Transcripts For CNBC Squawk Box 20170308 : vimarsana.com

Declines. Thats the first backtoback losses youve seen for the dow and s p 500 since late january. Futured are muted this morning. Dow up by 2 points. Nasdaq up by less than a point. A lot of things happening, were waiting on adp numbers this morning. That may give us insight on what to expect friday from the jobs market. That can het let us figure out the Federal Reserve will do. In asia, the nikkei down by a half percent. The hang seng up, and in europe, a similar story to what were seeing here. Muted moves one direction ortd othe or the other. The dax up by . And a look at currencies. The dollar is up across the board. Euro at 1. 056. Dollar yen at 114. 05. Here are the storying were watching. China posting a trade deficit of 60 yuan. Exports dominated in yuan, they rose 4. 2 in february, imports jumped more than 44 . That import growth driven by a construction boom. Analysts say the data may have been distorted eby the long lunr new year sell breaks. During the sell breaks,celebrat businesses shut down for a week. To commodity prices. U. S. Crude stocks rose more than five times forecast last week. Industry group api reporting gasoline inventories fell more than expected. This morning we will get the official data from the u. S. Energy department. Investor Jeffrey Gundlach says we are entering an old school hiking cycle. He expects a series of hikes from the central bank suggesting the fed will not stop until something breaks. Those are his words, such as a u. S. Recession. He thinks rates could move as early as next weeks fomc meeting. Commodities have been strong. Is gartman going to be here . Hes in the wing. Looks like hes in the penalty box. China importing commodities so dollar denominated, theyre up, is that would that cause a deficit in china if theyre importing commodities to build thing . Thats exactly what is going on. It shall continue. Why are they building when they try to cut back on some of the bad arent they trying to close down business that are not doing well . Maybe the economy is doing much better than the government is able to stop. I think thats what is happening. Can anybody else hear that . Is his mike on . This is the big secret, big diseas tease. Its almost like one of those shows where theres a mystery guest coming up. Hes in the dark. You cant see him. They told me his microphone is on. We just cant hear it back in our ear. Youre a good looking man, but you dont look bad in the dark either. I look much better in the dark. Mysterious. On my twitter, people are saying there are some chart things that look topetoppy. Im getting nervous because of the healthcare thing. If they dont do this, they cant do tack reforx reform. With the vix at 12, if you see pullbacks, maybe you will see heightened activity at the vix. Theyre requesting we have katie stockson on. They are, as in you . No. Oh, the people. I think this is going well call her for tomorrow. Watching the two sides, i dont mean republicans and democrats, republicans and republicans watching them bicker about this yesterday. Bicker is a nice word. I kept going back and forth trying to figure out what i believe. The journal had a nice piece yesterday. Terms of all the legislation . No, you cant take the entitlement away. Conservatives that think were going back to preobamacare where you just take it away. People have been saying for seven years, the congressional members have been saying for seven years that theyre going to repeal it they knew they werent going to. Thats why theyre calling it obamacare light. If you actually pull the rug out, you might be committing political suicide in 2018. You cant take i feel tricked. You cant take entitlements away. Once you do it. All along, i think they knew they would get it through reconciliation. The other argument is that this is just a tax cut plan. I saw people go back to fdr and all the social network that he put in back then. Eisenhower came in and didnt do anything. You have a republican in, you couldnt take back any of the Great Society things. Gartman may have we cant take it back, can we, gartman . He says no. Its as good as they get, now these hard core guys should get on. Thats what the journal says. The other hard core guys have to get on board. Will they . Yes, they will. Theyre just whining whining and moaning. Dennis, do you want to come over to the table and join us. My goodness, they killed my read. It said three big stories, if they were big you talked through them. You used up your time. Your time is rescinded. Gentleman from new jersey. I said asteroids, i took this show into the toilet. I looked over, it was six minutes 6 26. This squawkard moment has been brought to you by joe kernenment. I think you have done it, in the cold open before. For more, lets get to eamon javers in washington. Good luck. Wrap it up for us. To the discussion you were having there on obamacare, Goldman Sachs has a cheeky note out this morning that they put out overnight. Goldman saying Obamacare Repeal, who knew it could be so complicated. Thats a play off the president s quote from the other day theyre saying its far from clear that the current proposal has the support to pass and it looks likely to go through additional changes before it becomes law and is the first of several steps. The other thing we got cleared up yesterday was this idea on whether or not the white house would have its own proposal or not. The white house had been subjecting by midmarch they would put out their proposal for Obamacare Repeal an replace. We saw House Republicans move ahead with paul ryans plan. There was a question yesterday on whether we would see a plan from President Trump himself. Clearly the white house gave a full bear hug to paul ryans plan. Kevin brady was at the white house yesterday, he is the chairman of the house weighs and means committee, a player in this. He met with the president and other deputy whips from the house of representatives on the republican side, they have to count the votes and push this through, he said the same thing in the driveway, this paul ryan plan is President Trumps plan. The president made it clear this is his bill. There are no excuses. Its time to act now. Its clear, too, that he is putting his president ial weight behind this legislation. Republicans are unified behind repealing this terrible healthcare, but more importantly beginning important steps of restoring state control. Not clear where this goes from here. As you were talking about, there are conservatives who are upset about this bill. I asked at the event yesterday in the white house driveway whether or not they thought they had the votes to get it through the senate. He said wait on the senate, lets focus on getting this thing through the house. We have a lot of work to do to pass this through the house. Some say there are not 218 votes, thats the magic number you need to get this vote through the house. Well see. Theyll rush this up on capitol hill. We should also talk about this Wikileaks Dump yesterday. A massive dump of what wikileaks said are cia documents detailing the cias ability to hack into smartphones, smart tvs, all kinds of trojan horses, viruses, all kinds of technical details. Thats embarrassing to the cia, could be dangerous for the cia if those are real documents. The white house is not commenting on that. Im not going to comment on that. I think obviously thats something that has not been fully evaluated. If it was, i would not comment from here on that. So well wait and see where we go on that today. A potentially damaging story still developing. If the white house and the cia are able to confirm that today, well see where that story goes. This white house is led by a man who embraced wikileaks during the campaign trail, but they see a big difference of hacking political emails and hacking the cias most treasured secrets. Eamon, youre lucky the lights are off. Yeah, we were laughing. We have a great yearend reel every year. Yeah. Massive dump might show up on that. You started by talking about asteroids. Can you say a massive release of documents or something . Its a family show. I have a clean mind. You do. Youre cute that way. You didnt hear that at all. No. Five people started to define i figure people at home, too. But youre cute. My first boss in journalism, the first newspaper i worked at, said the editors with the dirty minds write the cleanest copy because they see that stuff. Yeah. Yeah. I told you about the journal headline that ran one time, get your boss a hummer . A journal story theyre talking about a car . Yeah, the humvee. I dont see why thats funny. Whats funny about a big gas guzzling car. Never mind. I looked up gundlach. Hes smart about certain things. People can be wrong at times. December 2nd. Yeah. Went totally bearish. Way too late to buy the trump trade at this point. We were quoting something he said earlier. I guess people can be wrong. Definitively turned bearish. Too late to you know what . I kind of like this zero hedge. They take shots at cnbc a lot. Do you know this guy . They take shots at me like you cannot believe. He has a fake name. I think hes got a checkered past or something. He has brad pitts name from fight club. Yeah. But i like some of the conspiracy stuff on here, and i believe it all. Joining us is phillip orland. He has 3 365 billion my fund as a whole. Dennis gartman, publisher, editor of the gartman leader, also a cnbc contributor. He was our mystery guest that we now have. Its hard to time things. Should we be thinking if theres some bumps in the road on tax reform or healthcare, the markets have ran a long way. Are you adding to positions still . Were sitting 3. 5 overweight for equities. We had a 15 run in the last four months. We got a bit of an overbought spike after the state of the union address. Drifting back a bit here. We thought maybe we would see a 3 , 5 correction, were in the middle of that now. Were sitting to see how the fed shakes out next week. Wafrnl. What do you think, gartman . Theres a piece about meaning markets and countries building up foreign reserves. I had to read through that to figure out why thats significant. Its not significant. Its not . No, its too ter ply es ribl esoteric. I am interested on whats dpg on with going on in japan. Something has to happen over there. What is taking place is the replacement of robotics, computerization. It will believe price to earnings multiples in japan dramatically higher for the first time in a long while. Im bullish on japan. Robots dont go on strike. Robots dont ask for healthcare. Robots dont take days off. You have to take them, bill gates thinks. You have to take them . Yeah. Well see. Well see. The difference between using robots there versus using robots here, over there they dont displace workers because the demographics are so terrible. They are and will be the future worker in japan. People dont talk about the fact that the japanese population is going down. Its not going up any time soon. The only way to get production done is with robotics. It will drive pe multiples much higher in japan. I was going to ask you on whether or not stocks will go down in the last week because of being overbought. Will the robots need humans . It may not happen in the United States, but they have no choice in japan. The demographics mandate that. And the lack of immigration. People never talk about that. But japan never allowed immigration, never shall. Everything is three steps forward, two steps back. Theenvironment is more pro business, less regulation. But the sausage making will be horrific if we watch it every day. Youre right. Were excited about the next year or two, getting to 2018 with deregulation, lower taxes, more defense spending, truc infrastructure, but it will be an ugly process in the interim. We already rallied in anticipation of what next years growth and earnings will look like. So we played it forward or we deserve what we got based on animal spirits. Youre right. So the transition from obamanomics to trumponomics has gotten us to where we are now. We have taken that on faith. As we look out a couple years, we could be looking at 150 in corporate earnings. Well probably do 130 or so this year. Inflation will go up. Treasury yields will grind higher. Does 130 inclues Corporate Tax reform . No. As we talk about 150 number, that bill has some expectation for deregulation and Corporate Tax reform. As we look at treasury yields working their way up to 4 , 5 , we so see multiples. They could go to 20 times earnings. We could be looking at a 3,000 s p three or four years from now. Thats what the market is trying to get its hands around now. We had this huge move, well probably consolidate here. The Bigger Picture looks good. Dont wait for a pull back. Well get a little correction here. Were sitting 3. 5 overweight in equities. We get a correction, well put some more money to work. 3 to 5 wont get us back to where all these people that we see were not going back to 2000 in our view. If its three or four years from 2368 to 3,000, thats not even that much. Youre talking about 10 , 11 the most. Yeah. Thats a long time without a big pull back. 3,000 sounds like a big number, if you look at it, its a normal progression. You will probably do that with Rising Interest Rates at the same time. Absolutely. The multiples will expand as treasury yields get up to that level. People should not be afraid of 4 , 5 securities. Theyll get there. When i first started trading in the 1970s, the long bond had a 14 coupon. Wasnt the best of times, but we survived. There have been 21 instances where treasury yields have moved up, as we think will happen now. 18 of those 21 interests, stocks did well over the course of the next year. The only three where they didnt is the economy rolled into recession. Were not forecasting a recession. If we can manage that, well be in decent shapement. Is this really an eightyear bull market . Its long in the tooth. Its had periods where it worked off. It shouldnt count whats the bull market . 