1st. Is that what the date was . The fear gauge hitting the lowest level in more than two decades. The volatility index closing yesterday at 9. 77, the lowest level since december of 1993. I cant imagine thats not a place where you would buy. Though normal stocks that hit new lows what do they do . Hit more new lows. Stocks that hit new highs, hit more new highs. It can only go 9 more lower. Yeah. This only happened five times ever. Having always thought in a contrarian way that complacency and when people get participants get bullish, you worry. Call ratios, you worry. Percentage of investment services. If its that complacent i admit, okay, its not going to be le pen, but the world at this point, theres nothing that were not thinking about that could happen that could throw us for a little bit . It scares me. The flip side is if premiums are so low, you can buy insurance and remain long or replace your stock with calls. There are different ways to use this to your advantage to remain long in the markets. One electromagnetic pulse from north korea that shuts down an entire grid that is your fear. Thats a binary issue. Because once that happens a lot of bad things happen. If the world ends, it doesnt matter if youre in cash. Doesnt matter if youre hedged n cash, all that out the window. Well tell you whether people are hedged or what theyre doing. Overnight in asia, the nikkei down. The hang seng is up. A little over 1 . European equities, 48 hours after the macron victory in france, cac up, dax up, ftse 100 up, and the italian ftse as well. The big stories were watching today. Shares of hertz down sharply. The car renting company reporting a loss of 1. 81 this qua 1. 61, far more than the 81 cents expected. That stock down 17 1 2 percent in premarket trade. Shares of hertz plunged 88 since 2014. Express scripts will start offering cheaper drugs for unsuinsured customers. They will offer a lower rate for a select group of frequently used drugs to those without insurance or those stuck in plans with high deductibles. And target is taking the fight to amazon prime and walmart. They will test a next Day Home Delivery Service called target restock in minneapolis. Target says Household Essentials like laundry detergent and coffee will be packaged at a nearby store allowing the delivery the next day. Amc entertainment topping street expectations. Admissions revenues surging more than 69 in the latest quarter. The company saw a big increase in food and beverage revenues. Shares of marriott getting a pop after beating on the top and bottom lines. The Worlds Largest hotel chain reported a nearly 67 rise in quarterly profit as more people booked rooms at higher rates. Pandora reporting a smaller than expected loss in its latest quarter but guidance was weak. Shares trading higher as the streaming Company Announced a 150 Million Investment from kkr and a boardroom shakeup as it gears up for a potential sale. A couple things on the agenda. At 10 00, the job openings and Labor Turnover survey along with wholesale trade data. Three fed speakers, regional president s neel kashkari, Eric Rosengren rosengren and rob kaplan. Lots of earnings on tap. Discovery communications, liberty media, dean foods and valeant all report before the opening bell. Well bring you that news as it crosses the tape. After the close, electronic arts, news corp. , tripadvisor and dow component disney. We will get comments from bob iger. Dont miss it. An exclusive interview or a cnbc first interview with bob iger, thats at 4 10 eastern time on closing bell. Joining us is ed keon from qma, and jurian timmer. Knowing both of you as i do, and im not sure that technicals necessarily are pairment in either of your view. I guess what the vix is indicating, that is a positive in the French Elections, positive earnings, things like that. You would probably be part of the camp that says this is good stuff. You dont need to look at, you know a gift horse in the mouth, take it for what its worth. Weve become more cautious over the last month or two. Because of the complacency . Not necessarily directly because of that, but i think there are first, valuations have gotten to the point where we have gotten nervous. Not horribly high but nervous. There are some signs that maybe the Economic Growth might be slowing at the margins. Even though earnings have been terrific, much better than expected. Weve been trying to be more cautious. When you see ill get right to you did you strain something. Do you need an ice pack. Youll see. Its just age. When you see a headline, investor anxiety drops to a 25year low, does that make you think this is a this is a usa today or business week death of equities or Something Like that . You generally do not want to be aggressively buying when the public is complacent. So thats not directly playing in our thesis, but its reason for caution. You see that through the upper valuations. So its reason to be, i think, more cautious than to be more exuberant. The election in france did not fix the senates fear about Obamacare Repeal. Didnt make tax reform score any better on a revenue neutral none of these things help here necessarily. Nothing has changed here in our prospects either. Has it . No but its one more piece from the wall of worry thats been removed, if you will. I thought you liked to build pieces of the wall of worry for the market to climb. If the wall of worry is going away, this is the sort of the i think the outcome from the French Election has more to do as europe as a region to invest in ive been bullish on europe to the u. S. Because its lagging behind. I think because youre from there. Does that color your my dutch pride . Yes. Do you ski . No, i grew up in aruba. Anything else going on over there other than speed skating . Soccer. Soccer. A bit of soccer. Okay. So when i was