecteded into the transports, when you think about the parcel business being a Fourth Quarter story. I would suggest we should spend less time on the transports, more time on the banks and lending activity. So, what other than that, the transports what do you think investors ought to be paying the most attention to . We had a good jobs number, right . The jobs story has been consistently good. Not so great that the fed is forced to panic. If i think about what i spend my nights worrying about at 2 00 in the morning, we should be paying more attention to, what does the fed look like a year from now . When we think about the potential openings on the fed, what do we wind up seeing in terms of Monetary Policy that comes nine months from now, 12 months from now, 15 months from now . Thats an interesting debate that we are not having because we have other headlines that are sort of capturing our attention. Did you wear green on friday . I did not wear enough green on friday. Did you throw back a couple . I can neither confirm or defly that statement. Deny that statement. Corned beef. I had a lot of corned beef. Did you . Yeah. Oh, boy. Final thoughts not final. You look healthy, but last thoughts for your appearance today . Look, were about to enter earnings season. I think, you know, we need to see earnings come in to support the p levels were at. Vix is low. Volatility is not out there but there is rotation under the surface. Stock pickers market, you have to find areas that have growth. Heres something, the drug stocks did not move yesterday very much. The comments from the president were pretty strong. Im surprised to not see more reaction in the market from them. I think theyve been in the headlines for almost two years so theyre pretty beaten down. Once you get a deal, you can value these drugs and you can then move forward. Coes can begin to plan. It will be great once they clear the air. Take the price cut, thats fine. If you get lower regulation in the fda, and i can get you a drug a year earlier, thats a great opportunity that they should be willing to give up pricing. All right. Talking about st. Patricks day, thats like the last bastion of political that will probably be outlawed fairly soon. You couldnt do that with im trying to think of any other ethnicity. Im irish, part irish, im allowed, but talking about st. Pratt ti patricks day, did you have a couple of cocktails . Youre stereotyping, right . Sure. Steve . Youre afraid to comment. Its your show. Youre okay, jack. Youve expanded the boundaries of television. Theres probably a defense fund i wonder if there are irish people who dont like that. Corned beef. I think correspondent beefne. I think the drinking thing may be stereotypical. Nobody drinks on st. Patricks day in ireland. They dont . Its a religious holiday. Inspecting towers way up high avoiding turbulence in the sky. Personalizing treatments with dna and recommending who should play. A dress that thinks, which crops to grow, tax prep to help keep payments low. You can find me on an oil rig, i answer questions small and big. Hello, my name is watson. Welcome back. A border adjustment tax is a key component of the gops tax reform plan but retailers have come out strongly against it. Ra kate rogers has more on the impact on retailers. Retailers are basing for the impact of border adjustment tax. Manufactu the other 98 of products are manufactured in europe. For our business, that 145 shirt they make from italian fabrics that we sew in poland, that will have an additional 20 tax on it. Some people might say 20 , thats not a huge deal. But whatnot everybody realizes is were paying a huge amount of duties to bring these shirts into the country. He says shipping shirts in from other countries would be too costly. The blueprint that has come out from House Republicans that contains a border adjustment, you know what lots of other really good things for Small Companies in it. It has unlimited immediate depreciati depreciation, expensing of capital equipment, has lower tax rates, elimination of the estate tax. Thats the other element of this you cant look at border adjustment tax all by itself. Its within the context of larger tax reform. The National Retail federation which has been a critic of the vap proposal, says it will crush small retailers causing them to lay off workers or close their doors. This is complicated stuff, nobody knows what the impact will be, and that is particularly concerning to Small Business because they dont have the manpower or ability to navigate new oceans. I find theres a big group of them that are heads down and not paying attention to it either they dont import, its not on their radar, then other Companies Like ledbury are saying this will churt our business, well have to cut hours. So its concerning. Kate, he imports fabric from abroad, makes sure thes here and expo shirts and then expo exports . No. Would he make shirts here . If if there was an import tax. He would love to make more here but its concerned about quality and people having the right skillsets to it make the type of shirts he makes here. Kate, thank you very much. When we come back, politics in focus. The gop pushing a revamped healthcare bill in hopes of securing a vote thursday in the house. Evan bayh is here and hell be here next. First a look at yesterdays winners and losers. Know you have a dedicated advisor and team who understand where you come from know you can craft an Investment Plan as strong as your values know that together, you can establish a meaningful legacy with the guidance and support of your dedicated pnc Wealth Management® team. Welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Good morning. Welcome back to squawk box. U. S. Futures at this hour have been trading positively for most of the session after a late swoon yesterday. Nothing huge. The market had been up for most of the session. You can see up 41 points now on the dow. Just under 6 on the s p. Nasdaq up 16. We almost forgot about after yesterday they may vote on thursda thursday. They probably are. They told everybody to stick around for late votes. Gorsuch, its a good time to be in the news business. Softbank dropped a 100 dror tls investment in a smartphone startup that competes with the iphone according to the wall street journal. Softbank was planning to take a stake in the firm called essential products which was founded by the creator of googles Android Software it scrapped the plans because of its close relationship with apple. Koc congressional republica recrafting their Healthcare Plan in hopes of a vote this week. Joining us now is governor evan bayh. Thank you. Governor senator. In a lot of ways this is described as being further to the right, conservative so the house can get the votes there. But it does a lot of things, raising what would be tax credits for Older Americans. It would be way too expensive for older people to be on this. What do you think of what has been added to this . How will that play in the senate . I think theyll make it a little more conservative to get it out of the house to satisfy the Freedom Caucus it will come over to the senate, theyll have to make it more moderate to satisfy republican members whose states expanded medicaid and are worrying about millions of people losing healthcare coverage if that adjustment is not made the the ultimate irony is that it may come down to three of the most conservative members in the senate, one of them is ted cruz, who the president had an off and on relationship with. Why will thit come down to those three . Ted cruz and who . Senator lee and mitch mcconnell, so they can afford to lose two of the three, but not all through. Ted cruz is trying to work his way through this but its ironic given the relationship between President Trump and senator cruz. It will get done but theyll have to come back towards the middle. It has to swing right to get through the house, left to get through the senate. What happens in the joint . Well, as joe said, its a good time to be in the news business. Thats the moment of truth. They ultimately get it done because failure is not an option. Theyve been promising this for six years. They wont it will be hard to get the tax reform if this fails. I think they get it done. But it will be like the perils of paul leem, teetering on the edge but it will happen. We say it will look more left leaning because of the senate, but then you have somebody like ted cruz. What does he want to see . You are starting far on the right. It wont be leftleaning. Left of what the house said. They will do medicare expansion. If i had to predict, they would grandfather in everyone currently on the system, but then slow the growth of it Going Forward. But it still busts the deficit . No, no, the Congressional Budget Office predicted it would reduce the deficit by 3 350 million. If you change these things, we call it left of the house because of what reasons . Will reduce the deficit but i will reduce it less. The market is most focused on tax cuts, infrastructure spending. Can you have a bill get through the house on healthcare, be discussed in the senate go to conference, and all the while can tax cuts and tax reform be working through congress at that time . Or is everything stopped until you get healthcare reform done . The answer is yes and yes. So these bills are going on parallel track. Right. The healthcare changes are going on a bill that relates to last years budget. The tax cuts, which most of your viewers and america is looking for that, that will go on a bill that will go on this years budget. First they have to pass a budget, then that allows them to use the reconciliation provisions in the senate which means they can pass it just on republican votes without democratic votes. Last time we did tax cuts under brush, 12 voted for it. Its conceivable 12 could vote for it again, but thats a heavy left. All the staff work is focused on healthcare, so it does slow down but both things can happen. I call you governor to emphasize your indiana roots. Get you out of the swamp. Out of washington. Because you were from indiana. First and foremost the governor. And youre from indiana. Thank you. Great state of indiana, next to another great state ohio. So the second and third round of legislation on the obamacare replacement, this could theoretically need the help of democrats to actually try to fix some things that were wrong. Would you concede there were some things that need to be fixed in obamacare . No act is perfect, sure. Far from that. Some people think it would have died on its own. Youre not in the senate anymore. You dont need to be partisan. You were always a centrist. Would you expect anyone to help in the second and third round and vote to get the 60 they need . Do you think any democrats may come along . You may get a joe manchin. You might get an evan bayh . Well, depends what was there. How about gorsuch, would you vote for him . He seems like a sensible man. For you to say these things is almost earthshattering. This is bigger news than an fbi investigation. But youre not in the game anymore. Thats the problem, joe. The place has become so polarized that even if one or two democrats were to vote for these things, it would take eight of them to break a filibuster, that wont happen. So no help with any of this stuff. I dont think so, no. But judge gorsuch will be confirmed ultimately. One way or another. The republicans may have to change the filibuster rule. Some of them want to do that. The other people say they should wait for the next one. The democrats argument is a good one up to a point. It would be good if we had consensus candidates on the Supreme Court. It would be good if there were a 60vote flethreshold, but its become so polarized the definition of sensible fell away. When you left the senate, that was one of your complaints about the place and washington and what happened. We have come a long, long way down the road since that time. Its regrettable we have. And some of my good friends in the senate are republicans. My father, when he was in the senate, used to have republican and democratic members at our home for dinner. What . And we werent serving a poison chalice. But those days of those personal relationships are not what they used to be. Beyond the partisanship, how much sway does President Trump have in congress . It strikes me there are at least two different parties and maybe three. Theres the democrats and republicans. Does donald trump have his own set of supporters in congress that are different from the overlays inside the Republican Party . Steve, the