20 . Were almost at 20 since if you look at global stocks, theyve been in a bear market. All right. We got you in the light of day, phil, thanks. Coming up f youre worried about sharing the road with selfdriving vehicles, youre not alone. Results from a new survey from aaa coming up next. And at 7 30 a. M. , david tepper will be our guest. Welcome back. A new study by aaa finds drivers feel unsafe sharing the road with selfdriving vehicles. The majority of drivers seek Autonomous Driving Technology in their next vehicle but fear the fully selfdriving car. 10 report they would actually feel safer sharing the road with driverless vehicles. Aaa says it is urging oh, god. A gradual introduction that person right there much more dangerous. I was going to say i feel uncomfortable sharing the road with half the people on the highway. Most of the people running red lights are probably more dangerous with a fan almost hit me this morning because he was coming over into my lane. I saw a guy yesterday, both sides of the highway are going like this and he was facing the opposite way on the shoulder of the road. How did you get there . I understand the feeling of irobot . No, you remember Dennis Weaver in duel . If you have a driverless truck chasing you so youre worried about it being hacked and taken over by an evil force . Or just some i dont know if someone took it over. Wipe out the machine. Why arent you more afraid of somebody hacking in a traffic light and making it green when it should have been red . Yesterday we were talking about people hacking into the pacemaker. Ands a the massive dump showed the big release of information that came from the cia . Thats what i said. I stopped listening to what you were saying because i was thinking about massive dump again. Good, you side tracked him. I want this guy to be governor of california. Peter thiel speaking at the cera Week Energy Conference in houston last night. Thiel said he believes the era of global saization is over. I think the tide on globalization is just going out. Going out on all these different dimensions. If you have movement of people, immigration is getting more restrictive, not just in the u. S. , but throughout the western world. Movement of trade. I think thats i think theres big headwinds there, through goods, movement through people, movement through goods. Movement through capital. Banks will get more regulated. Even movement through information where there may be headwinds. The internet was designed to survive a nuclear war, but even so, i think there are a lot of regulatory challenges that the Silicon Valley will be facing from western europe an elsewhere in the years ahead. I think the tide on globalization was just going out in a pretty big way. He is a nonconventional thinker. The conclusions he comes to, hes not afraid. Monopolies are good. Yeah. Silicon valley guy that when to the rnc, a gay Silicon Valley guy goes to a trump rnc so nonconventional guy. He also brought up cramer. Did he . Yeah. He said that guy on cnbc turrets guy. The audience laughs. He called him he said he always says there is a bull market somewhere. Thats great. When we come back, producing energy in america. We will get an update on the trump administrations movement in the sector. Right now, as we go to break, a look a the winat the winners an losers. Safety isnt a list of boxes to check. Its taking the best technologies out there and adapting them to work for you. The ultrasound that can see inside patients, can also detect early signs of corrosion at our refineries. Hightech military cameras that see through walls, can inspect our pipelines to prevent leaks. Remotecontrolled aircraft, can help us identify potential problems and stop them in their tracks. At bp, safety is never being satisfied. And always working to be better. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Duexperience our mostand pthrilling models ever. , including the exhilarating is, gs and rc coupe. Experience amazing. 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. Welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Good morning. We are less than an hour away from our news maker of the morning. David tepper will be our guest host starting at 7 30 eastern time this morning. Lets check out the u. S. Equity futures. Right now it looks like dow futures are down by 15 points. S p off by 3. The nasdaq off by 5. This is the first time weve seen backtoback declines for the s p and the dow since late january. Well keep an eye on it today. At this point the losses look muted. Big moves being made in the Energy Sector with the cera week conference happening in houston. Joining us now to talk more about energy is jack girard. Great to see you. Good to see you. Good morning. Where are we in terms of the price of oil in your view . Haas year Oil Companies cut capex deeply, by 40 , and now Big Companies like exxonmobil announce increases and expansions. Where do you see the price of oil by the end of the year . As you mentioned, were down at cera conference in houston, the Energy Capital 069d worlof. We have all the Energy Leaders from around the world gathered here. I would describe it as thoughtful optimism. As you know, exxon made a big announcement talking about the creation of 45,000 additional jobs along the gulf coast. Iny most people believe were at a point of stability. The cost cutting is taking place. Theyre managing in such a way that we can be competitive globally even at lower prices. I think a lot of people believe that things are beginning to stabilize. Hopefully move forward with more upside opportunity as demand comes back globally. Have Oil Companies learned their lessons . The rap against the oil industry, its a boom or bust thing. When you hear about Companies Expanding capacity, you worry that companies have forgotten that discipline and go the other way once again and well be oversupplied in the market, particularly when it comes to shale. In talking to major leaders, theyre very disciplined, mindful of the cycles in the industry. Theyre still focused on costs, controls, management, making sure theyre competitive, our costs have come down significantly in the United States. S no lying a down cycle to force you to focus on what your cost structure is. They will also manage costs moving forward. Hopefully there is upside as prices stabilize and as we move forward. Jack, Saudi Arabias Energy minister making comments about how opec is not the only one stepping in to make sure it saves the market. What do you take away from that . I was fascinated by his comments as we look at it in the global sense. Knowing here in the United States with a free market, when theres opportunity youll get somebody down here in texas, colorado, pennsylvania with natural gas, theyll go back into the marketplace, put people to work, bring more rig counts up. Its fas macinating to watch ho this is balancing out and how were finding a new equilibrium around the globe, but a lot of that focus has moved to the United States, particularly with those shale plays. A lot of people wonder what is the next step. I believe our guys in the u. S. Are well positioned, costs under control to take advantage of potential upside. Does it sound to you like saudi arabia and the rest of the opec nations may get tired of doing what theyre doing to prop up prices . Maybe they will not be as disciplined moving forward. Ch thats the big question. Im not sure i know the answer to that. I describe it as thoughtful optimism, particularly from the u. S. Perspective as we look floebl globally, watch other players around the world. There was talk about demand coming back, the increase in demand as economies recover. As emerging nations get become to higher growth rates. All in all there was the talk about the need to continue to invest more because they see that demand continuing to grow over time over the next three to five years. Jack, great speaking with i. Thanks for your time. Thank you. Good to visit with you. Coming up, the gop Healthcare Plan is in focus. Well ask republican congressman sean duffy what it will take to pass the new ledge laying our newsmaker of the morning, billionary Hedge Fund Manager david tepper will be our guest. And later, wilfred frost will bring us an exclusive interview with jes staley. Youre watching squawk box on cnbc. Welcome back to squawk box. Time for the executive edge. President trump will meet with conservative leaders to talk about healthcare today. This comes a day after House Republicans released a proposed bill that would replace obama care. Paul ryan heralding the legislation late yesterday. This is the American Healthcare act. Its been a long time in coming. This bill, the American Healthcare act, keeps our promise to repeal and replace obama care. It delivers relief to americans fed up with skyrocketing premiums and fewer choices. Also on the president s ag t agen agenda, President Trump will hold a meeting on the countrys infrastructure today. Ila nsh ilanmui has more. The meeting is closed to the press, we are hoping to get some comment afterwards, still working to confirm who is coming. The president assigned Richard Lefrak and steven roth to lead a new Infrastructure Council back in january. The administration has been working a plan to make good on trumps promise to spur 1 trillion in infrastructure spending. Dparry r rr rry on the campaignt was to combine tax credits with federal spending to finance the trillion dollars in infrastructure spending. That would have also used repatriated earnings for new roads and bridges going forward. There are now 69 infrastructure funds. The two biggest are run by Global Infrastructure partners, one that 15 15. Billio8 billion other has 8 8. 3 billion. Republicans on capitol hill are openly skeptical. John barrasso is worried rules committees will be left out of this, and marco rubio doesnt want to explode the debt. Well keep you posted. Back to you guys. Ylan thank you. Now we will take on another topic. Two schools in the d. C. Area closed because of the day without a woman protest which weve talked about that a little bit here. I was worried. Glad to see you two guys two ladies are in today. Yeah. President trump actually tweeted about International Womens day, about 20 minutes ago. Ylan, you saw some stuff in alexandria, virginia, some school closures. My kids day care is closed today. Its ironic. You have the teachers staying home from school, totally understand their perspective on that, but a lot of moms and dads now have to stay home to take care of those kids who are not in school. Are you working at work or working at home . Is work at work valued more than work at home . All worth debating. Yes. I guess they made their point though. Yeah. Theres always unintended consequences. I saw some organizers of the event saying, look, implied in this is if its going to screw things up, you nurses and doctors show up. Yeah. Use good judgment. Ylan mui, thank you. By the way, who is staying with your kids now. Grandma. Yea for grandma. Love grandparents. Very, very important. Thank you. Coming up, a new read on jobs. A first look at linkedins work force report for february. And a quick check on whats going on in the european markets now. Fairly quiet picture as u. S. Stocks are at flat line when it comings to futures. Marginal moves in europe. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Just imagine if all were constantly thinking. Always on the lookout for patterns and connections to make everything work better. I call it the internet of everything, but its really the internet of everyday life. The partnership between Dell Technologies and sap helps make the promise of the internet of things a reality for our customers. We know how powerful live data can be. 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Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. The first stock index musicwas createdughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Welcome back to squawk box. In global news, china is calling on north korea to suspend tests of missile and nuclear technology. The ch china is like its sort of there theyre a bad acting child. You want do do the best you can for your children. Theres a point where youre a grown up, take care of yourself. At some point, you need to put your foot down. Yeah. You cant always theyre afraid of north korea as we are. Russias Oleg Deripaska says Vladimir Putin and donald trump will not live happily ever after. We all like to believe in fairytale, but theres a reality. Trump and his administration need to prove their capable to change economic reality in the u. S. New adidas ceo, Kasper Rorsted is raising the companys targets for sales and profits. The executive also pledging to increase ecommerce sales, simplify business processes and keep investing in the u. S. Market. H r block reporting a narrower than ek pektded loss for t expected loss for the third quarter. The big quarter is the quarter were in now. Thats when they make all of their money during tax season. You can see that stock up by 8. 5 . Urban outfitters missing earnings by a penny. Revenue came in line. The company also anounouncing plans to increase investment on ron line sales. Uber ceo, Travis Kalanick announcing hes searching for chief of rating officer to help him run the company. Re code says he has hired a search firm and he would like sd cvs exec. They need a grownup is the bottom line. Its time. Somebody with gravitas, somebody with experience. I didnt watch the youtube video. Oh, i did. How bad was it . Well, he was dancing in part of it in the beginning. Then they get into the fight and the yelling. Not exactly what you want to have happen a week after all the issues with the former female engineer who wrote that big blog post. I now assume im always being recorded and always on film. And you still say everything you say. I do, but how about when youre at home in front of a tv . Thats what im alluding to. Turned off in fake off mode. Its listening. Its metadata. Theyre not listening to me specifically. Im not surprised. I now think maybe ill hook up alexa. What the hell. I was worried about alexa because i thought shed listen. Turns out everything is listening in to you anyway. My samsung is listening. I have like ten of those. I cant go in any room. Remember in 2001, they had to go into the pod and turn it around. Then he read their lips. What about the bathroom . You can go in the bathroom and close the door. En this you can have a private family meeting. We have tvs in the bathroom. You do not. No. Im in there for so long as we move on, linkedin is out with its monthly work force report. According to the findings, january and february were among the strongest consecutive months for hiring since late 2015. The trends are based on 133 Million People in the United States with linkedin profiles and 20,000 companies posting jobs. Lets bring in dan roth, executive editor of linkedin. Dan, this is only the second month that were sitting down with you to talk about these numbers. It is kind of phenomenal when you consider 133 million americans have these. What kind of information are you culling . For this particular part, were looking to see whos changing their jobs, when they change the name of their employer, and each month when they do that, were counting up whos doing it, divided by the total number of users in the u. S. We find information like 1. 