About 0. 6 hang seng down almost as much. The shanghai turned in a positive day up by 0. 1 and in europe, in the early trading, at least at this hour, you will see that the markets are weaker as well the cac is the big loser down about 1. 4 . You can see declines of over 0. 7 for the dax, similar decline for the ftse alltime low on the fix yesterd vix yesterday. We kept saying complacency we cant go down suddenly the nasdaq is up. Midday reversal. Everybody told us yesterday that for some reason the vix wasnt the indicator it used to be for volatility or for complacency. If its an alltime low, dont you think people are not worried about anything doesnt that usually set things up for a rise in volatility. My god these things can move around vix up 6 yesterday. We want to get to washington we have breaking news overnight. That could add a bit to the vix. Senate republicans failing to repeal obamacare in a dramatic latenight vote on capitol hill. Kayla tausche has more reporter it was a latenight sprint the bill text was printed at 10 00 p. M. The cbo score around midnight and the vote around 1 30 a. M. With three senators voting against the socalled skinny repeal of obamacare leading to a 4951 failure. There were gasps in the gallery when the deciding vote was cast by arizona senator john mccain so, yes, this is a disappointment a disappointment indeed. Our friends over in the house, we thank them as well. I regret our efforts were simply not enough this time mccain had chastised the process but voted to move forward. That sound bite was from Mitch Mcconnell. But mccain had said that House Speaker paul ryan, who you just heard mcconnell say that he was thankful for his house colleagues involvement, but people said that paul ryan didnt give sufficient assurance that the bill as it stood would not become law ryans statement earlier in the evening said senators have made clear this is an effort to keep the process alive not to make law if moving forward requires a conference committee, thats something the house is willing to do. Earlier in the evening a handful of senators held a press conference saying they would potentially vote for the bill only on the assurance that it would go to conference and get heavily debated, not that it would become law they viewed ryans statement as saying he was willing to do that but not committed to do that you heard Mitch Mcconnell speaking on the floor at about 1 45 a. M he was talking about that was his only regret. His only regret was the vote count. Now this leaves republicans without a clear path forward on healthcare and the president tweeting to that effect late in the evening just a couple hours ago saying three republicans and 48 democrats let the American People down. As i said from the beginning, let obamacare implode, then deal watch. Well see how the white house, if they decide to stabilize the Insurance Markets in the meantime in the absence of any movement on legislation. People describe it as a soap opera inside the white house the comments the mooch made to the new yorker yesterday what is going on what does it mean to who stays and who goes that will have a lot to do with policy well, for anyone who didnt see this interview last night, im not sure there are people left who did not manage to read this Anthony Scaramucci, the newly installed White House Communications director called up a new yorker reporter after the reporter tweeted some details about a dinner that was happening at the white house he demanded to know who was leaking it a colorful conversation ensued at which he disparaged nearly half of his new white house colleagues including steve bannon and Reince Priebus, the chief of staff who has been the focus of this. Because the conventional wisdom has been that this feud of scaramucci and priebus, if there is a winner, it could be scaramucci, because he is closer to the president he said if you want to leak something, priebus will resign shortly. This is a Communications Director that on one hand is leading a leak brigade, trying to fire staffs who are, he believes, behind leaks to journalists. Meanwhile hes on the phone call with a journalist who he believes to be con iffi believes to be con iffdential ao leaking things about the white house. The plot thickens. Clearly a lot of people are scratching their head over how this happened and what it means for him. Ultimately its the president s call there was mccain, ron johnson and who else did not wanted assurances from paul ryan himself that they would go to conference there were three or four Lindsey Graham of south carolina, who also used some colorful language. He did. In describing it he said he wouldnt vote for a pig and a poke their bill was a fraud but he voted for it he voted for it because he believed it would go to conference thats the beautiful thing. When you think about it, seriously, you wonder why people around the country dont understand washington. Those guys needed an assurance that if we pass this bill, that in the future it definitely wont get passed well pass it, as long as you can tell us you wont pass it. Its almost like they would say we will pass obama repeal, as long as he wont sign it. The fact they had seven months to come up with a plan that would garner enough support to pass, and they didnt do that so then in this 11th hour, theyre just trying to find something, something that would get enough votes to move the process forward to keep the process alive regardless of whether it was a good bill what are we on on jason movies were like 11 or 12. Is this dead or not . Jason comes back, like in a s is this dead or not . Are they moving on tax reform or will it come back next week . What do you think . Theyre committed to tax reform thats what the Administration Says at this point were wondering if the Statement