Squawk alley. Morgan, thank you very much. Good morning. It is 8 00 a. M. At snap headquarters in venice beach, 11 00 a. M. On wall street, and squawk alley is live. Starting from the bottom, now were here starting from the bottom, now my whole team here startied from the bottom, now were here started from the bottom, now the whole team here good thursday morning. Welcome to squawk alley. Jon fortt, sara eisen with me here at post 9 along with Business Insider ceo henry blodget. Good to see you this morning. Good to see you. Eight years in and still going strong. The s p rallying nearly 250 since hitting that closing low of just over 676 on this day in 2009. This is the second longest bull market ever. Oil, on the other hand, falling below 50 for the first time this year. Of course, had the worst day yesterday in about 11 months. Just to put the rally into perspective, henry, would you have been skeptical of for a long time, more now than ever . Yes. The higher we go on valuation basis, the scareyer it becomes. Valuation tells you nothing about what stocks will do next, and clearly thats played out over the last three years, where ive been cautious. But it usually, unless something is fundamentally different, tells you about your returns in the long term. And today, based on todays level, if you look at the market on a cyclically adjusted basis on many measures, not just the schiller pe, many other measures, it basically says were not going to have any return from here for another ten years. That means we could double from here and then crash, we could move sideways, go down and up, but basically, stocks will be about here in ten years, according to traditional valuation m valuation metrics. Dont things like deregulation, rising rates weigh on you, things that are pro business, pro friendly . Well, rising rates absolutely do. And back in history, usually when the feds raising rates, thats a break on the stock market. After a while. After a while, absolutely. Hard to time. Again, none of these things tell you whats going to happen next. Regulation. If we reduce the right regulations and do it in a way that doesnt have everything suddenly overheat, absolutely i think taxes everyones talking about, oh, going to cut the rate, profits are going to explode. The effective tax rate is already way below the statutory tax rate. So, unless we actually cut the effective tax rate, thats not going to be a big difference. Lets talk tech. Second longest bull market ever. Snap cant seem to get much of a tailwind. Alibaba is up, what, 10 maybe in 2 1 2 years, well off the highs, well off the lows also. What does this say about where techs going . Hard to argue that, say, apple is trading at a really rich valuation, but you could argue that about amazon. How should investors think about it . Very interesting. Ive been at conference this week with institutional investors. One of them said look, when i look at the market, i have to say, companies that are not growing, serial Companies Trading at 20 times earnings you look at facebook, google, apple and others a little bit more expensive but growing 20 , 25 per year. He said those are my favorite stocks. Apples the same way. So a lot to say that pop snapchat, its interesting. Talking to the same institution because that, a lot of sensitivity around valuation. David tepper on cnbc, i think yesterday, said i look it at the ipo price, not at 30, and that is the way a lot of folks on the institutional side are looking at it. Theyre saying, look, even if you think this could be a 100 billion company in four or five years, at 30, youre only getting a 2x return. At 16, youre getting 3, 4 or 5x, so its much more compelling. The other thing investors track is sentiment when it comes to the rally, and it does feel like a consistent feature of this bull market over the last few years is its been heated and not embraced, and there have been plenty of worries out there. How exuberant does it feel to you, versus, say, the number one longest bull market in history, 90 for 2000 . It is nothing like that. Right. And that really is the missing ingredient. And i think a lot of people do say, look, when youre really at a blowoff peak, youve got everybody, uber drivers and others, recommending stocks to each other, thats what it was like in the 1990s. We definitely dont have that. But still, on a valuation basis, numbers are closing in on that peak on the cyclically adjusted basis. Well talk about that all day long. Meanwhile, the president s meeting with the ceos of small and Community Banks at the white house. Yesterday sat down with infrastructure ceos, including teslas elon musk. Our eamon javers is watching developments at the white house. Eamon . Reporter yeah, hi, carl. The Community Bankers are here. They just walked in behind me here a few moments ago. A few of them had never been to the white house before, so this is a big meeting for them. A couple told me that they have some legislative and some regulatory ideas theyre going to pitch to the trump white house, and the expectation that they might be able to get some change that could help Community Banks ramp up their lending. Theyre also curious to hear what the president himself has to say about all this. They dont know what his message to them today is going to be. I can tell you that the secretary of the treasurys expected at this meeting. Reince priebus, the chief of staff, is expected there. Ga gary kohn of the National Economic council and Jared Kushner all expected to be in this meeting, which should get under way here momentarily. Eamon javers, thank you very much for that. Your thoughts on this . Again, more white house optics at play, working. This is an area where i do think theres a real opportunity to roll back regulation, and applauding the white house on this. I think Community Banks in particular, Small Business lending is incredibly important. This is a case where you can actually