4 increase in hiring in february. Thats on top of januarys increase. As you said, we have not seen this since late 2015 or since the summer of 2015. Basically right before the election season started. Now youre seeing really high levels of hiring. Its happening in particular cities. Its not spread across the u. S. Youre looking at places like the sun belt. Again, keeps growing. Austin, atlanta, houston, dallas. Then also what our chief economist is calling the rain belt. Seattle and portland also big gainers. Seattle has been the biggest gainer in terms of total number of professionals coming in. Its really some of the data is really fascinating. You look at where theres really crazy skills gaps in some of these cities as well, where there are you have people who are a lot of people working and a lot of employers who are desperate for workers in areas where they just cannot hire. Weve talked a lot about skills gap. You hear people talk about the skills gap all the time. Its not the traditional skills gap. Its not s. T. E. M. Jobs theyre talking about. What kind of gaps . Health care. Nine of the ten cities we measure, health care and Health Care Management are the biggest gaps. Things like billing, primary care doctors. They cannot get people to fill these health care jobs. Those particular cities with the dearth of workers, do you find people are willing to move . Is the pay higher . The question is if you have these skills and you there are certain cities that have too many people with these skills. If you live in a city where the skills are in abundance, you should really think about going to one of these cities where they are in high demand. The problem is these are also really expensive cities. So if you look at what the skills are in demand, again, health care but also teaching, retail management, restaurants. These are not super high paying jobs. The places where the biggest skills gaps are, are the places that are most expensive. So its the fault of the employers. Youre not paying enough of a premium to make it worth moving into these expensive areas. San francisco has the largest skills gap. Used to be houston. Were now seeing San Francisco is the largest skills gap in the country. Its all of these low to mid paying jobs in areas that are incredibly expensive. You mentioned that this is the biggest jump weve seen in hiring since the end of 2015. Since summer of 2015. So how long back to your numbers go . To the beginning of 2015 is when we started. What i will say is we had marty on yesterday from paychecks, the ceo. Hes seeing the same trends geographically. So it does match up with other data points that we reference. And the question is how much of this is politically motivated. Are our employers feeling like they understand whats going on, that they can start hiring again. Were there some uncertainties they were holding back on hiring. Its unclear whats going on, but it matches up against the political calendar. How many more months of data do you need to be convinced it is politics and businesses are, in fact, feeling better . I think we my guess is the more we see every month, well get a better sense of exactly why this hiring is going on. Its not just politics. Some of the biggest areas in hiring are oil and gas. If you look at the rising crude prices, it matches it pretty perfectly. There was a 50 increase in hiring in oil and gas in january. A 24 increase in oil and gas in february. That is exactly what weve seen with oil prices too. Exactly. Dan, thank you very much. Great to see you. Thank you. All right. Coming up, billionaire Hedge Fund Manager david tepper will be our guest host in a little over 30 minutes. Were going to get his take on the markets, his funds biggest investments, and anything else hes willing to talk to us about. And dont forget, its jobs week in america. Well get the adp private payroll report at 8 15 eastern. Thats a pretty good data point for what happens, sometimes, on friday. Well be back. upstate new york is a good place to pursue your dreams. At vicarious visions, i get to be creative, work with awesome people, and we get to make great games. what i like about the area, feels like Everybody Knows each other. And i can go to my local coffee shop and they know who i am. Its really cool. New york state is filled with bright minds like lisas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Search for our page, whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley hello, my name is watson. I am helping 8 million taxpayers get the largest refund they deserve. One Million People can benefit from precision cancer care. 197 million passengers can fly with less turbulence. I am on my way to working with one billion people. I look forward to working with you. 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. It is another squawk box exclusive. Billionaire Hedge Fund Manager david tepper joins us this hour, and there is a lot to talk about. Well find out why he trimmed his stake in apple and if hes still long stocks after this record run. Plus, well get his take on President Trumps economic plan, the fed, the ecb, and much more. Well also be hearing from congressman sean duffy on the republicans plan to repeal and replace obamacare. The second hour of squawk box begins right now. Live from new york, where business never sleeps, this is squawk box. Good morning and welcome back to squawk box here on cnbc, live from the Nasdaq Market site in times square. Im joe kernen along with becky quick and melissa lee. Were less than 30 minutes away now from oh, we do have the clock. We have the tepper clock. We need more decimal places. What part of a second are we waiting . Hundredths of a second. We need hundredths. Why do just seconds when you can do hundredths of a second . We have an interview with david tepper, founder of Appaloosa Management. Were going to talk politics, investment, and much more. Futures at this hour have worsened a little bit. Would that be three Straight Days . It would be. I read the journal just totally talked me into this. Wall street journal, editorial. Talked you into health care . Not going to get any better than this. I was resisting because i hate getting tricked into a huge new entitlement, which is what happened. But thats the truest thing ever said. Theres no way to take it back. You cant. You cant take it back. The things it fixes and changes and restructures. The journal points out its the biggest improvement on the way medicaid is administered. Medicaid is supposed to be for poor people. Instead, its turned into, you know, everybodys getting it. Its almost like look, the problem that obamacare did not fix and that this doesnt necessarily fix either is bending the Health Care Cost curve. Youve got to make health care cheaper. You do that in the second rerun and third rerun. The big problem you have with health care is trying to find a way to make it more affordable. You cant do it with 51 votes. Do this first. Get rid of the mandate and a lot of the worst things about the law thats causing it to implode. Health care far outpaces inflation. It has for decades and decades. Thats why were in the problem were in now. Donald trumps tweet yesterday talks about finding ways to negotiate on some of these drug prices or gives us a hint there will be differences coming from that. I thought he said he was behind it 100 . But the journal points out that it was kind of a tepid he said, yeah, but im leafing vin up to you guys. Congressman brady came out and said this is the president s plan yesterday. Said hes behind all of this. But yes, youre right. It was not donald trump himself saying that. All right. Melissa . Heres whats making headlines at this hour. Caterpillar shares are lower by about 3 . According to a New York Times report, a government report accuses caterpillar of deliberately committing tax fraud to prop up its stock price. No charges have been filed against caterpillar. It told the times it had not seen the report and could not comment. We are a little over an hour away from the february adp report on private sector payrolls. Economists think the u. S. Economy added 188,000 new private sector jobs last month. That compares to 246,000 in january. China posted its first trade deficit in three years. It came to about 9. 2 billion thanks in large part to a 38 jump anymoimports. Now to politics and todays washington agenda. The president plans to meet with a group of Business Leaders at the white house to discuss infrastructure. Those in attendance will include some leaders in real estate, management consulting, private equity, and other sectors. During his campaign, President Trump said he would push for a 1 trillion Infrastructure Program to rebuild airports, bridges, and contribute to other public projects. The president will also meet with conservative leaders to talk about health care. This comes just a day after House Republicans released their proposed bill that would replace obamacare. House Speaker Paul Ryan heralding the legislation late yesterday. This is the American Health care act. Its been a long time coming. This bill, the American Health care act, it keeps our promise to repeal and replace obamacare. It delivers relief to americans fed up with skyrocketing premiums and fewer choices. It moves us away from the broken status quo. We will be hearing more on this topic in just a few minutes when congressman sean duffy joins us. The markets pulling back once again yesterday. Joining us now is the chief investment strategist for the americas, a deutsch asset management. And keith banks from merrill lynch. Hes responsible for more than 2. 5 trillion in assets. Guys, good to see you. I want to start off with health care. Thats a sector you both like. Certainly its in the news between repeal and replace as well as the tweets on drug pricing. So why would you recommend a sector that has already run this year, second best performing sector on the s p year to date. Its got all these political headwinds right now. 2016 wasnt such a great year for health care. But yes, 2017 started off well. Weve been advising to own it. When we look at the Health Care Sector, the demographics are still there pointing toward demand growth. Importantly, theres been supply. Theres been channellillenges o pipelines pipelines, but this is an industry that innovates. It plays a big role in bringing down costs by being more efficient. This is all part of delivering health care in a more efficient way. What areas of health care are you seeing value . Well, we like the sector generally. I agree with some of davids points. Theres just a very powerful demographic trend with the ageing baby boomers globally thats going to drive the demand in this industry, not to mention the fact the biotech area, which has done quite well this area and has been one of the drivers of the health care performance, a lot of innovation, a lot of new drug discovery. Thats going to continue to be a very positive dynamic as well. Its interesting because the action in biotech yesterday, it was down well more than 1 . 1. 5 or so. Still, it was just 6 or 7 off the 52week high. At this point, what draws that higher, especially when you have donald trump just, you know, one tweet takes it down 1. 5 . The Health Care Sector has become a big part of the economy. Its going to stay involved in politics for some time. I think this is part of the opportunity. This is why the valuations are demanding relative to Interest Rates and growth potential. Look, one of the things i think is interesting it were talking about the fed likely hiking next week. Some people are fearful about inflation. I dont think the fed is too far behind the curve. I dont think they need to hike more than two or three times. What causes inflation is when governments interfere with markets. I think health care is one of the only areas where we see some inflation. And as long as we let markets get more involved in that space and companies innovate, i think thats an area where some of the inflation pressure comes back, even on the pricing we see with drugs. You guys both mentioned innovation. The question becomes if we do find ways to tackle the cost curve, its probably going to be allowing the government to negotiate drug prices or to get involved and set more prices. Does that, to you, run the risk of killing innovation . Look, it depends at what level and to what extreme. If it swings too far in that direction, i do think it could pose a risk. But we got to just kind of let it play out. Again, theres such a powerful underlying dynamic in my mind thats going to drive demand for Health Care Products across the whole sector. Well keep an eye on that. Theres always things we got to be watchful for. That would be one. Right now were not overly concerned. What would t. O. R. T. Reform do . Because thats down the road. What would interstate you know, opening states so theres more competition. The first thing you got to do is just thats what they were elected for, to get this thing off the books as much as you possibly can. But not to leave people hanging in the lurch, right. Initially, do you think this gets done the way it is . You think it goes through . If youre going to invest in health care stocks, you have to have an opinion, probably. Look, it just is being roll the out. Were trying to sort through the details of whats being proposed. Its going to be important overlay on whats happening in the industry, obviously, so we have to keep a close eye on it. I think its early. It doesnt go, no tax reform, and in 2018 the republicans got nothing done and are losers. I think theyre going to get something done. With all big policy, its an evolution, not a revolution. I think the providers are probably not going to be subject to dramatic overnight change. Also look, on the topic of drug pricing, i think if they get heavy handed on that, even with using the bully pulpit, all youre going to do is cause these companies to pull back on r d. If you Tell Companies theyre charging too much, the first thing they do is pull back on investments, not profit. Youre overweight u. S. Equities right now . Still dont like bonds at this point. Yes. This first backtoback loss yesterday and the day before, since january, is it because of the fed meeting . Is it because of whats going on with policy and health care . Whats your feeling of where we are in the markets . Its all of the above. The u. S. The s p is up over 6 already this year, total return. What we feel good about, theres a lot of focus on President Trumps initiatives, and theyre important. But what people have to remember, we have a u. S. Economy thats going to grow, in our minds, about 2. 5 real, 4. 5 nominal. Global growth is accelerating. Inflation is in check. David mentioned it before. One thing we watch is average Hourly Earnings because wages drive inflation, ultimately. Its a bit of a goldilocks in that youve got growth in jobs but not too accelerating. Doesnt that frighten you to say were goldilocks . Doesnt this complacency, this willing to say it is goldilocks concern you . Complacency concerns me, but what makes me feel good, makes us feel good, are the underlying fundamentals. We think earnings this year for the s p could be 134. Thats a doubledigit growth rate, which in our minds keeps valuation neutral. Theres a global acceleration of growth. There are things we got to keep an eye on. Complacency is one of them. There are other risks that can come. We have important elections in europe that can matter. Having said that, we think the underlying fundamentals are still positive. As a result, were still overweight equities, underweight fixed income, but still own fixed income as a diversifier. You look at that vix chart, do you see Glass Half Full or glass half empty . Meaning, its great people can protect at a low cost, so theyre more likely to stay long, or does it mean markets are too complacent . I think later in the year, in the summer and autumn, well have more challenging moments. I think the vix will go higher from here a thet a monthly basi. I think were on the right track Earnings Growth wise. To get to mid130s, 140, well need the tax benefit. When i look at the market, i think that there are parts that still make sense. Theres cyclical recovery, Interest Rate normalization. We like the Growth Prospects and valuation in health care and tech. One area where there may be too much complacency is probably the whole energy, industrial, materials space. I dont think theres inflation coming. I dont think growth is going to be booming. What we would do is stick with more of the Growth Stocks and u. S. Financials. Whoa, whoa. What are you freaking out about . 