Transcripts For CNBC Squawk Box 20170328

In asia, the nikkei closed up by 1 . Shanghai was down about 0. 4 . Hang seng was up by 0. 6 . In europe, some of the early trading right now, it looks like the dax is up by 0. 6 . The cac and the ftse are flat. If youve been watching the tenyear note. We fell below 2. 4 on the tenyear yield. This morning that yield is at 2. 38 4 off the lows of yesterday. If you look at crude oil prices, crude down 11 for the month. Its up 42 cents today, sitting just above 48 at 48. 16. President trump will be taking aim at former president Barack Obamas Climate Change policy by signing an executive order on Energy Independence today. The order will seek to curb the federal governments enforcement of climate regulations and focus on protecting american drives. The move expected to get legal and political pushback. The monthly s p 500 caseshiller home price index comes out at 9 00 a. M. At 10 00, march Consumer Confidence. Several fed officials speaking today, including janet yellen on Work Force Development this afternoon. Were also hearing from kansas fed president , esther george. Dallas fed president , bob kaplan, and fed governor jerome powell. And late yesterday dallas fed president kaplan said he would support further rate hikes if positive economic stimulus continues to progress, but said it should be gradual. Given what has been happening the past several days, i wonder if one of these could be off of the table, about you thought it would be four times this year. Programming node, y inming note has an interview with fed vice chairman Stanley Fischer at 1 30 p. M. On power lunch. Comcast is reportedly planning to rebrand and expand. Streaming video services. It would be priced between 15 and 40 a month and would have Major Networks and addon options. The company is testing in a few cities. A nationwide rollout could be available by the Third Quarter of this year. Comcast is the Parent Company of cnbc. Xfinity over the internet, so you dont have to wait for somebody to come in and put a cable box in . If you cant beat them, join them. Its not just cord cutters, but the never corders. This is what youre seeing directv doing with directv now and what at t is doing with directv now, and one reason they want to do the deal with time warner is because of this idea of everything over the top. Skinny bundle. This is not such a skinny bundle. My video needs and entertainment needs are im good right now. I want everything hooked up to my brain, though. Elon musk style . Yeah. If i can think about what i want to watch, it just any episode will come up. You know, i dont want to like voice commands are too much. Too much. Do you physically wanted to watch it or have it piped into your brain so you dont have to see anything. Instantly so i dont have to see anything. And not only that, nobody would realize youre not paying attention to them or listening to them, im actually watching a movie now. Will i still watch country for old men. I can enter any part of the movie, i turn it on and watch it. I like it. I can almost recite is now. Can i do that . Play it back in my mind . I think youre playing it back in your mind right now. I am right now thinking about tommy lee thats a good idea, too. What scene were you thinking about . No, no, no. They you know, i dent bring up porn, they brought up the porn music. Think if you get to you will never need to read the tell prompter anymore. Here we are in times square. Just squawk square never saying it again. You watch me, i will never say that again. I wont say squawk square, ill say here we are at the Nasdaq Market site. Some other stocks to watch today. Red hat reporting higher than expected revenue for the latest quarter. The forecast topping wall street estimates. Shares of tesara getting a bump after the fda approved its key drug for recurring ovarian cancer. The stock is up by 5. 8 . Red mountain is pushing Deckers Outdoor to explore a sale. Red mountain owns about 3. 3 of deckers outstanding shares. The investor says the stock has underperformed largely because of managements poor allocation decisions. Wow. 1 1. 8 billion company. Whats 3 . We should be activists. Whats 3 . Like 4. 4 what . 4 million. Is that it . Mmhmm. No, thats yeah. Its not 40 . 40 its hard. You need scientific notation to get all your decimal points. 40. Yes. Its 40 . Its not 4. Okay. We couldnt go that. Timer could. The dow posting its eighth day of losses. Joining us now is wealthy individual jurien timer. If you dont have money, we dont listen to you. Im selling you. Im channing you eling you a lee. Anastasia amarosa is here, too. The tenyear in light of what we heard from evans and what we will hear from fischer today, the tenyear is below 2. 40. Does that mean i cant believe it means four increases. Four increases for the year . Even three . Doesnt the tenyear need to play ball to justify the moves by the fed . The tenyear is exactly where it should be based on where the market expects the fed to do. Three more increases no two more for this year. If you line up the number of rate hikes priced into the market over the next two years, it is perfectly correlated with where the ten qulooyear is. 2. 4, the rate hikes are 3 or 4. Its not a flattening yield curve . The curve is flattened, but the tenyear at 2. 6 is where it should be. If the number of rate hikes goes up above four over the next two years, then the tenyear should go up as well. Does it have anything to do with inflation anymore . Is it just based on the Global Environment . It has to do with inflation, but also the global back drop. Two things will happen late their year. Its the ecb and their july meeting, theyll reevaluate are they still committed to the bond purchases, the answer may be no. Theyll start phasing that out. The second big undercurrent is that the fed will be talking continuously about stopping their reinvestment of bonds. To me, its those two things that could push the longterm yieldss higher. All the movement in the last couple of months has been in the real rate, not Inflation Expectations which is an interesting distinction. So weve got is this the pause that refreshes . Its been a tepid selloff which scares me more than a quick one. Based on what katie said yesterday. I think the market is more resilient than people think. They atrtribute everything to whether this piece of legislation is going through or not. Weve been in a global ink synchronized upturn for a year now. Were at the point where a peak reflation, if you will if you look at the isms, other High Frequency economic indicators, were transitioning from that stating up mode to a more choppy mode this is where the market hits a bit of a road block. The bull markets are intact and were transitioning from a fadz whe phase where it rises above trend to less than trend. Would use this pullback as a time to start buying . If investors have too much cash for where the market is or where their investment plans are, then you used pullbacks to invest. I would invest in nonu. S. Markets which have lagged 150 Percentage Points behind the u. S. Markets since the 09 bull market. Valuations are much lower. If i had too much cash as an investor i would deploy in overseas markets. Most u. S. Investors have a lot of u. S. Stocks and not enough foreign stocks. I think jurrien is right to say this is the time to be in the mar kelt. We thi were in the later stages of the business cycle. This is not the time you wabtd to s want to sit out. You say tax reform is important. It is important, but if you look at what is driving the market now, its not expectation of a tax reform. If you look at the earnings of the s p 500 companies, the revisions have come down. The market is okay. Did you not say this, material upside from here, tax reform needs to happen. Is that not you . Would be an additional catalyst, absolutely. At the same time the other big catalyst is the optimism feeding through from Consumer Confidence. Thats what one of the biggest reasons why the market is being supportive. Yes, agreed. At full valuations youre agreeing with yourself. Im just reading what you said. Im so confused. Hold on. At full employment, and full valuations, i do agree with you, jurrien, theres other places we should look for that material upside. Europe is one of those places. If Consumer Confidence is i was i know you. Retail. Jump ball. Consumer confidence. Amazon. Consumer confidence is the highest levels since 2004. What happened to retail . They cant give stuff away. Is it all amazon . It is all amazon. I will not comment on individual stocks, but its been a massive shift. Flip it around. Wasnt some of this Consumer Confidence a function of the election and the expectations about all of the things that were supposed to happen . That was a big part of it, yes. But its becoming a selffulfilling prophecy. You have a surge in Small Business optimism. You have a surge in Consumer Confidence, it is feeding into better date sa and leading companies to make those Business Decisions even ahead of the actual concrete actions. The reason why is we do have a notion that we will have a pro business disposition over the next four years. This is the kind of environment where you can start to make some of those decisions. Theresen befor been a lot o deregulation. You want to look at the trump agenda on market indicators, the russell after the election ran 20 Percentage Points in three weeks. Its been sideways since. Its been kind of underperforming the s p 500. The s p 500 is a vote against fiscal reform and small caps, the russell 2000 is a vote for it. Small u. S. Based companies are a pure play on tax cuts and deregulation. Than large multinationals are. Which tend to pay taxes. Yesterday was supposed to be the rout in the markets. The dow closed down 45. The nasdaq closed up 18. I said what happened . They were all up. Google, apple. The nasdaq is still up 8. 5 for this year. Look at yesterday. Netflix was up. Everything was up yesterday. Theres a lot of cash trapped on the sidelines. It wants to come in. Theres what . A lot of cash trapped on the sidelines. It wants to come in. Everybody wants that 10 correction to get in. Thats not how the market works. It will suck everyone in until its done. Theres not been a 10 correction. Theres barely been a 2. 5 pullback. If you look at europe, europe has been pulled back by pote potential outcome of the French Elections. If you dont believe thats the case, markets should appreciate that and flows should appreciate that as well. We think the pivot should be to european stocks. Take the uber down to philly. Youre in newark, there are places to sleep in that tranizatiotrain station. You will be there for a long time. The rain wont back up. It is not coming back to milton. Certainly not to penn station. No way. Youre too cheap to pray for the uber to philly. Bicycle. Bicycle might one of those city bikes. How far can you take those . You can take it. The question is can you get it back . You can take it where ever you want . Its on your credit card. After the show, can we all go on a citi bike . No. No. Its raining. Its rainy. In the summer. I have a stationary bike. You have a stationary bike. Fancy one. Fancy. Yeah. You just wait, wait until you see my body in six months. Why is that funny . Mental image slipped away. The guy on the steady cam, why is that funny . You you had a vision the visual image. Its a good segue to the earlier conversation. Yeah. The yeah. Thats right. Because im going to be porn ready, youre right, if i so choose. Wow. Thank you. Thank you for bringing it back to that level. You and john whats his face. Yeah. John goug ing to kate with eight oh, you say john, like someone from the 70s, you think of someone else. No, no, no. Im talking about John Gosselin who is now ready. We have more from the fallout of the gop healthcare bill. Trumps next big challenge, tack reform. Judd gregg will tell us whether we will get a bipartisan tax reform bill through congress or not. All that when squawk box returns in a moment. And this day in history. 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. At where instead of payinging a befor middlemen,em. We work directly with family farms to deliver Higher Quality ingredients for less than you pay at the store. Get 30 off at blueapron. Com cook President Trump says tax reform is next on his agenda after House Republicans couldnt agree on a replacement plan for obamacare. But tax changes come with their own complications. Joining us with more is former New Hampshire senator and Senate Budget Committee Chair judd gregg. Senator, great to see you. Great to see you. What do you think after friday and the bill getting pulled. How does this mean the reasons are he republicans are heading into potential tax reform. Theres much less controversy within the party on tax reform. Everybody is for it, wants to pass a bill or should. I cant speak for the Freedom Caucus, but tax reform is the most important legislative action they can take. And this can be done. Ironically tax reform is a much more dont event under reconciliation than healthcare because policy issues under healthcare probably couldnt survive a reconciliation test in the senate. Whereas almost all tax reform policy affects the budget, and you can do a substantive tax bill in the senate under reconciliation if you have to. We had Grover Norquist on yesterday, he said by shooting healthcare done, thats a potential trillion dollars in savings that could be used on the tax plan. By that going away, you went from 20 tax to 28 tax. If you have the b. A. T. , border adjustment tax, thats another savings, but you dont think the border adjustment tax will pass, do you . I dont think it makes its way through the senate it may pass the house, but in the senate it would be a heavy lift. If you want a bipartisan bill it certainly wont passion. You can get to a tax rate around 25 without the border adjustment. You do it the oldfashioned way. You step on everybodys toes. Thats the only way to do tax reform. You cant believe anybody ouleau have to step on everybodys shows so everybody thinks theyre being treated fairly, nobody is being protected. Its just a trading game. You figure out how much you can reduce deductions and exemptions to get to the rate level you want to get to. On the corporate side, it should be 25 . On the individual side, if you can get back to the reagan number of 28, thats very, very good. When you say stepping on everybodys toes, youre talking about mortgage Interest Deduction, charities, what else . Are you including those . The individual side, the four big ones are mortgage deduction, interest charitable deduction, deduction of state and local taxes and Highend Health insurance programs. In those four accounts alone, you dont have to eliminate them, but you have to watratche them back significantly, you can get a huge amount of savings. Under the Simpson Bowles commission, which was a bipartisan tax, we reduced taxes annually and took rates way down the its doable. Its a question of political will. I do generally believe political will is there. Republicans understand tax reform. They understand reducing taxes. And theres not a big ideological split. The issue youll have if you get rid of some of those things thinking about the state and local taxes. You have states like new