Transcripts For CNBC Squawk Alley 20170831

Apple is trading 30, away from reaching a 1 trillion market cap the last close above 22,000 thou walk 16th. Is there a peek optimism around the product cycle or does the stock keep riding this wave of enthusiasm yes hopefully we havent gotten there yet. Were about a year and a half into this preiphone 8 party runup. Usually it ends. Either right after the announcement or about a quarter later. The peaks and then we go down for a couple years until we wait for the next cycle. This is a rager though. Apple is up 54 in the past 12 months i mean, hasnt it gotten a little bit ahead of itself, would you say . Well, you know, i think the really important thing weve got here is that weve had a market environment where every stock has done better than you would have thought weve had good Earnings Growth but the reality is pe multiples have expand add cross the entire stock market and apple interestingly enough with a trailing pe multiple of 18 still looks very attractive, certainly comparison to other Major Tech Companies so i dont worry about that issue so much. What i look at with apple is a very simple thing which is that 1,000 is the new high end price point for smart phones and we have never tested that price point before i suspect that youre not going to see the raging demand for phones that weve seen in the past where i think apples advantage really sticks out today, i think its increasingly big, is in the software that they are starting to do things to protect consumers from mind hacking by, you know, facebook, google and other, shall we say, attention economy players. Theyre starting to really take the interest of the customers and create systems where people can they maintain privacy and importantly protect themselves from the addictive tricks that are being used by other internet companies. I think consumers are going to like the reality stuff thats going to come on the apple platform i think interestingly enough, apples funneled al situation to me looks great the stock market, thats anybodys call i think that will have a lot more impact on the trillion dollar number than apples actual earnings. Guys, we want to pause a moment were continuing to get these images and stories out of texas. We do have this live shot that we have been showing you from port arthur, texas outside of houston where weve been seeing rescue operations on going authorities still trying to get people out looks like the truck is actually stuck in the water so we just want to continue to just show you what is happening here the sun is out and the flood waters are still high. The streets are still flooded. It still very difficult to get around for residents this morning. Residents are trying to do that well keep you posted on what is still very difficult situation out there in texas all right. Lets move on with our guest here i want to get to that big news out of uber. The newly minted ceo says that the time is between 18 and 36 months reaffirmed his commit ment to the ride sharing giant lets take a look at audio im a fighter and ill fight with you. I dont like kind of the war metaphors. But its kind of really male metaphor but were in a battle here i think Everybody Knows it and just know that im here, i made the decision, i am going to fight for you. Addressing some uber employees. Of course that, selfie from Arianna Huffington that came out on twitter theres the picture with the founder and now former ceo Travis Kalanick. The board member who we understood was a very close ally with kalanick. Committing to a time frame on the ipo. Is that risky . I think in stepping back, the board snatched victory from the jaws of defeat here. I think they made a great decision its the right kanld dast tcand three. They have the opportunity to fix all of the problems. Get the company on a march towards profitability. One things that been amazing about uber over last several months of turmoil is the core business continues to do very well its growing at an extraordinary rate so customers still love this service. And ultimately that will buy them a lot of time. To that point, roger, all of the drama has mostly surrounded manage ment, management style, culture, a lot of the employee conflicts as opposed to Business Strategy but, you know, he mentioned the march to profitability what does have to happen in terms of managing a position the business to be ready to be a Public Company at this scale i suspect that dara has more than one option available. The thing that is clear to me is they have enough cash on the Balance Sheet today that if the strategy were to get public, what you want to do is get rid of everything that is absolutely not necessary to getting to profitability which is to say you get rid of the driverless car effort youd settle the lawsuit with wamo you would stop some of the most aggressive foreign expansion and you would make the model work and i think over 18 months thats probably a doable strategy with the cash they have on the Balance Sheet assuming there is a way to settle the wamo lawsuit the key question is can they maintain any kind of aggressive posture and still accomplish that outcome i dont know the answer to that the amount of cash they have on the Balance Sheet is large. But the way they burn it, they have to be careful henry, interesting that dara mentioned lyft in this some people said look, ub stirl doing really well. But he acknowledged that lyft has gained market shareand it going to be a fight against them i think unspoken Coalition Including lyft around the world as well. So touch on that if you will and how significant is it that they actually got through this announcement without a gaffe, without some kind of sexist comment or comment construed that