Transcripts For CNBC Power Lunch 20170620

Single day for tax reform for the gop so far i am Brian Sullivan. At a National Association of manufacturers summit in washington, d. C. , 30 minutes ago, vicepresident pence talked about tax reform and called for a 15 Corporate Tax rate we are waiting a few minutes for House Speaker, paul ryan he will give a major speech on tax reform and outline what he wants to do and when he believes he can get it done after that, he will sit down with us right here on cnbc to talk everything taxes, both from individual to Corporation Tax reforms. Michelle, a bringing day ig day. Im Michelle Caruso cab rrea the yields on bonds have hit 2. 748 snap and twitter taking a hit after facebook announced instagram now has 250 million daily active users lets listen to House Speaker, paul ryan right now as he begins his speech thank you so much, buddy appreciate it. Afternoon, everybody how are you doing . Great to see you thanks for coming out today. Appreciate it. Welcome to d. C hi, kathleen thank you. Thank you very much. Appreciate it. Please jay and i go back many, many years. Thank you so much, jay i also just want to say what an honor it is to follow my dear friend our vicepresident , mike pence. Isnt he doing a great job [ applause ] together, we are working on a bold agenda for the country, regulatory reform, health care reform, tax reform, rebuilding our mill theyritary. After years of talking about these problems, we are finally doing something about them i do not view this as a simple checklist for government or just turning the page on the policies of the recent past this is much deeper than that, much bigger than that. It goes back to something i talked about right when i became speaker. It is something that is as relevant today as ever it is about building a confidence america, an america where people are confident they can get a job that pays well in an economy thats growing, an america where people are confident their children will grow up with Real Security and opportunity. We want an america where people are confident that they can withstand any challenge and emerge Even Stronger this to me is the great task before us. I have to tell you, because these are anxious times. We all feel it it is not something we often think about in the rush of our daily lives. We are being tested. Our capacity to come together and to always move forward towards a better, stronger nation, is being tested. That is what defines us as americans. Its not about our struggles it is about how we overcome them, how we bounce back this is what drives me every day as a policymaker how do we build up our countrys antibodies you know what i mean when i say that how do we fill up that well of resilience we can call on when things get tough i believe i have come to the he can act right place to talk about how we get there how many fitimes in recent year have the socalled experts told us that American Manufacturing is never coming back, that its best days were in the Rearview Mirror right now, there are nearly 1 million more americans working in manufacturing than there were at the beginning of this decade. Manufacturing is thriving across the country. You know as well as anyone how quickly things can change. When they do, will we be able to say that we are ready . Will our workers be ready to take on the jobs that donteve exist yet . Will our economy be ready to handle the disruptions that we cant even fathom yet . Thats our test. That is why working with President Trump, we are delivering on an agenda to create jobs and to grow our economy, to begin fixing our regulatory system, we have repealed obama error red tape with a legislative tool we call the congress nary review act before this congress, this tool had only been used successfully once before, once in the 20 years this tool has been on the books. Since january, 14 congressional review acts have been signed into law 14 times we have rolled back repressive regulations that could save businesses more than 36 million. We are just getting started. To Revitalize Main street. Earlier, the house passed the financial choice act you have seen as much as anyone the hit that Community Banks have taken from countless costly rules coming out of washington these banks are the very life blood of credit for Small Businesses across the country. Our plan will give relief to those Community Banks. It will make it easier for Small Businesses to get the capital they need to grow and to hire. Another thing we need to do, we need to make our workforce more resilient and the thing we need to do that is to close the skills gap how many times have you been talking about this with your member of congress at euro tary clubs with your fellow workers this is so vitally important. We need to connect people with the skills they need to get good, paying, indemand jobs the house will take critical legislation to expand career and critical education it has strong support on both sides of the aisle we need to get it to the president s desk fast. Our work continues to repeal and replace obamacare. This law is clearly collapsing americans nationwide are facing double digit premium increases and coverage choices are disappearing by the day. In 30 of the counties throughout america, people have one or no plans to choose from this month, anthem decided to quit the Obamacare Exchange