york, new jersey, connecticut that have ridiculously high tax truck sure structures and you have some states paying for states like new york who constantly raise their taxes. Its not on an even Playing Field. Why should people in New Hampshire be subsidizing people in new york stated. You are such a homer. When do you hes right, though. Florida, too. Judd, obamacare reform is not over. No. And youre a numbers guy. I dont know whether the Trump Administration hastens its demise or just lets things go. Lets not talk about whether they make it worse or if it goes on its own. But ive heard people say that as it gets worse, that the republicans should write a bill and not use reconciliation. They should write a bill that would actually fix it and when it gets to the senate and democrats vote it down and obamacare continues to not perform, that then its theyre going to own it more than they own it now. In stead of doing this fancy reconciliation thing, put everything you want to put into it. Tort reform, all this stuff in there, put it in there and make the democrats vote it down. Thats an interesting tactic and a viable one, but the more viable one is a group of senators i believe the senate still has some rational people in it on both sides of the aisle, sit down and where they think they can fix this thing. You may get a bipartisan agreement that is not a marnlg bill, doesnt rewrite the whole law but does substantive things in the area of insurance reform and tort reform and tax policy. Have it be bipartisan. Thats a distinct possibility. Senator, can we have getting through the house would be tough. I dont think so. There would be democrats in the house, it would be like a boehner thing. The Freedom Caucus wont go for fixing you wont get anybody in the Freedom Caucus to support anything that has to do with governing. Thats the biggest problem. You have a bunch of folks tloefr w over who there who think theyre still shouting, on the sidelines and not in the middle of the ring. The Republican Party is in the middle of the ring, they have to start to govern. People not willing to participate, we have to figure out a way around them. You think trump would say the democrats come to him and say they want to fix it, he would say, okay, fix it . He still wants to repeal it. He wont let the whole framework stay where it is it almost becomes an issue of semantics. Okay. Obamacare doesnt really exist any longer. Its fraying, collapsing. Fixing it in a bipartisan way, where you had a large number of republicans including conservative republicans in the senate and people deemed moderate, though theyre conservative, along with Democratic Senators who are conscientious and want to get things done you would see progre progress. I said oxymoron. Conscientious. Got you. Okay. There are a few andrew thinks the cbo loves well start making money on obamacare. Two points. One on obamacare, as we talked about, i said it before on the show, the cbo said you can disagree with the cbo, they dont think obamacare is necessarily collapsing so fast. Going swimmingly. Coming back to the first issue that becky started the conversation about, the math of the Corporate Tax rate. We started to get into other tax rates. But the question i have you said it should be 25. We can pluck that number out of the air, but mathematically how do you get to 25, if you have not repealed obamacare, so youre missing that trillion dollars and the trillion on the b. A. T. , then you have a guy who wants taxes to be as low as humanly possible and already said his number is 28. I was there when we got to and did a bill that got us to 25. It was the last major tax reform policy. Whats in that . Basically an across the board reduction in various levels, primarily Interest Deductibility at the corporate level, where you get and where you get savings, and then you takal savinsav take the savings and reduce the rates. Its a simple exercise in how much you will take out of special Interest Deductions, deductions and exemptions, use it to get a leveller Playing Field on the rate side. My view has always been the lower you can get rates the better. You want people investing for return, not investing to avoid taxes. We have today a system which encouraging people to avoid taxes because of all the deductions and exceptions. You dont use capital efficiently when that happens. The further you get rates down, im willing to eliminate lots of deductions and exceptions. Thats the basic theme here. Border adjustment could you see the Trump Administration and donald trump, who spent his whole career in the real estate business that effectively relies on debt, removing that as a piece of the tax legislation . Well, hed have to if he wants to get rates down. Would have to reduce the debt deductib deductibl deductib deductible. Israeli politician and tech entrepreneur Erel Margalit will join us. As we head to a break, look at yesterdays s p 500 winners and losers. I joined the army in july of 98. I did active duty 11 years. And two in the reserves. Our 18 year old was in an accident. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. It actually helped to know that somebody else cared and wanted make sure that i was okay. That was really great. Were the rivera family, and we will be with usaa for life. Usaa. We know what it means to serve. Call today to talk about your insurance needs. What powers the Digital World . Communication. Like centurylinks Broadband Network that gives 35,000 fans a cutting edge game experience. Or the network that keeps a leading hotel chains guests connected at work, and at play. Or the it platform that powers millions of ecards every day for one of the largest greeting card companies. Businesses count on communication, and communication counts on centurylink. Welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Good morning, everybody. Take a look at u. S. Equity futures, after eight Straight Days of declines for the markets, some green arrows this morning. These are modest advances. The declines, the eight day losing streak was the longest losing streak in six years, but aadded up to 1. 9 . Thats the second day in history eight days of losses were lower than 2 . This morning, s p is up by 3, dow up by 13, and flaz dnasdaq 11. Nasdaqs bit for imarx is the biggest exit, alets bring n Erel Margalit, good morning to you. I have a million questions for you about business in israel, i want to talk politics in israel first. I dont know if this is you or your pr person. Bbs current government could fall any day now and he could call early elections if he does or not. Its a very rare Israeli Government that serves out its term. Is that you . Well, yeah. Its him, its not me. Theres two things going on. One major investigations that he has, and, two, theres a crisis in the government. He chose you campaigned strongly for those investigations. Yeah, especially when it came to arms deals that we dont like. We all serve in the army, special forces, we do whatever it takes, we dont like our leaders to take advantage of our soldiers, get security and corruption, that doesnt Work Together in israel. I think his government is in question. Theres a crisis now. We on the other side, labour, we need to get ready. What do you think will happen . What do you think it will do to our relationship the u. S. Relationship with israel . I think probably theres a chance that a new government will be forming in about a years time. I think that the new administration will have to come up with a new agreement or a new strategy with israel. A lot of discussions talked about were regional agreement with some of the moderate arab states like jordan and egypt, which is already there, and also gulf states, morocco, tunisia, have a larger deal, not just with the palestinians. Thats good, but you need in the core of that to be ready to have a political solution with the palestinians. You need israel needs to go back to being proactive. Like we are in hightech, we need to be proactive on the political scene. What is the view inside israel of jared kushner. Hes been assigned this project to peace in the middle east. Hes sort of responsible for that. Whats the view in israel about him . One thing that is very important that hes close to the president. So, if it matters to the president , whoever it is you assign, that means that it matters to, you know, to get a deal done. If it matters to get a deal done, you, as an israeli as somebody who wants to lead the deal, you need to come up with a strategy on your own. So, the view is everybody is happy, of course, that hes jewish, connected to israel, all that the fundamental thing is no matter what trump meant exactly, once you come to do a deal, you need to come up with your own vision and strategy. And israel needs to be very clear on one. Yes, we want a twostate solution. Yes, we want three blocks of settlements, yes, we want to control the security border with jordan, but we are also ready for a twostate solution recognizing the palestinians rights and use that for a larger deal in the middle east so that israel can show its people what it is to gain from a deal, not just what it has to give up. How would you describe the relationship with the Obama Administration and israel . On a scale of 1 to 10. A 1 . No, one is ominous. 2 . We are happy with the aid for the next ten years that the Obama Administration put together. Heres why i ask. You are very moderate. Are you youre are you a Netanya Netanyahu i would say so. A saudi gentleman, top diplomat, said since january 20th it went from the worst relationship saudi arabia had with the u. S. To the best relationship it has had with the u. S. Some people, probably netanyahu, would probably have similar comments about israel. It went from one of the worst relationships to one of the best relationships is that overstateding it foverstated ing overstating it . There is much better aura in the room, but when youre close friends, its tricky. Because you can be close but friends are friends, business is business. The question is does trump or the administration mean business in the middle east. If they do f we want to align the sunni moderate states its not arabs against goos in the middle eas jews in the middle east, its extremists where were you on the iran deal . The iran deal, its like telling a student in the next 15 minutes you cannot leave the class. After 15 minutes, youre thinking youre outside at recess. So you didnt characterize it as the worst deal in history. Are you far left . No, were labor, rabins fort i party, the party that lead the state, the ideas of the startup nation, caring for some other people other than the rich. But the idea is that israel instead of looking iran is a big threat, not only on the nuclear stuff, proxy military warfare in syria and lebanon, but its also getting the largest economic surge that any country in the middle east ever got. We need to counter that with economic strategy, with us and some other countries. The embassy, moving it does that make sense to you . It makes sense in the right time and right moment by not causing bad whiill. Right now it will cause bad will. We want to do it in the right way with the jordanians, our allies, we need to do it in the right way. What is the hottest next Biggest Company to come out of israel. Cybersecurity is a big thing. One of our companies was very, very successful. And wellness. Food, agriculture, and healthcare. In the gworld, when you take agriculture and technology, put it together, will you be eating to be well. After the first startup revolution, were taking those regions left behind in the far north, far south, and developing seven new regions of economic excellence and we want to use that as the basis for cooperation with other countries in the middle east, which would help transform the region in a big way. Thank you. Coming up, our guest host at the top of the hour, jeff greene weighs in on jobs, politics, education, automation, all these things at the top of the hour. Then Southern Company ceo tom fanning will talk energy and deregulation. Congressman joe crowley later will tell us what it takes to pass a tax reform bill. Squawk box will be right back. Ok lets call his agent. Im coming over right now. The newly advanced gle can see in your blind spot. [ dinosaur roar ] onboard cameras and radar detect danger all around you. Driver assist systems pull you back into your lane if drifting. Bye chief. Bye bobby. And will even help you brake, if necessary. 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E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade welcome back to squawk box. Elon musk is creating a new company. Hes launching nerf ining neur will aim to connect the human brain to computers. It will focus on a technology called neural lace, which could one day upload and dunn loownlo thoughts. Who would volunteer for this . What does he mean by one day . I thought he said five years from now. A long way to go in brain research. Musk believes humans merging with machines is the only way to stop us from becoming irrelevant in the age of Artificial Intelligence. Evolve or die . Yes. Spectacular article to read, if you have not read it. It is online, it is in vanity fair, maureen dowd has a employees about elon mu piece o on musk and this. Ky leave t can i leave the se this . Ill do that later. Now people have the Second Screen experience. Watching tv and they have the device. Wall streets fearless girl is not going anywhere any time soon. The statue of a young girl staring down the charging bull will remain in place through february 2018. New york citys mayor deblasio saying in her short time here the fearless girl fueled show. Powerful conversations about women and inspired so many. If you have not gone to see it, check it out. You have a year to do it. When we return, the trump rally stalling after the gop healthcare bill failed. Mark grant will tell us why he is still optimistic on tax reform and deregulation. Right now as we head to break a quick check of whats happening in the european markets. Relatively flat. The dax is up by 0. 6 . Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Ltry align probiotic. N your digestive system . For a nonstop, sweet treat goodness, hold on to your tiara kind of day. Get 24 7 digestive support, with align. The 1 doctor recommended probiotic brand. Now in kids chewables. 