way he seems to have acquitted himself pretty well. I think he acquitted himself extremely well i think its a great choice number drama, very smart, very successful, proven, knows the tech business very well. Clearly a not a pure Travis Kalanick choice which would have been jeff immelt who would leave in a couple years and traffic wois take over i think theyre in good position i think roger exactly right. This company has launched a half a dozen experiments. A lot of them need to be shut down you focus on the core service which is what everybody loves. The key is going to be the economics in the more mature markets. Can they run the service and grow at pricing that is sustainable profitbly . Thats the key we havent seen the numbers in a while. We want to get both of your thoughts on another story now, battle of old media versus new media. Walt disney preparing budgets cuts at the Abc Television ublt which could involve staff reductions this as facebook debuts the first reality show, balls in the family. I dont know if its going to be kardashian sort of interesting to put these two stories together i think we have a clip of this i am the bar ball, the father of three sons born to go free throw. Three from the same daddy . Theyre all superstars im ball believable. The direction that were going with this is on a whole different level. I got the nickname right now who episodes are available for streaming. Great its very exciting this one actually doesnt matter even if its terrible and nobody watches it, its the first step. They can get it right Going Forward. The Bigger Picture though is i think what is happening to newspapers over the past 20 years with digital just eat ago way, you go through the death by 1,000 customers a lot of organizations is now going to happen to the traditional tv business over the next 20 years. Its not going to be killed. Its just going to be a slower no growth continuing to do more with less exactly as abc said the other day. Becausest pressure as the attention shifts to digital, mobile, facebook, google and others roger, i check this out on facebook it is kind of hard to find the app. You have to find the watch tab, where is that . But then it just reinforced by feeling theyre going to have to split off a separate property just for video and make that a destination, make it really great video that has a social component instead of a social experience with video thrown in there. What are your thoughts i think once again you got your finger exactly on the issue here that at the end of the day, there is a lot that goes on in the facebook website and the facebook apps that get in the way of trying to watch a video this kind of program stuff but they have a long track record of launching things inside of facebook and spinning them off obviously messenger was the most Successful Initiative that they did that way and im completely with you. I dont think this can achieve any kind of large scale success without them spinning it off i think its actually more important to spin this off than it was messenger messenger was really easy to have it persistent inside the website or the app i think video doesnt work that way. Thats going to be a tricky dance for them to play the incentive to install another app is low they have a lot of time from an investor point of view, none of this matters its not going to move the needle even if they had the ten biggest shows in the history of television it wouldnt have that big of an impact on the staff. Does it matter for the tradition Alameda Business oh, yeah. Youre also going to have six second ads on television coming. Everything is converging toward one another at this point. Yes absolutely it matters this is a huge shift of attention away from a medium that seemed convenient before the internet now its very inconvenient you cant get television everywhere you can get facebook everywhere you happen to be netflix built a huge business based on this. If you start a tv network today, netflix, not nbc which is a great network, but we started where it is it a different distribution system. This has a huge impact netflix, their budget for new programming goes up every year by huge amounts. Now almost the largest programming budget out there of any network. Facebook has the same capability google has the same capability there is a big shift in who is making the shows ultimately. Yeah. And its going to harm the model. Yes continue to watch both of you, henry, roger, thank you for joining us henry from business insider. Roger from elevation partners. Just a quick update on that situation out of port arthur, texas, where weve been watching this rescue operation still underway it appears that the rescuers have been rescued with other boats and other machinery that have gone in the mayor of port arthur, texas, told abc news this morning that a number an unknown number of the residents there in that town still remain stranded and some homes as well as this area continues to be inundated with very high floodwater knee deep water. And so as you can see, some of these boats are still out there on what appear to be streets that are totally flooded trying to help people get out such a complicated situation. Recovery effort now underway we saw patches of sunshine yesterday. People should not think that means that were out of it and that certainly the houston area is out of it they still need donations, they still need help. And as can you see, the First Responders and volunteer rescuers are going door to door. Its hard to talk about rebuilding which, you know, were focused on but before theyre able to fulfill all the rescue missions. So keep an eye on that for you and keep you posted as we get the images and when we come back, shares of Enterprise Cloud