president really does have some sway and juice with the base of the Republican Party. For those members who would stand up and stop the healthcare bill or would stop tax reform or would stop an infrastructure bill that the president might be pushing, they could face primary opponents. They have to be worried about that. But getting to what joe was eluding to its so local polari any democrat who would vote for any of those things, the infrastructure bill might be different, but any democrat who would vote for some of these things, they would run the risk of facing a primary challenge with a lot of money backing them. Does the 37 or 40 popularity rating matter for internal congressional politics . Only for the primaries. But many of these members in the house in particular because of the gerrymander come from such overwhelming republican their real election is in the primary. So theyre worried about a challenge from the right if youre republican and if youre democrat from the left. Thats why they break ranks and vote in a bipartisan way. The president s low popularity rating, does that matter for congress . In the long run, but initially steve, because if theyre using reconciliation for the tax bill that you ask about, and on the healthcare bill, those can be passed on a purely party line vote. Really if you can unify your base and only have a few defections you can get those things passed. Did the 20 polling numbers he had before the election matter for the election is the other the 85 the probability that the New York Times had. Huffington post had 98 hillary. Did those numbers matter . Youre talking about gallup at 37 . There were a bunch between 37 and 45. You remember the previous president for a long time was mired in the low 40s. This is early, its happened question. My question was not about the president , it was does it matter for congressional politics getting his agenda through. Im not sure what real popularity number is. I guarantee you he has some serious clout with watch any of the rallies that didnt matter before the election, he had another one yesterday. People are still got you. Governor, thank you. Governor senator, the good things. With job approval ratings, i appreciate that. An executive making decisions. Mattering. A bipartisan way. Instead of talking. Like us. Coming Arne Sorenson will join us. And then john engler will join us to talk about deregulation in the Trump Administration. And later, kevin brady, mr. Chairman, will join us to talk about changes to the gop healthcare reform bill. I hope he doesnt pass ef van bh on the way out. Go to otect your vehicle . Im on it. Weathertech. Made right, in america welcome back to squawk box. Goldman sachs is building a robo adviser aimed at giving Investment Advice to the masses. The company is looking for employees to help build that platform. This comes as goldman looks for ways to broaden its Customer Base beyond the wealthy. Robo adviser. Okay. Tim cook making a stop at a bike sharing start up during his trip to china. The startup called ofo is mofo. You thought i would make a joke . Usually i do with moores foster, their thing is mofo. But ofo is one of two bike sharing startedups in ch s sharing startedups in ctartups. It expanded across several cities across china. Cook wrote thanks for welcoming me today ofo team. Great Energy Behind your mission to make commuting greener, more efficient and fun. Thats nice. Coming up, last chance no jokes . Youre good to go . I learned my lesson. Becky might, shes been a potty mouth lately. A new generation is entering the work force. Everything you need to know about hiring generation z. And as we head to break, a look at european markets. Up in germany, down in britain, up in france. Kevin, meet your father. Kevin e Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin trusted advice for life. Kevin, hows your mom . Life well planned. See what a Raymond James Financial Advisor can do for you. Time now for the executive edge. Move over joe thinks im envious of his hair. I am not. I am bald and i am proud and i am happy. Cant you get over that . You go to those meetings. When i put on a hat, its like covering up the sexiest part of my body, okay . Move over, millennials. Id agree with that. When i was pregnant, steve rubbed my bully. Belly. Bald heads and pregnant womens bellies. This awkward moment brought to you by steve liesman. Generation z, folks. Thats what were talking about. They will enter the work force this year. A new book describes traits employers need to understand when managing the group born after 1995. Joining us now, david stillman, and his son jonah stillman. I cant keep up with the letters. It was gen x. Also known as the millennials. Gen y is the millennials. Whats gen z . Whats the age bracket . They were born between 1995 and 2012. Im very skeptical of all these letters. They dont mean all that much to me. What distinguishes this group . So a common misconception is that anyone under the age of 30 is a millennial. Basically, the whole idea of this book is to pry neioneer a dialogue, telling people we are different from the millennials. As we enter the work force, naturally we have to be treated differently because we grew up in a different time. Im on your side. Thank you very much. You should hate the millennials. Cant stand them. You should differentiate yourself. You dont have one of those man buns. Back to the hair topic. Its all about the hair. Theyre insufferable. They dont leave the house. How are you different . So boomers raised millennials. At a young age, millennials were told by their boomer parents, if they work hard with their peers and collaborate, they can be a winner and everything is going to be okay. I was told at the young a age theres 72 million of us. If you dont work hard, one of them is going to steal your job. Im a baby boomer raising generation z. Im 17. Core members. What does business need to know about this particular group . Most importantly that theyre not millennials. If we treat gen z like the millennials, its going to backfire. Very collaborative generation. Compare that to this generation. Not only are they competitive but really independent. Think about the workplace today. A lot of workplaces, open Office Concept that caters to collaborative millennials. This generation, they dont like openOffice Concept. In fact, 8 said they want their own office. So a lot of workplaces arent ready for this independent, competitive generation. We anticipate a lot of clashes with collaborative millennials. Awesome. How many when you start measuring how many how many are there . A little bigger at 80 million. This is at 72. Million. This is still a very large generation. The leading edge is graduating college this spring and entering the workplace. Does it bother anybody that now were at z . What do we do next . Thats what i wonder. Your youngest, theres no letter for him. World war z was about zombies. What reaction do you get from companies when you tell them things like this . Part of the challenge is that a lot of people are just tired of talking about millennials. Theres a lot of millennial fatigue out there. Now we got to get to know a new generation. The good news is because this generation grew up with recession, they also had gen x parents telling them its a hard world, theyre willing to roll up their sleeves. 75 of gen z said they want to start at the bottom and work their way up. You almost sound like you described not necessarily globalists versus nationalists, but youre not looking for consensus and it takes a village. Individual initiative and earned success. Sounds like you may be moving a little right. A lot of them believe in the phrase, if you want it done right, do it yourself. Can i make a point publicly of not associating myself with joes criticism of an entire generation of people . Thats fine. What are they, 20 to 35yearolds. I dont take a broad brush and paint it across a bunch of people. Yes, youre right. We do risk stereotyping people by doing that. I will say and i thought for a long time its just that were cranky, getting older. If theres another Younger Generation that works a little harder. I think they are work plenty hard, these millennials. Working on their, you know, snapchat messaging. Thank you, david. Thank you, jonah. Very impressive. You got a future in something here. Coming up, marriott, meeting with investors today. Just saw some of the comments about the threeyear plan. Its interesting. Ceo Arne Sorenson will be here to tell us about the threeyear Growth Strategy. He joins us live on set. Our first name has always been american. At at t, we employ more than 200,000 people with goodpaying jobs. Connecting consumers and budiness through mobile, internet, and entertainment. At t invests more into americas economy than any other public company. Bringing americans more choices, more freedom, and entertainment everywhere. No company is more invested in americas future than at t. Sometimes they just drop in. Always obvious. 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. Bp uses flir cameras a new thermal imagining technology to inspect difficulttoreach pipelines, so we can detect leaks before humans can see them. Because safety is never being satisfied. And always working to be better. Fed speak and earnings dominating todays market moving news. A complete rundown of what you need to watch is straighting ah. Plus, well check in with Marriott International ceo Arne Sorenson. And fbi director james comey confirms a probe looking at possible Trump Campaign links with russia. Reacti reaction and the International Implications. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Good morning, everybody. Welcome back to squawk box here on cnbc. We are live from the Nasdaq Market site in times square. Im becky quick along with joe kernen and steve liesman. Weve been watching the futures this morning. They have been in the green. Dow futures look like they would open up by about 34 points. S p looks like it would open up by about five points. The nasdaq is indicated to open up by 15 points. Yesterday the nasdaq did set a new intraday high. Didnt manage to set a new closing high. Well see where things go today. In the meantime, lets get you caught up on the headlines. Larger Electronic Devices will be banned on certain inbound flights. The new rule applies to flights arrives from eight countries in the middle east, egypt, jordan, kuwait, morocco, turkey, and the united arab emirates. Well be getting numbers from fedex and dow component nike. And a mixed quarter from home builder lennar. A quarterly profit of 56 cents a share, one cent above expectations. Revenue missed forecasts. New home orders were up by 12 in volume and up by 16 in terms of sales. Stock is up by about 20 cents. Thats a big story. To politics now. House republicans releasing a package of amendments last night to their bill they hope will repeal and replace obamacare. The two key alterations accelerate the expiration of the Affordable Care acts taxes and further restrict the medicaid program. At a rally in louisville, kentucky, President Trump saying the goal of those changes is to bring down costs. Were going to have a great Competitive Bidding process. Medicine prices will be coming way down. Way, way, way down. Thats going to happen fast. Were just adding that to the bill. I said, we got to add that to the bill. Were going to do a bill later. Were trying to add it to this bill. If we cant, were going to have it right after. You have some crazy archean laws. The house bill will be voted on, on thursday. Secretary of state Rex Tillerson reportedly plans to skip a meeting of nato Foreign Ministers scheduled for april 5th and 6th in brussels. Chinese president xi jinping is expected to visit President Trump in maralago that week. No official comment from the state department at this point. In the meantime, reuters reports tillerson plans to visit moscow coming up on april 12th. Supreme Court Nominee neil gorsuch will head back to capitol hill for a second day of his confirmation hearing. If confirmed, hell replace the late justice antonin scalia, who died early last year. Oh. Sorry. Were looking up whether or not the house Freedom Caucus is a posing the repeal and replace plan. I see they will not vote as a bloc. Okay, yeah. Plenty of fed speak on the agenda. Theres just one economic report, thats the Fourth Quarter current account at 8 30 a. M. Eastern. Marriott international announcing a threeyear Growth Strategy at its Investor Conference today. Lets bring in Arne Sorenson, president and ceo of Marriott