Transcripts For CNBC Squawk On The Street 20170327

Since the aca was not repealed. Lets get to the road map and now it starts with tackling taxes, the president is looking to rally republicans on a tax reform strategy. And plus the Global Markets are down on signs of a stalled trump agenda. It is on track for the lowest losing streak since 2011. And premarket, after five top analysts issued bullish ratings on snapchats parent. Global markets are moving lower on the pulling of the Health Reform bill and how it can impa impact President Trumps pro growth agenda. Yesterday on nbcs meet the press the president s budget director mulvaney described why there was a rush to pass Health Reform legislation. Heres the hurry. Theres a lot to be done. We needed to get rid of obamacare. We needed to fix the system so we could help folks back home and then move on to tax reform so that we could help people get back to work. The president wants to do a lot of things and is not willing to do what other politicians would do. And here we sit of course today, jim, with the markets first real opportunity to digest the failure. To repeal and or replace in some fashion the aca and the focus is going to be as we heard there too on the tax reform agenda. Right. I think its important to say reform versus cut because were not going down the reform route it would seem. No. This is about the border tax or whatever kind of readjustment. In other words, not made it so its more difficult. You have to make this revenue neutral. If you try to cut taxes you have to win over some change change in the way congress works. So that you can blow out the budget or youre going to do the same thing we have with health care which is well debate, debate, debate. I dont think thats an easy solution to therd boer t border you raise health care and they said many needed to do it first. Why . It represented a 20 trillion in savings over ten years to your point that any tax reform deal would be done under reconciliation as part of a budget measure, these arcane rules of the senate. Right. But you only need 51 vote. But you have done away with the trillion dollars revenue savings making the border adjustment tax which is the key revenue raiser of any tax reform agenda even important. But it seems to be dead on arrival given how Many Republican senators we think would line up against it and a democratic block that seems unmoved and unwilling to engage, given their success in having done the same thing with the aca repeal. 34 of retailers make direct imports, okay, so that is going to go up. And they often say, look, some of them say thats about it. But remember indirectly through vendors, now youre talking about 90 of retail will go up. I think that what youre looking at, at the ceo of pvh, they make calvin klein and Tommy Hilfiger, youll deal with a lot of layoffs that will occur at retail. You can regard that as being a canard. We heard that from jcpenney and youll have layoffs. To y you wont bring back the jobs. Its not very unlikely. You cant compete with vietnam. Cant really compete with hon dur as. So what will happen, this gets bogged down in the Speakers Office again and were going to see another leg down. This right now its very interesting, david. On friday at 3 00, we knew that this legislation for health care was not going to get through. But the Interest Rates the bonds had done nothing. This morning, Interest Rates are lower. We take our cue from Interest Rates and were obviously having a selloff here. I still think that trump with gary cohn and a Different Team working to try to get this through will have some luck. Well, let me share a quote or at least some thoughts from steve mnuchin, of course the treasury secretary on friday. He thought a tax bill would be simpler than health care. I know many people who disagree with that. How you can say that thats any less complex than overturning the aca and replacing it is not clear to me. And certainly amongst the people i have spoken to, given so many parts of reform that have so many different constituencies associated with them or against them. Particularly when again youre just dealing with what it would be republican majority that you need there. Because you cant expect that any democrats would play. Maybe you get a manchin or a thune in montana, maybe get them to come your way. But jim, let me put the scene yes out there. Sure. No reform, just some cuts. We just get Corporate Tax cuts. Later this year a repatriation deal. Much easier to do and maybe we get something on the individual front. That seems more likely. But thats a win. Thats a win that is presumed to not occur with this decline. I mean, decline today is really interesting, david. We have had declines for literally a couple of weeks now. Now, there were a cohort of stocks, some Health Care Medical device stocks, some of the industrials hadnt come down. Theyll come down today. But a lot of stocks have been Goldman Sachs has been going down every day. I think your scenario that you just laid out is the right one. Is it positive or negative where we are on the stock market . I think you have to settle down. I think there are a lot of people that are saying its so confusing. Its back to the old days. Trump doesnt have any power. They cant really do anything. I think thats false. I think that health care is the naughtie naught knottiest of everything. It took a year to get through. It took a long longer than with the repeal and the replace bill. Yes. But come on, the lack of the interest deduction, the ability to expense Capital Expenditures immediately. So many different provisions of tax reform that by the way will have as we said from day one, far reaching implications from business in america. By the way, many people think we need reform. So youre telling me when you think we wont get it, at least many of the people on the outside believe will be the case. That we wont get it. Unless you want to just blow the deficit out. Small cuts. Thats the question. Small cuts and repatriation will be big wins. What does it do . You wont stop companies i mean, 25, get down to that, i dont see how you do that unless you blow the deficit out. And the hard core republicans will not do this. So then small cuts we go. Repatriation will win. But the big win, for every one law that obama put in, there were 25 rules from agencies. And what youre going to from agencies. What youre seeing very rapidly is the roll back of the rules and thats whats impacting the psyche of business. Thats very important. I think we always get lost. When we did a very good day of deregulation around here, we have to do endless deregulation. Dave, you have the fcc. Im told major roll backs. Of ferc, major roll backs. Epa, tough to talk about, but major roll backs. They may issue an executive order saying no more doing anything on climate change. Thats right. Or now, whether youre for it or against it you have to understand a lot of businesses are very welcoming of that kind of agency reform. 25 rules per one law, geez. There was just i mean, youre talking about promulgating something literally every month. That is what people should be focused on. But its behind the scenes. So much easier to see a speaker versus a president. I do think repatriation is what they should pull right now. Thats what they should put in. Youre right, tax reform is too hard. Because there are major corporations that are in favor of the v. A. T. Geez, they should be about defending far reaching in its implications and a lot more perhaps something much more needed than simple tax cuts for Corporate America that may not move the needle that much in terms of addressing the overall problem of getting us out of this system. Right. But we have to come back to the fact that there were so Many Companies doing well. That the world is growing better. Most of the markets factored in the weaker dollar. Every market in europe is stronger than us. Even after the decline today. Dont smirk. Asia has gotten much stronger. Youre smirking at wwe . Yeah. Theyre opening an umbrella behind you. Its bad luck. Yeah. Bad luck inside. Something. But i think we have to emphasize that other than retail i have seen quarter after quarter you missed the quarter last week. Theyll come back to micronmicr right. Im over here i got distracted by the wwe im for real. Youre for real. The semiconductors they led the rally, came down hard and they bounce. Okay. The industrials come down hard and they bounce. Watch united technologies. That to me is a core doing better than it was industrial. Yeah, i know. Just a curious back drop we dont have full control of whats going on here. Lets have Chuck Schumer have his say. He was on meet the press and then move back on to the Broader Markets. This is what the Senate Minority leader had to say about the push on tax reform. It has been captured by the hard right special interests na. Na. Thats who loved his proposal on the trumpcare because it gave huge tax cuts to the rich. If they do the same thing on tax reform and the overwhelming majority of the cuts go to the very wealthy, the special interests, Corporate America and the middle class and the poor people are left out, theyll lose again. Of course that was on this week, not meet the press. Does trump go to democrats, try to i mean, fashion something . Gary cohn, mnuchin theyre used to speaking the language of the democrats if they have to. Will they be listen, will they be interested in helping this president . No. I mean, you had the we like we like tax cuts. The republican whos going to fight tax cuts . Achieve any victories after the aca. David, if you come you know, i fight tax cuts, American People dont like that. No. I dont know. They dont like that. It seems as though paralysis is more of the issue. So well be talking about issues as a country we cant have paralysis. Paralysis is you go back to the banks, stocks which have been leaders giving up a lot. You go back to the fed only being able to raise once rather than twice. The yield curve is certainly saying that. And that bores people to death but you have to mention it. Two or three on the ten year. Everybody was thinking it would be 2. 