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. Does it really impact the market . Tomorrow, no. Because keystone is probably not going to be operational until 2020. I think we have to do something about Corporate Taxes. Ill come to the table. The real question now is whether this trump rally becomes a prolonged trump slum. All the banks look great. This is not indicative of a market panic. Youre not going to succeed at tax reform. Youre not going to succeed at infrastructure. Welcome back to squawk box. Lets get back to the markets. Joining us now mark grant, chief strategist at hilltop securities. Like so many things, i didnt write that. Lets get back to the markets, because were going to talk about some of the stuff that both europe and here, mark, that youve been opining on recently so we dont have enough time to go into as much as id like to. But lets start with your nonconventional thinking on the notion that trump was bloodied by what happened with obamacare. Where youre not so sure. You think that theres you think that there is actually going to be a way of eventually getting to where the administration wants to get. And that you wouldnt write it off yet. Why . Good morning, joe. Yeah, my view, joe, apparently unconventional. My view is that obamacare had nothing to do, as in zero, with the fact that the markets have been up since his election. Its a political issue, but its not an economic issue for the markets went up on the basis of less taxes, less Corporate Taxes, less individual taxes. Also on less regulations. I dont think the guy was bloodied. I think that in six or nine months youre going to see a head line on cnbc with President Trump saying, i told you so. Because i think obamacare is going to crater. I think its in deep trouble. And i it has nothing to do with republican or democrat or politics. Its just a very flawed program. Its going to come back to bite the congress in its proverbial behind. Even the Freedom Caucus or democrats or both . I think both, joe. I think this is going to turn out to be a blame the congress issue. Trump will say he did what he could. He tried the best he could. And maybe he could have tried better. But he certainly tried. And i think its the congress, both sides of the aisle, that are going to suffer from obamacares eventual demise. As far as europe goes, youre worried again about, number one, it could be maybe not a frexit but greece. Whats the status of whats going to happen with greece . You expect them to finally say enough is enough and that that could cause a grexit . And that would be two, brexit and grexit, i dont know what that would mean . I think there are two issues in greece. Grexit is one, the imf, the American People in the imf now report to the Trump Administration theres a bill in congress against support in greece. I dont think the imf is going to step up to the plate. In finland, in the netherlands, in germany, the parliaments there have all ruled unless the imf is involved theyre not going to get involved. I think the road has run out of asphalt, finally, and that were going to have either greece leaving the European Union, asking greece to leave that something is going to blow up and the other country im very concerned about is italy. I have my own word for it. Italgo. I have a better want. I saw you say italexit. And italgo. Italeave. Thats a good one. What does the central bank have in its coffers . I saw that figure in your notes. I was like i mean youre going to need a real multiplier to fix that, arent you . What are the bad loans in the bank. Okay the banks basically in italy are bust. Even yesterday, one of the members of the ecb said that they are, quote, not solvent. And that they have tremendous problems, financially, and of course operating under the new eu laws, they have to hit the shareholders, theyve got to hit the subordinated bond holders before they can do any kind of reorganization. The five Star Movement is already ahead in the polls in italy, elections coming. Have to come before next may. And i think the five Star Movement is going to probably win the election, and this is another Inflection Point on the time line. So 380 you say the banks have 380 according to the journal, 387 billion in problem loans, and the italian state bank has 21. 6 billion . Thats correct. Thats thats i mean thats 387, and 21. 6. But its not just it wouldnt just be the italian state bank, right . They could look theyre going to get all their friends in Northern Europe to help, right . No . Well, they cant get the europeans to help unless they operate under the new eu laws, joe. And that means that all the credit holders, the subordinated credit holders, all the italian banks, one by one, are going to fall, and theres people in italy are going to be very angry. Well. Very, very quickly, mark, you say that Congress Deserves the blame for obamacare falling apart. Theyre also the ones who have to put tax reform to the. Can they do it . Yes, becky, i think they can do it. I think theyre totally separate issues. While a lot of the Mainstream Press is attaching obamacare to the tax reform act, i just dont buy it. I think theyre different issues, and people are going to line up in a very different fashion behind that issue. Thanks, mark. All right. Thanks, mark. Thank you, becky. Thanks, joe. Coming up, when we return our guest host for the next hour billionaire Real Estate Investor jeff greene is going to join us. His take on jobs, education, politician and the markets. Markets in wait and see mode as investors weigh the prospect of tax reform. We will break down what you need to watch and where you should be putting your money to work as we head towards earnings season. Plus hes a billionaire, a former gubernatorial candidate and a member of Donald Trumps maralago resort. Billionaire Real Estate Investor jeff greene joins us for the hour to talk washingtons effect on investments, his real estate portfolio and why he thinks this market is at the end of a long up cycle. Also a brexit is coming. A look at the Economic Impact of the uks plan to trigger article 50. We will speak to former British Ambassador to the United States. As 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. Welcome back to squawk box right here on cnbc. Live from the Nasdaq Marketsite in times square. Also known as squawk square. Im Andrew Ross Sorkin along with becky quick and joe kernen. Futures at this hour. Dow looks like it would open up higher about 12 points. S p 500, call it 2 1 2 points higher and the nasdaq up a little over 11 points. Lets get you through some of the big headlines for the moment. It is a big day for fed speakers with five on the schedule. The highlights, steve leashmans exclusive interview with Stanley Fisher at 1 30 p. M. Eastern time. It will be on power lunch. Also fed governor jay powell, robert kaplan, as well as fed chair janet yellen, although yellens speech not expected to focus on monetary policy. Were also going to be getting the latest Housing Market snapshot at 9 00 eastern time with case shiller report for january. Its expected to show that home prices were up 5. 6 . That kars to last year, and samsung planning to sell refurbished versions of its galaxy note 7 smartphone. Would you want one of these . I dont know. Those are the phones that were pulled from the market, you might remember, last year, because, well, they exploded. Their batteries were prone to catching fire. It hasnt announced when the devices will be sold or perhaps most importantly how much theyll cost. Maybe if theyre cheap enough people will be very happy to buy a refurbished samsung 7 note. I like that what you said, though. Just kind of glossed over it. Yellen is speaking although its not expected to be about monetary policy. No. Shes going to talk about the weather and some really, what is she i mean, id sit and listen to her about anything. Stamp collecting. Whats that called . Phila fill tellist. Prob ert frank. Robert frank is here. Is it philatelist. You put it on the wrong syllables . Correct. Philatelist. Collectors of various sorts including philatelist. Every time you say that i get nervous. You say it confidently and thank god youre nailing it. A few stocks on the move this morning. Red hat reporting higher than expected revenue. For its latest quarter. The Sulfur Company forecast also topping wall street estimates. And shares of tesaro did you talk about no, it was tesaro. Oh, it was is tosorro is an oil company. Tso was the symbol. I can check that out. I remember for years and years. Obviously. Yeah, there it is. Tso is its tosorro is the one we did earlier. I thought you you did hear me say tesaro. I thought it was wrong at first. But i did not go back and correct it. Big winner up 7 after the fda approved its key drug for the treatment of recurrent ovarian cancer. The Company Expanding its development for the drug to also treat other cancers. We must be running out of names for companies. Because thats toughly close to tosorro. I mean. And cnbcs wealth reporter robert frank is here, along with our guest host this hour. Not a philatelist but a big philanthropist. There you go. We dont collect stamps. Do you know for a fact hes not a philatelist . I would guess. Im not a philatelist. Whats coins . Thats a num you dont know . I dont know. All you knew is stamps. Coin collector. Why do we have make up something for coin collector. Nuesotoologist or something. Lets get to our guest host jeff greene is the billionaire real estate and Financial Investor and founder of the Greene Institute and now the greene school. Were going to talk a lot about that. And next week he hosts his annual Conference Called managing the disruption. Thats going to look at the impacts that technology on the workforce. Jeff, thanks for coming in. Thanks for having me. So, you, of course, became famous and a billion dollars richer by betting by shorting the Housing Market during the financial crisis. What do you see in the Real Estate Market right now . Are there any parts of the market that worry you . Well, i think the high end seems to be overbuilt. You know, as a developer, and ive been a developer now almost 40 years, and as a developer, its much easier to build one big giant house for 100 million and make 20 million or 30 million on it than to build 500 condos and sell them at 200,000 each or 500 homes. So i think a lot of developers jumped into this highend market without any understanding of really the depth of that market. So, i think what you have is you have a tremendous overbuilding of these very, very expensive homes in places like new york, los angeles, florida, some of the wealth centers, london, all over the world. I think that area is already struggling. Other parts of the world seem to be doing okay because Interest Rates still seem to be staying reasonably low. Youve got some experience with that, right . Yeah, speaking of high end real estate you have your own property which is sort of a testament to whats happened at the high end there is a lot of oversupply. And so people have come down with prices. You have a house, were going to show some pictures of it, in Beverly Hills, its actually a vineyard and a house in Beverly Hills that was listed for 195 million in 2014 and then you just put it back on the market for 129 million. So folks, youre saving 70 million by buying this house. What was your thinking there . And do you think were going to see prices come way down at the top . Especially in l. A. , like around this house there are a lot of 100 millionplus houses now on the market. The fact is in history only two homes ever have sold over 100 million in southern california. So, right now, theres probably dozens that are priced at 100 million, another 100 million, over 100 million. In the case of our property i think its the best property in california. Nobody can get, has 25 acres, a mile and a half from the Beverly Hills hotel, with an amazing custom home with a quarter mile gated driveway. Six acres of vineyards. Its an amazing property. And rotating dance floor. And an 18,000 foot entertainment complex. Its an amazing property. However, its a specific property for somebody who wants to have, you know, 60,000, 70,000 feet of living space on 25 acres in Beverly Hills. And you actually make wine on that property. Right . We make five kinds of wine, merlot, cabernet, sauvignon blanc. And if you call in the next half hours weve got a special. Let me ask you this. I want not to get too political. Yeah. But i did want to ask about your sense of whats going on in the political universe and how you think its going to affect the economy. I know you know President Trump. You spent time with him before. Yes, well i live very close to him. He lives across the street. Down the block. Down the block. From maralago. Yes. Are you a member of maralago . Yes, i am. Have you been in when hes been there . I just saw him 2 1 2 weeks ago. On friday night for dinner. I was seated at the next table to him. And . What do you think . Had a nice dinner. Food was good. Hes always been very gracious to me whenever ive gone to maralago and i think its a great club. You werent a supporter when he was running for president. What do you think of his presidency so far . Look, i mean, you know, i think that hes there are good things and there are bad things. I think hes definitely picked some very capable people. I have to say that. I mean the vetting process, we all saw in front of our own eyes he really worked that very aggressively and carefully, and i think he brought some great people into his administration. Some people i dont like as much. Im a democrat so i dont agree with a lot of his politics. I think that hes sort of missing it on the business thing, relates to what rob was talking about. 88 of manufacturing jobs are lost because of technology. So, to build a wall and keep mexicans or Latin Americans out of the country, to, you know, to clamp down on immigration because thinking that globalization is the problem is a mistake. I think that i think neither of the parties are really focused on the big issue of our time, which is what were going to be facing, and which i believe i really believe that, what globalization did to the manufacturing blue collar job over 30 or 40 years, big data, ai, robotics, Machine Learning is going to do the white collar workforce in the next five to ten years. And i think were head nothing a period of, unprecedented job destruction. Thats what we should be talking about. Steve mnuchin was just interviewed by mike allen on friday, asked about ai and said thats not something we can talk about. He said 50 to 100 years away. 50 to 100 years away. Hes completely out of touch with reality. Look, come on, we all know, i mean, you see the amazon store. You know. No employees. Why wouldnt every store be that way . What are the answers . I mean, i know that you know, this conference you have people like chris christie, you have larry summers, you have david cameron, what do you see as the answers . I mean do you just pay people not to work . I mean thats what seems to come out of this. There are two things were exploring at our conference. Number one is what is a utopian outcome in a World Without work. The most people. And then what is dystopian outcome. And if we want to head toward the utopian outcome what steps can we take . I think we will have a world eventually with much less work. Its interesting. I grew up in the 60s. And my family, and most families, worked 40 hours a week. Because mommy stayed home and dad went to work. Well maybe well get back to 40 hours a week. Maybe split 30 10, 20 20. Who says two parents both have to work 40 hours a week. Whoa, whoa, whoa, im not working 40 hours a week. Im sorry. Okay were not going back there. Dont follow the french way. I think rob well have more 15 hours. The show is three hours a day. Five, thats 15. Thats 15. You have no idea how hard i work. I mean most people now, there are many families where theyre working 100 hours. 