International. Great to see you. Thank you. When did the deal close that made you number one in terms of size . We closed september 23rd, which still feels like yesterday. Is everything done . It sounds like you just put these two together. Theres not a lot of stuff that happens. But theres all kinds of stuffs. Theres tons of stuff that happens. Its technology that takes the longest. We immediately allowed customers to link their loyalty accounts the day of close at midnight. By the end of the year, most of the people decisions had been made so we could have one team looking forward and not worry about do i get a job or whats going to happen to my organization. Now were left with the naughtier problems, which are how do you get to one finance reporting system, how do you get to one reservation system. There are a hundred other systems that these two companies have that we have to reconcile. Sarwotarwood is not run independently were all one company. But you did get a bunch of new properties you must be proud of, i would think. We got ten new brands. St. Regis, luxury collection. Steve loves the lap of luxury. Is there a st. Regis in park city, utah . Theres a st. Regis in deer valley. I went there one time. I was mobbed by our people. Its all our people. I was pretty amazed. You can visit. I dont think People Like Us can really stay there necessarily. No, i didnt stay there. I went in for a drink. Its pricey. Its a little on the pricey side. Even at your salary, joe . I can stay maybe two nights. Maybe. Can i crash on the couch . No. Friends and family. So you got i mean, i would be excited if i were you. Now this threeyear plan youre going to present. Its got both companies under one umbrella. The most stunning statistic is for the next three years, well open a hotel every 14 hours. Were talking today about opening 285,000 to 300,000 rooms in three years. I think before the starwood merger, i think our High Water Mark would have been about 50,000 rooms in a year. Were essentially double that. Part of that is because of starwood. A big part of that is because of where we are in the cycle. You say where we are in the cycle. The one concern everybody has is people say, great, when you have a limited number of rooms, you can charge more for that. If youre talking about just bringing that many rooms in with the industry at large, what does that mean . Is there enough demand . It obviously depends on the market. The way the cycle works often is individual traveler demand peaks before openings peak. People start projects during Strong Demand times, then they take two or three years before they actually open. So where are we in the cycle, and how do you know that . Obviously weve been growing since 2010. Weve had a long run already. Youd have to go back into the 90s really to find a run thats this long for the economy, which is what really drives demand in our business. Obviously its a question every day, how long is this bull market going to continue, how long is demand going to continue to grow. We dont see any signs of weakening. To be fair, we dont see powerful signs of strengthening either. We think the economy continues to bump along in the u. S. At a kind of plus 2 number. Obviously the market shows a lot of optimism. If that optimism reveals itself in faster growth, thatll be good for our business. You love growth. So i dont know what you think of i mean, i do know from past interviews. You probably would be a proponent of tax reform. You probably would like less regulation. So there are certain things this administration is bringing that im sure would be a positive. Plus, global growth, which you might get from that, would be a positive. What about the trade concerns . Well, were not a very regulated industry. Selfishly, the Regulatory Environment is not hugely important to us. I think tax reform is important if they can deliver it. Theres a lot of work to get tax reform done. To do it right, of course, means there will be some winners and some losers in the business community. But the growth that would come from that would be something it could spread around the world. The u. S. Can lead the world in growth. Clearly. And theres clearly a lot of money offshore, which could come back and be in the u. S. Economy broadly. I think would be quite good for that. The risk element and whether you look at trade talk or you look at the travel bans, they sort of relate to the same thing. Are we in an environment in which folks are saying, you know what, lets erect literal and figurative walls to lessen trade, to lessen the movement of people, to lessen even tourism. Which we shouldnt do because tourism supports about 10 of the jobs around the world. In the u. S. , we think its about 2. 5 million jobs in the u. S. Directly dependent on Foreign Tourists arriving to the United States. Staying here, leaving their money here, and going home. Has there been a Chilling Effect from some of the comments about immigration . Ive heard some stories about, for example, foreign students arent coming as much to the United States. I think were going to have to watch that. Obviously we have a fall coming up, which could be the academic calendar, which will give you a much better read. The stories that have come out so far are about people doing searches in various countries around the world. Searches going to the u. S. Are down. You look at bookings, and we dont see anything terribly profound. Can we go back to the one every 14 hours. These are new hotels . New hotels. Bottomup construction hotels . Overwhelmingly. Maybe 10 are converting from a prior use. But its a new net addition of rooms to the market. Overwhelmingly. 90 . How much out of the country . Oh, about 50 . And how are you sure youre not going to overwhelm the market with supply here . Well, again, its a big world out there. There are maybe 15 million rooms in the global hotel business. Were talking about 300,000 rooms. You can do the math. Yes, that is supply growth, but in a global context, its not extraordinary. And you have this growing global middle class that is a real additive demand for global travel. So how much is china out . 50 here, 50 elsewhere. How much is china . Our pipeline in china is about 500 hotels. There are probably on average 300 rooms. You cant go in and say, hi, im marriott, im starting my own hotel. Do you have to partner . Everything we do, we do with a local owner. Thats true in china. Thats true in the United States. We own ten hotels. Something like that out of 6,000. So thats an important market. You dont like to see things sour with china. Thats right. At the same time, because every hotel is owned by a chinese investor, our business is as much about Chinese Capital and chinese returns as it is about a Foreign Company doing business. So do you just have Business Travelers in china, or are you opening resort hotels on coasts for Chinese Tourists that are going on vacation . Very much both. Hainan island is the chinese hawaii, florida. We probably have 20 hotels over there. You do . Yeah, including an addition. We opened one in december. Beautiful, gleaming hotel. People there say im going to a marriott. They know marriott. Absolutely. The brand is very well known. Give us a couple three that youre really excited about in this whole expansion that really stand out that you remember, youve actually paid personal attention to. Again, its a big portfolio. Ive got four kids, by the way. You love them all equally. We debate all the time about which one we love the most. We of course love them all. I think, though, that luxury and lifestyle so think about ritz carlton and st. Regis. I could go on, but just to use those as an example. Theyre the ones that intrigue people the most. The st. Regis in deer valley, its a special place where youre having a special experience with your spouse or your family or your friends, your parents maybe. So those are the ones that often we hear people talk about and love to get those stories. It turns us on in a way that, you know, some other hotels may not quite as much. But we love them all. Wow. Whats the message you most want to get across to wall street . Whats the key takeaway youre hoping theyll get from . Two questions, really that, they bring today. One is hows the starwood deal going . Whats the risk that youre going to mess things up because youre doing a 13 billion merger . Mergers are risky. And we think were on a good track. I think one of the things that is obvious is were acquiring a company very much in our space. So the risk level is a little different, although its still a lot of work. Then i think secondly, its just that even in a lowgrowth environment, were talking about 1 to 3 samestore sales growth over three years, which in historical terms is not much to brag about. That is producing Something Like 16 to 20 eps growth over three years compounded. Thats a powerful financial model. We just want to make sure we reiterate the strength of that model. Arne, thank you. You bet. Can you open one in davos . Would you mind . Thats a great idea. I mean, this year was a big year for us because our the hotel where we stayed had a kitchen. So you can order food at this hotel as of this year. You never could before. Oh, thats right, you had the baby. You didnt get to stay in the famous upgraded. Its one of those places you can go all day long and theres food everywhere, but you get back to your room and you havent eaten all day. They didnt have a kitchen. Not in the room. He means in the hotel. Oh, nothing. No. Can i get room service . Theyre going hahaha. Hotels do that in other parts anyway, thank you. Good to see you all. Thank you. Coming up, fed speak, oil prices, and washington policy driving the markets. Well find out if thats going to continue. Later, fbi director james comey confirming the agency is investigating President Trumps campaign ties to russia. Well talk about the International Implications and the state of american politics with former u. S. Ambassador to sweden. Stay tuned. Youre watching squawk box on cnbc. Can i get some help. Watch his head. Im so happy. Whatever they went through, they went through together. Welcome guys. Life well planned. See what a Raymond James Financial Advisor can do for you. Welcome back. Investors likely to focus on fed speak today, along with Quarterly Results from nike. Some key events investors will want to Pay Attention to, including a discussion featuring new york fed president william dudley, and earnings from dow component nike, as well as fedex and General Mills. Joining us now, director of Investment Strategy at glen immediate. And mike ryan, chief investment strategist at ubs Wealth Management americas. Let me turn to mike. How much did yesterdays comey hearing matter to the markets . I dont they they matter a great deal. At the end of the day, were going to focus more on what theyre able to achieve from a policy stand point. To the extent it draws some of the Political Capital away from the administration and distraction, i think thats an issue. But i dont think at the end of the day its going to have a real big material impact. At least not in the near term. Jason, your take on it, the exact same question. It seems like there is some threat to the administration here, at least from a political judgment. The market makes no judgment at all. It doesnt seem to care. I think this is interesting. I think its fairly similar to other cycles and other president ial cycles weve seen, where youve seen a twoterm president replaced by an inbound administration. Youve seen hope spring up in between the election and inauguration. Youve seen basically realism set in afterwards. Were going through that period right now where realism is setting in. These kind of misfires and political back and forth is the regular thing that happens as the administration kind of gets its footing and gets set in place. This administration has put forward a lot of policy ideas. Reality may be that they cant implement everything theyve said they want to implement on the timeline they want to implement, and therefore maybe a little bit disappointment from the markets. The markets may have to back off just a little bit to recognize that. Still, underpinning that is a pretty good economic and earnings cycle that will end up setting the pace later on. Lets stick with that. I think in the markets view point, earnings trump everything. I would afwree wigree with t. What are you looking for from this earnings season . Were looking for mid Single Digits earnings growth, which is better than what we saw last year. We had basically break even and negative