8. Yeah. 3 . I went to the conference that cnbc threw weeks ago and the average is well be at 2. 8. Were not even supposed to be talking about 2. 3. We should be talking about the United Airlines and leggings. Well talk about leggings. Well talk about commodities and oil and next when we come back well talk about snap. As you can see its getting a lift. A number of bullish 20 times thats just the kind of thing you right here. 20 times sales. Sales. Later, one of the analysts were talking about, mark mahaney whoa, 31 target. A serious guy. He does a lot of due diligence. Well talk to him lafrt later. We are set up to for a lower open. Well be right back. L be right. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Snap is rising in the premarket. Getting a lift of a number of upbeat calls from wall street analysts including Goldman Sachs. And Morgan Stanley with an overweight. Theyre the underwriters for the ipo and not unusual to have them come back positively when theyre allowed to do so. Its much more rare when they come out on a company they underwrote negatively. You mention this prior to the break. Were talking some of the price targets over 20 times the sales. Does that get a bit high for a company thats at 12 times sales . I think people are using go to 2 billion sales number theyre basing this on. So it doesnt seem completely absurd. The issue here, david, they have a lot of buys from advertisers as you always get when you start. So were only in the beginning phase. And no one who is advertising is saying, im not getting any results here. Theyre starting the advertising buys because theyre trying to reach that younger audience. You will see good numbers out of the chute. I thought the goldman piece was very interesting because it talks about this is a venture stage investment. And thats kind of the way they can get away with using this 20 times, 18 times sales. Its venture stage. Thats okay. So if youre a venture capitalist, you would say i have to be in this thing. Soon it will be down to nine times sales. I would caution people that thinking, right. Highly engaged user base. A lot of high value inventory to get to mobile modernization. Jeffrey here is saying that mobile add sales will be as large as tv ad budgets today. As long as the guys can keep sort of a nice share will it would seem if theyre right, have a lot more to thats really kind of the essence of this, is to say that tv is going away. David, tv is not going away and people who say that are wrong when we see the aggregate numbers. I like the web too, but im saying that tv if you talk to some of the local you know, look at cbs. That stock has held up almost more than any stock in this market. Pure play. It is amongst the purer plays. Although advertising even less and less of their overall. But a larger part of it as opposed to fees. When you look at what the guys are saying, theyre betting its a big three. It will be facebook. Its going to be google and there are many issues about advertising. Its going to be snap and my problem with it, david, what happens if facebook decides to evi eviscerate jpmorgan which is one of the negatives here. Neutrals lets call it or less positive and increasingly competitive social media landscape including snap. They raise as one of the key concerns which is why they have a 24 price tag. Remember this quarter is a good one. This is a quarter that you are going to be surprised on the upside when the numbers report. At the same time, this is a market where everything is getting clobbered. So you sit there and say, wow, i want to hide in snap . No. I want to hide in i dont know, how about dominion or duke . Real Estate Investment trust that are not related to retail. Thats what you buy. Thats what they buy. Im not saying buy that, but im saying that this is not that high yielding safe play that no. Anything but. It is anything but. Its anything but. Theres a look at snap. Well be following as we get closer to the opening bell. Well have jims mad dash as we count you down to the opening bell. This is the futures, this is a lower opening. Used to be 135 dow points. Lets not forget where we are. Percentage wise thats still not too much. We have a lot more squawk on the street straight ahead. 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. I am on my way to working with one billion people. I am on my way to working with one billion people. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. Its league night . saved money on motorcycle insurance with geico goin up the country. Bowl without me. Frank. im going to get nachos. Snack bars closed. Gah ah, ah ah. Im goin up the country, baby dont you wanna go . Im goin up the country, baby dont you wanna go . Geico motorcycle, great rates for great rides. Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. Here we go, seven minutes before we get to the opening bell. The markets first opportunity to react to the failure to pass repeal and replace of the aca. But well talk about some deals here. One in particular that got a very important approval today. Yes. Your world, okay, were talking about dow dupont. You told me this could probably get european conditional approval. It got it today. Whats important is that they had to give up some Crop Protection from dupont. Ellen coleman who used to run dupont talked about Crop Protection, how important it is. Theres a nuance here, david. If you have late staged Crop Protection and Crop Protection thats in the market, its fine. Its early stage that goes away and that little bit of nuance means 20 billion more to this merger than people may realize if they just read the release out of europe. Theyre still waiting for hart scott on the antitrust final approval here in the United States. This was the big one. Theyre still waiting on sen general that and then you have the monsanto deal. Right. Those are still in the hopper, soon to come, im not sure where monsanto stands, frankly. This is dupont merging with dow to form three companies and the three companies are very attractive. You have to get there. But youre talking about some point, we were thinking this would have happened already. But they were patient. They stuck with it. And i think more Andrew Ed Reed is able to bring more value as he did with tyco. Look, hes a water man. Stick with it. Dow, not getting rid of it. You like it once the deal is actually completed and today it is much closer to being. Right. I circled this. This is where people felt it would fail. A lot of concerns and it was focused on the eu but they got it. They move ahead. And Crop Protection, again, it not sweating it. But the eu made it seem like theyre going to lose that business. That would be critical. Because Crop Protection is the major Growth Engine of dupont. I would argue. Because its noncyclical. Right. Well, we have that opening bell coming up five minutes from now of course. Wwe superstars are getting ready to ring it. They have been the ones behind us, opening up that thing with farley doing some stuff. Im not sure whats goganing on. But i know wrestlemania on sunday. Subscription business is going to turn up there. Wwe is the symbol for the worldwide wrestling federation. Were back after this. My business was built with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The bell will ring in a minute and a half or so. When its just the two of us without our colleague, carl, i always like to ask you what the key to this market is. Im going to guess in my own mind i want to see if im right. Actually, the key its its not bristolmyers. Micron. I didnt get that. Ill tell you why. Because they reported a blowout quarter. Literally just last week on thursday. The stock was gaining a lot of strength. This would be the one theoretically youd come back to in the middle of a broad selloff because you know that they just reported a great quarter. Theres no guess work. So i would watch the market did not respond appropriately no. Went up 10 . But im saying if they roll back that gain, that would be where people will go to. And now, there are other people who would say Goldman Sachs is the key because Goldman Sachs is down so big. People are like wake me up right now, wow, that goldman, that is really a big decline. Down big after an incredible run and on the back of expectations that Interest Rates would be moving up. And obviously a lot of activity would also follow. Well, i mean, theyre factoring in that Interest Rates might go to 2. 1. Is that what people are saying . Then you have a flat yield curve. [ applause ] you hear the applause build here, jim. Interest rates would be another key i would assume. Yes. And ive got to tell you that the orthodoxy always says a flat yield curve means recession. I question all of the bond orthodoxy. On the [ bell rings ] closing in on 2. 6. I heard 2. 8. Some of my colleagues are saying 2. 6. But thats a far cry from 2. 3. Right. Theres the opening bell for this monday. You can see as we expect to see a lot more red on the board. World wrestling entertainment highlighting wrestal mania 33 this sunday in orlando. I have been watching a lot of wrestling lately and those three gentlemen are part of a team. Theyre competing over at the nasdaq which is discovery communications. Sixth Series Premiere of yukon men. And there was a monster move in the stock, always, always, always suddenly upgrades me for not upbraids me for not knowing how big wwe. Is i know idolatry, but i dont know the wwe. If they can get the subscription business, the churn down they deliver it to you directly. You subscribe it. They have brilliant people who work there. It would not surprise they can get that churn down and i like it. Like it. I like it. Lets go to a commodity first that being crude oil. Start with wti. Brent right around 50. 