con tender box recovering some of their losses after opening this morning. Nearly down 5 cnbc exclusive with box Ceo Aaron Levie is next. Then hear from u. S. Treasury secretary Stephen Mnuchin on the president s tax plan and much more thats coming up at the ttboom of the hour. Squawk alley is back after this player box recover something of their loss this is morning after opening down nearly 5 after a Second Quarter beef. Lets go out west with a special guest. Josh thank you, jon. Im here with box Ceo Aaron Levie. Thank you for joining us thank you so john mentioned the stock was down harder in the premarket and bounced off the low. There were some questions about the guidance listen, it was a strong print, billings, so some analysts say why dont you raise the high end of that revenue range for the full year . And did that imply, aaron that, maybe you were seeing some headwinds in the back half yeah. So were, first of all, we were very happy to have the results in q2 which is the quarter we came off of and revenue to 123 million. So 28 year over year growth billings growth was 31 year over year. We now have 76,000 customers on the platform from the q3 and q4 guidance stand point. We actually improved our eps guidance and we guided in line to our previous guidance on the revenue side we want to put out a conservative number that we felt very, very confident in achieving or even provide something upside on. But that was the reason for. That were seeing incredible traction, especially the upper end of the markets so Large Enterprises are starting to buy and deploy box at scale we saw a Record Number of the large enlt price deals in q2. So eight deals over 500,000, four deals over 1 million as compared to one deal a year ago in the Million Dollar segment. We are very, very bullish on the direction of the growth that were seeing and we want to make sure that we put out conservative guidance that were very confident in. You mentioned the deals more big deals getting done. But fewer of the deals in that 100,000 range so walk me through what explains that that is the run rate part of our Enterprise Business which has some volatility and quarter over quarter and year over year. The more important part is the average Contract Value for that big deal segment thats what we saw rise in the quarter year over year so again, we look at deals over 500,000, deals over 1 million, those were much stronger on a year over year basis got it. A lot of investors wondering when youre going to consistently generate cash, thinking this cloud category is at least beginning to mature at what point is a 2018 the fact that it starts to happen xanltly . And is that because of a reduction in sales and marketing spend or an overall strengthening that you expect in the consistency of your business yeah. So we did dip into negative cash flow in q2. This is actually an expected dip and the reason for that is q2 is seasonally our worst quarterer from a cash collection standpoint were coming off q1 which tends to be a ramp period from a new sales stand point. We end up collecting a lot of the cash in q2. We did extra real estate transactions in q due to our expanded International Growth efforts. Id say q2 is an anomaly. We guided in the Earnings Call that in q3 and q4 well be Free Cash Flow positive and on a full year basis in fy18, well be Free Cash Flow positive so were very, very confident in the facash flow storey were acquiring customers with a healthy rate and strong economics. So were super confident in the overall cash flow story on a go forward basis annually, we expect to be Free Cash Flow positive i want to check you said annually which means we could still see quarters, you expect, like this quarter where you dip into the red cash flow well, we havent guided to next years individual quarterly cash flow target so thats why im not calling that out nq4 and q3 well be Free Cash Flow positive and Going Forward xbekt to be Free Cash Flow positive on that basis. And aaron, want to swish gears. Youre talking about potential competition, drop box preparing an ipo is this category big enough for you both to compete in yeah. I mean, it could probably even handle more competition if we wouldnt want that but its a nearly 40 billion category the vast majority of spend goes into legacy Storage Infrastructure and content Management Systems and enterprises of all sizes i think the market is fairly broken out you have Small Businesses which pursue products like drop box or google and then you have larger enterprise thats look at box and microsoft as the primary options as they move their content to the cloud so this is a tens of billions of dollar market with a couple players that really compete for it and its even divided on a segment basis. So were 100 focused on this market lets talk about partnerships thats a big part of boxs story. You have partnerships with microsoft. You recently expanded that one walk me through why is microsoft insentivized to sell box you dont compete in some areas. Yeah. And more so theyre insentivized to go to market us with. We want to be able to go to joint customers and have a story around letting customers use box with azure what weve been building is a platform that lets us run our storage and certain work loads on any Cloud Platform that we want to work w and that gives us the opportunity to go to a customer that might have some preference for azure as opposed to other cloud provider and be able to jointly sell box alongside Azure Services this is a partnership we enacted in june. Were very excited about the potential of what this can do from a growth stand point and distribution stand point but its very consistent with our overall approach to interoperability and having very Strong Healthy