earning. Now were seeing underlying growth to companies. Were seeing that domestically. Were seeing it internationally. We just need that in order to drive the Valuation Base higher. Because were sitting at about 19 times earnings currently on normalized basis. We need to push that earnings number up norm to keep driving this market higher. Mike, does Wealth Management suggest to you i should be looking more overseas for wealth rather than here domestically. Were still focused on the u. S. Right now. I think it is all about corporate profits right now. Were actually a little more optimistic about the earnings cycle in the u. S. We see the earnings recession, which has really played the market over the last couple years, drew to a close really last year. So you had an earnings acceleration that started in the third quarter, progressed to the Fourth Quarter. Now were seeing the earnings cycle start to pick up a bit of momentum. Were expecting 11 earnings gains this year. Again, part of this based on were going to have less of the headwinds that have been buckling us over the last couple years. I think that dynamic means equity markets can continue to move higher. Therefore, were going to continue to focus on earnings as the strongest in the u. S. How is that contingent upon things like tax cuts . We havent baked a lot in, in terms of tax cuts or regulatory reform. If we find up getting broad based kpre tensive tax reform, we think that could add 5 to 15 over the next three years. Jason, what about the fed . Two rate hikes more baked in for you . Are you concerned about there being any more . Were in the camp of being three this year. Our base case here is that theyre looking at the numbers and theyre seeing inflation a little bit more engrained in the system. Its starting to show up in wages, particularly the low end of the wage stack. That job market is relatively tight. I know San Francisco fed just came out and said its really not that type. Its forcing employers to drive wages higher. I had a friend that was president of the Philadelphia Fed that used to basically point to this and say, watch out for sticky inflation. Once sticky inflation shows up, the fed has to act a little bit harder. Therefore, were in that three camp, maybe even four. Probably three though. All right. Jason, mike, thanks for coming in this morning. When withe come back this morning, tim cook blessing a beijing bike sharing startup. Thats next. Squawk box will be right back. Still to come on squawk box, the battle for a health care overhaul. Congressman kevin brady is helping lead the charge for reform. Remakes i had fin remakes his final pitch before the house vote, first on squawk box, an interview you dont want to miss. Stay tuned. Youre watching walk squawk on cnbc. The greatest population shift in Human History is happening before our eyes. Sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implicatio of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. Adios, honey, hasta la vista, baby. singsongy im a fat guy in a little coat. Fat guy in a little coat. That rug really tied the room together. Any questions . Bueller . Bueller . Stream all your enrtainment. Introducing at ts new unlimited data plans. Plus, get the amazing new iphone 7 on us. Still to come, one of former president clintons top russia advisers joins us to talk about the Trump Campaign and possible ties to moscow. Hes also an obama adviser. Then he got an ambassadorship to sweden. And hes Mika Brzezinskis brother. Stay tuned. Squawk box will be right back. The first stock index musicwas createdughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highctranslation . Vesting. Its time to bench the benchmarks. Good morning. Welcome back to squawk box here on cnbc, live from the Nasdaq Market site in times square. Among the stories front and center, a Technical Glitch on the new york stock exchanges platform affected closing prices for Certain Exchange traded funds. Late yesterday, arca didnt give many specifics, but the wall street journal reporting etfs with a value of 150 billion were affected. Arca sent out alerts after the close, saying it was using a backup method to determine closing prices and it had canceled an unknown number of orders. Wells fargo is seeing a notable decline in new accounts. Checking account openings were down 43 last month compared to a year earlier. New credit card applications falling 55 . That all follows last years sales practices scandals. They have new rules where they actually have to be opened by customers. Its much more difficult. Its part of the overregulation of the economy. Exactly. They want actual people. And heres something you dont hear often. Rich new yorkers are asking the state to raise their taxes. A letter to lawmakers Governor Andrew Cuomo makes that request, saying top earners should pay more to support bridges, roads, schools, and other areas. It was signed by 80 people. I dont know how i feel about that. I feel like new york you both live in jersey. I live in new york. Its a very hightax state. We work here, so we get taxed here. We get to enjoy it like you now, since we moved in. Can we get a closeup of your face when you say that . Those potholes youre not hitting now, youre welcome. Right. Because of you. Yeah. In large part. New york is just a wonderful city. Certainly compared to what it was 30 years ago or 20 years ago. Absolutely. Its an incredible place. The fact it works at all is just beyond me. I dont understand it. Me too. Although, i still have some complaints about no lights on the first mile of the west side highway after you come off the bridge. Im going to call it 311. Ive never thought about that. Thats true. Theyre burned out. Theyre there, theyre just burned out. Im going to call 311 and complain. Anyway, tim cook making a stop at a bike sharing startup on his trip to china. That startup is called ofo. Its one of two major startups in china and cheated by University Students looking to make commuting more convenient. Theyre quickly expanding across several cities in china, attracting the likes of dede for investment. Cook writing in both english and chinese, thanks for welcoming me today. Great Energy Behind your mission to make commuting greener, more efficient, and fun. Fbi director james comey confirming theres an active investigation into possible coordination between the kremlin and the Trump Campaign. Joining us now is mark brzezinski, former u. S. Ambassador to sweden. He also served as director for russia and eurasia in the Clinton White house. Thank you for being here today. Thank you for having me. So we saw the news that came out yesterday. Confirmation that there is an investigation. Now what . Becky, an active investigation is under way. In the short term, there will be less certainty at the tippy top of the u. S. Government because any one of President Trumps Political Associates could be a target of that investigation. After all, trade craft in terms of russian espionage is to cast the net widely, to cultivate people over the long term, and well see where the investigation goes. But this is a clarion call to our democracy that Foreign Governments have a selfinterest in manipulating our electoral process and public policymaking process. There are laws on the books to enforce against that, but the question i have is do we have the resources dedicated to the offices at the department of justice to enforce that. Theres something called a foreign agents remembgistratio act, which requires americans who represent the interests of Foreign Governments to register before they act in the name of a Foreign Government in our public policymaking process. Under that law, you dont even have to be paid by that Foreign Government. But you have to register. And if you go to the foreign agents registration act website at the department of justice, you see that there are more than 400 foreign entities registered to really, in certain ways, engage on and try to change American Public policy. The office at the department of justice is tiny. It has minimal resources to even enforce the law with regard to those who have actively registered. What we may see in this fbi investigation is that people very close to President Trump b didn didnt even register. Ambassador, are you suggesting that this is sending out you said its a clarion call to other nations. Do you think china looks at this and thinks, hey, we can get more involved in trying to manipulate elections here . You think that because this has taken such a public spin that it kind of changes our relationship with other nations Going Forward . It depends on how we handle this particular case. I think to answer your question, becky, other nations have an interest in changing american policy in a way that suits their interests. If there is a very weak response to what could be russian manipulation of the 2016 president ial election, and there seems to be a litany of events that are quite surprising in the leadup to the 2016 election and a closeness between trump advisers and the kremlin that needs to be investigated, depending on how we handle this, will be an Important Message to Foreign Governments regarding hands on or hands off our electoral process. Foreign governments will try to manipulate our political process. The question is how far they can take it. There are very clear rules of the game governing this, but they need to be enforced. The office at the department of justice that does this is not really heavily resourced, unfortunately. Thats the enforcement piece. In terms of our intelligence priorities as a country, you know, during the soviet era, during the cold war, america was able to outmaneuver the soviets because, thanks to signals intelligence, we were able to completely understand every defensive and offensive structure of the soviet military. After the collapse of the soviet bloc, and understandably, especially after 9 11, u. S. Intelligence resources were redirected towards the middle east and al qaeda, again understandably. But did we take our eyes off the ball off of the russians and others who might want to manipulate the electoral process. I want to get your thoughts on putins end game here. What is he playing for . Is he makesing a mistake . For most of the 90s, it was pretty much the russian policy to incorporate itself into the western world. Is his objective now to piss off all of europe and the United States . I mean, its one thing during the soviet era when they had this ideology they were trying to promote. Whats he trying to promote now, and is all this going to end up well for him . Its a very interesting question because the putin who came first to russian prime ministership and then to the russian presidency at the end of the 1990s replacing yeltsin is different from the putin today. You know, assessments of putin when he first rose to power and remember, this is a guy who made his career as a kgb operative and who has said in speeches that the single most cataclysmic, negative event of the 20th century was the disintegration of the former soviet bloc, when he first came to power in early 2000s, hand picked by yeltsin, he was very cautious, very careful, very happy to find himself prominent on the international scene. The putin we see today, shirtless, creating museums in honor of himself in moscow, is much more egomaniacal and quite frankly much more engaged in manipulation in terms of western elections and the like than weve ever seen before. Okay. Ambassador brzezinski, want to thank you for your time this morning. Thank you so much for having me. When we return this morning, it is tough to be a retailer. From the border adjustment tax to the pressure from growing ecommerce sites, a look at how luxury retailers are innovating to stay ahead of the curve. Thats next. Later in the program, congressman kevin brady talks health care and tax reform. It all goes through his committee. Squawk box will be right back. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back, everybody. The way consumers are shopping is rapidly changing. Excel brands is trying to monetize these trends by reimagining retail as a convergence of shopping, entertainment, and social experience. Joining us now is the chairman and ceo of excel brands. And judith ripka, whos founder and chief designer of the judith ripka brands. I want to welcome you both and thank you for being here today. Watching whats happened in retail over the last couple years has just been stunning, to see these changes that have come about. Bob, how do you handle this . How do you think about it . Has it happened even quicker than you anticipated . Well, becky, the Retail Industry is going through an unprecedented cycle of change. It all started about six years ago when control over margins shifted from retailers to consumers. At the same time, social media, as ridiculous as this sounds, began to emerge. No one really knew what social media was. Everything that we knew about marketing at that time changed. So whats happened now is there are five very Disruptive Forces that are impacting the industry. We have control over margin in the hands of the consumer. We have the emergence of the online retailers taking market share, driving traffic down in malls. We have the consumer now influencing trend in ways they havent been able to in the past. So we have this whole movement now of see now, buy now, wear now. At the same time, we have the fast fashion guys taking market share, delivering what the consumer wants, when they want it. Most Major National brands here in the u. S. Are overdistributed. That takes us back to the consumers controlling margin. Thats what were dealing with. Obviously this is something bob has to think about all the time, judith. Is it something as a designer you think about too . Are these changing influences the way that you reach your consumer, how quickly Consumers Want things, what they want, has that affected how you design your jewelry . Well, we worked on it very hard to make sure that we change our styles every few weeks. Theres always something new thats happening with me. It keeps me up until 4 00 in the morning, but thats fine. Its something i want to do because i want to make sure that im in the marketplace and that my things are selling. Is that because the online demand of it, or is it just the Consumer Needs new and fast and different . Its the online. We need to do that all of the time. Of course, im on qvc for 20 years. So they need new merchandise every we have 500,000 people watching and buying, and they want new merchandise all the time. Ill be on, on thursday. Theres new things. Fortunately trump wont like this, but im in a factory in bangkok. Theyre all graduates of oxford. Theyre brilliant. They know how to work with factories here. They only have 20 people at most working for them. So thats how im able to do it. These people are brilliant at what they do. So will that change things . If theres a border adjustment tax, what will that mean for you if youre producing so much many bangkok . Its obvious what it will mean. Well have to hold the price, and we plan on doing that. So bob, what does that mean for you, when youre managing not only judiths brand but other brands . Youve got Isaac Mizrahi and others. How do you stay ahead of this . As it relates to the border adjustment tax, given that our industry imports the vast majority of what we sell, there will be a severe impact. We would hope that common sense would prevail here in washington, and the border tax is given a transition period so we can adjust. As an industry, were dealing with enough change now, this will complicate things even further for us. And what are your hopes . You think it just wont get put through . If it does become law, it would be very helpful for our industry to have a three to fiveyear transition period. Is that something you could deal with . If theres a fiveyear transition plan, no problem. Yes, that would be something i think the industry could adjust to. Judith, how does Technology Change what you do as a designer . Arent you getting immediate, constant feedback from customers right now in a way that you didnt, say, ten years ago. Its amazing. Theyre telling me what they want, what they need, how to make it. Its wonderful. Of course, our technology, were going to be using the machines that immediately make the product three dimensional. Wheres that going to be done . In bangkok. Why cant you do that here . Well, we can do the beginning part of it here. But the manufacturing part after that, the polishing, the setting, and everything else, its all hand. And they dont have the facilities here. Everyone on 46th and 47th street, i started there, theyre all small, teeny factories. Theyve got trump has to upgrade everyone. He has to figure out ill be happy to make it here, but we have to get the people to do it. And i hope we do. Judith, i want to thank you for coming in today. Bob, thank you. Well talk more with you as we see what happens with policy. Coming up, why are retirees going back to work . Jane wells looks at some interesting folks who are past the age of retirement but feel the need to stay involved. That is next. And the next hour, a squawk box exclusive. Pick for car of the year. Well talk hot wheels and big money in the next hour. Every day is a new day. Yesterday the nasdaq brought us bacon. Because you complained. I was doing something on shake shack. I said, have you ever had a shake shack burger . Theyre supposedly really good. I said id really like to try one. Ask and you shall receive. But when a company hears that and goes to the trouble of doing it i mean, did you try one of these burgers . Ive been there once. Ive only been there once. Did you have a burger . Ive got a burger here. Did you try it yet . No. Its unbelievable. Remember you complained about me having food in my mouth the last segment. The negative feedback has stuck with me. That tells you about management, when theyre smart enough to do that because they know im going to talk about it. Im telling you, this is one of the best hamburgers. Youve taken a couple bites out of it. Im going to finish this thing. Were you here when terry h d lundgren had the red velvet coat . It was christmas, you were away. Did you keep that . No, but it was a red velvet coat i wore. Kind of the same thing. I have no use for red velvet. Put a beard on and youll be fine. This im going to use. What else should you talk about . What else do you lack . The fries are really good. What are you going to ask for, for tomorrow . Jane wells would appreciate this. She would. Im going to stand up, look over here, and eat while you talk to her. The annual report that measures workers and retirees attitudes on retirement. Jane wells joins us with more on the new retirement, which is not retiring. Jane . Look at you. Reporter guys, its a little early for a shake shack burger here in palm springs. The motto here is ageing is natural. Getting old is a choice. In the survey, 60 of American Workers have at least some confidence that theyll have enough to retire on. But the confidence level is even higher among those who have already hung it up. Like you said, steve, the new retirement is not retiring. I got a world map, and i started mapping out places that i wanted to go. Reporter sherry goodlow worked at trippiaaa for 30 year retired at age 62. I had Breast Cancer six years ago. I looked between 62 and 65 and i thought, do i really want to stay there another few years, or do i want to start really living . Reporter she ran the numbers, realized with a little downsizing she had enough retirement to, quote, start living. Now through a website called trusted house sitters, she house sits and pet sits around the world for free from england to australia. We caught up with her in dallas pet sitting a doxson. The Employee Benefit Research Institute found almost 80 of retirees feel confident they have enough to make ends meet and a third of retirees who left the work force earlier than expected wanted to, like sherry goodlow. She says her best friend says shes changed. She says, it was almost like a rose that was closed and it just opened up. She says, you had your hair wrapped with the scarves and these flowing dresses and youre out on the beach. I plan to do this as long as i can. I love it. Reporter now, later on squawk alley, well hear from two guys, one whos 67, the other whos 77. They have both gone hollywood in their retirement. One because he wants to, its fun. The other could use the money. That is something we will also be talking about. Right now on cnbc. Com, more from the survey, including how many American Workers have actually put together a formal retirement plan. Guys, back to you. That looks good, jane. Jane, you still live there in l. A. I lived there for a long time. You know what i miss most about los angeles is where you are. Innout. No, being two hours from the desert. I dont need the ocean. If i could get out there and have a house out there, the weather, its dry, its gorgeous, its clear, the golf. Its just phenomenal. Reporter joe, i had dinner here last night. There is a lot of theyve done theres a lot of new stuff in palm springs. It is so it was such an awesome, cool place. Very hip. Very hipster. Give me any of them. You dont need anything else. Why do you need an ocean . The sand getting in your toes. Theres sand in the desert. Reporter dont bad mouth the pacific. Theres ocean people and desert people. I dont know. The golf is great. Big horn, vintage, iron wood. Theyre all great. Reporter and right now its almost 70 degrees before 5 00 a. M. Exactly. Its beautiful. Never rains. Jeaane, thank you very much. When we come back, john engler will talk job creation and deregulation. Plus, kevin brady is our guest. Also, a quick programming note. Dont miss ibm ceo gin ibm ceo ginni rometty. This is a first on cnbc interview you cant afford to mis. Squawk box will be right back. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Health care overhaul. The gop unveils new proposals to the reform bill. House ways and means chairman kevin brady will join us ahead of a key vote on the hill. New this morning, pimco reveals its latest read on the km i. Why the investment giants key them this year is scaling it back. Plus, buckle up. The hottest cars of the year pull up to cnbc. We go behind the wheel. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square. Im joe kernen along with becky quick and steve liesman. Andrew is off today. The futures right now have been trading in positive territory for most of the morning. Up just under 40 points on the dow. Up just under six on the s p. The nasdaq indicated to open up about 16. 5 points. Take a look at treasury yields as well. Weve been watching those closely. Youll see that the ten year right now is just under 2. 5 to 2. 493 . Among our top stories this morning, the department of Homeland Security announcing that larger Electronic Devices will be banned on certain inbound u. S. Flights. This new rule applies to flights that are arriving from eight countries in the middle east, including egypt, saudi arabia, and the united arab emirates. General mills out with earnings. The Food Producer beating estimateds by a penny with adjusted quarterly profit coming in at 72 cents a share, but revenue did fall short of expectations. The company pointed to a gap in pricing and promotional activity. That stock is down by just over 2 . In political news this morning, House Republicans releasing a package of amendments to their Health Care Bill. The two changes accelerate the expiration of the Affordable Care acts taxes. They also further restrict the federal medicaid program. President trump will be meeting with lawmakers on capitol hill this morning to try and push for support of the American Health care act. Well talk more about Health Care Reform with house ways and means chairman kevin brady coming up in less than half an hour. And hes the guy. Hes the guy for that and for taxes. Everything has got to go through his committee. Some of these proposals the journal has an interesting piece. One of the editorials. I dont know whether you read that one too, steve, about this one other provision to actually try though hold down costs thats being overlooked. Everybody is talking about coverage. Might be the top thing in the wall street journal about one of the provisions not being sold. I want to ask brady about that. And a story were watching this morning, the Apple Online Store is down for scheduled maintenance. Thats weird. So the site needs some maintenance. Thats weird. Even the site like a physical place that needs maintenance. This needs maintenance. It has a message that says weve got Something Special in store. No other details, though, at this point. But there has been speculation that the tech giant is planning to launch a series of new ipads. Shares of apple above 140, closing in on 800 billion not too far from now. Steve, you tried the shake shack burger. I did. It was an excellent its pretty awesome. I have a smash burger and a five guys and also an elevation burger near me. This ranks. It does. Its up there. See, ive never had a five guys burger. Wish list for tomorrow. Have