let the banks figure out their own risk profile. If they get too crazy and they go out of business, its not going to harm the system. And we do have a problem in lending to smaller businesses. So, this is a great opportunity to roll back. You think banks should make their own regulatory rules . Not completely, but with regard to lending, thats what a bank used to do is figure out what risks are worth taking, what arent worth taking. But what about mortgages, for instance . They make a lot of Mortgage Loans and theres been more regulation and some would say its a good thing. What happened in the past bust is banks would make the local mortgages and package them and sell them, they didnt have to hold the loan and that changes everything. But that is what a bank is supposed to do. You have Loan Officers who evaluate each credit and decide whether to take it or not. And if theyre too aggressive and go out of business, fine that is capitalism. You just have to be able to absorb the shock, and we can absorb Community Banks. It gets tougher when youve got a massive, global institution. Then its hard for even the government to take over. But even then i think thats the answer, let them fail. Youre in the camp of arguing that we overregulated absolutely. Post on lending. On lending. Lending specifically. We went through a heart attack, near death of the economy. Obviously, we erected a lot of systems to make sure it never happens again, but now we have swung way too far the other way, and youve got to let again, that is what a loan officer at a bank does. Thats their job. They figure out the credit. If they do it badly, they go out of business, tough. Thats certainly what you hope they do, thats for sure. Its been one week since snaps ipo. Doesnt feel like that long. A wild ride for shareholders. Stocks up better than 30 . Now fbn has this note out initiating coverage at sector perform with a 23 target. Tepper, of course, had comments yesterday. Part of fbns thesis is that facebook would love to buy them and theres protection in there on that. Do you buy that . Yeah, i think so. Really . Facebook has wanted to buy them for a while. I still dont think theyre for sale. Facebook could afford to buy them. Snapchats 25 billion, 30 billion, but they could certainly do that. This morning jim said he thought these guys would rather die than sell, and they have the voting rights. They will decide. They have everything. Its amazing the control the snapchat Management Team has. At some point, if the market is working correctly, that should actually be factored into the price. There should be a discount as a result of that, because investors just dont have the same kind of control. Heres what i think about snap thats interesting and different from say facebook or twitter. I think snap and snapchat by extension, is far from fully formed at the point of its ipo. When facebook was ipoing, they had the facebook platform, they had the like button, they had already at least begun to sketch out their blueprint for global domination. We just didnt know about mobile yet. Twitter, i mean, twitter is twitter is twitter. It hasnt changed that much since. But snapchat, get the feeling if theyre going to have a platform, if theyre going to have this advertising strategy writ large that capitalized on the popularity among millenials on the smarts that they have around content, we havent necessarily seen all the tricks in the bag yet. And if you believe that much in evan spiegel, then perhaps theres up side. Thats right. And they are a Communications Network more than a media company, so they have a network effect. In our household, the devoted Snapchat User you know, i hear people are dumping snapchat wouldnt know it from her. She says, no, absolutely not, back and forth because of communications, and theyre doing a lot of cool stuff on the storytelling side. Theres no question that a lot of millennial and younger focus is on that. And the bull story on snapchat wi, what the smarter investors believe is that theyll be able to go from a few dollars per average u. S. User to 20, 30, 40, 50 over the next few years per year, driving huge economics. Going in, the big question was, if this did well, would it open the floodgates for more ipos . Its been so quiet, especially with technology ipos. Was it a success . Whats the verdict . So far, a tremendous success. So, hopefully, we do see a lot more. The thing thats definitely happened in the ipo market for ten years now is companies are waiting so long to go public and they have to be so mature or they get hammered. Its too bad. Were missing out on a lot of very cool younger just reported that airbnb raised another 1 million. Do you believe if facebook were to truly pose an existential threat to snap, they would have done it by now, and thats what that early offer was about . No, i think or they exited some sort of window where they could quickly be either destroyed or bought . I do not think snapchat has permanent protection by any means. People abandon networks very quickly, especially a network like this. Its a Communications Network. If your friends leave, youre gone. And facebook has created a lot of the same functionality on instagram. Theres a lot of popularity there. And some people think that folks are moving. So, no. In this business, it can change incredibly rapidly. But snapchat has what it needs to build a very Good Business if they continue to iterate youre betting on the rich kids if youre betting on snapchat. Unlike twitter, which is just sort of globally everybody loosely connected, facebook, which has tried to expand in india, in Southeast Asia and places like that, and actually done it in africa with whatsapp especially snaps not interested in any of that. Theyre saying developed markets, the places where big brands want to advertise. Thats all we care about. There are some potential weaknesses in that strategy, are there not . Absolutely, starting with that is the story that you would tell when your growth slows in all of the other markets. Well, its intentional and we just want to focus on this market. Yes, that limits it. On the other hand, if they do what they want to do, there will be a huge opportunity in this market. The big warning side for snap is if the user growth in the u. S. And europe slows, it is over. They will have huge Revenue Growth for a little while, then theyll platt eau and fall. That is the bear case weve been getting some analysts, total Addressable Market is a fraction of what it is for some of its larger rivals. Thats right. Although again, as they move into video and television, and if they can continue to control this particular audience, there is a huge market in just these markets in that audience. You could argue theyre netflix and facebook is network tv, you could argue, right . Because theyre premium, theyre focused, they understand content at this deeper level, theyre willing to invest in it, other people are copying them. I mean, hey. Absolutely. And thats why when you come back to valuation on this, reasonable scenarios for the future give you a massive difference in the stock price today, and its hard to know. And thats what the market is doing right now is arguing back and forth. Well get new idea at the quarter, obviously. And each quarter for the next several years, there will be a massive recalculation of what that longterm got to see if theyve got a game of thrones up their sleeves. You were with us on ipo day, right . And has the past week played out essentially as you thought it would . I think its settling down, and we hit a peak where, again, david tepper came out, seller here, bottom of the ipo seller, but if it gets back down to the ipo price, im a buyer. That is good. That is people thinking, analyzing the future. Thats what you want. Do they have to turn a profit where i mean, do they have to become profitable . Eventually. Look, every stock eventually is going to trade at 20 times earnings, Something Like that. Thats where facebook and google over many, many, many years i just want to know what the patience level is for that. So, the smarter investors, as they analyze snapchat, theyre going out five to ten years and saying, look, what can this company earn . Lets put a reasonable multiple on that, in this case, 2025 times earnings. What does that get you in terms of market cap . And there are reasonable scenarios that get you to 100 billion in market care. Farthest thing from gauxted, but thats how theyre thinked about it. I would argue the biggest thing this news cycle, airbnb, looking mature compared to uber and profitable compared to snapchat. Absolutely right. The only pushback i got from a smart institution on airbnb over the last couple days is total address ybl market. They say how big can this company get versus an uber . Interesting question. Everybody needs shelter. Yeah. A lot of people travel. Its big, no question about that, its just how big. Henry, thanks. Henry blodget. Thanks. When we come back, why the house plan to repeal and replace obamacare may be hanging the president s most loyal supporters out to dry. A first on cnbc interview with the head of athena health, Jonathan Bush, an outspoken voice on the health care system. And later, speaker ryan live on his pitch to the gop plan. Thats coming up later this hour. Squawk alleys back in a moment. Moment. Uh, yeah. Its over, larry. What is . The whole wheelie thing. What do you mean . I just got this baby to get around the plant floor. Right, but now Ge Technology monitors every machine. Yeah, it brings massive amounts of information right to you. So you dont need that. Well, it makes me look young and uh. With it. Time to move on. Oh ill move on. Right into the future. Backwards. Youre going backwards. The futures all around us not just on your little tablet, my friend. Im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. The house plan to repeal and replace obamacare clearing its first hurdle late last night, but the new plan could come at the expense of president trumps most loyal supporters. Our john harwood is back in washington with the details. John . Jon, the old political saying is to the victor belong the spoils. Donald trump himself repeated that during the 2016 campaign. But for the Largest Group of his supporters, this bill turns that maxim on its head. First of all, lets take a look at where the trump votes came from. Only 10 of them came from people earning more than 200,000 a year. 48 came from whites who did not have college degrees. 51 came from people 50 years old or older. Now lets look at the tax cut winners in the obamacare rollback. By rolling back those obamacare taxes, you get an average tax break of 33,000 for the top 1 , 179,000 for the top 0. 1 . Lets look at the losers in terms of Health Benefits for people who enroll in those Affordable Care act exchanges. The average aca enrollee would lose 2,409 in benefits in the year 2020, because the tax credits in the republican bill are less than the subsidies they get under obamacare. The average 55 or older enrollee would lose almost 7,000 in subsidies through the shift from obamacare to that bill. There would be further cuts from medicaid reductions. Those would hit especially hard to Trump Supporters in states like arkansas, kentucky, ohio, west virginia. Senators from all of those states are opposing this bill right now. The bill is not dead by any means, but its got big political problems, guys. John, you mentioned arkansas. Of course, we all paid attention to cottons tweet this morning. Does that mean that you expect big elements of this draft to bend in the coming days . Well, theyre going to have to bend. The challenge is how can you bend them and preserve 218 votes in the house and 50 votes in the senate . If they respond to the objections that the benefits should be greater, if they respond to sh