47. 18. Give me a quick take here. The commodities are coming down of course as there seems to be a bit of a pull back on the idea of faster than expected growth because we may not get the Growth Initiatives that you thought at least legislatively. Interesting, theres a fascinating Weatherford Schlumberger deal that was announced while you were away. Ill get to why this is important. Well, weatherford gets 535 million cash payment and schlumberger wants to be bigger in the permanent. The United States has created a real problem for world oil crisis. Texas, 100,000 barrels more a month. Youre talk about the United States being the swing producer that no one counted on. Why . Because the cost for the permian is around 20 or 25. At 47 bucks theyre making a lot of money. I was using the downside target of 47 initially and then 45 when things go wrong. 45 is more in play. 45 is more in play. Yeah. And what is the play at 45 is in play . The saudis have to say, you know what . Weve got a very big ipo coming up. We can control this market. There are a lot of countries iraq and iran to speak of, that really dont see anyone playing ball. But the United States that is producing far more oil. We were not supposed to be producing this much oil at these prices. Everyone thought particularly everyone in opec, the big swing in opec said the United States is going to get shut down at 50 to 45. Not the case. They lowered the cost due to american ingenuity. And in many cases by 50, 60 . And the permian, they just had a problem with the pipe. The more pipe four new pipes coming in. Slipping into the south to the southeast. Theyre big. Natural gas. Were the number one. And we export now too. American ingenuity. The saudis they have a its not going to be a problem for a long time. I know that i was i deal with a lot of the oil companies. And they themselves were shocked. By the way, they are maybe sewing theres a supply destruction going on here. A lot of the people i deal with in oil, including rbn energy saying if you deregulate even more, theyll produce even more. Then well have Oil Prices Going down even more. So remember, the regulations have really kind of hurt a lot of the oil companies. This is what they would say. I think Obama Administration would say are you kidding me . Look at how much theyve produced during our period of where we were tough on speaking of things other than stocks we started with oil. Lets quickly hit currencies too because the dollar has been weakening against both the pound and the euro. Boy, no one thought that was going to happen either. I thought that there was the consensus had been the consensus was the dollar had to get stronger. The euro seems to be in the i believe that the netherlands election was the High Water Mark against the eu. Now, the election this weekend in the thank you, wilfred for going over this and sara. And i think what really matters here is that people felt that the netherlands election was a bridge too far. Right. Dont forget of course part of the key thinking behind the border adjustment tax is you have an adjustment in the dollar far higher would off set a lot of the costs. If youre unlikely to see a border a adjustment tax or tax reform, you wont get that up higher. And they dont fix or float, so lets be careful there. David, the decline in stocks like Morgan Stanley is a little breathtaking. I mean, these are stocks that have been going down down down. Yeah. They were going up up up up. I mean, ill give you ten ups to your three downs, come on. Probably 25 regulation versus the one law. Thats still the case. Jpmorgan, good number there. Theyll still benefit from deregulation, although dodd frank is not going to be overturned. I need this. The stocks that are suddenly in vogue are up to two fold. Its the consumer products, they have a 3 yield. People have not stopped talking about kraft hines. You put the gun to their head, that stock is doing well. Because unilever is switching to the more aggressive way to budget. David, theres a draft hines bid, a bid underneath and no one wants to sell the companies for fear that theyre going to be the one that kraftheinz goes after next. I know. Theres a belief that kraftheinz needs to do another deal. Look at what happened when they went after unilever for the brief period. You could have blinked an missed up, but the stock went up dramatically because investors believe in delivering when they do a transaction. They may not do one tomorrow or next week but theyre going to do another deal. Its the way these companies are built, jim. The question is unilever is off the table. As i reported the high likelihood is they will not pursue anything that will have a hint of being hostile or unsolicited. What does that leave you with . A lot of the companies that want to remain independent, whether its kellogg, General Mills does not want to fold. They do not want to do anything. Youre so right. By the way what had happened kraftheinz reported the day before the unileaver and it dropped from 90 to 86, 87. Did not report a particularly good quarter and then it shot up on the news by the way. The Supreme Court not going to review the visa master card. They have been the outstanding thin tech plays as the banks rolled over. Masterca mastercard, higher and higher. This is certainly when you ask me key to the market. Do you see money reveshrt to the again . Theyve been getting that money in for ages. This is actually a recidivist move right here. You have had the trades. You have had the trades and i like the regional banks. It was a i was away for a bank. Goldman is down 7 year to date. There you go, ill take back my up up up comment. They did lose a lot of good people to the administration. Some people are saying some guys just had a cup of coffee while they were at goldman and others spent a lot of time. Steve bannon was not a Goldman Sachs guy. He was this was many, many years ago before he cashed in on those seinfeld reruns. Heres an interesting note while you were away, David Gary Coen was he was number two. But hh gregg bankruptcy, david, while you were away, sears going i wanted to get your opinion. A lot of people feel when youre going there its kind of done. Opine, because you know more about what the going concern is a formality or it was a formality, but does it scare your vendors. Right. Thats really the issue. Those who are factoring and therefore providing the financing that allows forress f the vendors to sell to you. Thats a key question. Can you make it through right. People forget. Now they have a lot of sales but not much market cap at this point. 900 million bucks left. You have sarah tahj, difficult to unwind real estate trust. And thats i think not pvh is saying go on the website. 250 items, Tommy Hilfiger and calvin klein on the sears website. The ceo reminded me the website is different. E commerce, you order and then they ship. I want to what a wind fall for stanley, black decker. I think its worth following if only because best buy is up on the strength of a call which says dont forget, with hh gregg out and with sears out, you do have a place to go, piper mutual to buy of the hard goods. Well, the story of the morning, jim, once again the financials. Bank of america is down 3 . Citi down almost 2. And Goldman Sachs is down 2. 5 . Its having an impact on the dow. Not that i care about the dow. Morgan stanley off 5 . James korman hes doing a remarkable job. Its frustrating. Listen, im telling you those guys when it was 45, 46 they were like really. Come on. The pricing did not go up. Which meant they werent banking on this. I have been jersey shore pricing is coming back really well. Is it really . Why . Convenience. I think that the traffic is really mattered. Far east guy. Not anymore. Not anymore. What . You know that. No, im saying you go to you dont have to stay out travel. I used to go to amagansett. You get you leave friday and get there saturday afternoon and leave sunday morning and get there sunday evening. I wants crazy. The traffic is crazy unless you take a helicopter to show friends how rich you are. Speaking of traffic, jpmorgan lowers the ads on verizon. They dont change their opinion, i think theyre neutral on it. This is not a strong performer this year either. But its got about the same amount as Goldman Sachs. Well, you have yield protection. But they do point out, there wasnt much going on in terms of being able to survive in the Competitive Landscape until they went to unlimited. That will of course have a Significant Impact on on their post net ad estimates. Let me give you one. Heres an example of the fcc. What happens if the fcc says these isps Internet Service providers. They havent gotten the information that a google would have gotten. What happens if fcc deregulates and verizon gets the same information as google gets that will happy sources tell me. You have a much more hands off fcc and you have legislation overturning title 2 of broadband is unlikely. But the fcc is saying we dont see it that way which is positive for verizon. At t, our Parent Company of course comcast. Charter which had that Job Announcement i think it had been made a long time ago. But got nice press out of it last week i saw. Which makes me feel beater about at t. Aol and yahoo that was not a factor. At t i think has made a lot of bright moves here and its a good deal. You think its a good deal . You think they got out too high . I think its great deal. I think at t has been running away from the core business for a long time. Because the core business has conceivably being eroding. The question is what are verizon do . Run away from