25 seconds ago. President trump tweeted. The linkedin work force report which we just talked about. Cutting edge. January and february were the strongest consecutive months for hiring since august and september of 2015. Think hes watching . I dont know. Whered that guy go after us . Did that linkedin guy go somewhere else . Hes probably down in the lobby. Hes still here. Thats a squawk exclusive . Its our thing we just created a month ago with him. Well, well, well. There was an article. More squawk, less morning joe. Its really more the original morning joe. Meaning you. Less the faux morning joe. That other guy whose name is charles. But he couldnt take charles because of chuck scarborough. Oh, really . I had no idea. He had to take my name. Anyway, there it is. The president is on the right track now. Someones watching. On the right track. If were doing business, might as well be watching business news, not them arguing over there with a bunch of liberals. Its arguing over here. Were not arguing. Were on the same page. Im going to read that again. Anyway, coming up, congressman sean duffy talks jobs, tax rc reform and obamacare. And then its tepper time. The Billionaire Hedge Fund investor joins us for a squawk box exclusive. Stay tuned. Youre watching squawk box on cnbc. Welcome back, everybody. President trump formally backing the House Republicans Health Care Plan, but some conservatives are concerned the obamacare replacement comes at too great a cost. Joining us to share his thoughts on the republicans American Health care act is congressman sean duffy. He sits on the House Financial Services committee. Sir, thank you for joining us this morning. Thanks for having me on. Good to be with you. Its only a day that this has been out and been bounced around, but there have been some conservatives that have come out and have been staunchly opposed to this, saying this is obamacarelight. What do you tell them . When you put any plan out, youre going to have people on the left and right who complain because they didnt write it. No product is perfect for everybody. But what were doing is not the philosophy that says were going to pass this bill so you can find out whats in it. Its been introduced. Youre going to see a lot of km chatter on both sides of the aisle. Well take the best ideas from both sides and get a product where think can make markets work again. You have a government thats set up these exchanges with heavy mandates, heavy taxes. We want to move to a system where actually we can let a market work where we give people an opportunity to choose Health Care Plans that meet the risks in their lives and the price points they can afford. We know that markets actually work to provide better services, but also to reduce prices. Thats the plan here. Again, you have some on the right who will chirp at us and complain about the product, but in the end, i think were pretty close to where we need to be. Were going to hear their opinions and views. Well tweak the bill. This isnt the final product. It sounds like a very reasonable approach that youre going to take the best ideas from both sides of the aisle, but when it comes to health care, there has been no sort of agreement on any way shape or form over the last eight years or so. This has been a highly charged environment with people kind of digging in their heels saying on the far right, no, we shouldnt have any sort of Health Care Plan, that we should repeal the entire thing. On the left, saying forget it, were not going to negotiate in any way shape or form with the republicans that are there. Where is that Common Ground . So first offer, i think theres wide agreement that obamacare is in a death spiral. On average, weve seen Health Care Premiums go up 25 alone this year. Weve seen deductibles incredibly high. We have a product thats unaffordable for so many people. So in the end, conservatives or those opposed to the bill will be confronted with the idea that either im going to vote for a plan that most everyone agrees on, or im going to vote no, and if i vote no, im voting to keep obamacare in place, which is in this death spiral. I think as people analyze, you know, what product we have today and how they can improve it, they can get on board and be supportive. Health care is like an aircraft carrier. It takes a long time to shift and have a transition period to get from obamacare to this new plan is going to take a few years. To think that you can snap your fingers and absolutely repeal obamacare tomorrow and not massively disrupt the Health Care Markets is insane. You need a bridge to get to the new plan. Even obamacare took several years to implement. Insurance companies are writing plans under current law. You cant just automatically shift it and expect them in five days to come up with a new plan to offer to citizens. Congressman, eight years ago when we were all trying to grapple with what to do with health care, the democrats came up with their plan republicans are trying to figure it out too. I dont know. Maybe they want health savings, maybe they want preexisting. Maybe they want a lot of the same thing, but they didnt get to be part of that process. But they did want to try to do something. Youve got to convince maybe some of the far right guys. And i understand what theyre saying. Once you do an entitlement, you cant take it back. They feel like they were tricked into this big new Entitlement Program and this is just going to extend it. But back then, if the republicans had done it, they probably would have come up with something then, some kind of tax credits. You had to, to cover people who cant afford it. Theyre in this ideological painted into this corner where they arent going to do anything that costs anything. They want to go back to where either you got Health Insurance or you go to the emergency room. Thats not an option now. Do you think theyll eventually see this . Some of these guys sound like theyre totally in concrete on moving on this. Theyre angry. Are they just blah, blah, blah . Will they do it eventually . Were in a unique situation right now that we havent been in for the last eight years. We have a president who in a lot of these members of Congress Districts is very popular. When donald trump starts to weigh in with different members of congress or different senators and their constituents start to move and i think theyll move toward where mr. Trump is, i think those who are in opposition will soon come over to be supportive. Trump can come at you with a hammer or a tweet that can be pretty powerful with your own constituents. In terms of support within your own party, congressman, i appreciate you being optimistic about finding that support within your party for this bill, but already there are a number of groups that have come out against this. Conservative groups. The cato institute, heritage action, americans for prosperity and the aarp. In your view, are they just exacting their political leverage in order to get certain things into or out of the bill, or is this a source of concern for you, that there isnt that support amongst conservative groups for this plan . Listen, i think theyre voicing some concerns they have with the current package. We have an opportunity to hear their concerns and to make the product better. Thats what the legtdiislative process is about. Actually, i think this is a really healthy process. You want people to come out with points of disagreement. When you have that tension in congress, the sausage making factory that goes on here, you end up with a better product. So this is a good thing. Ill tell you this, i would hope the democrats come to the table and have a conversation with us about how they want to improve this bill as well instead of being just the hashtag resistance. Say, no matter what you do, were not going to participate because we think we can extract political leverage. Theyre not coming. Work on your own people. Get your own guys. Be hopeful this morning. Dont even waste your breath. Youve said already this was a process that took a very long time to put obamacare into effect. Its going to be a situation where youre probably going to have to go to reconciliation. Youre looking at a tenyear plan you put in effect thats going to take years to implement. Are we ever going to get any certainty into what to expect in our Health Care Market . I think we are, yes. You know what were trying to do here. Youve heard the three buckets. This is reconciliation, which were dealing with budget and taxes. This is phase one. Dr. Tom price, with the regulatory front he can deal with at health and human services, hes bucket two. Well have to come back with a third bill, hopefully this summer or fall that will do the rest of it with t. O. R. T. Reform and competition across state lines. Were going to give credit to the market. Congressman, thank you very much for your time. Were just minutes away from another squawk box exclusive interview. David tepper of Appaloosa Management. Lots to cover in just a few minutes. Stay tuned. Time now for todays aflac trivia question. Who founded snapchat . The answer when cnbc squawk box continues. Leg. Yeah looks like a real nasty moving back in with his parents. What . No. I just broke my leg. No, this is a full blown move in to the basement, youre gonna be out of work without that money from. Aflac you might miss your rent. Aww i just moved out. Bummer man. Hey i used to have my own place. Yeah . No, no i live with my mom, but its cool. Health can change but the life you love doesnt have to, keep your lifestyle healthy with. Aflac deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia now the answer to todays aflac trivia question. Who founded snapchat . The answer, evan spiegel and bobby murphy. Up next on squawk box, Appaloosa Management Founder David tepper on the Trump Presidency and the market rally. Find out where hes putting money to work and how high stocks can go despite this record run. His exclusive interview is next right here on squawk box. That schwab billboard. Oh, not so fast, carl. Oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. And four times less than vanguard. Whats next, no minimums . No minimums. Schwab has lowered the cost of investing again. Introducing the lowest cost index funds in the industry with no minimums. I bet theyre calling about the schwab news. Schwab. A modern approach to wealth management. Good morning and welcome back to squawk box here on cnbc. Were live from the Nasdaq Market site in the heart of new york citys times square. Among the stories front and center, the february adp report is coming up. Forecasts call for 188,000 new private sector jobs compared to 246,000 in january. Mortgage applications rose 3. 3 last week according to the Mortgage Bankers association, both refinancing activity and new purchase applications increased even as average 30year Mortgage Rates increased slightly to 4. 36 . Shares of retailer childrens place are on the rise this morning. It reported quarterly profit of 1. 88 a share, well above consens consens consensus estimates. It also reported better than expected samestore sales and doubled its dividend. Legendary investor david tepper is our guest anchor this morning. You come with high praise from most of the legendary guys in the field who say youre like in the zone or have been in the zone. Well, you have been. 25 a year or whatever it is. I know you dont release that. Previously when youve been on, weve had like a tepper tantrum and a tepper taper. Do you have anything today thats going to be easy to put on cnbc. Com that begins with t . Your overall theme, like a tepper, i dont know. Tepper something. If we think of it as we go along, it would be good if it began with a t. Overall in a very broad sense, can you just wax eloquent about where you think we are right now in terms of the economy, market, what are you asking . Lets start with the stock market. If its lower today, its three Straight Days after a huge run, which has faced skepticism the entire time. Its gone too far. Has it played forward . Has it paid forward at this point, in your view . First thing, i have to say congratulations to becky for her baby. Thank you, david. How old . 5 months yesterday. Whats your babys name . Hailey. Second, i have to recognize its International Womens day. Probably why melissas on the set. I fit both international and women. Two buckets. Have to say hi to mom because she always likes that. Hi, mom. Are you stalling . Im trying to think of what im going to say to him, exactly. Well, listen. The market you know, its on a multiple basis, its kind of full. On the other hand, every region of the world is growing. China is growing. Its synchronized growth around the world, which is pretty unusual in the last ten years. Actually, since before the crisis. China, europe, japan, and us are growing. The day with he three republican houses, that was the day there wasnt going to be another regulation put on the economy. That alone releases animal spirits. Nothing else happens, that releases animal spirits and upticks where earnings and other things should be. So listen, i dont think the market is cheap by any stretch of a multiple. You cant say that. On the other hand, with that backdrop of growth around the world, with the potential that well do other things here, with the you know, with the sugar that is still being put on by the ecb, boj, and lets face it, the fed is way low where they should be by old tailor rules or any kind of conventional Monetary Policy, still incredibly easy with full employment and inflation thats getting to their target. I dont know. You cant be short in that kind of setup. Im not suggesting the market is really cheap, but listen, its hard to go short when you still have the, you would say, drugs being given. I think thats what you would say. The punch bowl is still full. Whether different people are heroin addicts at different feds around the world or cocaine users, i cant tell you the story. Maybe theyre just drunk. You watch us, i know. Sometimes i watch you. When cnn doesnt have anything interesting. Im kidding, joe. I watch you every day. If you do, i was just gratified to hear you say that some of this move weve seen so far could be justified just from not adding more regulation, much less getting rid of some. Case in point was in telecom. There were like six or seven things that were going to happen that now just have been shelved. If you start getting rid of some of them, even if the tax reform, even if obamacare, even if there