you had a steak from the palm, joe . I dont believe i have. You havent had a steak from the palm . Havent had any onion rings from there either. No onion rings from the palm . All right. Actually, this is bad. This is almost like pandering. This is pandering . Its almost pandering. We should go to the governor probably. I just want to remark before we do that. We could be sitting here and having no discussion about the testimony yesterday from looking at markets. Theres no imperative here. Im not boing to sgoing to s you can say it. I mean, i saw the hyperventilating, i saw the dems and the mainstream media. A month ago, even yesterday, they said theres been nothing. Just confirming the fbi is looking at it for everybody else on that side of the aisle, it means theres something there. I get it, joe. Im reading the articles that say yesterday was an historic event, that an fbi director was saying the president s people from the campaign are under investigation is a transcendent historic event. You look at the futures this morning. Its not just that. It may just be that its comey, and weve heard a lot of other things that were you should under investigation. This is why i wanted to tie in the conversation. Consumers might be feeling a sting in their wallets. Joining us now, former governor john engler. We know what happened yesterday. You cant see it looking at any data point in the market this morning. I think becky just touched on it briefly. I think its comey. I think hes got so little credibility on both sides of the aisle that, youre right, its a unique admission, but i think comey has been all over the map. Who believes what he says . Well wait until something happens. Governor, let me push you on this a little bit. I really want to explore the tails on this thing here. Yesterday i think it was the New York Times described it as an historic event. Is it not historic to have the director of the fbi come forward and say that the president and his team, for actions in their campaign, are under investigation for relations with russia . Sure, but the whole build up to this has also been, in my judgment, historic and unusual and unique. Weve never been through a Campaign Like weve just had. Weve never had a campaign that had the machinations that were taking place. Weve never had a campaign really where the two candidates were as unpopular. The emotions i think this is part of whats going on. Everybody is so wrung out. So yesterday was old news. Continuation of the story, yeah. Lets push it forward then. The only thing i think that matters here were a business channel here. What did yesterday and this ongoing investigation, what does it say about the ability of President Trump to get his policies through, the economic policies, the tax cuts, the infrastructure spending, the deregulation . Well, i think its going to be hard because of the political division. This doesnt obviously fix anything, but it doesnt frankly make it worse. Youre seeing a president whos being described by members of congress, and chairman brady might talk to this, but hes rolling up his sleeves. Hes personally going to the conference this week. I expect the Health Care Bill to pass the house on thursday. I think speaker ryan will get that job done. There is a great deal of moment tunn momentum, in my view, on the tax issue. You had discussion on a phasein period on adjustability. Thats an important kind of statement. I do think theres ways. Brady and his team are outstanding. Theyre listening and looking and molding and shaping. I think they can get a bill out. I do think on taxes, unlike health care, that tax bill that comes from the house is going to be very close to a final blueprint for what goes to the president s desk. We have congressman brady on next or chairman brady. Hes the guy whos crafting that plan. But lets talk about health care. Does Health Care Get out of the senate . I think its hard. Thats going to be a lot of negotiation. I dont know what thats going to look like. Ic President Trump is sort of uniquely blessed. I dont know that its fully appreciated maybe by him and the white house, at how skillful hes got in the leadership of people like speaker ryan and leader mcconnell. If it can get out of the senator, senator mcconnell is the person that can get it done. I think theyll get it done. I think its going to look differently. The one thing im pleased with now as a former governor is that theyre really starting to hone in on the importance of medicaid. I dont want to go back into history too much, but 5095 and 96 we put a bill on president clintons desk. We didnt have an answer as to how it was going to work, but we knew among the 50 governors, somebody would figure that out. I think were still at the same point in 2017. Give these men and women, our chief executives at the state level, the chance to mold and shape health care for people of very low incomes. Thats where the gain has come and the coverage primarily is in medicaid. Let them figure out how to run these systems. I think youll get a better value for your health care dollar and a much more effective system with a federalism approach, not a top down from washington. It blows my mind that some of the people who say theyre conservatives and standing up for conservative principles cant see this. Weve got members in this Freedom Caucus who simply dont have an economic sensibility about anything. They would lead everybody over the cliff. They need to follow speaker ryan, and they need to get off their obs on city answer in obstinanc and get on board. This is legislative 101, politics and negotiation. But pass the bill and stop standing in the way. I think rand paul is embarrassing himself with his opposition. Governor, are you unhappy with the changes that have been proposed overnight to paul ryans bill . You think thats catering too much to the very people you just talked about . Well, no, i think thats negotiation, becky. There was an interesting piece in the journal. Hey, were back to actually watching a legislative process. It was always described as the sausage making. Sometimes you dont want to get too close to it. I think youve got to negotiate. In a real robust legislative process, democrats would also be part of that negotiation. At this point, theyre not participating. So theyre not going to be, you know theyre not ep haddihel create this recipe. I think what brady has done and what ryan is doing is exactly what they need. The senate will do more of that. The house and the senate likely will be in a conference where theyll be writing those final details. Governor, thank you very much for joining us this morning. Well check back in with you as this process unfolds over the next several months and probably more than a year maybe. Id love to do that. A lot going on. Thanks. Coming up, some of new yorks wealthiest residents are calling on the state to raise their taxes. Well tell you why. Squawk box will be right back. Still to come on squawk box, the battle for a health care overhaul. Congressman kevin brady is helping lead the charge for reform. He makes his final pitch before the house vote. First on squawk box, an interview you wont want to miss. Starting at 8 30 eastern time. Stay tuned. Youre watching squawk box on cnbc. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. What would help is simply being able to recognize a fair price. Thats never really been possible. But along comes a radically new way to buy a car, called truecar. Now it is. Truecar has pricing data on every make and model, so all you have to do is search for the car you want, there it is. Now youre an expert in less than a minute. This is how car buying was always meant to be. This is truecar. A look at times square this morning. In fact, some of the wealthiest new yorkers are asking the state to raise their taxes. 80 people, including george soros and steven rockefeller, wrote a letter to andrew cuomo that would create new tax brackets to raise a projected 2 billion. The letter was obtained by the associated press. Those who have signed on say they should pay more to support schools, roads, bridges, and programs to help homeless residents in new york. Coming up i dont think theres steve, correct me if im wrong. They can send in as much as they want. Thats what someone on twitter wrote. Go ahead. They could double. Theres nothing stopping them from paying as much tax as they would like to pay. Right. Theres no limit on the amount of tax. You must pay the amount youre legally required to. God bless you. Go for it. Coming up, squawk box goes behind the wheel. One of these rides took the top spot for hottest car of the year. Well tell you which one and how much it will cost you. Its not really about them. They want other people. Squawk box will be right back. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. The rob report out today with its highly anticipated car of the year award. More than a dozen of the most luxurious cars in the world competed for the top spot. Robert frank joins us now. A couple of them, i think, robert. There you are. How are you doing, robert . Good, joe. We have a couple of them. For the first time in its 18 years of doing this award, the robb report, we have two winners for the first time. Joining us now to talk about this, david arnold, the managing director of robb. Thank you for joining us. So two winners. First time ever. Tell us about how this works. Sure. We have about 200 judges that pass through the event. We do seven separate sessions. Judges. And these arent judges. These are regular wealthy consumers who would buy these cars. Indeed. Affluent vips. We asked them to take the cars as if they were picking them up from a dealership, drive them around the roads in napa. And the criteria is what . Do they just pick a favorite and you figure out how many people pick that favorite . Theres about a dozen questions. Its an a through f grade. We ask them in essence, does the car deliver on the promise that the manufacture states, the perception of the promise of the vehicle. Its a hard choice. And what i love about this year, these are almost opposite ends of the philosophical spectrum of what a sports car should be. Lets start with the lamborghini. This starts at 313,000. Its a v10, 0 to 60 in 3. 4 seconds. What did people like about this car . So one person actually said it was they advocated for the fact that Driverless Cars should never be in existence when you can drive Something Like this, which we thought was amusing. Fun, great handling, great performance. Somebody said its like having a car on rails. Doesnt shimmy, doesnt move at all. And lamborghini, its all about flash. Its sexy. The design is a little outlandish. Opposite end, the porsche. This is the 911 turbo s. This is, i believe, one of f , not the, fastest 911. It goes over 200 miles an hour. Yet, its a mere 190,000. It is. In fact, we encourage people to buy both so they can get the comparison of the different driving experiences. Porsche is jusuch a reliable vehicle. This latest iteration certainly, i think, has put the performance mark out there. Look, the 911 has not changed much in 50 years of being in existence. The secret to porsches is always whats under the hood, the engineering. The stuff you cant see is what gets better and better every year. And great value. And this color, which i guess is called graphite blue, is brand new for this model. What do people love about porsches . Reliability. Plenty of our judges got into the vehicle and said, well, ive driven 911s, what could be different . Then they get out and say, now i see. Lets talk about the broader car market. Weve seen the luxury market for almost any highend goods after the trump election doing very well. Car market did terrific at the Fourth Quarter of last year. Ferrari, best year ever. Lamborghini, record sales. Porsche, record sales last year. Do you think that strength based on what youre seeing with luxury consumers at the robb report, is that going to continue . Its certainly continuing right now. The special editions, the limited editions, porsche being a master at that with a new series released every year. There doesnt seem to be any slowing down in that luxury segment. But theres so much supply. Even in the sort of 1 million plus range, all the super cars people are making, does it feel like there could be too much supply out there . Not right now. I think largely because the manufacturers are keeping this limited edition strategy. So its a supply and demand situation, which obviously youre very similar with. That seems to be working. You joked about Driverless Cars. Will you ever have a driverless car in the mix for car of the year . Absolutely not. Not. Absolutely not. Its all about the driving. Its the experience. It really is the experience and the joy of what the automotive manufacturers can do. I think for a luxury consumer, its of no interest to them. All right, guys. Buy them both. Thats the answer. And the robb report hits stands today actually. You can read more about all the other cars, how they did, and why they were chosen. Guys, back over to you. Joe, this is an mamazing value. This car is actually faster than this 300,000 car. Totally different experiences, but value for money, this is a great car. Its timeless. They do tweak it a little bit every year. Hes right. Since i lease it, its every couple years. They get better and better. People say i want the air cooled engine or whatever. I mean, the state of the art 911 is absolutely unreal the way that it and to get a car that goes over 200 miles an hour for under 200,000, i know thats still a lot of money, but thats really good value. The germans, they know their engineering. Whats the 0 to 60 on the 911 . 