in ohio, leaving 18 counties with zero coverage items next year. Last month, Blue Cross Blue Shield decided to quit the missouri exchange, leaving 25 counties with zero Coverage Options and also last month medica signaled it would quit the iowa exchange, which will leave 94 of 99 counties in the state of iowa, 70,000 people, with zero Coverage Options so this is the story across the country, higher premiums, little or no choice, a death spiral we are engaged in nothing short of a rescue mission to finally bring relief to americans struggling under this law and give everyone access to the care they need. Just in five months, in five months, we have made Real Progress on getting government out of your way. Your support has been the big reason why i just wanted to come and say thank you for that once in a generation, about once in a generation or so, there is an opportunity to do something absolutely transformational, something that will have a truly Lasting Impact long after you and i are gone that moment is here. We are going to meet that moment ladies and gentlemen, we are going to fix this nations tax code once and for all. [ applause ] this has got to get done. You may recall that the last time we did this was three decades ago, the same year i got my drivers license. A lot has changed since then our economy is more interconnected with the rest of the world than ever before the internet has transformed the way we do business and go about our daily lives. The world is changing and as it has changed our tax code has remained stuck in neutral. It has ballooned to 70,000 pages of rules and regulations that few people today actually understand there is this old line about the tax code our tax code is about five times as long as the bible but with none of the good news. Are President Trump recently introduced a set of prips fncip for tax reform right now, we, the house, the senate, the white house, we are working together to turn them into a transformational tax reform plan. Chairman kevin brady and our ways and Means Committee members are holding open hearings and meeting with stake holders on this right now i want to take a few minutes and walk you through what that kind of reform will look like lets start with families and individuals. At some point along the way, our tax system started working for the tax collectors rather than working for the hardworking taxpayers. Look at what happens during tax season i could describe the complexity of the code all day long what really defines our tax code is that sense of dread that you feel you know that feeling . You have to navigate long x complicated forms to file your returns. You need to wade through a seemingly endless amount of credits each with their own rules and after you tally up all those deductions, you are placed in several different tax brackets based on your income level. At the end of the day, you hope, you really hope that you do not owe a whole bunch this year. You hope, because you dont know ahead of time. How could you . This whole system is too confusing. It is just foo datoo darn expene we have to stop this madness dont you agree . So lets just start over. First, first, we will eliminate harmful, burdensome taxes, including the death tax and the alternative minimum tax. Next, we will clear out special interest carveouts and focus on the one that is make the most sense, home ownership, charitable giving, retirement savings. We will consolidate the seven brackets into three, double the standard deduction and simplify things to the point that you can do your own taxes on the size of the form of a postcard instead of the 1040 form this is within our reach wouldnt that be nice . Finally, most importantly, we will use the savings from limiting these loopholes to lower tax rates. We are going to cut taxes. You heard that right, yes. Not up, down but if we are going to truly fix our tax code, we have to fix all of it, both for individuals and for businesses you know why we are going to do that, because it is going to create jobs. Thats what this is about. Thats what this is all about. It is about jobs, jobs, jobs, goodpaying jobs as a matter of fact, the Nonpartisan Tax Foundation estimated that our blueprint would create 1. 7 million new fulltime jobs how do we do it . Well, right now, we have the worst business tax system in the industrialized world most people dont really know this here in america, 8 out of 10 businesses file their taxes as individuals. In fact, most of our jobs come from these new and Small Businesses under our crazy system, successful Small Businesses pay a top marginal tax rate of 44. 6 . Its crazy look you all know this but manufacturing employs more than 12 million americans and adds more than 2 trillion to our economy every year the overwhelming majority of these companies are Small Businesses at the same time, our Corporate Tax rate, the one that taxes the rest of american businesses, is 35 . Let me try to put this in a global perspective overseas, which where i come from means lake superior, companies in canada, they pay just 15 heck, the average tax rate on businesses in the industrialized world is 22. 5 yet our corporations pay 35 and our successful Small Businesses pay 44. 