is some hesitation, we may already say youre a Small Business guy in the United States of america, or any business guy. You had regulation under bush. There was a bunch. I cant remember the number. Then obama doubled those regulations. The day you had the three houses, that was a day there was not going to be another regulation. People say people are holding back because of uncertainty. Bull shih tzu. When you think about Small Business, whats the downside . Whats the downside here . Im not talking about the market. From a business standpoint, not one more regulation is happening. And potentially you have tax cuts coming your way. So unless theres an upset, you know, in the administration, something really bad happens there and thats not smooth, sort of passing on the baton, which i dont i had think is go happen, unless that happens, theres nothing to get in the way until potentially inflation starts picking up and people start getting worried about that. Which, by the way, can happen a little bit if the fed doesnt respond to some of the tax things that may happen. The fed has to respond. Hopefully the ecb turns the corner a little bit. Youre going to need some balanced increases to keep this economy from getting out of hand on the inflation side, i think, at some point. I know people dont think theres going to be inflation and all this stuff again because everybody remembers the last ten years like they did, you know, from investing back in 2012. They were afraid to do anything. But the market, you know sometimes you have to go against that curve. So im not listen, i havent been negative about the stock markets. I was guarded about the stock markets. I was a little nervous about potentially earlier this year about trade friction with china. I think theyve gone past that in this administration. So that big risk is off the table. Hopefully theyll get some kind of settlement with mexico, which concerns me from other standpoints. They watered down this immigrant stuff, which i thought was really dangerous a little bit from a business standpoint. From other standpoints, we can talk, but were talking business and markets. But thats been watered down enough to make it, you know from a business standpoint, i would say palatable. From a personal standpoint, that may be different. I dont want to speak from my personal standpoint. Are you short bonds right now, david . You bet your hiney. I asked you that because when you say valuations are kind of full on equities, some might argue that valuations arent so full because Interest Rates are so low. But here you are, youre betting that Interest Rates are going to go higher. At the same time, youre saying theyre fully valued right now. When does this turn happen . Listen, you are so far behind, in my mind, the curve now for the potential upside, downside. We can talk about the fed. We can talk about the ecb. Everybody still looks on the negative side of life on everything for some reason. Almost ten years, nine years after the downfall. Its not just a negative side of life. You have to be on the Positive Side of life. For instance and ill answer your question about Interest Rates and stuff. Let me just answer that first one. If you have Interest Rates go higher here, where does it matter . I dont know where we are as we sit here. Lets say were 2. 5 on the tenyear. Youre sitting with an 18 multiple. Wake me up at 4 , okay. Just wake me up. You can call my number. Ill give it to you. You can wake me up. We got a lot of room until we have to worry. If they do the tax stuff and you get a lot of things and inflation looks like its picking up, its one of those things. I think this fed has to get really nervous at some point if you have some of the fiscal stimulus youre going to get. Yellen the other day, i think it was on friday in chicago, she gave a speech where she says in a few years we have to, you know, the real fed funds rate has to be 100 basis points. That would be on top of inflation. Thats not going to happen in a few years if you get this kind of stimulus. Thats the fallacy. So thats the one thing the market has to get ready for. You could have doesnt mean the market wont go down, you wont have a correction or Something Like that. I cant see it really falling in the backdrop of growth and still very easy Monetary Policy and such. You think that the fed is going to raise much more quickly than they have been . I personally think the fed should i think they will raise more quickly and for sure ill bet if you get some of the stimulus, they have to raise more quickly. They have to raise more quickly. So its a question then its the probability if you believe theyll get this stuff through or not. I think this whole tax stuff should get through. We can talk about some of the stuff people say is harder. I think thats also a bunch of bull yorkie. Im getting a lot of tweets saying let david swear. Im not going to stop you. Its cable. I think we can get away with it. My kids will say, why did you swear on tv . Can he how far can we take it in terms of swear words . Not as far as you. Okay. They draw the line there. What i was going to say about the negative stuff thats interesting, you see a lot of stuff. Were concerned about the French Election. Think about the French Election. Everybody is scared to death about the French Election. So theres odds out there and because of brexit, trump, et cetera, and they mention italy for some reason. I dont know why they mention italy when italy went antinationalist. Lets look at that French Election. So people are so nervous about this French Election affecting markets, particularly in the euro stocks, particularly in the european curves and how people are positioned. Well, yeah, le pen is at 26 . By most polls, shes way behind, shes going to lose. 15, 20 points behind on the polls, depending what poll you want to look at. But people are focused on that. What happens if it goes the way its supposed to go . Who was there before and what will you have . You had hollande there before. Hollande was a real socialist. Like you would say obama on steroids. Now youre going to get reforms there. You can have a surge forward in france, but you dont have this the ecb is like, i dont know, hes deaf to that stuff. I brought the ecbs last statement. They said Something Like, the risks remain tilted to the downside and relate predominantly to global factors. That means factors outside of europe. Everything outside of europe is freaking doing well. Japan is doing well. Europe is doing great. I dont know what draghi is going to say. Alternative news . What is that stuff people say now . Fake news. Yeah, fake news. Fake ecb news. Fake facts, whatever it is. He has to make something up if he doesnt want to change his statement a little bit. There should also be in his statement, which i guarantee hes not going to do because of the way they are. At least i dont think theyll do it tomorrow. He should also say the upside and the downside. If you get this French Election going the right way, already you have good growth. Youre at minus 40 basis points. Sounds like youre long european equities. I am. I could lose my time, but thats life. There are upsides people arent recognizing that i dont know why theyre not recognizing. Not in bonds, not in euro stocks, not anything in europe. Its a probability game to me. You have to be where the right probabilities are. Valuations are much lower compared to the United States. Much lower. Much, much lower. Its kind of an interesting thing. Barry sternlich was here yesterday and said he likes the european equities. I love barry. Not in a real love sort of way. He talked about you yesterday. Man love. Platonic man love. You know what . Its all about money. Normally i would say were not going to do any commercials because we have you. But i think we can really charge a lot because youre here. What commercial are you doing . Whats it for . You want to give us money instead . If you pay for the commercial. Take it easy. Calm down. Were going to take a quick commercial break. Then i think somebody else is going to get to im going to switch seats. Youre going to come over here. No, no. Were going to do it from here. Okay. When we return, stick around, because we have much more from our special guest, david tepper of Appaloosa Management. A programming note, tomorrow on squawk box, epa administrator scott pruitt will join us for a first on cnbc interview. Squawk box will be right back. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Welcome back, everybody. Were speaking this morning with david tepper, the founder and president of Appaloosa Management. 7 billion under management and a very strong track record. David, thanks for being here today. Weve been talking broad markets. We want to hear more on that. Wed also like to hear specific picks from you as well. Just according to some of the most recent s. E. C. Filings, you have some large bets in the pharmaceutical space, Companies Like allergen, pfizer, and mylan. Why these stocks and what happens now that we have this new Health Care Plan that was just released yesterday by the republicans . Well, the Health Care Plan doesnt really Touch Pharmaceuticals yet. We did see a tweet from the president yesterday suggesting were going to see lower drug price. What does that do . Is that the first time he tweeted . No, but it was enough to take down some of these stocks by over 1 . Listen, weve been through what can be done. Theres actually a fair amount there is some competition there already. Theres this patent law, but not to get into that. I think we thought in the fall the pharmaceuticals went down way too much. So thats why we made the bet. The bet was predominantly was probably leaning allergan. The reason why is i was watching squawk box and saw the botox job that happened on joe and thought it was really good. I thought i should buy the stock. Dont make me laugh. My forehead will rip right down the center. Anyways, no, listen, these stocks got fairly cheap, particularly allergan. We had owned a large amount of a company. Weve known that space for a long time. I think its like 40 of their business thats not affected by regulation, that part of the busine business. We thought that part of the business, taken down with everything was, was just absolutely crazy. That was the bulk of our position. The multiples were too low. For some reason, because it was tied in somehow with the valeant, the nonsense there, ill say it that way, it always gets kind of fallen when those stocks get hit. I dont know why. We bought that. The stock is up a bit here. We still own quite a bit of it. I was going to say, have you changed your position . Because you were talking about some of it in the past tense. Have you sold some of that position . We have probably 80 of our position still. We wont own allergan . 80 of the position we had. So youve sold off some of it. Yeah, not to have i think we bought it at like 190, got up to the 240s. Not to sell some of it, just managing our books. If it went up higher, wed sell more. Its just a way you manage a book. Whatever it is, youre not supposed to own the same amount. So its actually interesting. I dont know, we may own the same dollar amount as we did before. Just a smaller number of shares. Because the stock is up 20 . We probably own pretty close to the same dollar amount. So its actually kind of interesting in that respect. Some interesting turn of events maybe since your position was taken. The ceo is gone. Patent ruling against them, the ms drug. Can you say screwed the pooch . You just did. Teva was not the best position when we took it. Some of that may be linked to border adjustment and how that company may be perceived affected. Some of it may be execution. Teva looks pretty cheap right now. I go back and forth on teva. Some days i say its really cheap, i should buy more. Some days i dont know why the look at it on my book, to be quite honest. Listen, it was note the best position we took. Do you remember one of the last times you were on, you had this major macro all about china, how the flows were getting likely to reverse. Did we see that . Is it still something that affects your overall outlook . What did you say back then and how did it it was just how the reserves were coming down. I think theres been a stabilization of those reserves to a certain extent. They always have reserves come down around the new year. I think youre having a stabilization of those reserves. You saw the trade deficit went the other way. I dont know if they played with it a little bit. Futz is good. Its actually so good in china its moving that way. Its one of those two reasons. Is there any other major seat change, other than going from regulation to deregulation . Is there anything else that looks that macro for you . Like i said, the big event that will be coming up is the French Elections. You dont they le pen wins . I dont think she wins, but listen, i cant go as you like the phrase, balls to the walls. That phrase is fine. I know you like that. Blow your wad is fine. Im not saying that. Thats a musket. Thats with a gun. Im not saying anything like that. Ill stay with the first one. Youre allowed to say that. What is your dollar amount long european versus dollar amount long u. S. Stocks . Are you more long european versus u. S. . No . Were more long u. S. Stocks. But the bigger bet is on listen, its all kind of the same sort of bet. If were short u. S. Bonds, were betting on a stronger economy here. Right. Okay, thats the bet. So were betting on strength one way or another. Strength here and around the world, one way or another. The only thing on the horizon Different Things can happen in france. Once you get through there, theres nothing else in the year. You have smooth sailing. The chairman election is just upside to me. Schultz, theres probably more european integration. Hes leading merkel right now. He may actually spend physical money, which will push it even more. All these things those things would be all negative bonds if you want to be negative bonds. Listen, bonds are really hard to own. The yields are really low. In europe, the german fiveyear was like minus 45, which is just insanity in some sense. But its not insanity because theyre buying bonds, theres technicals in the market. Theres all kinds of other things in the market. Its insanity on any kind of economic basis. Part of that is caused by draghi and his gang over there. Whether they want to keep causing it, keep siiaying thing are negative. Maybe these feds should be leaning to the Positive Side. That may help the economy, mr. Draghi. So thats an idea. Were going to continue this conversation. Which is good. Into the 8 00. David is our special guest, the head of Appaloosa Management. In the meantime, check out the futures very quickly. You can see theyre flat. But theyve come back quite a bit. They have come back from being down about 20 points, i think. 8 15, we get the adp payroll report. Market reaction straight ahead. 