their core business . I dont know. I see a gfios ad every 30 seconds. I have omni lights off the whole thing. Put a dimmer on the box. Im telling you, those green lights keeps you from sleeping. Im giving you a heads up there. Need another night light. Bob pisani has more on whats moving. Good morning. The trump agenda a little under assault right now. Look at the sectors not surprisingly financials of course lower yields impacting, we have industrials, materials. Theres the trump play right there. Utilities on the upside on the lower yields. I think the senior economist this is what they said the risk that the markets are confronted with is one of trumps deal making claims. You can see that in the way that the markets are reacting today. Big beneficiary banks, lower taxes and less regulation. Higher rates potentially. All the big names down about 3 . All of them are down 10, 11, 12 this month alone. Infrastructure of course another part of the trump agenda. Most of the big names that are in the Industrial Area of the like Martin Marietta and the big Engineering Companies all down 8, 9, 10, 11, 12 so far this month. Also down about 3 or more today. So the big question is how much is this going to impact the market and the multiples overall . The stock market is really expensive, we are trading 18 times 2017 earnings. Thats historically high. Bringing it down to the closer to normal level, would the s p have to go about at 2310, and thats a hundred points the thats about 1,000 points in the dow. To go back to the more normal level. People are saying whats the right multiple . But everybody agrees with this kind of uncertainty we may be high priced. The great hope is that the earnings numbers are going to impress people and sort of change the conversation a little bit and the numbers so far are good. Right now, we have got hopes for First Quarter earnings to be up 10 for the s p 500. Is that good . This would be if we got that number, it would be the best quarter since the Third Quarter of 2011 in nearly six years. The best quarter. So far the numbers are coming in pretty good. We have had a Dozen Companies reporting. Jimmy mentioned micron and oracle had great numbers. Lennar had great numbers and nike had some disappointment on the guidance and the stock went down, but if numbers were good on the reported numbers. We see revenue gains of 6, 7, 8 on average. Theres only a dozen but the early signs at least are pretty decent for earnings. The hope is that once the market understands its not just the trump agenda were high priced because the numbers are going up even independent of tax cuts adding to things the market hope here among the bulls is that that will stabilize things. Can better earnings commentary help move the market . Well find out in the next couple of weeks. Theres a lot of damage to the market. Look at your etf leaders. Some of this is fundamental. You know about the problems with retailers. The retailers had highs in november and december and straight down ever since then. The Exploration Companies moving towards a 55 to 60 oil if not 54 oil. Another fundamental problem there. Regional banks we were supposed to be moving up on Interest Rates, thats not happening. The s p only 3 from the highs but still notable damage in some important sectors particularly those regional banks. David, right now the dow is near the lows, down 150 points. Back to you. Thank you very much, mr. Pisani. Well, still to come, mark mahaney why he has an outperform rating on snap. Look at the movement in treasuries this morning. See the yields are down. Prices are up. And we are talking about a ten year note thats yielding 2. 35 . A far cry as jim had pointed out from what many had been expected would be the case at least as we come to the end of march. Were back after this. Whether youre after supreme performance. Advanced intelligence. Or breathtaking style. Theres a cclass just for you. Decisions, decisions, decisions. Lease the c300 sedan for 389 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. [vo] quickbooks introduces he teaches lessons to stanley. And thats kind of it right now. But rodney knew just what to do. He got quickbooks. It organizes all his accounts, so he knows where he stands in an instant. Ahhh. Thats a profit. Which gave him the idea to spend a little cash on some brilliant marketing ha, clever. Wow, look at all these new students way to grow, rodney know where you stand instantly. Visit quickbooks. Com. Cmohappy birthday i survived a heart attack. Im doing all i can to keep from having another one. And im taking brilinta. For people whove been hospitalized for a heart attack. I take brilinta with a baby aspirin. No more than one hundred milligrams as it affects how well it works. Brilinta helps keep my platelets from sticking together and forming a clot. Brilinta reduced the chance of another heart attack. Or dying from one. It worked better than plavix. Dont stop taking brilinta without talking to your doctor since stopping it too soon increases your risk of clots in your stent, heart attack, stroke, and even death. Brilinta may cause bruising or bleeding more easily, or serious, sometimes fatal bleeding. Dont take brilinta if you have bleeding, like stomach ulcers, a history of bleeding in the brain, or severe liver problems. Tell your doctor about bleeding, new or unexpected shortness of breath, any planned surgery, and all medicines you take. Talk to your doctor about brilinta. Im doing all i can. That includes brilinta. If you cant afford your medication, astra zeneca may be able to help. 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. Of course you can see were down on the s p. Were off the lows about 0. 7 . Had been down as much as 0. 85. One winner we havent gotten to the hospitals, the obvious beneficiaries of the aca remaining in place. The hca was up 3 on friday. This group was under pressure. People felt that this was the group that will be crushed by repeal and replace. Instead, its the one that benefits the most. Hcaer ha hca very good company. But theyre moving rather amazing. Didnt think wed be here with those stocks flying. And although worth mentioning the pharmaceutical and drug stocks largely in the green. Bristolmyers and glaxo and bristolmyers all up. You have yield protection on glaxo. You have the flight to safety recession proof. David, do not think there will be a recession. But its tiresome. But people will say. We havent had one in a very long time. Geez, youre going there . No. Jut raising the point. The economy is better. It is. Its better. Orders are coming through. Herman miller had a great quarter this week. Herman miller, really . Yeah. Thats the chair. Small businesses i love those chairs. Squawk on the street will be right back. It is that time. Time for qustop trading with ji by the way, dollar tree up today. Jpmorgan not as worried influential analyst with jpmorgan. Right. Talk about a major increase in the new its so lets watch that units so lets watch that stock to see if the market will come back. That had a major push from a major house. Had some news on apple, didnt they, involving the positive ruling in the Court Victory in china. Remember when that dropped the stock almost 10 . Tim cook, a commission to streamline. Mark bennyoff, he was in there with merkel. Yeah. Hes starting to get some face time with the pres. You know what . You and i are the only two who havent. Its highly doubtful. What do we have on mad money tonight . End game is nate fick. For anyone whos read the books one bullet away he created a Cyber Security, a private company. When you look at companies that are on fire, Cyber Security private or public you need to understand it in the broader sense and im sure guys like this can help you do that. Yes. I have to tell you, david, that goes on a pace. That doesnt slow down. Thats probably the most unfortunate secular growth trend i know other than the humanization of pets as you know from your dog. Yes, i do. Hes coming back today, actually. There you go. We were away. So he went away. So watch out for glaxo. Gets stronger and stronger. Id throw it out to you. I dont know what thats about. Jim, see you tomorrow. Absolutely. Right back here. Coming up, well have more on the rough starts for the markets and were coming back in a bit. And where the trump agenda fits into the big picture. Keep it right here. Its time for your entrepreneur of the week. This woman bottles her great grandfathers caribbean drink and trying to build it into the National Brand but she needs help. We answered her call and now shes getting a your business makeover. Sunday mornings at 7 30 on msnbc. Go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential good morning. Welcome back to squawk on the street. Im sara eisen with david faber and mike santoli. Carl has the day off. Looking at the markets were continuing to follow this stock selloff for you. The dow is down now about 126 points. S p 500 down more than half a percent. The nasdaq getting hit the hardest of if bunch almost down 0. 