partnerships with Large Technology Companies Like ibm, google and others you mentioned google. You have that partnership. Youre going to take advantage of the Image Recognition what do you expect that to come out of beta and when could it generate meaningful revenue . Ai and Machine Learning are massive trends in technology in jevenlt and very specific to enterprise software. We think that these capabilities can fundamentally change how people work with the information. So when you think about things like automatic Image Recognition and in this case powered by google, you can dedetective any object in content. Within enterprise, there is a tremendous amount of image content. We store 30 billion files. A large percentage are image files. You think about retailers, cpg companies, Insurance Companies we want to help them get more value out of the information by being able to classify tag and understand what is in the data and we can really only use ai to do that at scale it is in beta right now. We expect it to become available later this year. That will start to show up in the numbers as Customers Put more and more data into box and start to use box in all of the new ways got it. Thank you so much for cominging out. Appreciate it. Mike, we send it back to you in new york josh, thank you very much appreciate it. When we come back, take a look at gasoline futures. Theyre flying this morning on pace for the biggest daily gain in over a year basically trading at two year plus highs on refinery concerns and pipeline concerns out of texas. Well have details when squawk alley returns where to get in. Where to get out. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Arbob gasoline prices hitting the highest level since june of 2015 since harvey knocks out the port arthur refineries we have an update on the refineries and the explosion at a Chemical Plant down there, scott . Right, mike as you know, the gulf coast is full of all kinds of chemical wlz it is Refined Petroleum products and other types of chemicals, were in crosby, texas. Were as close as were allowed to get now to that plant where it is flooded. You can see from the air what the result has been. These are pictures taken earlier of flames basically because we have a situation where organic per organic peroxide needs to be refraj rated cannot and with the plant under six feet of water, the thinking is that what they know thus far based on what weve seen is that when the chemicals heat up, there is a reaction. When they decompose they generate heat. And when they generate heat, there is possibility of a fire and possible explosions. Now what they say thus far has been is that there has not been an explosion per se there have been pressure releases and tank thats have ruptured but they are saying, as you heard, theyre very well could be an explosion. Thats why were being kept a mile and a half away and the residents have also been have also been evacuated from here. Theyre flooded out anyway the situation with the refineries you start to get a sense of what theyre dealing with in that part of texas. Still underwater, still rescues going on the refineries are in trouble as well the refinery is there in port arthur, largest refinery in the u. S. , 600,000 barrels a day. It is shut down. Theyre saying for two weeks and some analysts are saying two weeks could stretch into longer and that gives you a sense with so many refineries now shut down trying to get back up and running but not yet. That gives you a sense yf prices are doing what theyre doing mike all right scott, thank you delicate situation across a couple fronts there. Appreciate the work. Lets head over to hq. Sue is there with the news update indeed, thank you so much. Heres what is happening at this hour, everyone Vice President pence departing washington for texas where he will visit costal locations devastated by harvey hes traveling with the secretaries of labor, transportation, energy, and Veterans Affairs along with the acting dhs secretary. The European Union warning britain that negotiations over its exit from the block have so far failed to make enough head way for discussions on future trade deals to begin in october. The eus chief negotiator said that they are far from seeing sufficient progress. Frankfurt Authorities Say they plan on sunday to evacuate more than 60,000 people from their homes to diffuse a world war 2 bomb found during a construction work. It was unearthed earlier in the week and it contains 1. 4 tons of explosives a new study from Georgetown University says e. Cigarettes can help people quit smoking the odds of quitting increased the more they used ecigarettes. Thats the update this hour. Back downtown to you guys. Sarah . Thank you when we come back, a cnbc exclusive with Stephen Mnuchin quk le wl rhtsawalyilbeig back most American Homeowners would be shocked if they knew just how rich they were. The average American Home value has increased 40,000 over the last 5 years. But many dont know you can access that money without refinancing or selling your home. With a home equity loan, you can pull cash out of your house for anything you need home improvement, college tuition, even finally getting out of credit card debt. Come to lendingtree. Com to shop and compare home equity loans right now. Because at lendingtree, when banks compete, you win. Moments away from Steve Liesman sitting down with Steve Mnuchin. A quick check on market moves in the energy patch arbob gasoline, the pump price, surging another 1212. 