Slowed. Nat dak off by 1. 5 . Last week, a pretty good week for the markets, dow was up by 66 points for the week. Nasdaq was up by 1. 4 . If you look overnight in asia, nikkei, 0. 4 . And kospi up 0. 34 . Markets in Mainland China were closed. The european equities, the dax is off. Off by 0. 4 . Market is flat in france and london as well. A couple other big stories were watching today. Weve got a lot. On the economic calendar, the ism. Auto sales. Tomorrow, factory orders and the paychecks Small Business jobs index comes out. Wednesday, the adp employment record, ism Services Reports and fed minutes. Thursday, weekly jobless claims, friday, wholesale trade numbers and march jobs report. There are a few names of earnings this week, monsanto, walgreens, boots alliance, young china, beth, bath and beyond and constellation. And on the wall street journal, trio of fed officials speaking today. Bill dudley holds a press briefly at 10 30. Philly president Patrick Harker speaking about fintech. And richmond fed director jeffrey lacqu lacker will talk too big to fail. And in political news, President Trump is going to be hosting chinese president xi at his maralago resort in florida. Ahead of that meeting, the president suggesting trade to be a key issue to secure chinas population. The interview with the new york times, ill tell you, china has great influence over north korea, china will either decide to help us with north korea or they wont. If they do that, it will be very good for china, if they dont, it wont be good for anyone. Also saying washington is ready to go and make a big press against the Nuclear Missile programs on its own. Heres the headline, if china is not going to solve north korea, we will. There you have it. I dont know what that would entail. What does that mean . I dont know. Suggestion has been that there would be a strike that take it out. Tellerson alluded to that, too. I know, japan is right across the water there. The west coast, i dont think its risky. Pretty scary stuff. Look, anybody who has been around defense for the last 30 years says that this is the biggest concern. I know. China isnt the only major item on the political agenda this week. As you know, Trumps Supreme Court nominee neil gorsuch is facing a confirmation showdown in the senate. A Committee Vote will go on party lines theyre probably aiming. And three republicans so far, red state republicans, thats not enough, though. And most likely, they wont get enough, i guess. And that means in honor of w, the nuclear, the Nuclear Option might be on the table, right . Yeah, thats exactly it. There are three democrats now who have said they would be for neil gorsuch the president s nominee. Thats not enough. Remember, republicans have 52 seats that means in order to get to the margin they need eight democrats. Ill check my math, that makes them five votes short. The question is where are the votes going to come from. A lot of talk on yesterday with meet the press, chuck sure explaining simply that republicans just dont have the votes. Heres what he said. It looks like gorsuch will not reach the 60vote margin. So instead of changing the rules which is up to Mitch Mcconnell and the republican majority, why dont President Trump, democrats and republicans in the senate sit down and try to come up with a mainstream nominee. That might sound like a very nice idea to democrats, but its simply not going to happen. Donald trump is not going to back off this nominee who is very popular amongst conservatives in the republican base. Where does that leave Mitch Mcconnell . Heres how he explained how this is going down this week. What i can tell you is that neil gorsuch will be confirmed this week p. How that happens depending on the senate plan. The Nuclear Option changing the senate rules to allow a 60 vote margin difference and the idea here, is that republicans and democrats both very much like the filibuster, and they would like to keep it but they like the filibuster so much, they keep using it all the time which makes it very hard to manage the place. Thats Mitch Mcconnells dilemma going on this week. The other thing important to watch is the battle between the Trump Administration and House Freedom caucus of conservatives. There was a war of words on twitter over the weekend. Take a look at this tweet from the president s social media guy. Dan scavino saying donald trump is bringing back auto plants and jobs back to michigan. Justin ama is a big liability. The trump add stricken and establishment have merged into trump establishment. Same old agenda, attack conservatives, libertarians and independent thinkers. That fight between the Freedom Caucus and the president is worth watching in the coming weeks. It has real bearing on whether or not they get a Government Shutdown deal to avoid a Government Shutdown. And also so the president can get what he wants on tax reform. The president very deliberately now picking a political fight with a group that blocked him on the appeal of obamacare. Some of them, a couple of guys are coming around in the Freedom Caucus. This guy mutt be even in the Freedom Caucus, some are more and less ideological. This guy must be the like the one farthest right. He played golf with rand