75 and crude oil is not helping. The dollar is weak and the market is focused on washington, david. Yeah, it is. Of course our road map begins with those stocks selling off as sara just said. The dollar on track for the longest losing streak since 2011. Optimism over the president s agenda beginning to fade following the failure of the Health Care Bill late last week. Plus, President Trump approving the keystone xl pipeline. Well break down the prices at the pump and go live to the pipeline pumping station in steel city, nebraska. And snaps shares are rising. Well discuss the calls with two of the analysts coming up. And days after pulling the Health Care Reform bill the Trump Administration is on the defensive here. Kayla tausche has a look at how that may affect other priorities like tax reform. Reporter gam. With the failure of the American Health care act the administration has pivoted to tax reform. So its a familiar topic and something its been toutsing as a couple of weeks away for months. Were going to be announcing something i would say over the next two or three weeks that will be phenomenal in terms of tax. Before we do the tax we is which is actually very well finalized. My Economic Team is developing historic tax reform. The white house is expected to put forth a plan and the leader of the Freedom Caucus over the weekend said hed support one that increased the deficit which is a positive development. But the more near term is how they continue to fund the government a month away. Only 12 of the days is the house in session. By comparison it took 17 days for the ahca to be released and then pulled. The question is how quickly can republicans settle their civil war . The Freedom Caucus david shwyche art we now know where everyones key buttons are. Speaker ryan said friday republicans need time to reflect and regroup. The issue, guys, is time is in short supply and to do list for the Trump White House is very long. Certainly for now. Investors arent expressing a lot of optimism. Thank you. Well focus on the market angle the dow is down 135 pulling back on the optimism of the trump agenda. Joining us is the chief equity strategist and Isabelle Lago from blackrock. Welcome. Good morning. So isabelle, do you change your view on the market now that what many investors saw as the first test of the trump agenda has failed . Well, look, our view has been for some time now that we believe theres a global inflation going on in the world frid economy and thats true of the u. S. As well and that reflation trade will continue to play out. What we were skeptical about or at least wanted to see conf confirmation of was the trump trade and thats to say its more in doubt. But the idea that the u. S. Economy is on the growth trend and thats going to lift cyclical values, thats going to take Interest Rates on an upward path that remains true. And what happened on friday doesnt challenge that view. So you think this whole reflation trade we have been seeing in the markets doesnt have to do with the election and will therefore continue . I mean, look at the dollar, isabelle. Its erased all of the post election gauges and is now at a four month low. Precisely. So we saw this reflation trade start around july of last year and that you thats the turn around point in the u. S. Rates. The turn around point in the stock market as well. And also the dollar to some extent. So youre right. The dollar has erased moe st of the gains since the election and is probably a little challenged until it becomes clear that the fed remains on the normalization path. But we had always been pretty i would say modest in terms of the path of the dollar going forward. And we did think the initial rise was going too far. As i said, the reflation trade look definitely more challenged now. Thats what everything has to do with significantly higher or real rates with additional stimulus put into this economy because of a tax reform. But the u. S. Economy is still growing, still on a very good path and were seeing this reflation train absolutely continue today. What about you, bob . Do you see this selloff on the idea that the first Health Care Bill failed and therefore puts in jeopardy pro growth policies like tax reform and Infrastructure Spending . Do you buy that idea and if so, do you sell this market . I think that there is a question mark now. Can the republicans get their act together . We think the market was up for two reasons. One, as isabelle pointed out the economy has done both here and abroad noticeably better and the second reason is hope around fiscal policy and its the second piece thats coming out of the market now. Underneath the economy is still doing okay. So we think earnings will continue to advance. But kind of the icing on the cake may be deferred or diminished somewhat. Well, bob, just to follow along on that. Where do we sit with regard to the markets as reflecting the current economic and earnings path. Because it seems like were looking at the 5 earnings gain. If we exclude energy last year when it was crashing and we have another one of the First Quarter potential kind of soft patches in the u. S. Economy. Did we kind of put off what would have been a little pull back . Yeah, i think so. The market believed everything, that the economy was going to be great. And go straight up. And that trump was going to get through the agenda. 2400, i think you have to ask some of the questions. Of course were only off 3 from the highs. So there could be more to come out here to get back to the reality of the economys fine, but weve got to question d. C. s contribution to all of this. Isabelle were talking about tax reform now. That gheez to the front of that goes to the front of the agenda. That could be bullish for stocks and thats what investors wanted anyway. They didnt care about reforming and replacing obamacare. Now that goes to the top of the agenda, is that a positive . Well, i suppose getting to tax reform faster than would have the case otherwise is a positive. But as your commentator said previously there are now question markets over the ability over the republican majority to deliver the tax reform that had been talked about. So we may well end up with a fairly minor tax reform and that could be a disappointment in terms of its ability to move short term growth and the growth potential. Bob, final word on that note. I have been hearing a lot more about this. The sort of diminished tax reform just to get it done. What do you think is priced into the market right now in terms of where the Corporate Tax rate will go, repatriation and some of the other sort of Market Impact events in the tax reform like the border adjustment tax . I think a more watered bill is beginning to be assumed by the market. Look, the republicans have been put on their back foot here. Theyre maybe going to do something that has a much higher probability of getting done which could be a less controversial, more watered down bill. For the long term growth of the economy lets hope they stay bold but well have to watch and see. Yes, we will. Guys, thank you for joining us today. Bob dal and Isabelle Lago from blackrock. When we come back, the keystone xl pipeline is getting the green light. What it means for oil prices and exports. Well go live to the pipes pumping station next. And shares of snap are on the rise, a lot of analysts came out with the recommendations many of the recommendations were positive and the stock is up. Were going to discuss that. Squawk on the street will be right back after this quick update. Yes . Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. Experience exciting offers on sales event is here. Our most thrilling models ever. Get up to 2,500 customer cash on select 2017 models for these terms. Experience amazing at your lexus dealer. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. President trump setting the stage for speedier pipeline approvals after granting one for the keystone xl pipeline. Our jackie deangelos is at a pipeline pumping station. Good morning. Good morning to you. Thats right. At this pumping station actually its sort of the keystone for the keystone if you will. Its where this recently trump approved part of the pipeline will come down from canada, connect to the lower leg and take the heavy crude oil down to the gulf coast to be refined. Whats ironic here is the fact that when the keystone conversation first came up years ago, we actually needed the canadian crude. Arguably right now because of the shale rev neolution we don. Theres a supply and demand imbalance. We do this every week and were seeing u. S. Production go up taking advantage of those higher prices right now. As opec is trying to stabilize the market but not really doing a great job. You can see oil prices are under 50 and moving lower today. The question of course is what were going to do with the around 800,000 barrels that are coming down from canada every day. Are we going to turn that into product and store it here . Probably not. We have a storage issue with our own oil. Well probably export that product to asia or other places in europe potentially. But at the same time, were not seeing demand forecasts increase to really kind of absorb the shipments that were sending over. If you look at the data from the eia, you can see that exports are ramping out of the United States. Our imports are moving higher but dropping as well. Right now when it comes to the project overall the keystone in general, were dealing with a long term short term perspective here. The administration is taking the long term perspective, we want to see north american independence and America Firstenergy plan. Short term, analysts are concerned that it will depress prices even further. Maybe low 40s, maybe 30s. I will say this. One caveat. Its probably going to take a year for the pipes to go into the ground. Now that we have the overall approval the states have to work through some approvals as well. Back to you. Thank you very much. Well, for more on the energy trade, we are seeing in this market right now, we are joined by Rbc Capital Markets global managing director and patrick da than, gas buddy. Com. Colima, so jackie set this up. What does it mean, where are we at with Global Supply and demand and market share . What does this do to influence its . The thing about the keystone xl debate this is important for canadas outlook to move their barrels. Does it impact the markets tomorrow . No because its not operational until 2020. This is not an issue well be dealing with tomorrow or next year. We still have to see what happens in nebraska with the pipeline approval there. But again, everyone is watching