5 , this is extending eight day rally for the price of gasoline as increased fuel shortages are weighed as the refineries and pipelines are struggling to get back on line after hurricane and now Tropical Storm harvey. Those are the september unleaded gas futures thats looking like it may be a little bit supply constrained. October also up. So stretching into weeks when we might actually have a little bit of a, you know, mini shortages of gasoline in some markets. Interestingly, we are seeing Energy Companies rally on the back of Higher Crude Oil prices which is not a dynamic we have seen after the storm that put pressure on oil prices because the worry was the refineries shut down with demand decrease demand for oil, mike, thats sort of going the other way here it s arguably kind of got stretched. It was declining for days and recovering here right now which is helping things like some of the Oil Exploration stocks which had been very weak throughout this storm. Marathon oil, newfield exploration, cabbot oil. As far as the rest of the market, another rally in biotech and Health Care Stocks technology is strong today this is the last trading day of the month of august. One where everybody feared the season alt would interfere and a doomy and gloomy month there was more saberrattling around north korea, all sorts of concerns and add it all up, the dow barely positive for the month and nasdaq up is. 3 for the month. The s p 500 isnt down a whole lot. President trump delivering the first pitch on tax reform speaking in missouri calling on congress to commit to reforming the tax code w more on those commends and more, lets send it to Steve Liesman with a special guest. Thank you soech im inside the Treasury Department in the diplomatic room with the treasury secretary of the United States, Steve Mnuchin, thank you. Thank you very much the president made it very empassioned plea yesterday, support for the tax package. But many on wall street are a little confused fwlauz is no package. Can you explain to us why there is no package or details about rates and things like that coming from the white house . Well, first of all, there absolutely is a package. I think, as you know, i have had the opportunity to work with the president on tax reform for over the last year. We started on the campaign were looking at the issues. He did two major speeches during the campaign both in new york and detroit. And since january, ive been working with gary cohen and the leadership on this plan. So we have a very detailed plan. What yesterday was about and we couldnt be more excited that the president kicked off the campaign for tax reform is taking it to the people. And what the president is focused on is explaining to the American Public why tax reform is important and its about creating american jobs fwz creating competitive business so that we can bring back trillions of dollars and have it invested here. And its about a middle income tax cut and tax simplification those are the issues that president wanted to explain to the people in missouri i get that want to talk about that when you say there say package, are there numbers and rates and, you know, growth estimates and things like that in that package that we can talk about first of all, as i said, weve been working on the details. You know we came out with a statement on the group of six when we started this process we want to bring the three of us together, make sure that there was one plan with the administration, house and senate weve done that. The house and senate are now socializing. The plan with their members. Were going to release a blueprint and its going to go to committee and were going to turn this into a bill which the president will sign. So you spent some time on wall street. You understand the imperative out there right now to discount when this thing is going to happen and when well see it can you walk us through your i know you love doing this because i know how complicated its been in the past when is the best time line when can we see the numbers and when may it work its way through committee to the president s december snk. Ive been in the trading markets for the last 30 years. Markets move i think we talked about originally our goal had been august unfortunately, things got delayed a bit. But were on a track to get this done by the end of the year. So youre going to see the detail come out later this month. Its going to go through a committee process. We couldnt be more excited about the progress weve made. If can you help me out with one number which is the Corporate Tax number that youre going for. The president yesterday said ideal ideally 15 which suggested sense of reality 15 is a hard number weve seen in press reports a number more like 20 to 25 . Is that a realistic number you think investors should think about a new Corporate Tax rate in the campaign, the president came out and said we want to have a 15 corporate rate and let me just say this is not just we want to make sure will is Business Rates so Small Businesses can take advantage of this as well. This is not just about big business but the president made very clear that that was our goal during the campaign. When we came out with a plan earlier in the administration, we said that and our object sieve to get down to 15 now having said that, i think as you know, theres a bunch of different levers that we can move and weve gone through the different scenarios and the different levers and these are the thing thooz are being socialized with members. And well go through with the committees and well see where we end up. But as the president said yesterday, that would be the ideal rate but wherever we end up, the objective is to get a competitive business rate. We have one of the highest rates in the world we have this concept of worldwide. But with deferral. So it encouraged companies to move their business off shore and keep their profits on shore. And what is most important is that we end up with a competitive rate