Released yesterday by the big six principles, so the top leaders in the house and the senate and the white house, treasury, National Economic council and the like, they put out a statement yesterday hailing the conversations this were happening on tax reform and the commitment to have this be in committee by the fall theyre trying to move the goalpost on timeline they also dropped any discussion of the border adjustment tax well talk about that youll have fun asking kevin brady about that people were wondering was that the agreement that we were supposed to get on tax reform before recess . That the white house promised. Or is there still something forthcoming because there were not really new details in the statement, just the fact that theyre committed to doing this. Okay. Thanks well talk border adjustment with david walker. Republican chs said they were trying to give up border adjustment tax the proposal would have hiked prices on imported goods to the United States. Gop lawmakers reiterated their goal on starting work on a joint tax plan through committees by this fall. For more lets bring in david walker you have been around washington. But you havent actually been one of these illustrious decisionmakers do you think that tax reform is possible given what we have seen with trying to do this will democrats work in a bipartisan fashion on tax reform first, washington is a train wreck right now. Yeah. I think healthcare is off until after the 2018 elections you do. Needs to be. Were having the wrong debate on healthcare i can come back to that, but, yes, we need tax reform. Theres bipartisan support for tax reform for Business Tax Reform it needs to be pro growth, simpler, fairer, more competitive. I think realistically you have to decide whether or not the democrats will play on this. Part of that depends upon the scope. I believe they ought to try a couple Infrastructure Investment with tax reform as a means to have a pro growth, pro jobs policy, to try to get more democrats to play. Realistically you wont see anything at the earliest before 18. Theyll have do it through budget reconciliation. And were talking deja vu all over again i was in washington during reagan he was my first president ial appointment. Broadened the base, lower the rates, go to territorial rather than global, and youre talking about just corp frat, broaden the base no. No for individuals, too both when you say broaden the base, i think individual reform, not corporate. Both. On the corporate, you know, in 2012 i mentioned last time i was on with you, i did this National Fiscal responsibility bus tour, tested a range of reforms including tax reforms with the American People, which is what matters. Some things we talked about on the corporate side, lets go to territorial rather than global lets bring the top tax rate down to 25 . Lets do something with regard to capital expenditures, accelerated either immediate expenses and more aggressive depreciation rules lets have a tax credit for basic research, not applied research lets have a dividend deduction that would encourage corporations to either invest for growth or distribute earnings for growth. To create a more level Playing Field. You also have to keep in mind a lot of businesses in the country are not taxed as ccorporations. Theyre taxed at the individual level. Which is why its hard to do corporate without the individual right so on the individual what we talked about is going down to 3 rates, 90 of the people would be able to do tax return on one pete piece of paper we could have rates of 10, 20, 28 that we would end up having deductions for things like one Home Mortgage up to the maximum conforming loan, which varies by region of the country, charitable contributions and retirement and certain other forms of savings so you get to keep things that people like in it, charitable, 401 k s, but to joes point, how do you make this happen . Let me phrase it this way so nobody will want to give trump a win on the democratic side you know that. And whether thats right or wrong, mcconnell and pane didnt want to give obama a win youre saying infrastructure might get the democrats to cut taxes. If youre going to blow out the deficit cutting tacks, blow it out further by spending money on infrastructure, do you think the democrats will sign on you wont get all the republicans under this plan. They will probably say, we want this thing paid for, we dont believe in dynamic scoring. You are looking at 26 , 27 on the corporate side at which point, you lose more republicans. The Third Largest caucus in the Congress Today is something called the Problem Solvers Caucus im one of the national cofounders of no labels, which supports that caucus roughly equally divided between republicans and democrats. How many people in the caucus about 70 i think. Its not an oxymoron, sear youts seriously . Its not an oxymoron. This is the only one bipartisan of any meaningful size they have publicly come out and said they would like to see tax reform coupled with infrastructure reform. You are correct thats spending money coming and going youre spending money. Then we have to come back and say first keep in mind on infrastructure most money will come from the private sector okay. Even the president has already said that. Hes talking about investing 0 200 billion over ten years, having 8 800 billion come from the private sector theres plenty of opportunity to do Infrastructure Investment we have plenty of patient capital, Pension Funds and other types of investment vehicles that could make this attractive. One thing we have to think about is how do we want to keep score . Do we want it to be revenue neutral . Deficit neutral . We have the debt ceiling limit coming up, one of the most ridiculous things on the planet. We need to change our metrics