6 . How can we compete like that we cant it actually gets worse than that you see, the status quo encourages companies to move operations overseas, to make things abroad and sell them back into the United States this makes no sense. It is actually costing us a lot of jobs. We are actually very unique in the world in the way that we discourage capital from coming back to america and how we incentivize offshoring this is not the kind of exceptionalism that we should be aspiring to. Today, u. S. Companies are leaving to become Foreign Companies when it should be the other way around we want Foreign Companies to become u. S. Companies. We must think differently so that once again we make things here and export them around the world. There are so many different ways of achieving this. We, in the house, have our own idea that is one of the things that we are discussing with the administration we are going to get this right here is the bottom line. We can not accept a system that perpetuates the drain of american businesses overseas [ applause ] when i look at this once in a lifetime transformational opportunity, my view is this, we should not just try to play catchup with the rest of the world. We should not just aim for being in the middle of the pack. Lets not accept following any other countrys wake lets be the best once again part of this is moving to what we call a territorial system that reverses this trend of corporate inversions and enables businesses to bring back cash stranded overseas without being taxed. Right now, if an American Company makes money overseas, it gets taxed over there. We also tax it again if that company tries to bring that money back into the u. S. Almost no other country does this as a result, it is preventing Many Companies from bringing that money back home they just keep it over there it is literally straining trillions of dollars that can come back into our economy we have got to fix this and we will [ applause ] of course, real tax reform means slashing our Corporate Tax rate as low as possible. This means eliminating special interest carveouts and replacing them with lower tax rates for all businesses and it means creating a new, lower tax, specifically for Small Businesses so that they, too, can compete on a fair, level playing field. There is one last piece of this puzzle it goes back to the idea that all of this is about looking down the road. It is about planing fning for te future, leaving a better legacy. These reforms, these tax cuts, they need to be permanent. Every expert agrees, they need to be permanent because every expert agrees that temporary reforms will only have a negligible impact on Economic Growth they need the certainty to hire more workers to invest in their businesses and plan for the future so thats basically an overview of our plan, which we will begin to turn in the legislation to put before congress. It is a very ambitious plan, yes. It has to be now, i know that the cynics and the naysayers will be in full force. You will hear that tax reform is coming along one day and then you will hear that tax reform is dead and then you will hear it is back on track and then you will hear it is on life support. Sometimes you will hear this the same week, in the same day heck, sometimes you will hear this in the same hour. Do not be surprised by any of this i am here to tell you, we are going to get this done in 2017 [ applause ] you know why we are going to get this done in 2017 . Because we have to get this done in 2017. We can not let this once in a generation moment slip by. Yes, the defenders of the status quo, and there are many of them, they are counting on us to lose our nerve, to fall back or to put this all together. We will not wait for a path free of obstacles guess what it doesnt exist we will not cast about for quick faxes and half measures. Transformational tax reform can be done and we are moving ahead full speed ahead i promise you that we will give it all that we have. Here is what im asking you today, im just asking to you do the same get in this fight. Help us get this done. Help us make this difference help us make and build the confident america that our children deserve that you are building for your families and your communities right now today. Thank you very, very much for having me today. I really appreciate it thank you. House speaker, paul ryan, laying down his guide posts for what he would like to see in a tax reform bill. Lets bring in brian and our own steve liesman. A lot of similarities to a lot of what has come out of the white house but we didnt hear the border adjustment tax. He talked around it quite a bit. The speaker is going to be joining us in 15 or 25 minutes on cnbc. We are going to ask him about that and whether that is d. O. A there are a lot of similarities between what speaker ryan and vicepresident pence had to say. Pence spoke about 45 minutes ago talking about reducing the code from 7 brook kackets down it 3 pence highlighted a 15 Corporate Tax rate ryan did not stick to a number we will ask him about that a lot of discussion about tax reform the speaker will join us and we will dig more into the numbers when he does what did you think whether he heard what paul ryan said . It is what i didnt hear. I didnt hear the words donald trump. We heard the words mike pence but not donald trump this is somewhat reflecting the polling that we talked about yesterday. The president s declining Approval Rating. Also, the declining Approval Rating of issues that he had