and that we ended up with a territorial system and thats what we heard from literally hundreds and hundreds of business people. It is also important that you end up being revenue unite either on the Corporate Tax side or in terms of the whole package putting together corporate and individual taxes well this is one of the things that is under decision. And obviously, you know, the administration believes we can get growth the difference between 2 and 3 is trillions of dollars. We have to deal with the congressional models so one of the discussions were having with congress is how we score it i think there was an excellent editorial in the wall street journal today it talks about the difference between policy and baseline. The president is concerned that debt has gone from ten trillion to 20 trillion whatever we do, were going to be comfortable to pay for with growth is z. That mean the president s committed to revenue neutrality in the tax reform package . Whether you talk about revenue neutrality, it depends on how you score it. So under our models, were absolutely committed to revenue neutrality thighs are the discussions that as it passes through, the congressional process are going to be debated and decided. Let me turn to another issue that is a technicality until it isnt. Is september 29th still the date when well reach the debt ceiling . It s. So the tax receipts havent changed from the earlier estimates and the spending is on track to september 29th is still that date . Thats correct. What i would say is the next big cash day is september 15th thats when we get Corporate Taxes. There is an issue. That is going to have some impact in our september spending more importantly, we have to go to congress and get authorization to spend more because its absolutely critical that we spend money to help the state. So you have to go to Congress Earlier than you otherwise to get that money for harvey and aid for the hurricane s that going to change the day to bring it snor it forward i think theyre two different issues one its going to hit the debt ceiling. Again, there could be some impact of a couple of days but that would be most but on top of that, we do need more money for harvey. Do you expect the debt ceiling to be raised by congress i think there is no question that both democrats and republicans intend to raise the debt ceiling nobody is going to let the u. S. Government default on the debt. As a clean bill again, i said before, my preference is to pass a clean bill but at the end of the day, its all about raising it i dont want to raise it and attach it to something, thats fine with me as well is it possible they would attach harvey aid to the debt ceiling bill again, im not going to comment on any of the specifics. Ill tell you, were having discussions with the leadership. Were having discussions with the republicans and the democrats. And im very confident well get this raised. What kind of Economic Impact are you expecting from the hurricane . I think its a little too early to tell. But i think there definitely is going to be some Economic Impact obviously were looking at what has been a devastating storm its not finished. Recent develop ment, the dollar is weakening for quite some time. Do you look at that as a positive develop ment or negative development what is your view on the level of the dollar and the relative strength obviously, the short term issues of dlart have positive and negative impacts for different parts of the economy obviously, as it relates to trade, having a weaker dollar is somewhat better for us what ive said consistently is where the dollar is in the short term is less of a concern for me i do think over long periods of time the Dollar Strength is an indication of the reserve currency and the confidence that people have in the u. S. Economy. So in general, you think a stronger dollar is better for the country than a weaker dollar again, i would say its not a question wlf its better or not. Its somewhat inevitable given the strength of the u. S. Economy and the confidence that people have fed chair janet yellen in jackson hole praised the do doddfrank bill and said she saw little decline in lending and said it actually helped the economy. Is the administration and the Federal Reserve, are they at odds over Regulatory Reform . Is that a problem right now . Well, let me just comment on i had breakfast with the fed chair yellen this morning. We meet on a weekly basis as have previous treasury secretaries in the fed and we have a very constructive dialogue on a lot of issues including regulation and one of the areas we are focused on working on with the fed is fixing the volker rule. Youve seen the treasury put out a report on what we believe are regulatory changes i would say 70 or 80 of them we can work with the regulators. We have a working group on were going to use congressional support for. We believe in proper regulation. But we also believe we need to make sure that banks can lend, particularly Community Banks and regional banks so there arent differences now between the Federal Reserve leadership as it is now and the treasury or the administration on regulate sorry reform again, i would say that we are working on a lot of things together with the fed and see many aspects of this the same way. I assume youre involved in this process of the decision over a new fed chair could you tell us where the process . Again, i think it is inappropriate for me to make any comments on that at this time. I will say i am involved in the process. Ultimately, the president will make a decision later in the year is later in the year december, november an idea when we can perhaps get ready for it and be prepared for an appointment thats for the froze decide and inappropriate