eluding to fundamental types, you look at these things as positive. You dont look at them as instilling too much complacency, things are good in your view . If you see the low vix as a sentiment measure, sentiment is an ab tribute of priattribute o. If something comes along to shake up the apple cart, well have a problem. In the absence of a catalyst the vix is like credit spreads. Normal is slow, then you get occasional shocks. The question is what will create the shock. This is abnormally low. Does that concern you . Weve said this, this only happened fivetimes in the vix history where weve been in single digits. Single digits are the norm, and then the spikes are the abnormal. Certainly since last february, a year ago, when the global cycle bottomed, we had investors getting bang for the buck. If you look at the return of the s p versus normal vol, you usually get 10 of return for 14 vol. Over the last 12 months we got 17 return for less than 10 vol. So this is about as good as it will get. Certainly investors should expect at some point to see some more volatility. Even with the French Election, the vix went to 18, but the s p only fell about 2 , 2. 5 . It doesnt necessarily mean prices go down when the vix goes up. Why do why did you say earnings were so much better than you expected . You missed that. I went to work at ibis for a long time. The fact they beat consensus was not surprising, the fact they beat growth. I think corporate earnings are good. But theres a warning sign that reminds me of the late the 090. If you look at the gdp, that number has been flat. Youre seeing a divergence between the s p 500 and the broader sample taken for the nippa products. That happened in the late 90s it was a warning that trouble for the markets ahead. That compared with some other things, tightening of credit standards, auto sales off their peak, it doesnt mean things are terrible but just little warning signs that we could see a downturn in the economy. Were not priced for that. Were not priced for a soft patch. I think theres a possibility even though i think the Second Quarter will bounce back, theres a possibility that growth this year will be sub 2 and that were not really breaking out of that soft range weve been in for several years. Just by you saying that suddenly stocks have gotten less cheap, even though earnings were way above what you thought, we were at 21,000 on the dow before we knew the earnings. If the earnings came in better than expected, the market didnt get more expensive t got che, i cheaper the last return was based on the beat in earnings. So now thats in the price again. So earnings are still quite high, but also prices. The vulnerabilities that things will get worse is heightened by the fact that is already reflected in prices. Joe, if you think of it this way, after the election the pe based on trailing current earnings jumped from about 18 1 2 to 21. The market was pricing in an earnings rebound. Which happened. Q1 earnings are growing, 14 year over year. Thats against easy comps, last year q1 was the cycle bottom. Even if you take calendar year numbers, you apply the usual drift, we should end up at about 126 at the end of the year, an 8 gain from last year. Thats about the normal 6 , 7 gain. But the challenge for the market is it has to grow into its new valuation. 21 times trailing is too high. So the pe has to come down as earnings grow. And then price goes up less than earnings. I think thats where the risk is that the market priced in a nice outcome. Now it has to actually grow into that. I think the market will end the year from here, maybe a couple, 3 higher. Which is good. Im not bearish. When you think about expected return of a couple percent over eight months with the historical volatility of stocks, it doesnt look attractive. We also rotated towards europe. And were just fairly cautious in our equity allocations now. Good number on friday. So i guess the fed is back on track. You saw buffett yesterday, andrew, said the most important thing to think about are yields. In ten years. Thats the one thing, if you knew rates would stay low, you would stay lock. Th stay long. Maybe the fed is important again. Fed is always important. You know what irritated me. He said im getting a hell of a tax cut with this Obamacare Repeal. Yep. Does that mean when obamacare was passed, it was a hell of a tax increase . Yep. Thats all this is is reversing what was done to the wealthy when this very unpopular bill was passed. So i didnt hear anyone saying this is a hell of a tax increase on the rich. Now im hearing just by getting rid of obamacare shg its, itsf a tax cut for him. The most unbelievability thiloe not as unpopular as you described. I saw yesterday, heritage came out saying it was just as unpopular as it has ever been. Heritage. Of course. They went into they looked at a cnbc poll that asked a certain question quoting breitbart. When you take an entitlement away, its going to increase. Its also understood. Understood. Andrew whe where are we going with this . Most of the added people covered are medicaid. So when healthy, working age people are suddenly covered by medicare, if thats the way you want to go, thats fine. But thats really what it is. Increasing the number of people that are in that entitlement. Maybe as a society we want to do that now. Thats the question. But one thing that got me yesterday i kind of missed it did buffett say his entire tax bill was 4 million last year . I think thats what he eluded to. I didnt pay 4 million. But were in the realm i think my net worth versus 60 billion. He is right. He is undertaxed or structured everything in his life in a way to totally avoid paying taxes. Thats staggering to me. Hes giving it all away. I know he is eventually. Not eventually, but 40 is given away. Thats also his choice to direct his philanthropy where he directs it. He says i would rather choose than the government do it. Which you told me you like. You applaud. Hes just no, but to always talk about you want to keep the money in the market, right . Yes. Private market rather than the government hands. But hes very pro higher taxes. He is. Would be easy for him if he felt this strongly about things, just write a check for 100 milt on. Why . Thats a silly argument. 