debt to gdp. We need to get rid of the debt ceiling limit, the focus on the deficit. We need to focus on debt to gdp. Very to get spending on the table. Spending it out of control its not just a federal issue, its a state issue i think this is great to talk about, but its all theoretical. Its divorced from the reality of the situation politics. Needless to say that with all due respect to everything you just said, it may be spectacular, but this will never happen because of political dysfunctionality is that your point at the moment the problem is you have four parties in washington you have two parties, at least two parties in the republican the gop, and at least two parties in the democrats you have a sort of very progressive left, a semi middle. Back to the 70 people caucus. Probably not including the leadership of either party, right . No. It does not. Neither of them, it would be willing to sign on to this can you bill enough of a consensus in the middle or can you sway the leadership at this point to get on board with some of that . The truth is we have way too many wingnuts in washington. We have too many far right in the Republican Party too many far left in the Democratic Party theres nobody in charge of congress theres somebody in charge of factions, called republicans and democrats, but nobody in charge of the body as a whole the president has an opportunity to lead. The president has to be more effective. And he needs to follow Ronald Reagan what reagan did, he went directly to the people with regard to the facts, the truth, the tough choices. Heres a goal. Heres principles of values. He rallied the people to put pressure on congress then he negotiated on a bipartisan basis behind the scenes to get something done i dont know that we can get anything done or not im not optimistic im saying if you want to get something done, its not going to be early than 18 it will be on budget reconciliation, majority vote. And you have to get something to entice the democrats to play the best bet is infrastructure theres a Washington Post amazon Washington Post piece. And it is that republicans are starting to openly rebel against President Trump. Theyre feeling comfortability doing that as we move along here, its going to be democrats are going to hope that gets to the point that even republicans wont cooperate. I dont think tax reform will be as simple as you think 2018 is coming, they will not want to give him a win nobody said simple. A lot of these people feel safe in their districts. The far right and the far left, a lot of those in the Republican Party democrats are hoping it gets bigger in the Republican Party and people feel free, like murkowski. Did you see Susan Collins yesterday say its despicable they would threaten murkowski with federal money in alaska if she doesnt come up with something. Thats been done the last 50 years. Can i say, President Trump ran, though, on a platform of being a great negotiator i remember having conversations with him years ago, when president obama was in office, president obama would say the republicans are on stbstinaobstd trump would say im a brilliant negotiator the job of the president is to bring people together to take the most obstinate person on the other side and bring them with you. Thats the on, thats what he sold the public on thats not happening now full stop. You think he can negotiate with the democrats frankly i dont thats what i mean. Theres no one that can you are setting up this strongman argument pardon me one second. Two things reagan is the model. The president is the only person who is elected by all the people the president has the bully pulpit the president has to go directly to the people. Trump has not done that. He wont go to the democrats because the democrats dont pardon me one second. One reason that we have polarization, we have too many wing nuts is because most of the districts are safe we need political reform we need political reform to have a republic thats truly responsive to the public david, thank you. Coming up, shares of star bux a bucks and amazon weighing down the nasdaq well be back in a moment. Welcome back to squawk box. On todays economic agenda look for the first report on Second Quarter gdp. Thats coming out at 8 30 a. M. Eastern time then the final report on july Consumer Sentiment that hits at 10 00 a. M. Eastern. Minneapolis fed president , Neel Kashkari is speaking later this afternoon. As for earnings, we have a triple play of dow components hitting today. Records from merck, exxonmobil and chevron. Well bring you the numbers and reaction from wall street as soon as they hit lets talk about whats going on in seattle. That city taking center taj on t stage on the earnings front. Starbucks reporting profrlt prof 55 bucks a share revenue just missed at 5 5. 6 billion. Joining us is a. B. Mendez from frost investment advisers. Lets take amazon. How much you are upset about the profit miss or do you look at the revenue piece of this . Good morning. Thank you for having me. You know, weve been involved with amazon as investors for over seven years for better or worse we basically learned to focus less on the quarter to quarter ups and downs of profit and more the Strategic Vision of the company. Those trends are intact as well as top line growth moreover were confident in the Strategic Vision of the company. What do you think the company could be worth you look at the stock right now, 1,015 i think breaking that 1,000 mark has psychological significance looking at the price to cash flows, its around the median multiple. Not out of line. Its less expensive than the fiveyear averages this quarter notwithstanding, on a rolling 12month basis theyre converting more earnings into Free Cash Flow in 16, they did 10 billion in Free Cash Flow, thats from 2 billion