paul. Right, right. Rand paul is a tough senator. They were all smiles. Did you see a picture the two of them . Trump looks like a giant. I have not seen the picture. Trump looks like a giants. Rand paul is not a tall guy. No. This is the question for the Trump Administration, right . If youre calling for a primary of the most conservative figure information the house of representatives, theres like five dimensions in politics. But its very hard to get to the right of these guys in the primary. So is the president really calling for moderates to primary these conservatives . If he is, thats a very different tact than weve seen this administration take so far. Or is he simply calling for just a loyal trumpian, for lack of a better word to come in there and run against the Freedom Caucus members who wont do what trump tells them to do. Thats also sort of not only an ideological by a trump this is like a subset. You take the Freedom Caucus. Sake the subset of the most free to be Freedom Caucus people, take that subset, where could they govern . What could they possibly what would you look at . Youd just repeal obamacare and everybody would be back yeah. Would there be any government at all. Thats a good point. They dont want government. Yeah. Thats what i mean. Those guys may never, if they were in charge, we might not do anything theoretically. Right. And they dont have the votes nobody charge but they have the votes to make it very difficult for the people in charge. The question is whether the Trump Administration wants to do this with democratic votes. The Freedom Caucus is what, 32 people, Something Like that. A subset of that is even smaller as youre pointing out. Cow go on the democratic side and pull in moderates and get democratic votes. They havent been courting those votes, structuring it in in a way to get those votes. Dont get me wrong, im empathetic with that viewpoint. Its just that i dont think its not practice. Washington is not set up for that right now. But chuck sure god almighty, why dont we sit down and come up with a very good thats why we think of it sort of comically and we dont really listen, its like that was total crap just drivenle coming out, not going to do it. Not come together. No we dont come together in washington anymore. We fight in the trenches. Thats the h. W. Thing. God bless him. Anyway, i feel like our greatest living expresident , right, h. W. , right . Yeah. You might beg to differ, i guess. We have to agree on the great expresident . Hes a kind man that was wrongly hes a kind man who was wrongly laid out in a lot of ways. I didnt mean you know, we dont have to agree on that. Why dont i tell you about stocks to watch. British goods consumer, rec the benkaiser. And Schneider Electric is said to be close to selling its Software Business to europe. The deal is reportedly valid at around 1 billion and could be announced in the next couple of days. Shares of uk chip maker Imagination Technologies plunging after apple said it would no longer use its chips and products. Apple also owns about an 8 stock in a company. Its been a long time that ive seen stock down like that, down 61 sfp. Slayers in toshiba dropping today. Tesla delivered a record 25,000 vehicles in the First Quarter. That was up nearly 70 from last year. Breaks down to about 13,450 model s sedans. And 11550 model x suvs. Tesla said up 50,000 delivers in the first of the year. The company is expected to begin protection on its new and affordable model 3 in july. The dow and s p 500 each building on six positive quarters. The First Quarter was the nasdaq bust in the last three years. Were joined by marion bartles head of Merrill Lynch strategies. And peter bookmar a cnbc contributor. Folks, welcome to both of you, its very good to see you. Were setting off on a new quarter trying to figure out which direction were heading. And we have had massive momentum. Marianne, do you expect that momentum will continue kitchen a rockier backdrop . Well, washington may be wacky but theres no rise. And the first time in six years were seeing more business to the upside than dot downside. And in the u. S. Not only are we getting an expansion in earning, but were finally starting to see Top Line Sales expectations come through. This is all really positive for the markets. You know, i saw a graph that was laid out this weekend that looked at the soft data versus the hard data. Actual numbers on gdp and things versus Consumer Expectations and Business Expectations and the gap was pretty significant, just in terms of the stock expectations rising pretty rapidly. And some of the numbers catch catching up. I would say at the end of the day, earnings are the most important to the market. Certainly, im out talking my colleagues at Merrill Lynch. Theres still a lot of concern worry and on some level, some fear. Im not surprised not to see the confidence. I think its about reeducating the public about markets what we then went through eight years was tough. And it takes a while to bring back the individual investor to the markets. Peter there was a new article out this weekend, he said that there are cautionary signs that are starting to blink that uses that measure. Right. That looks like ten years of earnings. Figures out where the