120 hours a week just to get by. I think what we have to do with technology. The main thing technology has done now has benefited businesses because they have a lot of savings by reducing costs of their employees. Eventually well get to the point where technology, as a society if we can get technology to be helpful in reducing the cost of living for people who are struggling, for instance, 3d printing of houses so we get housing costs way, way down, that would be lower mortgage payments. More renewable energy, so people have lower energy payments. And then i think basically if i have to think how would i like to see society evolve i really dont believe that the work consumption model of our capitalist economy is going to work longterm. Were going to have to have focus on quality of life. Which is sort of what i want to ask you one question about trump and his tax plan actually, which is, depending on how you make the math work you might have to get rid of the mortgage deduction or at least lower it. You might have to get rid of the Interest Deduction on the corporate side to make some of the numbers work. What would that do to the Real Estate Market . Well, i cant tell you what it would do to the Real Estate Market. I think that most people buy homes because they want to own a home. You know, they get married. They have some kids. They want to throw a football in the backyard. They want to have a barbecue. I think that thats really about home ownership. But it certainly would be a beginning. But lets be realistic, the realtor lobbies are very strong in this country and theyve got most congressmen and senators are you part of that . No, im not a realtor. And im not a lobbyist. But i think it would be unlikely to pass. Last question, you just started you opened your own school. Yes. In september. What was the idea and whats the goal . Well, you know, we moved into palm beach and in our community we i have three young children. 3, 5 and 7yearold boys and we just didnt feel that we thought our kids were getting the kind of education they would get at a top school in a big city like new york or los angeles. So we decided, were going to do whatever it takes to build in West Palm Beach the greene school, which we want to be at the highest level in every single way. And it is. All of our teachers have masters degrees. Two masters degrees teachers in every classroom. Our second language, Computer Science and coding. We teach kids to be digitally fluent starting in kindergarten. Our second language is spanish. We have a fulltime yoga teacher. Can i go . Best practices from all over the world to make our school amazing. Jeff, thank you. You know what a coin collector is called . A coin collector is called a coin collector. But there is there is something called a numismatist which they look at coins but theyre more looking at the social and artistic, and theyll look at a years. Not just a coin collector. Robert, thank you. Yours is a what . Philatelist. When we come back, europes chief brexit negotiator warning that the eu and the uk will face severe consequences if britain leaves without a deal. Prime minister theresa may is ready to trigger article 50 and begin the formal process. Tomorrow we will talk economic implications with former British Ambassador to the United States. Well be right back. Heres a look at times square this morning. Or as we like to call it squawk square. Welcome back to squawk box everybody. Lets take a look at the european markets right now. Things have been relatively flat. The dax is one major market that is higher up by 0. 6 . To the French Elections we go. A new reuters poll suggesting that far right Marine Le Pen would win the first round of the French Election if it was held next sunday with 25 of the vote. But in a twoway decider vote, in the second round the polls show la pin would end up losing to centrist tenant macron with him taking 62 . So the establishment might be fighting back. Its more of the establishment. 39 years old. Hes a former investment banker. More of a more of a globalist. How about a globalists are fighting back. Its weird. Because he is an investment banker yet hes hes a protege of hollande so you wonder about, you know, whether hes a private sector guy. Le pen is not a private sector. Shes almost a socialist although shes a populist. Everybodys got all these a nationalist. The populist. There are people establishments. There are people like mark grant and others that actually like that dont think le pen would necessarily be the right answer for a more market oriented europe. That macron is not a bad figure. The other guy is in trouble ethically for something. Million dollar bribe or something. British Prime Minister theresa may is going to invoke article 50 tomorrow kicking off talks with the uks exit from the European Union. For more lets bring in sir peter west, former British Ambassador to the u. S. I think you were also you got you had some good gigs mr. Ambassador. Also, ambassador of france for awhile, were you not . I was. Thats right. What was i cant imagine paris your favorite, would you say . Just getting it out . You wont hurt our feelings if you say that. Paris is a lot of fun. But washington was really exciting. Really interesting. It is, after all, the most important Political Capital in the world. Its where the power, where the influence is. And i was ambassador in turkey. Which is another interesting, complicated country. Thats a lets have a drink with you sometime and talk about your greatest stories. But were you a brexiteer or were you a remainer. Hard core one way or the other . Just get that out front right at the beginning. Lets get that out front. I was remainer, because my career is in europe. I even went to the European Commission once. I think theres a good deal that needs fixing about the European Union and the institutions that look upon themselves as existing for their own benefit rather than for the benefit of citizens of europe. But i did not think it was a good idea for the uk to leave. Okay, but thats water over the bridge or under the dam or something. Either or. So now at this point its happening. Is your view thats right. Is your view colored by your previous opinion . Or what do you think . Can it be done effectively . Can it be a positive for the uk or are you going to stick to thinking that they shouldnt have done it . I think a lot depends on how we handle this. The two big reasons, if you like, why i still remain somebody who would have preferred to leave in is britains influence in the world and i like to think we could be a force for good and reliable and useful ally. I think we will be less important on our own than if we stayed in the European Union. And the second thing is that if we do leave, especially if its a complete break, rather than a gently negotiated departure, theres a risk that our business interests become extremely damaged as we get stuck in with tariffs, and technical barriers, and no longer having a Single Market ability to move goods in and out of the United Kingdom and services, too, for the benefit of the british economy. And i would say for the rest of europe. So i think it could get very messy. Has my view changed . No. I still would prefer us to stay. But i am realistic enough to grasp that the british people have spoken. And so i wish the government well. We are heading for something called a hard exit rather than a soft exit. So a debate is still ranging here in the uk as to how we handle it. And as you say, tomorrow is going to be a big moment when theresa may formally, finally, begins the process, when she opens the article 50 proceedings which are supposed to last two years. And at the end of that, the uk leaves. There was some dire predictions about the markets, Economic Growth. Yes. Everything else. Same with here. And thats not what the way things turned out. Just like here, people say just wait. Going to end up being bad eventually. Is that your view . I mean, britains been one of the strongest economies in europe since voting for brexit. Thats true. And Consumer Spending has held up. The currency has gone down by about 15 compared to the european currency. So thats made a number of things seem kind of better value. On the other hand its made vacations abroad expensive. But consumers have kept spending. Money is still cheap. And theres a little bit of a sense, it seems, that the market is enjoying it now because theyre not sure where its going to be in the future when Interest Rates go up. My own concern is that after this kind of phony war period, and you know guess what . A lot of people in britain think weve already left the European Union and theres nothing to change. Right. We havent done that. That starts. I worry that the market, and the increased costs of having a currency devaluation of such a big amount, 15 , that all this is going to start kicking in and creating inflation and higher costs and competitiveness, and that the uk economy will suffer. Second most important thing is that a lot of very important people we have here in the uk who are not british citizens who come from elsewhere in the eu, and who make our agriculture and our Health Service and our Financial Services industry and all that kind of stuck work very efficiently. If we cant guarantee theyre status that theyll be welcome to stay, some of them will start leaving. Not the end of the queue anymore over here. Well do a great bilateral deal with you. Time will tell. Thats great. Well be optimistic. Mr. Ambassador we appreciate your time this morning. Thanks for being with us. Energy is amazing. How we use it is only limited by our imagination. And at Southern Company were building the future of energy, for you. The power of innovative thinking. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. 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. When we return the Oakland Raiders announce a new home. The details about the move and when it will happen, next. Plus the dow battling back yesterday after being down nearly 200 points. Were going to find out what investors will be focused on over the coming weeks. Right now as we head to a break take a look at the u. S. Equity futures. Its time for the your business entrepreneur of the week. She now battles her great grandfathers caribbean drink and shes trying to build it into a national brand. But she says she needs help. We answered her call and now shes getting a your business makeover. Sunday mornings at 7 30 on msnbc. The valiant taste times of death, but once uh, excuse me, waiter. I ordered the soup. Of course, maam. My apologies. Cmon, caesar. Lets go. Caesar on a caesar salad . Surprising. Excuse me, pardon me. Whats not surprising . How much money matt saved by switching to geico. Could i get my parking validated . Fifteen minutes could save you fifteen percent or more. Welcome back to squawk box. A live look at times square. Sun really not breaking through the clouds there this morning. We are at the Nasdaq Marketsite. Jack dorsey brushing off calls to focus on either twitter or square but not both. Dorsey who is ceo of both companies told cnbc europe that hell do whatever it takes to make sure both companies succeed. Also President Trump tweeting about an expected announcement from ford later this morning. Tweet says big announcement by ford today. Major investment to be made in three michigan plants. Car companies coming back to u. S. Jobs, jobs, jobs. Quick note on that the detroit news going through what the significant investment might be, but also cautioning that its part of a 2015 contract with employees that they had already planned to invest 9 billion in u. S. Facilities, and spend 700 million at a Michigan Assembly for new products. Always unclear whether these announcements are new or whether theyve been made previously, and whos taking credit for what. Separately the administration wants to do for tax reform and structure at the same time thats according to a new report by ax yo quoting a white house source saying theres a major strategic shift that the deal with infrastructure could attract some democrats and keep the white house from having to deal with the Freedom Caucus. So they would try to do it in one stop. Could be an interesting way to do it and maybe could bring everybody along. Well, maybe makes more complicated. Interesting. I think it was interesting when the president tweeted about judge jeanines show. Did you see that . I did. And theres some im not sure whether theres any remorse or recriminations in the Freedom Caucus. I cant tell i saw rand paul saying we still wanted to do this. We didnt know it would be over. The Freedom Caucus is going to get some flak, i think, in ways that arent maybe totally overt. Right. And this is i think this is another one. Because this is a shot across the bow that were going to start dealing with democrats again, because you guys somebody whos going to come to the table did you know how mad judd was . Yeah, and yesterday. And you read the journal editorial. Coming out about this is were not a two party system anymore. We really arent. The liberal democrats, the moderate democrats, and i think that the i think people just assumed that there was one Republican Party, one republican president , we were just going to but i dont, even though there are six different parties if you subdivide them into three and three, they arent doing anything together. And i mean we can say this but you saw schumer is just i saw i was glad when harry reid was leaving. Im like harry, god, come back. Anyway. What happened . I was going to read about las vegas raiders. I was going to read about the las vegas raiders. I think thats a great move. I do, too. It will be interesting. And it gives las vegas Something Else to instead of just gambling. Exactly. And other nastiness that comes along with it. Did you know that las vegas now makes more money on restaurants and shows than they do at the tables . Yes. So theyre going to make even more. Oh, wait now you get to say it. Go for it. Your oxygen is back. They brought it back. Wow. We already we already said that were talking about. Las vegas is another step closer to having an nfl team. Nfl owners voted overwhelmingly to approve the teams move from oakland. Raiders fans gathered at las vegas famous welcome sign to celebrate. Lawmakers in nevada approved a 750 million worth of public funding for the new stadium to be built in las vegas. Thats i mean just think about what kind of stadium. There will be slot machines. Its a stadium. Frobly will. Theres slot machines at the airport. It wont be ready until 2020. Barbara wawa. The raiders will play in oakland for the next two seasons. 