2. 9 seconds. 2. 9 . I wasnt listening to everything, robert. Thats got to be a turbo or something, right . The 911 turbo s. Yeah, thats 200 grand. And theyre both allwheel drive, so you can drive them in the snow. Thats frightening to me. You can get a nice 911 for half that. Thats less than a tesla. Think about that. Anyway, thank you. Thank you, guys. Is it the robb robert for robert frank . Not yet, joe. Maybe some day. I just think of it that way because youre so associated with wealth. Its almost branding. It almost goes hand in hand now. Well, you know, david and i will chat. Well come back to you on that. All right. We havent had any porsches on the set here, have we . Going to be hard to get in here in the elevator. Coming up, House Republicans proposing changes to the Obamacare Repeal bill. Ahead of a key vote this week. Well talk to congressman kevin brady about the Health Care Battle next. As we head to break, take a look at u. S. Equity futures, which are on the positive side, maybe a little weaker than they were today. Up 34 for the dow. Five for the s p. 15 for the nasdaq. Yes . Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. 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 front and center, walmart is launching an investment arm to try and help expand its ecommerce business. The new unit will be led by mark lore, who joined walmart when it bought jet. Com for more than 3 billion last year. The investment arm will partner with retail startups, venture capitalists, and entrepreneurs. Adobe and microsoft are teami teaming up in effort to better compete with Companies Like salesforce and oracle. Plus, two big name earnings reports that are set for after todays closing bell. Well be getting quarterly numbers from fedex and dow component nike. Softbank has reportedly dropped a 100 Million Investment in smartphone startups that competes with the iphone. Softbank was planning on taking a stake in the firm called essential products, which was founded by the Android Software. It scrapped those plans because of its close relationship with apple. A u. S. Federal judge has rejected a bid by leon cooperman to dismiss the s. E. C. s Insider Trading case and his firm. The judge says the s. E. C. Made a plausible claim that cooperman and omega reaped about 4 million in illegal profits in 2010. Separately, the judge dismissed claims by the s. E. C. That cooperman failed to file about stakes in eight public companies. A trial date has been set for november. Speaking to cnbc, cooperman said, i look forward to going to trial to prove my innocence. As ive said all along, theres no case of Insider Trading here. Hes told us that on set. Were going to get now to josh lipton. He has breaking news on apple. Josh . Steve, this news just crossing from apple. Apple today is announcing iphone 7 and iphone 7 plus product red special editions. Looks like theyre be available to order online worldwide and in Stores Beginning on march 24th. Remember, when you buy red products, what occurs is that apple makes a contribution to a charity. That charity then uses that money to finance hiv and a. I. D. S. Programs in africa. Over the past ten years, apple has collectively raised about 120 million for that charity. Whats different is other products in the past that have been part of this campaign have included ipods and cases and wristbands. This is the first time youre going to be seeing an iphone. It is a 7, which means that apple is going to be making some percentage of donation on a 650 device, which could be substantial. Of course, apple has been on a run here. Its up more than 20 year to date, on track for its best quarter since 2012. Guys, back to you. All right, josh. Yep, market cap keeps going up and up and up. Watching that. See if the law of large numbers ever takes over. House republicans are unveiling a package of amendments in a bill they hope will repeal and replace obamacare. Joining us now, house ways and means chairman, kevin brady. Thanks for joining us. You bet. Thanks, joe. Ive read a lot of stuff in the journal and elsewhere. Well get to the lead editorial, which i think is very interesting and something i wasnt even considering. I think its a good selling point. What about changing it for Older Americans . What kind of provisions are you looking at . Has that been done yet . Yeah, it has. So look, theres two big provisions already in the replacement bill that helps seniors. Not those on medicare. Those 50 to early 60yearolds that havent retired yesterday, may be running a body shop, their wife is doing the bookkeeping. Those type of workers. We want to make sure that they get even more help. So the house is creating really the financial space for the senate to look at Solutions Like increasing the tax credit for them. We had former senator evan bai on. I just asked him, you know, democrats know that obamacare, you know, isnt perfect. After round one, when you get these other rounds, two and three, where you need 60 votes, do you have any open that you could get any cooperation given the poisonous atmosphere down there . Well, great question. We hope so, but some of these changes were proposing are very common sense. Letting Small Businesses join together to pool and get the same discount as the gbig guys, letting consumers buy the best Health Care Available to them, even if its in the state next to them makes great sense as well. Plus, we have some Important Health care programs coming up this year, like the Childrens Health program that has universal support. I think these common sense measures fit in those provisions. At the end of the day, im hopeful that we can move all this across the line. The original one of the original rationales for obamacare was to try to somehow slow down Health Care Inflation and premium increases. If you come to these people on the other side of the aisle with genuine practical ways of holding down Health Care Inflation, do you think that theyll be open to that . I guess thats the same question. Im very skeptical. Well, i sure hope so because, look, everyone acknowledges that obamacare did nothing but actually lowering health care costs. It was just sort of the model of very expensive medicine chased by very expensive subsidies directed from washington. Our approach is much more Affordable Health care, much more affordable credits to buy it, directed by you as a patient, as a Small Business person. So were hopeful that they join us in here because health care is so critical. Ive seen zeke emanuel and others say that some people characterize the individual Insurance Market as in a death spiral. Ive seen them say, no, its not at all. The journals lead editorial today says the biggest gamble is whether theres enough reform to try to stem the death spiral in the individual Insurance Market. It goes into this tenyear, 100 billion Stability Fund. Its the first time ive heard of it. Can you go into that . Yeah, look, this is a sinking ship. However you describe it, its going to pull out of people under obamacare. By allowing states to have ample amount of money for low income or handle those highcost patients, that could result in a premium decrease for the rest of those citizens in a state by 20 to 30 done right. If you take out some of the other regulations, some of the other exchanges so those other added costs, you can lower it further. So there is a real way to Lower Health Care costs so theres more affordable products for americans. Thats the approach were taking in this bill. By going retro active on a 2017 taxes, do you need to rescore . I dont know if you really agreed with the first scoring by the cbo. The deficit reduction wouldnt be as significant. It wont be. So for a couple reasons. One, we are going to accelerate that tax relief on job creators, on local businesses, on consumers who have health care plans. We think that relief needs to be automatic. It will cost some money, but we think thats good for the economy. Certainly good for consumers. Were putting in those dollars for the senate here in the house so the senate can muscle up the tax credit for seniors. That will cost money as well. So yeah, that deficit number is going to come down, but i think for the right reasons. Chairman brady, some of the things youre doing, repealing those taxes sooner in 2017 versus 2018 and also freezing an unwinding medicaid sooner, i know those are things youre doing to try and negotiate and work with people in your conference, making sure that you bring in some of the people who said they couldnt support it otherwise, but when this goes to the senate, the senate is very likely not going to be on board with a lot of those issues. It goes back to conference. Its going to be changed and taken out. Is this just a head fake to get some people to support it so that it goes through . No, absolutely not. In fact, every stem of the way weve looked for ways to improve this bill, listening to our members. The truth is, the house is doing the hard its march madness. Maybe the appropriate analogy, were driving the ball way down the court, making it easy for the senate to complete the shot. Certainly theyll want to make some changes. We recognize that. But look, this is a partnership. At the end of the day, these are real reforms in the house. These are their rules that were abiding by. They can make even more improvements as they see fit. At the end of the day, were going to get this done. Does that mean it cant be changed in conference . Very likely some of those measures will not pass the senate. So most of the discussions were having are very positive. Wed all like to do more. But these are the senate rules were abiding by. So to the degree that they can help control their own role over there, thats always helpful. So yesterday didnt throw a wrench in the works of the thursday vote . Then well talk a little bit about yesterday. I want to get your comments. Its going to happen thursday. How many guys you think youre going to lose . Where are they from, and whats going to happen to them . Look, i think theres going to be extremely strong support for this for a simple reason. This is what we promised, relief from obamacare now. In the replacement, restoring state control and the free market to people. That will be thursday . This will be thursday. Okay. So yesterday i just wonder, the reaction and steve pointed out the New York Times editorial versus the wall street journal editorial. I dont know how you could be watching the same developments and come away with that. You watch either side of the aisle. Comey is able to talk about the investigation into the russian links, but could give no information on the investigation into the leaks. Does everything seem like its proceeding the way you would expect it to from the fbi director . Or were a few eyebrows raised on what the hell is happening here. You know, joe, i have to be honest. I have my head full down on health care and tax reform. Good answer. Every day. Truthfully, if its not in that wheelhouse, im aware of t but thats where im focused on right now. All right. Thats fair. The worry is you know, its like a what are those Rube Goldberg devices . If you dont get repeal and replace, theres no tax reform. This russia thing just because theres an investigation now, one side thinks, well, it has to be true if theres an investigation. At least thats their narrative. If that happens and that messes up repeal and replace and that messes up the tax reform aspect, were going to start worrying about the