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. Its a very simple procedure, mr. Diaz. Were just going to make one small incision here, then were gonna go in and remove your 67 corvette. My vette . Its just a gall bladder you dont have. Aflac paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. More funny juice. But my papa gave me. That. Car. What do you wish you had . Aflac. Ohh, i love doing that. Health can change, but the life you love doesnt have to. Keep your lifestyle healthy with aflac a squawk box news maker. Billionaire Hedge Fund Manager david tepper on the markets, President Trump, and his top stock picks. Only on cnbc. Listen, i dont think the market is cheap by any stretch of a multi. And you cant be short in that kind of a setup. Breaking jobs news. The adp employment report just minutes away. Well bring you the numbers. Plus, barclays ceo Ceo Jes Staley straight ahead. 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. I say that with confidence because i think you were probably watching before the break. The Nasdaq Market site is where we are. Thats the setting. Im joe kernen along with becky quick and melissa lee. What do you think of this place . Its much nicer than the other set in jersey. And the green room, which is great. Green room is great, isnt it . Its great. Its a great color. Its almost like were a real tv show. Joe, dont get crazy. Pseudo professional. Professional joe kernen. Stfu. Were up now. Were up on the two can play that game. Go ahead. I dont care. Now were up three on the dow. Im not saying its definitely because of you, but you made me feel a little better. I have actually made that case, that just deregulation can get us where we are. If we get anything else, it could almost be icing on the cake. I told you, you seem smarter this year for some reason. I gave you a compliment the other day. I turned 40. 40 . You say 40, i am. More from david in a minute. First to this mornings top stories. The february adp employment report due in about 15 minutes. Private sector payroll forecast to rise 188,000. Were also watching oil prices. Crude dropping on new api data that showed u. S. Crude stocks rose more than five times forecast last week. Later this morning, well get official Inventory Data from the u. S. Energy department. Lets get back to our special guest this morning, legendary investor david tepper. David, weve been talking some individual names. Just based on the s. E. C. Filings, it looked like you trimmed your position in shares of apple. Fair to say . I think thats right. We saw this at the same time Warren Buffett announced he tripled his position. Are you seeing something that you think hes missing . He made a better trade than me. The stock is up since we sold trimmed it. I think when we trimmed it, we were probably like i said, we were concerned about what china policy might be in the beginning of the year. There was a lot of rhetoric and things that were it was the only thing specifically well, i dont know what will happen with border tax. It wasnt exactly as trump said. Were waiting for that shoe to drop with china, which it never did for different reasons, which is probably good over time because its complicated. Unfortunately, it probably trimmed a little bit, worrying about that because of apples exposure in china. Listen, its fine. I dont know where the stock is now. 139. 05 this morning. I wont be adding at 139. I probably should have added we sold at better levels than i guess he added the last quarter or whatever. How much now . I dont know the exact position. 139 is a little too rich. Its not something i wont be adding at 139. I can tell you that. Are there certain policies or proposals out there that you say, you know, this creates a short opportunity or long opportunity, for instance border adjustment tax. We see headlines about that. The retailers have had a really hard time. Do you look at that sort of Political Force when it comes to putting on new positions . Why are you smiling . We look at everything. So how do you look at border adjustment . I look at the aca. I know all this stuff. I dont know know it, know it. Lets choose, then, border adjustment tax. Whats your position that you put on because of it . Lets look at the if you look from a trump perspective, its probably a very elegant way to do some of the trade stuff that he might want to do, even though the net net at the end of the day may not be that much of an action. Lets talk about border adjustment. If they do it in an intelligent way, theyll spread it out over five years. So i listen to some of the people talking about the winners, the losers, and lets think about if you spread it out over time, and you can spread it out over time by different mechanisms. If you do it that way lets say theres 20 , right. Lets say the currency adjusts 12 . Fair . Lets say you do it over five years. Well, the markets dont wait for the actual thing to happen. So maybe, if it is a 12 adjustment, it probably does adjust over the five years 12 , but most of that adjustment will happen in the first year. Lets say it happens in the first year, right. Lets say you get an 8 adjustment in the first year of that. So whos a winner and whos a loser . Guess what, the winner is the loser, the loser is the winner. If you spread it out and the net net effect is very small. These people, the retailers complaining, the Koch Brothers complaining, this guy complaining, its all ridiculous to me if you spread it out. I think these guys in washington are smart enough to spread this thing out. If youre me looking at the market, i cant make a bet on this because it doesnt make any sense if they spread it out. Its hard to know who the winner it, who the loser is. By the way, if you do that by the fifth year, dont you think the economy may adjust other ways . Dont you think there will be more capacity in this country or other things may happen . So that net negative that people talk about is such an exaggeration. And i dont know which direction it is. But are the Retail Stocks already reflecting that . The Retail Stocks, what are they reflecting . As i said, are they totally wrong in how theyre reflecting it . I dont know why thats what i mean. Are they reflecting that already . I dont know if theyre reflecting that the border tax is going to happen. I think a lot of talk about this border adjustment, to me, its just a mechanism to raise revenues over time. Its somewhat effective doing that, raising revenues. I think its a lot of noise about it. It shouldnt be a negative. Its not a negative if they spread it out. At the end of the day, they will spread it out. I was going to say theyre not that stupid not to spread it out. Paul ryan and his friends. I think they will do that. Stop the nonsense about this thing. It is what it is. Its a revenue raiser. What about the consumer . Are they the ones who end up being the losers . Its a mechanism for raising revenue. If you go it the way im saying and you have a market adjustment, the consumers are a winner in the first year. Even if the dollar doesnt adjust as much . Because im only doing a 12 adjustment. I know ill go get a lot of than the first year. Im not going to get to 12 . Maybe its 7 . They could be a winner in the first year. If you give time over five years for other things to happen, competition to happen, other businesses. Maybe there will be more things done in the United States. And you pay for some of the tax reform that could be stimulative. The key is people are thinking this is going to happen. If they do the year one altogether, i agree, thats going to be negative a little for the consumer. It will be hurting the retailers in that year one. Its not the smart way to do it. The border tax is supposed to raise revenue and make it better for american exporters. If the dollar adjusts as a result, that kind of washes out the advantage. Dont expect a full adjustment, right. I dont think there will be. I think those guys will say that. Thats kind of interesting to me. I dont believe that. Could be true. To me, i live in a world of probabilities. I just picked 12 because i think thats where well settling in. Thats just me thinking that on probabilities. You get these guys say its going to be this way, its going to be that way, stop. Theres probabilities along that whole stretch. Its going to be somewhere in the middle. It. May be the middle at 18, may be the middle at 10. Is the bottom line that youre not positioned on an equity position based on any sort of outcome of border adjustment . If they do border adjustment, it will be a smart policy where theyll do it over a number of years. It may when a little complicated for companies, but its not that complicated. I think youll get not that big a deal. I dont think its that big a deal, that anticompetitive for people, and it doesnt necessarily mean americans will pay more. Let me tell you something. Not usually 100 in this world. It wont work like that because theres different trade relationships with different people and it wont move that. Theres a whole world of currencies going on. It might be more of a move by some countries, less of a move than other countries. Overall, its kind of if you spread it out, its just logical it wont have that big of an effect. By the way, if it does look negative if you spread it out, you can change it. So its just so much more sense to do it that way. I hope they do it that way. I hope theyre logical. I believe logic wins at the end of the day. All right. Were winding this down here. So you came on the day before the election, talked a little bit about trump. Are you glad he was elected at this point . I think that theres its interesting that theres three republican houses, okay. Listen, i would be very, very, very happy if trump would tighten it up a little bit at this point. Motte so ma not so many tweets. Its like my position. Theres a lot of stuff. Theres missiles in korea. Theres missiles in iran. Youll stay a little longer . Yeah, im here. Oekay, good. We have to take a break here. A adt employment just minutes away. Stay tuned. Manage my portfolio. De and since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Breaking economic news. The adp employment report about to hit. Steve liesman is here. Go. We have a blowout number here. 298,000 is the estimate of adp for what private payrolls will show on friday by the government. That is against an estimate for the adp of 188 and an estimate for the friday number of 197. So any way you look at it, adp is about 100,000 higher than whether the street thinks this number will be. They revised up january by 15,000. Amazing balance here. The good sector up by 106,000. The Service Sector up by 193. I dont remember a tripledigit goods number in a while. Lets look more closely by industry here. Construction up 66,000. Some weather in there. Dont get too excited. It was a warmer than normal february here. Also professional Business Services up by 66. Look at the breadth of the job creation. Hos hos hospit hospitality up by 40. Manufacturing up 32. When we look at it by company size, small powering ahead by 104,000. Large business, 72,000. An absolute blowout. Guys, i looked at when there are blowouts like this, when adp is more than 75,000 bigger than the consensus, the left is the adp estimate. The right number there is the actual number given by the bls. Its not too shabby. Theyre not necessarily out of sample. These are the instances in 2012. A couple times they were too heavy. My point is when they blow out like this, it doesnt mean its wrong. In fact, they do better than the consensus on these incidents. Youre smirking. Because i cant wait until friday if its a really huge number because im going to be watching the trump tweets. If its some huge number, you know youre going to hear from the president. Youre right. Can i bring in mark zandy . Of course. Unless thats yours. Its yours. Ive said a lot here, more than usual, because its a really big number. Im a little breathless. What do you think . Its a big number. Its three times the rate of job growth necessary to absorb the growth in the working age population. So you know, any slack in the labor market is being absorbed rap rapidly. You pointed out weather. Obviously that played a role here. Construction is not adding 66k. Thats going to steal away from future job growth. Underlying job growth is very, very good. Do you worry when you come out with a number like this . I checked the blowout situation, when youre much higher than the consensus. Do you get nervous with a number like this . I get very nervous, especially when i go on the set with joe. Hes not going to cut me any slack. Im just waiting for you to say it was the obama administration. This actual number was an obama number. Can i ask a question . I think thats an interesting point. Do you think there is confidence that has risen so much in the confidence surveys thats leading to hiring right now . Hey, joe, the answer is yes, i do. I see confidence. Cue the star spangled banner. I think businesses are anticipating a lot of good stuff, tax cuts, less regulation. Vacci having said that im in the done. Just that is major for mark. I tell it like it is. The bottom line is the economy is fundamentally strong. It was fundamentally strong before the election. Its fundamentally strong after the election. David, you were talking about this. Theres a lift in Global Growth. Its more than just the u. S. I was in asia last week, china two weeks ago. Theyre feeling pretty sanguine about things. Were seeing a Global Economic rebound thats also playing a role. Thats not trump. Dave tepper this morning gave my theory for why the market is up. How convenient. Tepper agrees with you. Hillary clinton did more for t this rally than donald trump in that the loss of Hillary Clinton led to the demise of a certain tax increase that was going to happen. Thats interesting. Right . And you rolled your eyes when i said that. No, i didnt. I like the way you said it, that her not getting elected was a very positive thing for the world. It delivered something immediately to the markets. Tenyear yields, highest level. Where are they . 2. 542. That didnt change though. No, it didnt. When we return, we have a lot more with Appaloosa Managements david tepper. Still looking for something with a t to describe his musings today. I think tepper trump trade. Later, dont miss a cnbc exclusive interview with barclays Ceo Jes Staley at 8 40 a. M. Eastern time. Youre watching squawk box on cnbc, the real morning joe. i moved upstate because i was interested in building a career. I came to ibm to manage global clients and big data. But i found so much more. its really a melting pot of activities and people. applause, cheering new york state is filled with bright minds like victorias. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Lets get back to david tepper, Appaloosa Management. I watched you when the adp number was said. You had no reaction. Almost as if you were expecting a number like that. Now it turns out maybe you had listen, we talk to different people in the market. We have one of our partners is a private company. I think its the second or first biggest background check. Ill talk to him about how his business is going. Its a private business. Thats amazing. People getting hired need background checks. A week before the jobs numbers. His numbers were running really well, really upticked this past month. They were running great all the way through the end of the month. If momentum continues, you know, maybe well have another. If you get these numbers to continue, this is going to be the first good quarter in forever. Right. Ill tell you something. As i said before, take away the punch bowl, take away the cocaine, take away the heroin, put the marijuana in the drawer. The fed has to get serious now. They have to start thinking about getting serious. By the way, ill say that to mr. Draghi again overseas. This stuff is really going on. Its a worldwide growth, as zandy said he recognized that too. You have to recognize another uptick, besides a downtick that can happen. It can happen down. Its a probability game. If france goes the right way. David, with what you have said about the power of not adding more regulations, do you think that has something to do with this hiring stuff . As i said before, before this segment, i said if youre a Small Business, theres nothing negative on the horizon, nothing. Whats negative . Theyre going to give you less regulations for obamacare. Theyre going to give you a tax cut. Everything is neutral to positive that can come their way versus an atmosphere for the last 16 years, lets call it, thats been regulation, regulation, regulation. Can we break out of the gdp doldrums . People think its population and productivity. I think these guys are too negative. Theyre not going to get to 4 growth in the longterm. Get to three . If it was 2. 25, maybe pick up half a percent. For 17 . No, im saying i think the long run, could be a quarter, half a point higher. If you talk about 17 or 18, you could be much higher in the near term. We could do it again. Youre saying do it again and get to a higher growth track. The other side is if we dont do anything stupid on trade. Dont forget that. Hopefully we do smart trade policies here and dont get crazy on trade policies. Do things that are mutually beneficial for your partner to do a good deal. We were talking before about the fed being behind the eightball in terms of raising Interest Rates. Theres a risk here the fed has to catch up so much that its a shock to the markets. I know you say waking me up when its 4 , but traders could easily freak out in advance if you see a sharp move higher in rates. Listen, theyre so far behind the curve. They may have if you get after the French Elections and you get these tax cuts, theyre going to have to move incredibly fast. Janet yellen was saying three years for 1 real. Thats just wrong. Its wrong if you get the good things happening. Its not wrong if theres no tax cuts necessarily, certainly if the French Election goes the wrong way, its not wrong. But its going to be dead freaking wrong, wrong. Let me not pull a punch here. Wrong, if you get the good things to happen, which is a distinct possibility. You going to bet against these tax things . You going to bet against the French Electioning . You better be ready. The market has to get ready for a june increase, september increase, december increase, and maybe more than that. This is fallacy that says the fed wont go in nonpress conference. No, theyll go a lot because theyre so far behind. If you have all these things happen, i think the real rate should be higher sooner. Shes not going to be 3. 25 at the end of the year. If she just does 91 if they do the 25, which is 100 chance, youre 91 basis points. If they raise more rapidly than anyone is expecting, more than three rate hikes this year, are stocks then going to look more expensive . Just relatively speaking. Well, again, look at the multiple. The multiples arent you had people on the other day talking about 20 multiples. The ten year just not that high a yield. If they go four times this year, theyll be at 191. Still fairly low versus where they should be. But moving faster than people expected. But its relatively easy money out there. The question is, they have to go at a pretty good pace not to get further behind. The question is how many times do they have to go this year. Im sure the fed funds odds are going up as were speaking. The question is, should they be pricing in a fourth time. Only a fourth time because its not necessarily bad if they do the fourth time. You dont them to go eight times next year. You want them to have some sort of pace. Theyre going to talk next week. They got to recognize this. They should talk about potentially the upside of international factors. Forget about this draghi fantasy nonsense stuff he put out. Heroininduced sort of stuff he put out. You have to talk about the upside to things. Enough about this downside. Weve had eight years of downside. Why do we got to be negative . Lets be positive. I love this song accentuate the positive, eliminate the negative. Bing crosby. He was in your time period. If things went right, which republicans. Ing happe i could happen. You can see the stock market go higher. The stock market will do okay. Youre going to be facing a head wind of higher rates, but it will not be enough necessarily to take you down. The question is how much are you going up. Im not sitting there listen, i didnt say unequivocally go crazy on equities. I said im long equities. You asked me another question about bonds. I was a little more enthusiastic about that position. You bet your hiney. I didnt say im balls to the wall sure, but i am short. I didnt pull any punches on that. So the question is, you know, listen when youre really short and you can ask my friend, you just bet the ranch long. I cant bet the ranch because i still got the French Election. I got liquidity issues. I cant get out. Your heart of hearts, you would be short bonds, unequivocally, and long equities. Longer than you are currently. I dont know if id be longer than i am. If i knew the French Election was going to go the right way, 100 , id be much longer europe. But theres a downside there. You have to recognize. You know what growth does to wage gains and being able to pay maintain our debt and entitlements. 3. 5 . If we had that for a few years, wouldnt a lot of these nagging they need you to score these different plans in washington so they can get i thought you said 3. 5, we can get there. I think you could get much higher. Listen, if it all stacks up the right way, europe goes the right way, france goes the right way, we get the tax cuts the right way would you be worried about deficits . Im going to say it. Ill say it out of my mouth. I think we can get into the threes. I dont want to say no doubt about it, but i think theres a high probability well be in the threes if and by the way, all the probabilities stacked, you have to bet against these republicans screwing it up. They should be able to get it. With three comes a lot of good things. Why these guys, you know, talking about the republicans again, this probably looks to me like it was an improvement in obamacare. Whether its obamacare 2. 0, who cares. It may be an improvement of whats there. We couldnt pay for it before. It was going to go bankrupt. It was ridiculous that you were subsidizing to people our age, making younger people a tax on younger people to pay for us. Thats crazy. Thats what effectively we were doing to our children. Youre being generous saying were the same age. Im trying to be nice. Its a new leaf im turning, joe. A lot of good things come with 3 . Weve forgotten what comes with 3 . Joe, we forgot about a lot of things. We havent been there since 06, 07. Thats ten years. Theres traders that are 40 years old that are betting, not thinking the fed is going to go at a normal pace because theyre 40 years old and last time was a normal pace, the position they were in, they were barely out of grad school. You cant be 40. Thats the advantage about being a little older than 40. You dont remember. Its been so long since its been good. Hey, guess what, it can be good. It can be good. Ive seen it good. Youve seen it good. Youve seen it really good. People dont listen to me. Its been that way. Its not going to necessarily be bad. Maybe these guys, like i said before, these feeds can be a cheer leader instead of dragging this thing down. Negative rates and all this other nonsense that they do over there. Its just nonsense. They dont consider that it could be a negative signal that theyre sending out. How about sending out some positive signals. I dont think they know how. You may need new people. There was an old cartoon that said we saw the enemy and its us. That could be the case over there. Something different. Maybe the germans are right for a change. Speaking of which, in terms of enemies and so on, seeing the positives and not the negatives, is it do you think its hard in this sort of market environment to be a short seller . Do you have any major or notable short positions against particular equities right now . Or is the market force so strong we were just talking about i dont want to pick on caterpillar. You dont necessarily have a position. Caterpillar has had this revelation of a potential accounting problem. Because its an infrastructure play, its actually doing decently, even since this news broke. When you break a little bit of youre changing regimes in a sense. Im going to call it a change in regime. The regime changes from an easy money, everything goes up market. Listen, i probably was the biggest cheerleader for the feds around the world in 2000. I was. I came in here, said these guys are doing the right thing. I thought it was good for the economy. I really do think it was good. But youre potentially changing regimes. Potentially, because we still dont know some things could happen. If you go from an easy money regime around the world to now a growth regime around the world with higher Interest Rates, its going to be winners and losers. There will be some guys that wont do went ll in that regime. Guys that are great short sellers, they will pick the spots and this change in regime will come for them. While the general levels will go up, it will be a more interesting market than it was in the past. You wont have this rising tide. It will be for different reasons, which are good reasons. Sounds like a jumbo shrimp sort of. Whats like a jumbo shrimp . A great short seller. Its been tough to be a short seller as the markets gone from 1,000 to 21,000. How can a shrimp be jumbo . Oh, i get it now. Youre really smart, but yeah, no, sometimes i can be stupid. I see that a lot. It happens. David, have you taken a look at shares of snap . Weve been watching it so closely. Yeah, you know you in it . You flipped it . We bought it on the new deal. I like the company and the story. I think its going to force me eventually my youngest daughter loves the thing. Anybody between 12 and 25 loves it. When she eventually has a family, i will be forced to use it. I dont really use it myself now. I will be forced to use it because it is really interesting how stories are told and the story of the day is told. I believe that eventually the demographics and this is kind of antifacebook. Snap right now is kind of interesting from that perspective. What price did you pay for it . We bought it on the new issue. Do you own every share you bought at that price . No, i dont own ever share we bought. When i bought it, i talked to the guys, the underwriters. I said if the thing gets into the high 20s, im going to have to sell it. Same thing as allergan. We still own some shares. If it gets back down to where we bought the original stuff or close to it, ill buy more. But not at 21. 80. At 21. 80, listen, im not jumping through the hoop to buy it. But should it go down closer to the original offer price, i would love to buy the stock there. Im a believer in the company. Its a valuation question to me. To me, im in the nowhere land of valuation. You can call that 19 to 23 or whatever, 24. You dont touch your position. Up near 30, its too high for right now. One day it may be 30, one day it may be 100. But today its too high at 30. My opinion, if it went back to the offering price, it would be a place where i would probably add. The thing is, i cant love stocks at every price, you know. Its a valuation game to me. But i think the prospects i believe in the company to a certain extent. I couldnt get enough shares on the offering. Im looking for if it wants to go back down, if it has disappointment, if i believe its the same prospects, ill buy more. Youre supposed to buy low, sell high. Of course. Makes perfect sense. Gets you good prmperformance over time. What about facebook and google . Facebook and google are two of our bigger positions. We like places in tech where we think the competition is not as high. We thought snap should be one of those type of companies potentially. Thats why we have an interest in snap. And something that could be we can see the monetization of it. If facebook doesnt seem to be getting any traction, attack it for a lot of different reasons. If it continues on and can have big revenue growth, its going to be an Interesting Company at some point. Its an Interesting Company now. Its just a matter of price to us. Its all price. Like i said, we still own a little bit. If it would have gone to i would guarantee you if it went to 30 or 31, i would own nothing now. On the other hand, you want to take it back under 20, i dont want to tell you exactly where it would be, but at the offering price of 17, we would certainly be there. What are the valuations like in the financials . At what point would a bank of america, which you hold, does that get expensive . Listen, its a question of growth. Its growth and margins. But youre looking on the bright side of things. You see the fed raising much faster. Its still a decent position. We like the banks. Listen, the banks with the biggest upside, if the policy changes, its europe. Youre minus 40 basis points. Its killing them. Killing pensions, killing insurance companies. But again, theres problems here if it goes the other way. Big problems. We own bank. Listen, we have a decent position with financials. It really gets into Interest Rates and growth and how that goes. The stock is not as cheap as it has been. Its had a nice move. Im not going to pound the table and say were adding a lot, which were not. Were holding what we have. We can see the upside. Bank of america is the bank of america. Were a little bullish on america right now, okay. On america, on the economy. Were bullish on the economy. Hopefully nothing gets in the way of that. I hope that Different Things you know, if we can just tighten up some of the stuff in d. C. Right now, you know, that would make me really happy. Tighten it up. Like a portfolio. Everything is like a portfolio. Its a portfolio of Different Things down there. Tighten it up. If you tighten it up, it will be a lot better situation for everything. Like i said, im bullish. Im bullish on the administration. I hope everything works out there. I wish everybody well in d. C. Like i said, theres some personal things i dont love, but i dont want to get into that. When you hear the president say i got jamie dimon here, who better to talk to about fixing doddfrank. That would have never been said. Another change in the view of having all those ceos not being vilified but getting information. The cabinet, the guys in the cabinet, wilbur ross, all thats got to be gratifying. From a business perspective, its very gratifying. I said the only thing is the you said tighten it up. That other stuff can screw up the business perspective. I got it. You know exactly what im talking about. Tighten it up. Tighten it up. You know that accentuate the positive, that was bing crosby. You think hes my contemporary . Thats low. Thats low. Maybe bob dylan. Maybe big bopper even. 60s. Big bopper, is he still alive . Dave, just so you know people are listening. Take a look at shares of snap quickly. The stock was down about 2 before you started talking about it. You said its a valuation call for you. If we can take a look at the chart right now, youll see this morning after being down 2 before davids comments, you can see this morning it is trading up another 35 cents. Yeah, 36 cents to 21. 