stock average is. He said based on that, were looking at the highest levels paid since 1989 and 2000. The question is what makes valuations matter. To me, its Interest Rates. And monetary policy. And if that is not a potential headwind that valuations begin to matter. Lets take earnings and stock prices since the ending of 2012, qe began, 14 times to 22 times. All because of easy monetary pose. This year may be the first year in this experiment that all four major Central Banks may bupull back. Front page of the wall street journal central bankers rethink 2 inflation target . I think that needs to be in the academic ditches. To say we neat to raise the cost of living by 2 is somehow going to make a better economy remains outrageous and remains in the halls of academia not in real life. Its reducing the purchase power by 2 . Not saying it may be lower, theyre saying if it goes higher. What are you talking about, you say 2 is going to hurt the purchasing power of people, youd rather have deflation . No, id rather have price stability. Zero ideally, thats how you gain wages. Earnings are only growing around 2 . You cant look at inflation in a bubble. You have to look at it with thats a hard take on this. For years i think youve suggested on this show that we should raise Interest Rates, this is effectively suggesting that the money continue on as a target in a way to enable these guys . What this article said if we had a period of time below 2 inflation we could tolerate 2 inflation to get an average. The 2 inflation is made up of thin air. Theres no risk there. But i think we should stay at 2, not go above it, you want to be forward looking you dont want to let it out. Janet yellen has clearly told us that shes willing to run the economy hot. Im going to talk about that. A little bit longer, to make sure that the reflationary trends take hold. Right. Thats been the risk. And because of the reflationary risks come from other countries such as europe and japan. I think thats clearly laid out the market that willing to run at 2 and quite possibly run it a little hotter. Here we have artificial rates that are low. Inflation is not a black or white thing. Theres some good deflation. The drop in technology prices is good deflation. Progress efficiency leads to lower prices. So this idea of trying to pick a proper inflation rate irrespective of wages lets just say that wages went to 3 . Wed still be no better off than 1 . You got to look at real wage growth. What does it mean for the markets and stocks that this is the feds new line of thinking. If it leads to higher Interest Rates, that earnings can be good, if multiples start to contract well there will be a discrepancy between the economy and stock prices. Marianne, quick last word . Well, if we get Corporate Tax rate cuts thats going to expand earnings. Even if you look at where pe ratios are today, relative to where Interest Rates are. Interest rates are 300 points basis below where we are. As long as the fed raises rates in a global fashion, the market can continue to go up. Thank you both for kicking us off on this monday morning. When we come back, well talk march madness. I was just going along to figure out where i stand in the brackets. Were going to talk march madness which ends tonight. Going against each other for the national title. Thats your total that you have. It cant go up from there. Plus, Tech Companies teaming up to take on fake news on squawk box. Squawk box returns in a moment. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. We love that Basketball Basketball theyre playing basketball im out of it. Okay. The Mens NationalCollege Basketball game kicks off tonight, 9 20 p. M. 9 20. It might as well be 2 00 a. M. , really. At 2 00 a. M. , you could get up earlier and watch it. Top seeds gonzaga and North Carolina face off in an east coast versus west coast battle. I mean, i really like the South Carolina team. And i should like gonzaga, i dont know, i still think they i got that stigma of playing in what some people think is not a great league. Right. They were like 361. I love my guy on South Carolina, Justin Jackson. You sound like youll be okay whoever wins. You could either win i could come in second. Of all of the people to win, who would be the most obnoxious. I did not realize he got himself out of the wrong bracket that i was in. Got put in the right one. To be honest with you, before he put them in, he asked me about my bracket. I said im picking North Carolina. And he picked it. You know, mississippi state, they beat connecticut. I went to the harlem globetrotters. I thought you were going to the major you can spin the ball on your finger like that . No. Someone said you were going boo the poor mans harlem globetrotters. Theyre just as good as the other. I remember, we had a guest here. You were explaini icomplaining ticket passes. I did something about the magic pass. You bring the kids on the court theyre supposed to be able to play with the players. They charge extra, as you can imagine. Did they get to play with them . Yeah, but they sell like 500 magic passes so theres too many kids on the court to play with them. That was my Quick Customer Service caveat. Do you think that big center is good enough to beat Justin