60 billion. Why give it to the government when you can distribute it yourself to charity. Because hes always lecturing about tax rates being i dont want to speak for warren, he would engage in a conversation with you about a wealth tax. He would. I dont know that. I think he might engage with it because he knows it will never happen. 20 wealth tax may make sense for people over 10 billion. Now youre confiscating profits . No but for someone made in the Free Enterprise system . For someone who all wants to raise taxes on everybody else and who paz no tys no taxes its not that he pays no taxes basically pays no taxes. He made his money in the stock market. I know how he has done it. I know how he sets it up. If he was spending it, that would be a different story. Hes a very frugal man. Something you identify with. I do. Any way. Ed, jurrien, thank you. Lets get to washington for the top political story. Eamon javers has more. We had sally yates testifying yesterday on capitol hill. It was the first time for Many Americans to hear the voice of the former acting attorney general. Remember, she was fired by the Trump Administration shortly after they came to power. She was an Obama Administration hold over. She was on capitol hill yesterday testify being some of the intrigues surrounding former Trump National security adviser Michael Flynn and his intera interactions with russian officials. Sally yates testified she had a conversation shortly after donald trump was sworn in with don mcgann, the white house c counsel for trump, and she raised concerns that she felt flynn was lying to the Vice President. We began our meeting telling him that there had been press accounts, statements from Vice President and others, that related conduct that mr. Flynn had been involved in that we knew not to be the truth. But more than the question of lying and what was the truth and what was not the truth, yates said to don mcgann that was she concerned about potential of compromise with the russians. That is if he had not been telling the truth inside the white house the russians would know that and could potentially use it against him. Heres how she explained that piece of it. Compromise was certainly the number one concern. And the russians can use compromise material, information, in a variety of ways. Sometimes overtly, sometimes subtly. Again, our concern was that you have a very sensitive position, like the National Security adviser, you dont want that person to be in a position where again the russians have leverage over him. In many ways this was a tale of two hearing hearings. For democrats, the focus was on the 18day gap between that meeting and when general flynn was ultimately fired by the Trump White House avenfter deta leaked out to the media. Democrats want to know why did it take so long for donald trump to fire him after lying to the president and potentially compromised for the russians. For republicans, the focus was on news media leaks about all of this. How that got into the newspaper. Sally yates and James Clapper were both asked if they had been sources for any of the media information. Both of them said under oath that they had not. This is not the end of this conversation. But a few new details about who knew what when and what they did about that. All right. Thank you. Coming up, when we return, were going whale watching. Some big investors at the sohn conference revealing some big investment ideas from tesla to teletubbies. On power lunch today, wilfred frost will be sitting down with lloyd blankfein. Blankfein. Blankfein. Hey. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. 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. A used car,g this information. Read it carefully. If you want to stay on top of your health, one simple thing to do is take the pledge to go and get screened for the cancers that might affect you. So stand up to cancer and take the pledge at getscreenednow. Org it only takes a minute to take care of yourself, and nothing rhymes with org. Welcome back to squawk box. The sohn Investment Conference providing ideas from real estate plays to tesla. Leslie picker was there. She has some highlights. The sohn kicked off with the bulls. Century link and its merger with level 3 was touted. Chamath palihapitiya urged investors to buy convertible bonds in tesla and to participate in the upside in case elon musk is the next thomas edison. Debra fein brought up tel teletubbies as her next play. Much of the audience was looking for a big pick from ackman, but he opted instead to talk about Howard Hughes corporation, which he owned for years. Cliff robbins talked about Investors Bank corp. But there were bears there. David ireinhorn said he was shorting. Gundlach createded an account at twitter, and he has already over 1,000 followers. What would you say the big takeaway . What was everyone buzzing around in the hallways about afterwards . People were surprised by the number of tech picks and tech long picks that there were. You look at the s p 500, the nasdaq, just consistently going higher. You have these smart Hedge Fund Managers who say here are specific opportunities that we think can still go higher from here. All right. Well have chamath on in a bit. He was on yesterday in the afternoon. Closing bell. Asked about we always talk about ibm. He was asked about watson. He laughed and said watson is a j