stock market. I dont think you want that. We dont. But heres my point. You know washington. All they do is try to distract the president from his agenda. In this case with President Trump, it is about repeal and replace. It is about the economy and tax reform. I dont think anything is going to knock congress or this president off his priorities. Congressman, did the amendments overnight to they change or get at the estimates of the number of people who will potentially lose coverage under the republican plan . You know, probably not. Although, by giving states more flexibility on medicaid, theyre going to be able to serve that population, especially the help you give for those who are aged or in nursing homes. That makes good sense. Then on the tax credit side, the financial space were giving the senate to address those 50 and early 60yearolds, we think, is going to improve coverage for those that population in a very positive way. No, we havent seen those numbers. I think well get the raw budget numbers from cbo before we go to the floor for a vote. So the idea is you make it less expensive for people in that 50 to 65 range, and thats part of the cbo estimate as to why they would lose coverage, because they couldnt afford it. You make it more affordable, you think you bring that number down. The thing is, today those 50 and 60yearolds are paying extraordinarily high premiums because of obamacare. Remember, they said, look, if we punish the young people, it will keep your premiums down. Young people are smart and said, no, thank you. Seniors are paying higher premiums today. Our approach is lower the cost of those health care products, have a Stability Fund so states can target and help those in that population. Then were adding a third degree of help here in this big by giving the senate the space to perhaps increase the tax credit. Where are you now on the feeling of the border adjustment tax and whether the administration, whether President Trump and the white house are 100 behind that . Im going to i always risk things. At the risk of someone just sent me some mail. Not going to say who it was. Said that the two Goldman Sachs democrats making Economic Policy are at odds with the sort of populist nationalist group and theyre butting heads about whether to do border adjustment. They dont want to do it. Do you have any anecdotal evidence about whats really going on behind the scenes there . My sense is that border adjustability has become a given. It will be part of the final tax reform plan. Really, now the discussions are how can it be designed and transitioned in a very positive way. For the rest of businesses, and i would say for importers as well, looking at this strong economy, taxing everyone equally in the u. S. , eliminating any tax incentives to move overseas, and making sure made in america products can compete around the world, Everyone Wants that in the final tax reform plan. So really, now i think it has shifted to how best to design these provisions. Just a moment, chairman brady. This is very important for our audience. Can you just clarify on that. You say that this has become a given, based on what . It has been the senate in the past that we thought theres no way. Have you got a new count . Again, i never speak for the president. I certainly dont for the senate as well. I think people are coming to realize that as a key component tied with the lower rates, no longer taxing worldwide, the Critical Role the border adjustability plays in being able to leapfrog from now 31st in the world in competitiveness up to third and keeping us there for the long term is really key. But again, whats different . What we had heard in the past is opposition obviously coming from retailer, opposition from anybody importing a lot of things, opposition from plenty of key republican senators. And still having the president not signing off on this just yet. Whats changed . Look, this is naturalists. Special interests protecting tax breaks. I get all that. They would say that its not special interests. They would say youre doing things they say 15 different arguments. I get that argument. The truth of the matter is the tax code Going Forward is not going to favor foreign products over u. S. Products, nor is it going to chase u. S. Manufacturing and research overseas. I think that is a given. What i sense is just a change in momentum as we move forward on this. Congressman, theres talk about phasing it in. Are you in favor of that idea, of doing a partial border adjustment for a period of time and then phasing in over a number of years . I think that will be one of the modifications on this, to make sure its done in a way that the economy adjusts efficiently, effectively, so we can see as this moves forward. I also think were open to design changes. Look, we want the most pro growth tax reform we can muster. We think this is critical to it. So were listening to the import industry, and more poimportant, theyre engaging on the design part of this. I just see a shift in the thinking that the at end of the day this will be in there. Lets make it the most pro growth provisions we can. When you say open to design changes, what does that mean . What aspects of the design would you be willing to bend on . So were looking at just as we do in the current tax code. On the import industry, youve got issues like raw commodities. You have Component Parts that might go through automobiles. You have finished products that might ind up in tend up in the store. We know the Exchange Rates will adjust efficiently. A fair concern is what if they dont immediately or completely . Well, design, in my view, of this tax revision can accommodate those in a good way so that theyre seeing 3 and 4 growth, not what we have today. A much more competitive u. S. And a simpler tax code where they can use their capital from around the world where they need it hopefully in the u. S. So i just see very positive directions in the design in the transition of that provision. Always a pleasure, chairman brady. Thank you for all your time this morning. Okay. Up next, pimco just out with a new read on the economy. The firms Global Economiced a vie economic adviser will explain why scaling back is the big theme this year. Hey gary. Oh. Whats with the dogsized horse . Im crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. Isnt that right warren . Well, you could get support from thinkorswims inapp chat. It lets you chat and share your screen directly with a live person right from the app, so you dont need a comfort pony. Oh, so what about my motivational meerkat . Inapp chat on thinkorswim. Only at td ameritrade. Hi, im frank. I take movantik for oic, opioidinduced constipation. Had a bad back injury, my doctor prescribed opioids which helped with the chronic pain, but backed me up bigtime. Tried prunes, laxatives, still constipated. Had to talk to my doctor. She said, how long you been holding this in . laughs that was my movantik moment. My doctor told me that movantik is specifically designed for oic and can help you go more often. Dont take movantik if you have a bowel blockage or a history of them. Movantik may cause serious side effects, including symptoms of opioid withdrawal, severe stomach pain and or diarrhea, and tears in the stomach or intestine. Tell your doctor about any side effects and about medicines you take. Movantik may interact with them causing side effects. Why hold it in . Have your movantik moment. Talk to your doctor about opioidinduced constipation. If you cant afford your medication, astrazeneca may be able to help. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back, everybody. Pimco is updating its yearly Economic Outlook. The firm is dialing back a number of the global macro risks. Joining us right now to tell us more about it is the Global Economic adviser at pimco. You think that there are some tail risks that are less likely to happen now. Why dont you tell us what those are. Yeah, so going into the year, we worried a lot about tail ris coming from china, coming from europe, coming from trumps economic policies. These tail risks are still here, but i think what has happened is that they have become a little less fat. So we have less fat tails right now. In china, i think the risk of an accident is much reduced. The buzzword in china is stability ahead of the 19th Party Congress later this year. Theyve clamped down on capital outflows. They are curbing some of the successes on the credit side. The risk of a disruption of the chinese currency is lower. Europe, the risk of a populist victory is lower. They didnt win in the netherlands in the election last week. In france, it is suggested Marine Le Pen will not become president. Here in the u. S. , a risk of a trade war sparked by very aggressive trade policy by the Trump Administration is also lower now. Trump could have started a trade war. He could have imposed tariffs by executive order from day one, but it hasnt happened, arguing for a more moderate approach. This is why weve scaled back the tail risks. This is why we think the Global Economy will be doing well this year. Were in the midst of a broadening and more synchronized, Global Economic recorr r recove recovery. The outlook is good. As a result, you feel more comfortable telling people to buy stocks . No, actually, not really. The interesting thing is that the stock market, i think, is prized for an outlook. The stock market has really focused on the right tail risks, the positive aspects of u. S. Economic policy in the last few months. So we think stocks are relatively expensive. And we think that this is a time for investors to maybe take up some cash race, some liquidity in order to deploy the cash and liquidity when we get further bouts of volatility, which wed expect. Whats the point of having a feeling that theres less risk out there if it doesnt translate into on action from an investing perspective . Are you less likely to tell people to sell . No, becky. One thing is to, you know, have a good assessment of what the Economic Outlook is, but you have to look at what is priced into market. Where are the opportunities . We think, this is a time where, you know, credit spreads are extremely tight, so we have reduced our credit exposure somewhat. This is also a time where we think think that inflation risks, at least medium and longterm, are on the upside. This argues for being overweight inflation bonds, tips particularly in the u. S. Sure. Where are the opportunities . Well, we think the u. S. Housing market, for example, is very robust, very solid. We think there are opportunities in nonagency mbs, for example. Great. Thank you very much for your time today. Coming up, todays top stories, first as we head to break, a programming note. Kelly evans will sit down with ibm ceo first on cnbc at 2 00 p. M. Eastern time. Squawk box is coming right back. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you 24 7. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance when the Energy Sector drops over 5 in the first quarter, as it is on track to, the energy atf, the xle, tends to spike the one stock to watch this morning, General Mills. The Food Producer beating estimates by a penny. With the adjusted quarterly profit coming in, revenue fell short, pointing to a gap in pricing and promotional activity. Tomorrow on squawk box, dont miss marc lasry, our special guest starting at 8 00 a. M. Eastern time. Well be right back. It just feels like anything is possible here in upstate new york. at corning, i test smart glass that goes all over the world. But theres no place like home. Theres always Something Different to do like skiing in the winter, jet skiing in the summer. We can do everything. New york state is filled with bright minds like samanthas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound i wont. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Lets get a final check on the markets this morning. U. S. Equity futures have been in the green all morning. The dow will open by 37 points. S p futures up by 5. 5 . The nasdaq up by 16. Youre looking at the yielding at 2. 493 . Oil prices are up by 12 cents. Steve, thank you for being here. Go carlton knights. Strong pitching. They do. Strong pitching, upcoming. That does it for us today. Join us tomorrow. Now it is time for squawk on the street. Good tuesday morning. Welcome tow quintanilla with sa eisen. The president makes his way to capitol hill. Even as we speak, drumming up support. Well watch that along with news on apple, facebook, General Mills and more. Europe is steady after the debate with le pen