as jackie talked about the inventory numbers. And opec sort of struggling was production coming back. The inventories are remaining elevated. Does opec extend their cuts . So thats what the market is focused on right now. Whats the answer to that question . I think opec rolls over this cut because again what are they going to do . If they basically throw in the towel youre looking at another selloff. And the decision to cut production initially came from heads of state saying we dont want to be in the sub 30 price environment. Were willing to take on some u. S. Production coming back. Patrick, not necessarily affecting gasoline prices for consumers this driving season, but what does it mean longer term for gas selfsufficiency in the United States . Theres two ways this could go. Number one, oil could stay in the United States and be refined and added to product inventories which at least right now are still very healthy. The other distinct possibility this oil eventually will be exported from the United States which will cause some gas prices to see some upward pressure. This is a story of an early christmas for canada. It will certainly help nar row the gap and could cause motorists to pay more, depending on which way this goes in the next few years. Yes, brings up an interesting point about the u. S. Politics of this decision. The white house says that this helps toward the u. S. Goal of making us Energy Independent and creates u. S. Jobs. Yeah. In the Construction Industry initially it will create several thousand jobs but the question is once the pipeline is build, what does that do in terms of Employment Generation . There was an issue about how much steel should come from the u. S. Its not going to be an issue for this pipeline but for other pipe lealines going forward. It will be a short term boost. What about the energy indpen dense point if its all exported . I think one of the initial arguments were getting more crude from canada were not getting it from other countries in the middle east so its basically increasing our supply security through giving us relations with friendly producers as only opposed to being dependent on producers we sometimes have problems with. Patrick, to add a layer of complexity on the whole question, oil refining is one of the big areas that could be impacted by a border adjustment tax. How would this play in if at all to domestic crude prices and gasoline prices . Another complexity added into it. It could make u. S. Refineries Even Stronger in their profitability and to add something to it right now, mexico going through deregulation of their refining sector. Right now, u. S. Exports to mexico are certainly surging with a lot of the gas price deregulation. So thats another complex issue that could go one of two ways just depending on how Trumps Administration ultimately decides to move on the play. Only finally on the broader issue of oil prices. While well continue to hear amongst those of us who dont follow it closely day to day, how cheap the permian has gotten. Does that continue to be the case or are we at a level that you cant get any more in terms of cheaper in getting it out of the ground . The permian is economic in the price environment but one thing that opec has to worry about if they dont extend the cuts, a lot of the permian was produced when it was in the 50s. That production is coming on. Energy is actually the worst performing sector in the s p this year, down about 10 . You might think given the deregulation push from the new administration that would impact the companies positively. Is the focus now on price . I think that the focus for us right now, we still are constructive on the back half of this year. Its very tough right now because were in seasonal refinery maintenance. We have the big inventory builds. We expect to see the draws in the next couple of weeks and we expect the market to clean up in the back half of the year. Four month low for crude right now. Thank you guys. When we come back, bullish calls from the street giving snap a boost this morning. Up 3 . Well talk to two of the analysts that initiated coverage today. And taking a look at the Broader Market at this hour, all 11 Industry Groups in the industry lower adding up to 0. 6 decline. This is coming off the worst week for the stocks of the year. Squawk on the street will be back after this quick break. Bre. From engineering and manufacturing. To stealth bombers. To nextgeneration fighters. To landing an unmanned vehicle on a carrier for the first time in history. Just wait till you see whats next. Thats the value of performance. Northrop grumman can i get some help. Watch his head. Im so happy. Whatever they went through, they went through together. Welcome guys. Life well planned. See what a Raymond James Financial Advisor can do for you. Snap is on the move this morning after wall streets big firms initiated what was broadly positive coverage for the newly public company. Joining us now are mark mace from citi and the internet analyst over at oppenheimer. Jason, let me start with you. I mean, a lot of the coverage this morning is positive. But you come back to the idea that this the a company that trades 12 times revenues obviously with a strong growth rate. How do you justify those kinds of numbers and the expectations in fact that some of these price targets take into account multiples even higher than that 12 times revenues . Sure, so we went out with a perform rating which is the equivalent of a wall street neutral without a price target. We saw fair value at 21 to 26 which would be between a 30 to 65 premium on facebook on 2019. So the reality here is to justify valuation you have to go up pretty far. So you can do it on kind of a 2019. You can have a discounted model and go out to 2022, 2023 but clearly thats the challenge. We acknowledge this is a good company. Were very positive. But we couldnt get much higher than 26 and we just didnt feel like that warranted an outperform at this point right now. Mark, i think you differ to a certain extent. You have a buy on the company. Im reading here of course. Youre looking for what 13 billion worth of revenue in 2024. How do you get there . Sure. We get there by assuming fairly modest user growth from here. But for the company which is only in the last two years begun to build out its Advertising Technology staff to close the gap with facebook and twitter to its closest two comparables to close the gap from the monetization standpoint. Even that 13 million number assumes that facebook and twitter are still monetizing their users at three times that which were assuming of snapchat. So we think were using fairly conservative assumptions to get to that 13 billion number. Mark, obviously, the chief appeal here and the thing you focus on is just the traction that they have as a product with this hard to reach demographic. You say 13 to 24. Well, in seven years when a lot of the revenue estimates are coming in those people are going to be 20 to 31. The question is are you going to replace those people with the next group of youngsters coming up . Its a great question. Its a bit of an unknown obviously. Our assumptions are us based on that being the case. But today if you look at the 50 some odd Million People in the u. S. That are between 13 and 24, 70 of them use snapchat 20 times a day for 30 minutes a day. Its obviously caught lightning in a bottle with that demographic. Our assumption is based on them continuing to be able to attract that kind of usage for that demo going forward. Could Something Else come up over the next few years and replace it, its a risk. Its a risk that we highlight. I think it is baked into our valuation framework. By using a 15 discount rate to try to bake in that risk that you talk about. Jason, its interesting, a lot of the early notes came out on snap. They were bearish and today its come out with a whole different tone. The early narrative here was that snap was looking a lot more like twitter from a profit picture than a facebook. Why do you not buy into that . I mean, first of all, the point that mark made. You have 75 of the younger demo 18 to 24 amongst 25 to 44yearolds that may be 39 . But we did some survey work and what we found is that the older people are willing to use it. Specifically theyre interested in the publisher content. So if snapchat can make it easier to find the publisher content, we think theyll be more there will be more appeal. In addition, older people said if my friends go on ill go on. So when you put the two factors together thats nothing that says that this company cant scale to older people. And other notes focused on the increased competition from the likes of facebook. The impledgeatimentation of sim services. How does snap protect the environment the ecosystem its creating . You cant ignore facebook as a competitor. A lot of financial resources, a lot of talented engineers, what they may not have is evan spiegel and the founder of snapchat whos been a product visionary and has been able to continually innovate the snapchat product to, you know, keep user growth continuing and keep the engagement quite high. Even in the face of facebook and instagram replicating some of the most popular features of snapchat, we have continued to see snaps user growth continue. I think ultimately the numbers, you know, prove out the competitive dynamic there. But i make one important point. User growth only represents about 20 of our total Growth Outlook for snap. The real driver of growth here over 80 is coming just simply from advertiser demand. And then building the technologies to fulfill it which to us has nothing to do with facebook and the Competitive Landscape. Its one of the reasons why we feel comfortable with our estimates and with our buy rating. Got it. Since its gone public at 17 its done quite well. If youre lucky