2020. Thats where you went with that. Basketball, basketball is going to be next. Which team . Well i think one of the teams thats not doing that great. Because think about basketball. It fits exactly in the season of vegas when the weather is when theyre in the season. And you know, everybody who goes there has their home team. Im from massachusetts. When the celtics are playing ill go to vegas. Spend the weekend. Watch the celtics play. I think its going to be a no brainer. Especially now that theyve got football. Would you buy a team . I looked at buying a team when they were a lot cheaper. I looked at a bunch of them. Basketball . Yeah. The ones that were for sale were losing 30 million or 40 million a year. The model david stern had when he ran the nba, you buy a team, you lose all this money and sell it for a big profit. The prices have gone way up now. So im not looking right now. Lets get to the markets this morning. Joining us right now is chief u. S. Equity strategy for Wealth Management firm ubs. Also, Rebecca Patterson who is chief Investment Officer at bessemer trust. Shes also a cnbc contributor. And germany you think that stocks are still going to be the place to be for some time to come. You think u. S. Stocks or beyond that . I think both. I think the u. S. Market is going to continue to appreciate this year. Its largely an earnings driven story. I think what a lot of investors had wrong is its all based on the prospects for fiscal stimulus and tax reform. But if you look at the earnings picture, its improving, and more importantly accelerating. We started to see the earnings picture go from negative to positi positive. First quarter earnings are on track to be up 10 to 12 . It makes sense theres not a pullback even though the Health Care Bill got scuttled . Yeah. The market returns are not dependent on fiscal stimulus. Rebecca, we saw that weve kind of been standing still. We pulled back the last eight sessions. Still decline of less than 2 . Weve not seen a major pullback which makes some people nervous. Makes technicians nervous. Makes people who are just used to seeing a 5 to 10 pullback every once in awhile. What do you think . Pullbacks are normal and i think healthy. If we did get a bigger pullback i wouldnt be overly concerned about that. Go back to world war ii the median pullback in rising markets outside of recessions is almost 11 and every year has a pullback of at least 3 . So if we see something a little bigger than this now or later in this year, that shouldnt be alarming. Its probably good buying opportunity. Do you wait for that or go ahead and continue to invest . You know, its waiting for godot because you never know when its going to come, what the catalyst is and when it comes youre probably nervous about putting money to work. At least thats true i think for a lot of investors. Were telling clients you should be invested. Were neutral equities. Were i call it constructive but not euphoric. I think there is decent data in the economy in the u. S. , and now increasingly globally, the fed is hiking the very gradually. I think at some point we will get some fiscal stimulus from policy. But, we have full valuations. We have a tightening labor market which eventually is going to start eating more into Profit Margins. So i think we go up. But at this point, the upside is more limited. So its going to be a bit choppy. Jeff you do have some concerns about how long things have been running. Im not youre not im not an economist. I am in the markets. It seems to me that cyclically, regardless of who became president , were well into this growth cycle and how many years have we had peak auto sales now three years with 17 million, 18 million cars. If we sold 55 million cars in the last three years, cars are lasting longer and longer. How many more cars are we going to sell . Weve had historically low Interest Rates now for eight years. You know its interesting because people talk about animal spirits. And i think like as a Real Estate Investor, you said how would you like to have borrowing at 2. 5 , or instead tax cut from 39 to 32 . Ill take the borrowing at 2. 5 . Thats why you have record highs for the Real Estate Market, the stock market, the bond market. I think were well into what is the Greene Family do with its money right now . You know, sustained diversion. A lot more cash than i ever was in my life. Its not fun earning 50 to 100 basis points but im happy to do it with a chunk of my net worth and i think cyclically were due for a correction in the che. What do you guys think . I think part of it depends on the trump policy. If we get a big fiscal stimulus we could get a bump up in growth but that prompts the fed to raise rates faster and then we have a good oldfashioned end of the cycle. We get overheating, tightening and then a recession. That could come within the next four years potentially. If we dont get a lot of fiscal stimulus its kind of the old normal, instead of the new normal. We have sluggish growth and this thing could last longer because it has been such a slow and gradual recession. I agree with thef. I think over the next four to five years statistically a recession should be in everyones plan. You should be expecting that. Wow, thats a big how long is this recovery been eight years . Yeah. So within 13 years, we might have a recession. I think that we thats not a big the longest expansion weve ever had is ten years. Theres no sign that a recession is coming in the next twelve months. But it depends part on what happens with policy in the rest of the world. Predicting a recession in a 15 year period is not well that is a good point. Because if the recession is coming in the next three or four years it means you want to stay in stocks. But they dont die of old age. You use the goldilocks word. In other words, goldilocks continues. Do you agree that things are setting themselves up for some time of fall here . No. Were not raising cash. Were more optimistic. Were far from gorying about an overheating economy. The unique characteristic of this entire expansion has been how weak it has been. Gdps been averaging 2. 1 over the last eight years. Recessions happen because you have overinvestment in a significant component of the economy that needs to respect auto sales may be at peak levels. Housing is still underproducing. 1. 2 million. Well under the level of household formation. If you think about business spending, Capital Investment has been very sluggish, especially the last two years because of energy. Even more broadly its been a week capex recovery so theres nothing in this economy or very few things in the economy overheating. The only area that has overheated was the Energy Investment that we had. Which that bubble burst and because were at 70 driven by economy thats driven 70 by Consumer Spending. Jeremy, the stock market tripled the lows from 09. But its only doubled since 1999. But there is so 18 years. Earnings are up im arguing i dont know if the stock market is way ahead of itself. Right now the market is training at 17. 5 times forward earnings. Historically when youve had this mix of growth, and inflation its averaged between 15 and 18 times earning. Three indicators everyone should have on their radar screen to know when were getting towards the end. It is hard to time it exactly. Jobless claims ahead of every single recession and sustained equity pullbacks go with recessions. You will see jobless claims rising in a steady way. We arent seeing any of that yet. Youll see average Hourly Earnings between 4 and 5 on a yearonyear basis. Thats when Profit Margins start to struggle for the economy at large. And watch those leading indicators. Those Business Sentiment surveys. March we came off a little bit for the United States but its still at a very nice, high, healthy level. If that starts going below 50, those three things that happen together, thats when you get out. All right, rebecca, jeremy, thank you both for joining us. Coming up when we return, President Trump set to roll back obama era climate and emission rules. Details after the break. Kevin, meet your father. 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. 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. Welcome back to squawk box. Were checking the shares of tesla. Investment firm Tencent Holdings has revealed a 5 stake. This stock was thrown yesterday, too. And thats premarket right now. Up another 2 today. And President Donald Trump expected to sign an executive order to reverse the Obama Administrations clean power plant. Eamon jarvis joins us from d. C. With more. The Trump Administration says its moving in a different direction than the Obama Administration in terms of Climate Change and that shoulden laid out today in a series of executive actions by the president of the United States. Heres what we know from a briefing yesterday from a Senior Administration official on what the president plans. Its going to start with a review of obamas clean power plan. Thats a regulation on emissions designed to curb coal consumption inside the United States. That review is expected to be the first step on the way to getting rid of that regulation altogether. Hes also dg going to rescind obamas coal leasing moratorium and conduct a review much the methane hydraulic fracking regulations. Air white house official said simply a Strong Economy is the best way to protect the environment. The Trump Administration feels that the Obama Administrations socalled war on coal was harmful to job creation. They want to reverse that. But environmentalists are not so happy with that. Heres the reaction from the sierra club saying trumps sweeping order is the single biggest attack on Climate Action in u. S. History, period. And interestingly, guys, on the Conference Call last night the Senior Administration official was asked if the president believed that Climate Change is real. The Administration Official said, sure, yeah. So, this administration believes that Climate Change is real. But they question just how significant the human component of that is. What the time frame is for doing anything about it. And just where all of this is headed. They very much want to prioritize Economic Growth here over these environmental regulations. Hmm. I guess unless you think the earth started 16 what is it, if you calculate how fast Angel Gabriel was falling you can somehow figure out a 6,000 year age to the earth. If you believe that, thats one thing. If you believe the fossil record and you look at just any type of cosmology, we know its 4 billion years old because we can measure light rays that started that or waves coming from that far out. Yeah. So we have 4 billion years of Climate Change. So to deny Climate Change youd have to be off your rocker. Eamon. Every time we find a mastodon after the ice melts there was a time when it wasnt melted, when it wasnt ice. So i mean im kidding. I get it. You get where i im with you. Im all for all these discoveries that were making. You saw the article in the New York Times about oxy the ice man who was find up on top of the mountain 5,000 years ago killed by an arrow. Great there were times in the past there was no you could sail right across the north pole. Times in the past. Sail right across. Post glacial, preglacial. We know all this. Even the poles move, if you go back, the poles alternate. The question is whats going to happen in the near run in our lifetimes and whether we can do anything about it. The Trump Administration seems to be suggesting we dont need regulations to do anything about it. I love North Carolina weather myself. So if in a couple years. 11,000 years ago there were the ice came down 11,000 years ago. I love to play golf year round. I think it would be it will be trouble in florida, thats for sure. Well see. Eamon, thank you. All right, see you guys. When we come back. Were going to wrap up the hour with Real Estate Investor jeff greene. In the next hour thomas fanning will be our special guest. Well ask him about the president s plan to power up the energy sector. And as we head to a break take a look at the futures this morning. Dow futures off by 12. S p off by 1. Nasdaq off by 3. bell chimes nice work brother dominic. Now we just need 500 more. Translated into 35 languages, personalized oh and shared across the 7 continents. other languages spoken look abbot, i got it. Its a miracle. 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. Get back to our guest host, jeff greene. Billionaire Real Estate Investor. I watch my twitter feed, and all of a sudden i had 15 things i hadnt read. They were all from one guy, who wanted me to mention this to you. The blue collar jobs were all replaced with software and hardware jobs. We can all wish automation led us back to one person working families. However automation of the past 30 years led us to twoworker families. His point here is the productivity gains were getting that this argument that you have in the fast has never been born out. Ever malfeesian bet has been if you bet on it you lose. And every time we think Creative Destruction is going to result in nobody working it actually results in more jobs there are we dont even know maybe theyre worse for now, maybe theyre not going to be worse forever. There are reasons that people are getting parttime jobs. But i dont know if i just if i just absolutely buy in to the notion that no ones going to be working 50 years from now. Were all going to be sitting around getting fat oh, no. Its not that nobodys working. Its good if you work less. Who says that youre supposed to work 50 weeks a year at 40 and 50 hours a week and commute to a house thats way far from your town and sit in your car for two hours a day. He says the addition of both efficiency and customization in any process leads to more jobs, not less. Efficiency itself is a job. If automation is the leading cause for job losses then we need to ban outsourcing today. Look first of all, the utopian outcome really is that people are living fuller lives. They have more time with their friends, their families. Kind of like what the millennials do. You love to play golf. You like to take trips. Why shouldnt we embrace technology and allow us to have more free time. I agree. It increases gdp per capita obviously. And there will be productivity increases. God knows what ai, good knows what Machine Learning is going to do for mankind in terms of having it will destroy jobs. Thats the problem is that most people in the middle class economy, traditionally where i grew up certainly did routine jobs. You worked on an assembly line. You put things in boxes, or you worked in an office, stamped checks, filled out deposit slips. Those types of routine jobs are now better done by artificial zbel jens and robots. If youd been in the agrarian world 150 years ago, jeff greene would have been running around that the sky is falling, because theres not going to be any farmers left anywhere and what are we going to do if were not farming . Or at the industrial revolution. You would have been a luddite. You would have not wanted any gotten mash i get it. Theres the old expression when the internal Combustion Engine came out what about the buggy whip maker. How many times does someone say its different this time. How many times have they been wrong . Has it ever really been different . I hope youre right. Maybe it will be hunkydory and fine. If youre a new york cab driver today, you know, you probably thought five years ago that that medallion was going to not only give you a guaranteed income but you could give it to your grandson. There are uber drivers now and some of them are doing pretty well. Look what its done to new york cabbies. Look i went to i was in a nice restaurant last night. I was thinking to myself you know, the waiter, i get this menu, i cant understand half the stuff on the menu. It would be better if i had an ipad that said how many calories, how many grams of fit. I love when you go on tripadvisor or one of these sites, i can see which is the most popular. Can rank them by most popular, healthiest. You could just who wants to have a waiter come over here and take your order. Ai does a better job than a waiter. This is why now youre talking about okay heres the deal. I dont want to live in a utopian world that a bunch of billionaires designed for me. That dont put me in that world. Ill take my chances with the way things are going fine. Dont make me live with absolutely nothing. I know you did. I dont want you designing my utopian world. My dad lost his livelihood when i was going off to college. I had to pay my way through school. I was a textile machinery dealer in new england. That might be where all of this came from. The reality is, when things got bad he lost his livelihood and my mom, who was a stay at home mom, and i had to move when i moved to florida i saw my dad doing a blew collar job filling vending machines. My mom put on a waitresses uniform having been a stay at home mom. I know what its like when things can change. They are changing for people. You can deny it and think its all great, but for most people suffering in this country, we better recognize that. Youre talking about the left behinds. That has been the key. The rest of the world would love to be in what we consider left behind. Hopefully we can bring everybody up else up to a much higher standard of living. Before we start worrying about our own in terms of this. I think that i think we have to worry about our own middle class because most people in the middle class are worrying about falling into poverty than hopeful about getting into the upper middle class and thats a terrible statistic. Hopefully that will help, too. Weve got, you know, less regulation and a tax cut. Maybe theyll do better as well. Thank you so much. Its been a pleasure having you here. Always great. When we come back, tom fanning the chairman and ceo of Southern Company will join us for the hour. Were going to be talking Energy Policy and how deregulation will affect the sector. Hes our guest for the remainder of the show. Also the cfo of the wwe, George Barios talks wrestle mania and the future of entertainment. Mixed picture this hour. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. 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 . Markets now, the bulls battle back as the dow looks to avoid its first nineday losing streak in nearly 40 years. Regulation rollback. President trump targets obama era policy on energy in america. Southern company ceo tom fanning weighs in on the Business Climate straight ahead. Plus content smackdown. Well tell you how wwe is wrestling its way over the top. Final hour of squawk box, inside the ring, 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 Marketsite. Stop. Im joe kernen along with becky quick and Andrew Ross Sorkin. Our guest host tom fanning ceo of Southern Company. Were going to hear from him in just a bit. Glad youre here. I need a i got an ally. Piece of cake. We got it going. I needed you in the last anyway. Lets get a check on the markets right now. The futures are indicated down now. Down 13. That would be nine Straight Days. Its weird. So we got to go back, what . 1978 to get nine Straight Days. Did we go back how far do we go back to get the eleven straight records. Wasnt that like 1960 something . A long way, yes. We just had one. Set a new record. We just had a record for up days in a row. Now were going to set a record for down days in a row. But the down days have been much more muted. Only down 1. 9 . And remember in we were supposed to not chase twice in history that youve seen that long of a streak with that small of a loss. All right. And treasury yields take a quick look. Treasury yields are below 2. 40 again. Id like to know if they go back below 2. 25 again. Some people think they will. We had a lot to talk about. Italy italeave. Yeah, among todays stop stories jack dorsey is brushing off calls to focus on either twitter or square but not both. Dorsey, who is the ceo of both Technology Companies spoke to cnbc europe after the launch of square in the uk. Theres a lot of potential synergies. And i just trust the teams to do the right things. Im going to do whatever it takes to make sure both succeed. There have been questions about whether dorsey should be running both companies. Hes been under pressure at twitter after stagnant user growth on that platform. In washington, President Trump is expected to sign an executive order on Energy Independence today. The order will seek to curb the federal governments enforcement of climate regulations and focus on protecting american jobs. Investors will get a snapshot of the Housing Market in an hour. We get the january case shiller report that is out at 9 00 a. M. Eastern time. Economists expect that home prices rose 5. 6 kard to a year earlier. Lets get over to Julia Boorstin with some breaking nus on facebook right now. Julia. Andrew, facebook is rolling out a new camera feature with a slew of new effects as well as two ways to share photos and videos that look just like snapchats most popular tools. Direct attack on snap the selfdescribed camera company. Facebooks new camera will be embedded in the facebook app encouraging users to share more photos and videos with dozens of effects like frames and interactive filters plus partnerships with artists and film studios. Now facebook is also launching a stories feature for sharing photos and videos for 24 hours. The same format that snapchat pioneered, and facebooks other apps, instagram, whats app and messenger have each followed. Theres also a new option called direct which allows people to share photos and videos with specific friends for a limited time only to be viewed once, just like snapchat. Facebook acknowledges the similarities to snapchat even calling snapchat the pioneer of the storys format and tells us its been testing these visual sharing products since august. Andrew . Julia this is built into facebook itself. Separate from instagram. Given what instagram has done which is similar in its own way to snapchat these days. Exactly. Weve already see instagram do a stories feature. Now youre going to be able to have a story feature within facebook itself. So facebook still encourages people theres really going to be a push to encourage its users to share photos. To share video. And Facebook Says theyre really reacting to the way that people are starting to use visual the visual medium as a way to communicate more than text. So facebook may be reacting to what people are doing and they want on the facebook platform but it certainly looks an awful lot like what snapchat is doing. Facebook had a separate app called masks, because my kids use it. They play with the snapchat one and when they run out of things to put on their face they do the mask. This is that technology theyre importing into facebook itself . Yes. So facebook bought a Company Called masquerade which had a lot of that technology where you can put lenses on top of your face. The same kind of thing that you can do on snapchat i also do with my kids. But i think what were going to see here is all of that is going to be integrated into facebook. When you open up your facebook app on your phone youre going to be able to swipe. Within your news feed youre going to have a camera, take photos, put funny lenses on your face. Have that minions interaction that we showed and really be able to interact with the camera. There we go. Theres minions. Take those photos and either share them with a stories feature right there in your Facebook News feed or send them directly to someone the way that you would on snapchat. Is the idea to steal market share from those who are using both services . Is this i mean we talk generationally about an older generation using facebook relative to snapchat. Is this just that this older generation is now going to be using theseselveses . Or is it how do you think about it . Well, look, when we saw instagram launch stories it had massive success. Hundreds of millions of users. I think whats interesting is while snapchat continues to grow into its thing facebook has massive market share. It is just a much, much bigger platform. So i think that facebooks not going to common specifically on snapchat. But theyre doing everything they can to make sure that their users dont ever have to leave their family of apps. Now you can go to instagram, whatsapp, messenger. There are a lot more options about how to communicate. I think they want to keep people on their platform and make sure they dont need to go over to snapchat to play with fun filters and send messages and view stories. Okay. Julia, thanks. Im going to go do it. I mean those dogs. Who doesnt got to be worth billions. Who doesnt vomit a rainbow. Thats got to be worth billions. Theres a reason facebook sells for three times what some Stupid Company like boeing sells for. They make those ridiculous airliners that people fly around on. I want to make my friends minions. So watch yourself for two reasons. One is minions owned by Nbc Universal. Minions are good. Im talking about the dog ears. Two is Nbc Universal spent 500 million on snapchat. Nap is back to 24. It did. Bottomed 17. Im just making a point. I dont understand why it just seems to me you do the dog ear thing with the dog nose a couple of times and you might not be doing it a year from now. Hey im doing it again. God it never gets old. Putting dog ears on people. Youre not 13. A 6yearold name max sorkin has been doing it for the last year and a half. Okay. Lets get to this guy is unbelievable. He provides energy for like your electricity. Thats priceless. Can you do anything with dog ears . No not really. We think dog ears work. You better invest some money so you can the next hour Southern Company does all this boring stuff, president chairman and ceo tom fanning. Tom, i tell you where i want to go with this because you saw what the president s doing today in terms of the power. Power plan and all that. If you, as a ceo of the Southern Company had bought in to the obama narrative on what was going to happen with energy in terms of renewables. Right, right. In terms of clean energy and where we were going to go and the tariffs agreement, you could have spent all your money transitioning away from fossil fuse. Thats right. Suddenly you got a new guy in here. Thats right. Where you feel pretty stupid now, if you had gotten out of all fos ill fuel investments. Did you go too far with as much as youve already done . Have you hurt because its not as economically feasible to do some of this stuff, youve made a lot of investments. Sure. Did you hurt results because you bought into that . No, you know ive been the big proponent of the portfolio, were the biggest owner of solar. What drove our investment in solar was really tax policy. Which also was wrong. Which was wrong. Way favored. Re newables. Hundred time per unit of energy delivered. 100 times tax preference items, wind and solar. Taxpayer got hit with that. But as compared to coils, coal, oil, gas, 35 times whats available to nuclear. Its completely skewed. And unnecessary. That was bad. Yeah but it was good for my shareholders. Good for your shareholders. Good for you. Made you and good for my customers. But bad allocation of capital and it was costly to the taxpayer to have spent money on those but joe heres what i would say is the biggest difference between what i see coming out of trump and what was in the prior eight years and that was setting Energy Policy on the basis of abundance not scarcity. Weve been doing scarcity really since jimmy carter. The fuel use act. Remember we couldnt use natural gas to produce electricity. And now all of a sudden, in a worldwide economy, with so many challenges, sun of a gun one of the greatest advantages america has is its natural resources. And now what we can do is unleash those forces. Whether its nuclear or coal or gas or renewables, or even kind of new models for energy efficiency. To really play offense and grow personal incomes and make lives better. So in a trump world will all of these investments take longer to pay off . That youve made . What if the tax structure changes in terms of incentivizing well they almost never. They always generally grandfather a commercial transax. Okay. So theyll run out. Theyre scheduled to run out. My sense is that the other side had won they might have been made permanent. But they should run out. Ive been saying that forever. As a ceo ive got to take advantage of those things to benefit my shareholders and customers. But its not good policy. So now what . What do you start thinking in terms of where youre going to put your capital . Well, were already committed on a number of big deals. Obviously when you look at that portfolio of generation for america, theres kind of two real well maybe three big things. Natural gas is a dominant solution right now. Its so cheap, so plentiful. Et cetera. The other thing would be kind of smart technologies. Okay . So i think theres this whole you were talking in the last hour about Creative Destruction. Right. Absolutely. Thats happening in our industry. For 100 years weve been doing this notion of, making moving and selling energy generally to a meter. And youre on the other side of the meter. You do something with it. What were seeing because technology is enabling it, because customers are requiring it, were taking that make, move, sell model, jumping over the meter, completely obviating that meter and putting all this on your premises. Whether its your home or your business. And son of a gun its changing the way this whole industry thinks about delivering service. Putting what on my premises . Vltz it may be distributed generation form of a solar panel or it may be my or a fuel cell remember last year i was here with bloom energy. Yeah. And we did the fuel cells and putting storage around it and microgrids and all that other stuff. We can take this technology now and put it on your premises and let you have more control. Its much more important today for a Industrial Company or maybe a commercial company. Its kind of sexy to talk about the residential side but its not here yet. Talking about the residential side. We always ask about elon musk, solar city. Now theyre going to be rolling out those, what look like Pretty Amazing rooftops, in terms of those tiles that will go on the roofs. That is so far away from being something most residential customers should do. Listen, theres always a segment of people that should do that because they love being green and they love the attributes of that kind of investment. You think that the utility and economics of it dont make sense . Its twice as expensive as centralized solar. So solar at scale makes so much more sense than solar on your rooftop. Is it something that only makes the sense if you have the government subsidizing . Well, that too. Thats a double down absolutely. We love scott pruitt. So heres what scott pruitt we got to go. Can we come back . Yeah, i love to. I think hes great, though. Well, we had an interesting interview with him here. See where you stand on some things. Anyway, well talk about that a little bit. Great. When we come back, President Trump shifting his attention to a tax overhaul. Congressman joe crowley will weigh in on the bipartisan road to reform, next. From engineering and manufacturing. To stealth bombers. To nextgeneration fighters. To landing an unmanned vehicle on a carrier for the first time in history. Just wait till you see whats next. Thats the value of performance. Northrop grumman 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. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Welcome back to squawk box. After a failed Health Care Bill the gop shifting its attention now to tax reform. Joining us to talk about it democratic congressman joe crowley of new york, representative crowley serves as chairman of the House Democratic caucus. He is also a member of the house ways and means committee. Good morning to you. Good morning. Weve been trying to make sense of it all morning and for the past several days now since the repeal of obamacare didnt happen. As we think about tax reform going forward, how do you see it . Well, its a good question as to whether or not thats the next tack they should take. What i will say, andrew, is this. I think, you know, theres both bipartisan, i guess observation that the code as it exists today is overly complicated. Because its complicated its inefficient. We also think its unfair in many respects. The code itself. But probably the worst thing about it, actually promotes growth overseas as opposed to here domestically. I think theres bipartisan support for an overhaul. Just what it will look like is the question. Congressman, axios is reporting this morning that perhaps the white house would try to offer up a twofer. Do tax reform and Infrastructure Spending at the same time as a way to get the democrats on board. Does that make sense to you or make it more complicated . Theres always been a component of tax, some type of tax reform in the discussion of infrastructure. And quite frankly, in the Health Care Bill many of us thought that was actually the first tax reform bill because it had so much tax relief in it. We wont go back to that at this point. But when you look at the idea of creating an Infrastructure Bank that was the notion behind that with Chuck Schumer and paul ryan had been working on was the idea of taking overseas moneys, repatriated tax moneys, and creating some type of Infrastructure Bank to leverage additional dollars here in the United States. So its not new to have that kind of linkage. But again, about what were talking about in infrastructure, does this just mean more toll roads for the average american . Thats not a place where democrats want to start. To the extent that President Trump may want to try or bypass the Freedom Caucus, he may have to do business with you. And so, the question is, if he were to try to do that, are you guys willing to go along at this point . What will you have to see . Well, what i would like to see is the president act more like an adult. And not in the childish ways in which hes been acting so far in terms of executive orders, upping the ante against sanctuary cities. At the same time willing to talk to democrats about tax reform, and how we can move forward, but also, insisting on making incredible slashes to the domestic budget. So, i think we have to see a drastic change in the way in which this president conducts himself personally. Whats the lowest Corporate Tax rate that you can imagine when you do the math given that the obamacare issue is off the table . That was worth a trillion dollars and potentially where you and i also would love to understand where you stand on the border adjustment tax worth another trillion dollars. Two important, very, very important issues. On the bat itself were hearing exactly what the intention is and how deep they want to go and what the percentage would be. Right now talking about a 20 excise tax. What we do think is that is a very aggressive tax. Normally speaking when youre talking about some type of a sales tax. In terms of the how low democrats would want to go, what we know is, without going into the personal side, or even quite frankly discussing the path we know you can probably get to about 28 just dealing with the corporate side of it, doing away with expensing that is in the code right now. Now you have winners and losers in the code as it pertains to the expensing. Some have available to them, others that dont. And what youre basically doing is maybe to some agree just picking different winners and losers. I do think we can get to 28 overall. Getting it below that becomes a much more difficult prospect. Tom fanning is here. Very interesting kind of trades that theyre talking about here. Lay aside this notion of expensing capex which is going to cost a lot of money and supposedly incense people to invest more longterm capital. The trade for that kind of is, eliminating deductibility of interest. Thats really a grand experiment in capital raising. And this country has been set for so long on that as a basis. Where do you come out on those two issues . Well, theres a real problem for me as a new yorker, in particular, particularly because of the ability to deduct state and local taxes. This is one aspect. The other is the Municipal Bond aspect of it. And the ability to deduct from that. We also have in new york advertising, and under the plan that came out that would severe curtail the ability to individuals to deduct advertising expenses. Thats just a couple of antinew york provisions. Theres a few more including a bank tax that would actually hit new yorks coughers greater than it would other cities, other states, other regions. So i do think that thats going to be something that we have to really have a key discussion on, and figure out how we can do that, if it can be done to ameliorate the issues as it pertains to congressman is there a democrats guide as to what it is to be an adult . I got confused. A couple of the things that youre not an adult if you want to do something with sanctuary cities or immigration, and i guess what was the other thing that is the debt his budget was not an adultlike budget . Im unclear about what the democrats guide to an adult is. Well you asked me whether or not im an adult too but im not going to do very well with this i dont think. Your question was what woe have to do to be an adult. You said that so that the president could act like an adult. I guess its the democratic view of what an adult is in your world, right . Well, were putting words into open others mouths. You just said the last part of that you asked me what would it take to get us democrats to work with him. No you said he needs to act like an adult. Oh, yeah, i had said that. What it would take for him to and he said he needs to act like an adult which included the sanctuary cities. I just want like a run down of the ten things of what a democrat this means to be an adult. You have to forgive me because i dont know whos asking me the question. Sorry. What im saying and what im suggesting to you in the less than first 100 days the president has issued executive order after executive order to create a crisis and tension within the country in particularly in my district. I have a very large immigrant population and people are incredibly unease. A tremendous amount of stress thats been created by this administration. What im suggesting if he wants to work with democrats, he wants to bring us in, he has to understand were not interested in slashing the budget domestically. Were not interested in seeing a 10 , necessarily 10 increase in defense spending. Were about increasing defense spending but not at the expense of domestic spending. Let me answer the question. So were asking to act less erratic and more rational. Thats what makes a twoparty system, though. The republicans think that there should be a 10 addition to defense spending. The republicans think immigration laws that are on the books should be enforced. Doesnt make a democrat any more of an adult just because they have differing opinions on policy, though. But you asked me what it would take for democrats to work with him. Im suggesting im just wondering what it means to be an adult in your eyes. No one can argue me this president hasnt been erratic. Theres no question this president has been more erratic than any other president ive dealt with in my almost 20 year career the examples you cited comparing him to George Walker bush. Thats not what you were saying. You were talking about sanctuary cities and enforcing immigration laws. I dont believe thats in the interest of our country. It makes us less safe. Some people do think it is. Doesnt mean theyre not adults. I disagree and you asked me what it will take for democrats to work with this president. Thats what im answering. Well its going to be tough go of it in washington. It may very well be. Well see. Congressman appreciate your time this morning. Thank you so very much. Coming up todays top stories. 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 . We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Good morning, welcome back to skwrk skwrk right here on cnbc. Live at the Nasdaq Marketsite in times square. Among the stories front and center this hour. Chinas tencent has a 5 stake in tesla. They just took it. That sent the stock higher in premarket trading. The disclosure coming in a filing the s. E. C. Form 13g which is indicative of a passive stake. Also dow component General Electric has completed the last major sale of its years long exit of the capital business. Closed on the sprint Consumer Finance today. It came a year ahead of schedule. And former valiant Ceo Michael Pearson is suing the drugmaker. He says the company hasnt paid him more than 3 million shares in stock that were due under the termgs of his separation. Valeant has declined comment on that suit. Valeant cant stay out of the news one way or another. Our guest host Southern Company chairman, president and ceo tom fanning is here. Want to talk about coal. You bet. Is it possible to create a true, clean coal. Where is that going in this country . Well, sure. Technically its possible. I think whats challenging right now, the economics of coal versus natural gas, for example. Its just hard to put that kind of technology on there, and compete against natural gas on a daytoday basis. So when trump talks about bringing coal back no, no, no. Really Different Things there. I would argue theres at least three things that we could do to help coal industry for the longterm. Its a wonderful natural resource. So heres the issue. Number one, we do have to be responsible about the regulations that are impacting the coal industry. Already taken some steps there. Number two, i would argue weve got to unfetter the coal industry to permit as much exporting of coal as we can. Coals much more competitive around the world than it is here on a Energy Production basis. Why . The third thing is, r d. We need to continue to invest to make coal more competitive. Like our plan in mississippi. Were putting carbon Catcher Technology on that, reduces the Carbon Footprint 65 and makes it competitive against coal. But what you need Government Funds for that research to do it . I thought we were talking about letting Market Forces take over. Well theres always been a section of doe thats been invested in promoting the different sections of our Energy Industry and thats always existed. And its kind of a small amount of money anyway. But i thought our whole point was were not going to make all of these other things like solar and Different Things, were not going to subsidized them. Were going to let the market take over. Thats right. But all of the national labs, for example, sanvio labs, Idaho National labs, all these things, i mean i could come up with some suggestions about how to run those labs. But for heaven sakes, the United States government should be involved in that part of bench research, translating kind of this deep research into something that commercial Companies Like mine can pick up. That is way different than tax policy that really changes decision making. Just a fine point on it. Given the economics of the coal business the way youve laid it out. Yep. President trump has pledged to bring back coal jobs. And so what im trying to understand is, is that realistic . Is it a fantasy . Given what youve just described. Hes going to do everything he can do to use the coal industry to play offense in a Worldwide Energy economy. And that means permitting the use of coal where it makes sense. That would be exporting, number one. Number two, taking away onerous regulation. And number three, investing in research to make it more competitive. So four years from now, how many more coal jobs do you think will be out there . Hard to say. More . Less . I dont know. In terms of exporting it makes sense in other areas, because because why . Gauze they dont have the natural gas that we do. Our supply of natural gas is just not going to let it be there. We can take what we have on the ground, ship it elsewhere and they can use it . Absolutely. When did we not allow exports of that . What happened . There have been all sorts of regulations around ports and variety of things especially on the west coast, and somewhat on the east coast. Okay. Tom fanning is going to be sticking around. Got a lot more from him, and a lot more coming up. You bet. Also when we come back were going to be taking on cyber policy. Former nsa director Keith Alexander will join us with what the Trump Administration should do to protect our countrys data. Welcome back, everybody. The Senate Intelligence committee will meet this week to talk about russian intelligence threats. Joining us is general Keith Alexander the former director of the nsa. Our guest host this morning is tom fanning. And general alexander, thank you very much for joining this conversation today. Thank you. An honor to be here. You know, weve been focused a lot on cybersecurity. Whats been going on. And it does seem that we are under greater threat than ever bch. Where would you say we are just in terms of cybersecurity, and how much were rising to the threat right now . Well, i think the key problem that we have is in three main areas. We have to set up a standard for companies and the government to work to. Think of that as National Institute of standards and technologies. To raise the bar for government agencies, and for individual companies. The second thing is we have to figure out how to protect one company at a level far beyond where we are today. And thats using Machine Learning. Automated and Artificial Intelligence. Its going to a cognitivelike system. Because the amount of data these companies will face will be eight times by 2020 than what theyre facing today. Then we have to figure out, and learn, how to have companies within the sector, and sectors, share information for common defense. And the government needs to step in and figure out how we give Liability Protection to those companies that do it. And how they enter in when a company is being attacked. So as we look at what happened in georgia, in 2015, or in the ukraine, excuse me in 2015, if you think about that, and one of our companies is being attacked, we have to have the assurance that company could defend itself initially. But the government could step in and stop that attack from happening at a certain point. And with the speed that these networks work, its got to be quick. Tom, for Southern Company youve got to be on the front lines with this. Oh, absolutely. Companies that are essential to the nations wellbeing and continuance. In fact the department of Homeland Security called out Critical Infrastructure sectors, electricity is one, finance is one, telecom is one. We three together and the general already spoke about the notion that theres got to be Public Private partnerships between the federal government and people that own the Critical Infrastructure. 