for me to comment. We talked about this as a two horse race between gary cohen and chair yellen is that way to think about it . Again, i watch your show. Im 0 for 3 i see what youre saying. It is inappropriate for me to make any comments on that. Im done with that question the president threatened to pull out of nafta again would that have negative implications for the United States so, you know this is an issue and we have a benefit since the president for the campaign hes been consistent starting in the campaign and now in the presidency that he thinks nafta is a bad deal, thats an old deal and he wants to renegotiate it and i speak to ambassador lighthouser on a regular basis there are discussions underway i hope there swa winwin solutin the president intends to renegotiate this deal. What is the implication thafz for the economy . Again, i especially unilaterally. Im not going to make comments yet the expect station well renegotiate this deal in a way that is good for us and them. The president supported the cotton purdue immigration bill which would reduce illegal immigration over a short period of time by 15 most Economic Analysis that ive read say this is negative for gdp and for Economic Growth. Do you think its a good idea that support this bill and reducing immigration in the United States . I it this president is very focused on making sure that americans have good paying jobs and have proper jobs and i think thats his priority. I think that youve seen the president has also been very focused on stopping illegal immigration. But what about the economic implications since immigration is a big part of population growth and population growth say big part of Economic Growth i think thats right. I think there is a lot of issues that are going to focus the economy in the short term that are much more important than this one you dont think it will have a anythi negative impact . I do not. Last question thank you for answering the other ones second lu before you, your predecessor, supported the idea of removing Andrew Jackson from the 20 and putting hairy tubman on do you support that idea let me just comment on, you know, ultimately well be looking at this issue. Its not something that im focused on at the moment but the number one issue why we change the currency is to stop counterfeiting so the issues of why we change it will be primarily related to what we need to do for security purposes and ive received classified briefings on that. Thats what im focused on. Certainly there are cultural aspects to decisions we make on who is on what bill, right people have been on the bills for a long period of time. This is something well consider right now we have a lot more important issues to focus on mr. Secretary, thank you for joining us on cnbc. Thank you. Sarah, back to you from the diplomatic room in the Treasury Department all right great stuff. A lot to chew on there for us. Thank you, Steve Liesman our thanks to treasury secretary Steve Mnuchin as well. First on taxes, still on track there say package, he says it is being socialized through were focused on the Energy Sector gasoline and oil spike traders are zeroing in on several names. Well share them with you. Bite yoe tech breakout several key stocks jumping again today. How do you play that sector which just hit almost a two year high and the legislation that may soon hit activist investors like a ton of bricks. All that is on the Halftime Report at the top of the hour. Well see you then were on a track to get this done by the end of the year. Youre going to see the details come out later this movement its going to go through a committee process. And we expect the house and senate will get this to the president to sign this year. We couldnt be more excited about prot grthe progress weve. Stephen mnuchin joining Steve Liesman discussing the president s new tax reform plan saying were going to get it done by the end of the year. Though, he also admitted the original target is by august which was a little ambitious. Yeah, three years into this thing. I love how he dead pens we couldnt be more excited you could be a little bit more excited, mr. Secretary but certainly a challenge to get this through given the number of things that have to get done before you get to taxes. Still, they do have a plan, he said hes been working on it with gary cohen and much more from the administration it sort of is up next for congress i think the market though is still in that mode of not rushing to price in any implications its going say great it will be a bonus fit happens were not going to assume so the market is not manicing over the debt ceiling they believe that gets done. Well see if dhafrthat changes. Equities are holding gains. Most are higher. Biotech is starting to break out. Technology stocks as well doing well the action in the bond market though, a lot of buying of treasuries yield goes back low to the 213 level. Yeah, the inflation number was on target but 1. 4 annual rate not really going to getted fed moving and its that stubborn lack of inflation and no surprise financials are underperforming, one two of groups lower right now along with telecom. That does it for squawk alley. Sayer yashgs mike, thanks. Lets toss it to headquarters. Melissa lee and the half. Welcome to the Halftime Report. Im melissa lee. The top story is the sudden energy surge gasoline futures up more than 12 . Oil, nat gas also moving higher. With us for the hour, our guests first, we start off with what has been a major driver of this energy trade that is the developing situation for the refiners down in texas cnbcs special correspondent is live in crosby, texas, just east of houston hi, scott. Hi, me list yachlt we never want to down plate human toll of