enough at least to get it on the offering. Thanks to you both. Thank you. All right. Thanks for having me. When we come back, the failure of the gop Health Care Bill weighing on markets this morning. The dow is down 133 points right now. We are going to talk about the impact and what it means for the likelihood of tax reform. Well speak to usa ceo judy marks on trade, tax reform and much more. Squawk on the street will be right back. G tools, g tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade bell chimes nice work brother dominic. Now we just need 500 more. Translated into 35 languages, personalized oh and shared across the 7 continents. other languages spoken look abbot, i got it. Its a miracle. Good morning, everybody. Im sue herera. Heres your news update this hour. Nbc news confirming that the Senate Intelligence committee is planning to interview President Trumps soninlaw, jared kushner. They want to ask kushner about meetings he arranged with the russian ambassador. The committee has been investigating russian interference in the 2016 election. Syrian state tv said more than 400 opposition fighters and faallies are being families are being evacuated today in the central syria city of homs. Its expected to last weeks and when completed the government can claim control over the entire city for the first time in years. Eight High School Students are presumed dead at an avalanche about two hours north of tokyo. Authorities say it happened this morning while the students were mounta mountain climbing. Theres word that 40 others were injured in the avalanche. And texas and oklahoma surveying the damage from the hailstorm. It pounded the cars and shattered windshields. Luckily, no reports of any injuries. Look at that. Wow. You are up to date. Thats the news update. David, back down to you. Thank you very much, sue herera. Well, republicans are moving on to tax reform after the initial failure to repeal and replace obamacare. So how will the markets react to the president s next move . Well, for more were joined by senior policy analyst edward mills and the chief Investment Office of merlin as set management. A lot of people who follow this closely from the outside to be fair believe the likelihood of tax reform is small. The likelihood of tax cut in some fashion for Corporate America and a repatriation deal, they believe remains certainly possible if not likely. Whats your take . Yeah, i think when you look at d. C. Theres a couple of truisms i follow. One is that congress usually doesnt act unless theres a crisis or a deadline. And one of the things about a comprehensive tax reform bill is that takes a long time and theres no real crisis or deadline that is driving that. Beyond a desire to get it done. With the failure of the Health Care Bill not getting done last week, we might have a new political crisis on our hands. Which makes them more likely to get a bill done and a tax cut done to show they have a win. But that doesnt mean its comprehensive. But it could be very much fiscally stimulative in whatever bill they do produce. But a tax reform at least the current plan that we have which is the blueprint from the house ways and means committee, you know, you had stephen mnuchin, the treasury secretary saying it was less complex than health care. The border adjustment tax needed for revenue raising and significant opposition to that, and not to mention the lack of a trillion dollars in benefit from the from the aca appeal that will no longer be part of this and so many other constituents that may be aligned on different sides. Ed, do you think its possible to get tax reform done when you dont have the democrats playing at all here . Yeah, i absolutely do. I think one of the questions i look at is can what is the likely bill . Thats the main thrust of your question and what i see congress do time and time again is take the path of least resistance. The path of least resistance is doing on fy 18 reconciliation no filibuster in the senate and not doing this as a comprehensive package but in something thats not budget neutral. You have seen the Freedom Caucus indicate theyre willing to do a bill thats not budget neutral. Theres been too much focus on that and if its not budget neutral its no longer a zero sum gain. We talk about what does the v. A. T. Look like if its not in there or not. The bad thing about not doing something that is budget neutral is that it would sunset after ten years but the flip side is if you sunset it after ten years you try to front load it and get a lot of the good stuff started now and so that would be looked at instead of a tax reform bill, more so as a tax stimulus bill that this congress will be trying to pass. Thats absolutely possible. And mike, where does that leave us when its comes to the markets in terms of just exactly how much lets say 2017 and 2018 earnings estimates were baked in with some kind of tax help or for that matter if the multiple on those earnings has been inflated for that reason . I think a lot of that depends on what our expectations were before. I think i never expected the Health Care Bill to actually pass. I expected it to be more tax cuts plus repatriation. So when you look at that now the probabilities of a tax cut, whether its as a stimulus or not thats very comprehensive. And the repatriation of assets from off shore assets you can depending on the companies you look at it, it can be beneficial to the earnings. A smaller u. S. Focused companies are probably paying taxes in the 30 upper 30 range. Multinationals probably teens or 20s but they can bring a lot of assets that they could reinvest in their growth in the u. S. The last time we tried the repatriation, a lot of the Companies Just bought back their shares. I think right now if you allow the companies to bring the assets back to the u. S. They would invest it. So i can see some increased Company Investing and also benefit from lower tax rates to many of the companies that are more u. S. Focussed. Ed, i was thinking about what you said earlier about how change happens in washington. Whether its a crisis or some sort of impetus. This is a president and a treasury secretary that has said that the stock market is their report card and, yes, 126 points on the dow is certainly not what it used to be. But were coming off a 1 decline of the year. I wonder how much of the market is going to factor into what happens and what the white house le leads on when it comes to policy. I have never seen a president who has used the stock market as much as President Trump as a gauge. We debate if thats a trump put on the market. Does that create that crisis moment, does that get trump to turn to his advisers and say, how do i get that back up because thats the independent validater for him of his success. And so if you cant get the Freedom Caucus members on board youre go having to move towards democrats. So then we start looking what gets democrats on board and that might be some Infrastructure Spending, paired with the repatriation that were just talking about here. And that certainly probably gets the market moving in the direction hed like to see again. So the Market Reaction here is really important, at least for the administration in terms of how they will react to this. And mike, when it comes to the market overall, in certain sectors that you believe will benefit from the position that you laid out earlier what are they . Well, i think when you look at the health care and its just after the failure of the Health Care Bill, you can look at that. The certainly the companies in the Health Care Overall will be benefiting those who rely on the number of insured people. I think many of the multinationals whether health care or technology are the ones that are most exposed to the assets overseas. They have been borrowing money to pay the dividends. They will be able to bring a lot of the assets and invest so its a broad range of companies. I think agree, i think i agree, look at whats easier to do in terms of whats easier to do and thats maybe some moderate Corporate Tax cuts and repatriation, that can bring in some of the democrats and probably the Freedom Caucus. When you look at the numbers, the average company is paying only about 20 in their effective tax rates so you can lower the tax rate to 20 . And to show to the Freedom Caucus it can be budget neutral. That is an advantage of the scoring. I see those two things happening and possibly very quickly. Yeah. Ed, does that make sense to you . Can you get to 20 with dynamic scoring and make the budget the deficit hawks feel better about things . Yeah, i think that the you know, very hard to get to 20 under dynamic scoring and not have people kind of have to pay more. Its going to be a zero sum gain that you get budget neutral. Im raising somebodys taxes, you cant grow enough of it. Thats where i go boack to the path of least resistance that we have a tax bill thats in ott budget neutral because you can get much more political support. Republicans generally care about the score. But when its taxes thats money they didnt think the federal government should have collected in the first place. Theyre more willing to have deficits related to that. And the budget hawks usually give on that more so than on the spending side. A subject we will be revisiting many times. Guys, thanks to you both. Thank you. Thank you. And Health Care Going positive here on the session. When we come back, the ceo of siemens usa will be joining us first on cnbc to talk about the companys outlook under the Trump Administration. But first, take a look at shares of cal maines foods, theyre unchanged. The largest egg producer missing earnings and revenue estimates by a wide margin. Shares are down 25 over the past year. More squawk on the street coming up with the s p down half a percent. 