80. A gain. Just be careful. Its in my nowhere zone. Its a valuation thing. Its not where im adding stock, but its a valuation thing. Awesome. Great having you. You got to come back. Was i nice today, joe . You were nice. Im reading stuff. This guy says, listening to tepper is like opening a window on a spring day for beautiful fresh air. Wow. Thats so nice. You should put that on a sampler. Just my presence is like a beautiful spring day. Letting the sun shine. Its beautiful. Great having you. All right. Ill see you guys later. Lets get to wilfred frost. He joins us with a special guest. Hi, melissa. Thank you very much. Im joined now by the ceo of barclays, jes staley. Good to be here. Youve been in the hot seat a little over a year and made some pretty big strategic calls during that time, most notably pulling out of regions like asia and africa and doubling down on the investment bank, which of course has its biggest presence here stateside. Are you now feeling vindicated with some of those big calls . Let me say first, if we can run Barclays Bank half as well as david tepper runs money, well be doing fine. It was quite a change in Bank Strategy to basically become a transatlantic consumer corporate and investment bank. I think its way too early to pass judgment. I think we like the momentum we have. Getting out of africa is a very, very difficult decision. We do hope to retain an important investment in Barclays Africa but not a controlling stake. I think, you know, to a certain extent, our strategy is a belief that the Global Capital markets will be the dominating vehicle to fund Global Economic growth as opposed to bank balance sheets. Barclays here in new york, for instance, has got a great position in the Capital Markets with its investment bank. We have a juggernaut Retail Business in the uk. Weve got a great consumer business here in the u. S. This transatlantic strategy, i think, is one that we feel good about. I think the early signs are encouraging, but weve got a long ways to go. On that transatlantic point of view, do you really believe the u. S. And uk can get to a trade deal pretty quickly . Is the u. S. A better trading partner for the uk than the European Union . You know, theres been a lot of talk about trade, for sure, but i still believe that the Global Economy has benefitted from the economic integration that has been managed, led by the United States, but also clearly the European Union, the uk. I think the g20 has been quite effective in reaffirming the value of not creating barriers to the free flow of capital and the free flow of goods and services. The partnership with the u. S. Is extremely important to us in the united kingdom. We think the United States economy, much like davids been talking about, has got a lot of runway in front of it. I think the dialogue between the u. S. And the uk is quite constructive. Both countries, i think, seeking to keep the channels of commerce own and the flow of capital open between the two countries. One of the overhangs after your recent earnings was legal costs because of the ongoing debate youre having with the department of justice. Of course, youve decided not to settle your case with them in terms of Mortgage Backed securities dating back to the financial crisis, whereas the vast majority of other banks have settled. Why havent you settled . You know, were knot going to talk too much about our position with the department of justice. One thing weve said publicly is what were looking for is a treatment that was commensurate with how the u. S. Banks were treated by the department of justice. There were transgressions. I think everyone has acknowledged that. As an american, i think what was important is let us be treated fairly with how the u. S. Banks were treated. If were treated on that basis, we hope to settle with the department of justice. Whats the ambition for the investment bank, particularly here in the u. S. . Can you be as storied as Lehman Brothers once was at its peak in American Investment banking history . You know, we want to be one of the most wellregarded Financial Institutions in the world. I think our reputation for conduct and how the type of business we do is whats most important to us. 2016 was a good year for Barclays Investment Bank in the americas. If you take m a fees, debt Capital Market fees, equity Capital Market fees, we actually grew 16 versus 15 and are ranked fifth in the u. S. We like our position in the United States. Lehman does have a storied history, but barclays is 327 years old. Thats got probably the longest history of all the banks that are resident here in the states for sure. In terms of boosting the investment bank, youve done a lot of hiring. So much so that, in fact, half the executive board, i think, is now former jpmorgan executives. What was your proposition to those guys . How did you make them leave jpmorgan, come to barclays . First of all, jpmorgan is an extraordinary financial institution, the largest bank in the world today. Its got an exceptional management team. I think the idea of bringing back to a place of high regard one of the oldest and most storied Financial Institutions in the world is something thats quite compelling for those that believe in the profession of banking and believe that we can bring barclays back to this position. Its also a number of people i worked with quite closely at jpmorgan. Its a great team. I think we relied on each other in the past, and i think we look forward to dealing with this challenge collectively with our friends and people who have been at barclays for a long time. I think its a great management team. I look forward to delivering what barclays is capable of delivering. Did it ruffle some feathers at jpmorgan . Is it true jamie dimon rang your chairman to try and get him to stop hiring former executives . I think jpmorgan has one of the best management teams out there. Jamie is arguably the best ceo of our generation in banking. I think theyll be fine. What did you learn from jamie d dimon . As you said, he was your ceo for nearly ten years. What did he teach you . Thats a good question, wilf. One, lock down your strategy and believe in it. Then execute on it. The importance of a management team. The a management team, the importance of a ceo dealing with all the important constituencies, from shareholders to Board Members to the press to analysts, to bankers, to clients, to customers, the obligation to reach as many people as you can that influence ultimately the success or failure of the bank. But, you know, jamie and i are very different managers. He does his thing and i wholly do my thing. If we come back to this sort of position on brexit, of course theres lots of other european elections coming up this year, would it in fact benefit barclays if one of those went to the antieu direction and it would take away the pressure of whether london can remain the biggest Financial Center in europe . No. I think a unified is important for all of us. I hope it continues to be a success. I think all of us whether its in new york or london benefit from political stability. I think the important thing is uk, u. S. And European Union recommit themselves as they did through the g20 to the free flow of capital and free flow of goods and services in a stable European Union engaging with the United States and the uk for the benefit of the Global Economy and the geopolitics overall is very important for all of us. So, no, more political instability is not a benefit to anybody. So in that sense President Trumps lack of support for the european project is a mistake . Im not going to comment on the position obviously of the president of the United States, but i think the United States is committed to a Global Community that is collaborative and integrated. And the u. S. Benefits so much from being connected the way it is to asia, to europe, to africa, to latin america, and i think that we continue to manage the Global Economy as a Global Community as opposed to putting up walls. In terms of the trump administration, clearly theres been a huge bounce in optimism shown in the stock market, shown in various indicators since hes taken office. Does that match up with what youre seeing in terms of activity, particularly on the u. S. Side of barclays . I think the economy was on a trajectory of growth to begin with. You know, the fed had already started to move Interest Rates. I think getting back to a more normalized Monetary Policy with Interest Rates that are more reflective of sort of long term rates is healthy for the economy. I think theres a general consensus that infrastructure spend needs to go up on both sides of the aisle. I think that will add a fiscal stimulus, i think, with this new administration. And so i think its helpful that the economy has got this momentum. We just hope that the Political Leadership of the United States uses this opportunity for the benefit of all parts of society. Of course one of the areas hes talked about a lot is deregulation of financials. Whats your view on that . Do you expect it to come soon . And if it does come, does it spark a race around the rest of the world to deregulate quicker than whoever else is . Thats a great question. My view, our view, is that it would be a good thing for dodd frank to stay in place and not to repeal it. But dodd franks a very complicated piece of legislation which requires a lot of interpretation by the regulators. I think what you will see is more of a volume control. You know, is the volcker rule a little too tight for the benefit of liquidity in the Capital Markets . Are they operating capital risk levels of the u. S. Banks a little too high if you want more liquidity into the system . This is a volume control and a complicated piece of legislation. And you never get it right the first time. So we look forward to that. But i go back to this point, you know, when the g20 met post the financial crisis, they did two things. They said, one, we have to reregulate banks all around the world. Theyve done that quite effectively from brussels to london to washington and new york. But at the same time they committed themselves not to use reregulation as a way to create an unlevel Playing Field that might inhibit the free flow of capital. We hope the g20 continues to believe that such that whether its the uk or European Union negotiating or the uk and the u. S. , we keep the free flow of capital open across National Borders which benefits everybody. And just to round things off, i know youre very happy at barclays and you foresee a long tenure in terms of your time at barclays ahead of you. One day would you like to come back and lead one of the u. S. Headquartered investment banks . No. I am thrilled and honored to be asked to lead an institution that has such great importance to Great Britain and to the united kingdom. This is the last gig. And a job that allows you to spend time between the two best countries in the world, i quite agree, why wouldnt you sit there and enjoy it . Thank you so much for your time. We appreciate it. Jess staley, barclays ceo. 102. I knew you were going to bring it up. Pick a new team. Arsenal lost 102. Hes the worst. You may need a whole new sport. You didnt say new team, you said whole new sport. I do. I think im going to change focus for a bit. Curling. Thanks, wilf. When we return, this mornings big movers, tomorrow on squawk box dont miss a first on cnbc interview, really . Epa chief scott pruitt . Hes my idol. Hell join us 8 40 a. M. Eastern time tomorrow. Well be right back. No matter how the markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. When i was too busy with the kids to get a repair estimate. Liberty did what . Yeah, with Liberty Mutual all i needed to do to get an estimate was snap a photo of the damage and voila voila sigh i wish my Insurance Company had that. Wait hold it. Hold it boys. Theres supposed to be three of you. Wheres your brother . Wheres your brother . Hey, wheres charlie . Charlie . you can leave worry behind when liberty stands with you. Liberty stands with you™ Liberty Mutual insurance with e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com were more long u. S. Stocks. But the bigger bet is on listen, its all kind of sort of same bet. If were short u. S. Bonds, were betting on a stronger economy here, thats the bet. Right. So were betting on strength one way or another here and strength around the world, in one way or another. And like i said, the only thing thats on the horizon, Different Things can happen, hopefully nothing happens political, but Different Things can happen. You know, in france. But once you get through there, theres nothing else in the year. You kind of have smooth sailing. The german election is just upside to me. That was Appaloosa Management founder and trending on twitter david tepper. We should mention as i said in the United States hes like number five or number five in new york, eight in the United States. We didnt have time for me to toss to jim. I think, jim, listening to that i was going to ask him did you disagree with anything, and i would say that the amount of agreement was much greater than the amount of disagreement. Jim was tweeting through some of it. Yeah. Anyway, futures have turned around, but maybe thats on adp. That was a really strong number from adp. Almost 300,000. 298 versus we dont drudge. Yeah. One of our stories. Got to wonder what it means for fridays jobs number. I always look forward to friday, but im absolutely looking forward to the jobs report. The jobs report this time around. Melissa, thank you for being here. My pleasure. It was fun. Great to see you. See you all back here tomorrow. Right now its time for squawk on the street. Good wednesday morning. Welcome to squawk on the street, im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. A solid premarket to start the morning, but the real stories are one, a blowout adp number, 298,000, the third best month of the expansion. And two, david tepper on squawk this morning talking Global Growth at Central Banks he says need to start taking seriously. Europe is relatively flat. The twoyear, fiveyear yields