87 of the Critical Infrastructure in america is owned by us. I share the electricity sector. I have three cochairs. And son of a gun we work with the general on some really important involving issues that, keith, talk a little bit about, i think the general notion of people attacking our infrastructure is some guy sitting in a nondescript building in beijing, china, pounding away at a key board. Talk about the notion of the evolution to machine to machine attacks, and then what Artificial Intelligence may bring in the years ahead. Yeah, well thanks, tom. And thanks for the partnership and your leadership in this area. First, if you think about the way the attacks are coming and the way theyre going to attack us, what theyre using is increasingly more systems to attack and try to penetrate a network. And the problem with that is those attacks are much more difficult to detect initially. So they have many ways in, and one company can see some of those, but if you begin to Link Companies together, you can see how these companies are being attacked across a broad spectrum. So if they wanted to attack the energy sector, or the financial sector, one of the keys is having the ability to automatically generate events about certain indicators that would give us insights to an attack, and share that across the sector to see where the real attack is coming from. In that way, if we share that, wed have a common defense. In doing that it gives us a great step up. We can do that at machine speeds, and you can share that Important Information with the government. Its not personally identifiable information. Its actually Threat Intelligence information. You can share it at network speed, and the government can see that somebody from beijing, or from iran, or from russia was trying to go after one of our key sectors. And at that point they could step in. Its the rules of engagement are there so the administration has to fix those. And we have to practice this with the sector. So whats cool about this is a very challenging problem is when do you have human intervention . On a machinetomachine attack these are happening in microseconds. And as soon as you default to, as an individual, becky, you have to make a call on what to do, all of a sudden the machine speed is beyond you. So this idea of where you put in place a decision rule on when to kick to human intervention is a very challenging issue. General . Thats right. So what you have to have in this whole screening is you have to have streaming analytics running at net flow speed that are actually creating these events, and making decisions on what to do with those events. What the share, what to block, and how to mitigate certain key things going on in the network. And if you think about the volume of information by 2020 the amount of information thats flowing in these networks is going to be eight times where we are today. We cant afford to increase the population eight times so as tom said we have to go to machines. We have to get there. Tom, do you before our nation, thats where we need to go. Do you feel like were safe . You see this on the front lines. What kind of attacks are you taking on at this point . Oh, listen, whether its my role as chairman of the atlanta fed, or whether its chairman of our industry, or this whole industry gets attacked millions and millions and millions of times a day. And a big segment of that, are nation states. Okay . So this is a very serious or something a corporation cant take on by itself. But heres the deal. In fact, even industries cant take it on by ourselves. As you can imagine the point of intersection of interest between us and say telecom, that point of intersection is generally the weakest kind of developed defense. Weve got to Work Together much better as the general said. General, what is one thing that you would like to see this administration do in order to protect us a little better . Well, i think the key thing that we have to do is we have to practice between government and industry how to defend the nation. And to get there theres a number of steps to go. But thats the key. And i think one of the things you hear people say is industry doesnt want to work with government. I dont see that. Industry recognizes that to defend against these actors we have to work to the. You know, its kind of interesting. This came out in the president ial commission and people said, you know, thats industrys got to do it. Well the reality is, the government is the one thats responsible for defending us against nation state attackers. Its in the constitution. It says, for the common defense. It doesnt say for the common defense, unless its hard. Then industry will do it. Its for the common defense. We have to practice that. And we need to get on with that now. General, just talking about the relationship between government and industry, where do you end on encryption . Because last year you know there was the whole commotion and controversy over apple and encryption in terms of programs like signal and telegram and other things that the view was that terrorists and other people were using. I think actually on that one our government and industry also ought to Work Together. How do we solve both sets of problems . Im not in the camp of, you cant have anything that were talking about and im not where the government gets everything. Im actually, whats the right thing to defend our country against terrorism and other attacks . And what do we need to do and how do we approach that . So my concern is if we take a hard line one way or the other, what happens is, we end up with potentially a 9 11, or a big outcry on our Civil Liberties and privacy. You know our nation was built on people who could Work Together. In this area, i believe we need Silicon Valley and the government to come together and see if there isnt a better strategy than an either or approach. I believe there is. General thank you very much for joining us today. Thank you. Up next, wwe is wrestling its way to the top. At least among cord cutters. The cfo joins us next. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Hidden in every swing, every chip, and every putt, is data that can make the difference between winning and losing. The microsoft cloud helps the pga tour turn countless points of data into insights that transform their business and will enhance the game for players and fans. The microsoft cloud turns information into insight. Welcome back. Were going to talk about wrestling. I said wwf but it is wwe now, wrestle mania is the worlds fifth most valuable sports event brand. The 3yearold w chlt e network is also wrestling for a top spot among the overthetop video services. Joining us right now is gorge barrios the chief Financial Officer of the wwe. And thank you for coming in the ring with us. Using all of these metaphors. I never hear those puns. You never hear those puns . First time. Talk to us about ott. Youve gone over the top. Youve done it more successfully than anybody now. And the question is whether its going to be a model for others and what youve learned. Youve got to understand the entire content strategy before you talk ott. Youtube, facebook, were the number one Sports Network on all of youtube. 12 million views last year. More than the nfl and nba. Traditional pay tv. 260 hours live, five hours a week raw on smackdown, about 5 million hours consumed around the world. Number one market is india. And you get our direct to consumer network. Premium content like wrestle mania this sunday. Our playoffs. We have 150,000 hour library. Were the fifth largest ott network in the u. S. It only works with the other two platforms are working with it. Does the ott piece at all . Have you seen it cannibalize the other piece . Yes. Thats the big question for those in the media looking at this. Other Sports Networks or sports are teams that want to try to model thats why i put it in the context of the entire ecosystem. What were not doing is putting the same content on three platforms. Its all different content. So the content on the network is not available anywhere else. The content on pay tv is not available on the network. The content that im doing on youtube and facebook is not available on either one. We want to grow all of it. Were not trying to how are the partners, if you will, the television networks, the youtubes, is everybody happy with each other . Or has this become very complicated in terms of how youre going to dive very it up . If youre youtube and were doing 12 billion video views around the world, 70 of it outside the u. S. , i think youre happy. If youre Nbc Universal and usa we have their number one and number two shows. Number one and number two on usa the Number One Cable Network in the country. I think theyre happy. And we have our own business direct to consumer where we super serve our most passionate fans around the world. As long as we deliver eyeballs and attention on all the platforms i think everyones happy. Yes about espn. I dont know if you want to comment on it. But one of the Big Questions thats overhung espn for a very long time is whether they could ever move into an ott kind of world. And go direct to the consumer. What do you in i about that . Look, if im disney i love where i stand. Ive got great brands, not just espn, ive got pixar, ive got star wars so i think similar to a brand like us, theyll have a lot of options. How much are people paying monthly . 9. 99 a month. How much elasticity do you think you have on that price point . We think its a great value. We want to keep it a great value moving forward. Well see over time. Its really important. Were only three years in. Were still in the growth face. At this point we dont want to disrupt that. Well keep the price down. You going to wrestle mania this weekend . Thats a joke, right . Of course im going to wrestle mania. Youre not going to wrestle mania . Joe was there last year. Were you . He had the face paint. I wanted to get the you remember, on its groundhog day i think. Remember he buys a ticket for the young couple. Wrestle mania. Is there going to be a cage match . We could work on that. Are they going to smack each other how do they smack each other with the chair and not hurt each other. Come on. What do you know . Down to the new york stock exchange, jim cramer, why was the nasdaq so strong yesterday compared to Everything Else . All the four horsemen, everything seemed like it was up yesterday. Do you know why . Yes, a lot of the news yesterday is a carryover from what micron said thursday night and got lost in the shuffle, the internet of things is going terrific, the data center is going terrific. Everybody involved in that food chain is doing very well. I also think that alphabet they keep repeating the same torrey how bad advertising is, probably not going to matter that much. All the positives about snap reflected on the entire group. The group was just kind of like its not really connected with health care and not really connected with trump. And its where people go when they think the economy is slowing down a little bit because they know the companies are going to make the numbers anyway. I dont know what to do with snap, buy at 18, sell at 2025 . Facebook came out with everything snap has and snap may have some loyalty but at a certain point if you give instagram everything that snap has it will stunt snaps growth. The analysts love it and the co quarter will be terrific because they have a lot of advertising. President s a mobile app that people love. I this i in the longterm Mark Zuckerberg is saying ill do anything i can to destroy them. Zuckerberg has a lot of decisions. I dont know how many divisions snap has. True. Jimbo, see you in a couple minutes at the top of the hour. Programming note, dont miss this. Steve leashmans sbesh view with Stanley Fischer at 1 30 p. M. Eastern time. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. The trump agenda to Reform Health care and taxes is reshaping global restaurant companies. Squawk on the street today on krn pc. Our guest host is southern cap chairman president and ceo tom fanning. Tom, weve talked about this administration, well get back to that in a moment. One of the questions weve had, trying to figure out how big Capital Expenditure Companies Like yourself puts money back to work, this waiting around for a tax reform. What does that do to that money . Waiting around the whole change in regulation and Everything Else people were bullish after trump got elected and now weve just got to see what we can do in terms of tax reform and others. Theyre gratified with the rollback in regulation. In terms of tax reform in my industry were one of the most capital intensive 60year paybacks for any investment we make. I asked the kongmen earlier in the show trading expensive capex for eliminating deductibility of interest, good heavens the Nations Capital markets have been based on the idea you can deduct interest. It is a grand experiment but boy, im not sure its worth the turmoil it creates. In terms of paying or giving us a benefit and expensing capex that benefit doesnt benefit us. We dont need that. With the longterm nature, giving short term benefits doesnt change our decisionmaking at all. And so tax reform to us i think is something that we want to preserve, were all for tax reform, only give up certain things by that trade doesnt make sense for us. More than anything we have seen Capital Expenditure as a nation be well below what had been anticipated, my guess is a lot of that is tied back to washington and not knowing the rules of the road. Becky we were chatting off camera for years now, for heavens sakes, when you look at the data coming out of the Business Roundtable im a part of, when i look at my passion as chair of the atlanta fed and the data coming across, people are not investing longterm capital right now. Weve got to get some level of certainty so that people have confidence in the future and now can start making and growing jobs. One question weve been talking off ka,camera and on caa about Climate Change. Ill ask you the same question he asked scott pruitt, do you believe, joe was the question, carbon the knob . Do you believe that Carbon Dioxide is the primary Climate Control knob . Do you think its been proven, was my question, do you think its been proven co2 is the primary Climate Control knob . No, is Climate Change happening, certainly, for millennia. Thats not the issue. What was the most important thing he rolled back, there were four. We dont have much time, the president. I think the biggest deal will be restoring balance between federal overreach and regulation, letting regulators set policy rather than letting congress set policy. Thats what you like about pruitt. Yes. Tom fanning thank you for spending the hour with us. Squawk on the street begins right now. All right, just dance good morning, and welcome to squawk on the street. Im david faber along with jim cramer, live from the new york stock exchange. Carl quintanilla has the day off. Half hour before trading on tuesday a lower open perhaps but not by much if at all after yesterdays down markets. European markets though not down