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Lets bring in judy marks of siemens usa. Also a member of the commerce 2ke departments u. S. Investment advisory. Good morning, sara. Im wondering with the big announcement in princeton if you feel more pressure as a Foreign Company operating in the United States to make the kind of announcements on building plants and hiring jobs in the u. S. Well, sara, we have been in the United States for 160 years. We have got 50,000 employees located in every state and puerto rico. We have 60 manufacturing plants and were actually a net exporter. So even though were a Foreign Company were proud to say were u. S. Local. How did the meeting go down with your boss . And the german chancellor and President Trump. What was his main message . Was it some of those points that you just went through in terms of siemens contribution in the United States to jobs and the economy . It was contribution but even more so it was how do we advance Vocational Training and use some of the apprentice models that have so successful in germany. We implemented them here in the United States and i think we were invited to be able to show that bridge between german and u. S. Companies. And to figure out how we can upskill and reskill for the advanced manufacturing of the future so we can have more manufacturing jobs and export more from the u. S. Were a net exporter here. I dont know that most people know that. We export ed over 5 billion of goods to the other countries using u. S. Manufacturing talent. What was the reception from the white house from the white house that hasnt caught on much to create higher skilled manufacturing jobs . Well, the reaction was positive. But i will tell you we think that this skill approach needs to be local. And each community deals with it a little differently. We partnered with Community Colleges in multiple states to advance this with alcoa and dow. We have authored a playbook that we have given to the department of labor. So other companies can use it. Were happy to share best practices. The white house liked it. There were three u. S. Companies present. Three German Companies present. We all got action items to figure out how we can scale this together. Judy, i wonder how you would 6 i guess characterize the urgency of this issue with regard to displacement of labor with automated manufacturing and other things. We had the treasury secretary saying this is a 50 or a 100 year problem. Not something so immediate. What about in your business or over the time horizon youre planning for . Well, we see it as a collaboration. You will see a couple of german kuka robots coming to you from the future flexible lab here in princeton or the research facility. We think thats a Critical Role for robots, when Decision Making is needed. When agile skills are needed theres a clear role for humans. When you need quantity or speed that humans cant do, theres a place for robots. We think we bridge both by having the german roots where a lot of the Robotic Technology comes from. But also having that u. S. 160 year base. So we think they both can exist together. But we do think the skills needed for advanced manufacturing need more than a High School Education and thats why we partnered with Community Colleges and Certificate Programs to try and drive more locally and then we need those certificates. Those journeyman certificates those welding certificates to be basically accepted across the country so people will have mobility if they want to move. When people talk about employment being replaced by robotics they speak of one of the positives, well, people are building the robotics but interesting the wall street journal has a story indicating of course that Companies Like yours, european and japanese manufacturers are the quirkey r suppliers when it comes to the manufacturing, that the u. S. Doesnt have much in the game is that the case and is there a way to get the u. S. In the game of producing the robots for manufacturers . Well, im glad that you asked because thats primarily the history and where the investment has been to date in germany and japan. But one of the technologies were showing today is something we call a spider bot. And what it is is its anned 3 robot about this large with legs and we believe we can pull the spider bots in a way and in the future we can create large 3d printing of a hull of a ship or a fuselage of an aircraft. You know, we recently tested a gas turbine blade that we 3d manufactured. We put it in at 13,000 rpm and it held up wonderfully. So that future is here in the United States and were looking forward to it. So judy, just set the record straight. Is automation hurting more manufacturing jobs than trade . Automation is growing manufacturing jobs. If you look at the manufacturing jobs that are open right now, we need more skills, we need more talent in those manufacturing jobs. Siemens alone i have 2,000 openings currently in manufacturing at all skills on any given day. Were looking for that Skilled Workforce right here in the u. S. If 2,000 job openings, you cant fill them . Were trying every day. Its. So theyre not always the same jobs, obviously, as we have somewhat of a fluid workforce, but it ranges from Software Engineers of which we have about 7,500 in the United States right now. I need more of those. And i need more technicians. I need more welders. I need more Field Service technicians for our wind farms. Goes across the board. It is a timely discussion, judy. Thank you for joining us on the new plant opening today. Ju di judy marks. Lets send it across the floor to jon fortt. Snap up more than 20 off its lows just 4 just today. Were going to talk to two analysts, one that says its going much higher and another that says not so much. Also, uber, more woes, and a questionable outing in korea. We will dig into that and what it means for the future of that startup. And finally, amazons retail plans taking a slower track. All that and more coming up on squawk alley. Yes . Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade or keeping a Hotels Guests cuttinconnected. I to 35,000 fans. Businesses count on communication, and communication counts on centurylink. Your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you 24 7. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance stocks continuing to selloff this morning. S p down a little over 11 points. Mike, for your column today youve been looking at the comeback of stock picking in this environment. And how difficult thats going to be. So essentially im talking about more traditional kind of fundamental based stock picking. Everyones been talking about this huge rush of money into index funds. Weve been talking about it a lot obviously. A billion dollars a day going into vanguard right now. Theres been about half a trillion out of actively managed funds in the last year, about same amount into index. This has accelerated, but not just that. The ones that arent indexing, the big institutional money is quantitating and moving faster and big data and crunching all this kind of numbers that basically keep the old time stock picker at a disadvantage. Heres another thing, theres also this focus on the reduced number of public companies, right . In the last 20 years about half of listing companies. What does that mean . Mean left picking stocks are more skilled on average than they used to be, theres fewer stocks to go around and the stocks in the indexes and in the market in general are more mature, more profitable, harder to get an edge on. All this stuff mashed together and i think you see a lot of wall street banks and firms trying to figure out what this is going to mean for their business model. I dont think its a doomsday thing. Its hard. Its not impossible. I do think maybe you want to orient yourself toward the smaller end of the spectrum if youre going to look at individual stocks. If youre going to pick stocks. Companies that may be somewhat undiscovered but particularly smaller caps. If youre a fairly large institution, youre not going to be investing in small cap stock. No, exactly. Big institutions i think have this big challenge, especially if theyre a mid size one. If theyre enormous, you have economies of scale, if tiny, can be focused and concentrated. I think this is the struggle thats been going on right now for awhile. Interestingly there was a little bit of a titfortat, theres more cfas, more financial analysts per stock listed in the world than theres ever been too. In other words, its only getting harder. I think thats why the market trades the way it does. It kind of works in these quantitative kind of bursts. Everything kind of gets priced in and we sit around for a while. It was a good chart. The flows going in completely different directions. Exactly. For more on mikes column, you can always check it out on cnbc. Com pro. As we head to break, quick programming note, dont miss our exclusive interview tomorrow, yum grand ceo greg creed, 9 00 a. M. Eastern. Much more ahead here on squawk on the street and squawk alley. Stay with us. Stay with us. 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. Im dominic chu, stocks in sell mark. S p 500 down for the seventh time in eight sessions. Nearly all 11 s p groups are lower today, the exception though is health care. This as hospital stocks extend gains following a withdrawal of the gop Health Care Reform bill. You got universal health, also Community Health and Tenet Health Care up as much as 6 . Hca holdings a new multiyear hi about 5 away from alltime highs. Looking at a oneyear chart of some of these names down as much as 40 , to 18 . Rock ri ride for some of these stocks as gop set to repeal obamacare. Lets send it to the squawk alley crew. Back to you. Thank you, dom. Good morning. It is 8 00 a. M. , 9 00 had had quarters, 11 00 a. M. Here on wall street and squawk alley is live