previously been up there on, in terms of the approval of the public out there we are seeing that these issues are going down they have to revive them what i also didnt see is the market react his comment we have to get it done in 2017 i am here to tell you we will get this done in 2017. Im not hearing anybody believe them glchlt them a few months ago, that would have led to a market rally nathere is a lot of sin ancym we have said and guests have said that tax reform is already, quote, built into the market others have said that tax reform is not built in. If you think it is already built in, maybe the market wouldnt react because it is already built in i am not talking to anybody who thinks it is built in. All our guests have said that all the survey data and economists are saying they dont expect it this year. They expect it next year when they get it, they dont expect a whole lot of juice for the economy out of it, brian fair enough lets talk about juicing the economy via Manhole Covers and other heavy industrials with tom rorden of nina and company they are a wisconsinbased manufacturer of all kinds of things, caterpillar tractors, Manhole Covers, about 1600 employees, based in wisconsin, factories in pennsylvania. Thanks for having me. Thanks for coming you and i were talking as the speech was going on. As a business owner, we know tax reform is important to you however, are you frustrated the gop tried to tackle Health Care First . The challenge, brian, a lot of things on everyones wish list, including the administration, congress, the manufacturers. Part of the challenge is understanding first, second, third priorities im not privy to that. All of those three are critically important to us this is a bit of the manufacturing renaissance. It has been a little sloppy in sausagemaking at this point of time to use a wisconsinism appropriate for wisconsin and d. C. None theletheless, a lot of k going on behind the scene. We are confident we will get there. Wloo hat we learned, manufacturers like yourself, tax reform is important but demand is more important. You are not going to produce more stuff and hire more people unless you have the demand can you tie tax reform to increased demand an job creation like many of our politicians do . Tough to do what it does do is particularly with tax reform, our external competitors, india, china, caterpillar, john deer, all the customers we deal with, that makes us more competitive. It allows us to invest Additional Capital equipment to drive our performance that drives drive growth. Certain critics will sky for the private companies of the world, why do you care about the Corporate Tax rate on a publicly traded corporation it sounds like the answer is you and many, many other manufacturers are sort of joined at the hip to a caterpillar which does care . Thats exactly right along with xm bank and a lot of other factors. At the end of date, our success is stitied to their success. Do you think it will get done i do. I think it may be sloppy or in two pieces but i think it will get done tie it back to your business. You probably heard our debate o one side of it if we get a tax reform plan will ne n enah start hiring more not initially but we are a bit cash constrained based on in our case whats going on, industrial markets have been slow up until literally the middle of january. Some are larger enmarkets have taken off like a rocket. How do we invest for the next industrial cycle and how do we take advantage of that we have to increase capacity and have smarter investments hiring should be a Second Derivative relationship. Tom riordon, a pleasure thank you very much. Thank you melissa, it is interesting. There you have it. He is not going to automatically hire people but as a second and third derivative action, he will do that. Maybe the president is accomplishing one big goal, getting wisconsin on the map tom is a wisconsin guy, paul ryan a lot of discussion about wisconsin. See you soon. Too hot to fly excessive heat in the west adg leinto canceled flights and a host of other problems we have the latest next. Life top speed fifty knots life on the caribbean seas its a champagne and models potpourri on my yacht made of cuban mahogany gany, gany, gany watch this parts a and b and want more coverage, guess what . You could apply for a Medicare Supplement Insurance Plan whenever you want. No enrollment window. No waiting to apply. That means now may be a great time to shop for an aarp Medicare Supplement Insurance Plan, insured by unitedhealthcare insurance company. Medicare doesnt cover everything. And like all standardized Medicare Supplement Insurance Plans, these help cover some of what medicare doesnt pay. So dont wait. Call now to request your free decision guide. It could help you find the aarp Medicare Supplement plan that works for you. These types of plans have no networks, so you get to choose any doctor who accepts medicare patients. Rates are competitive, and theyre the only plans of their kind endorsed by aarp. Remember these plans let you apply all year round. So call today. Because nows the perfect time to learn more. Go long. Welcome back to power lunch. Rick santelli here live on the floor of the cne group look at 30year bond yields, a chart going back to november thats the last time they were down here. They certainly are leading the curve. Making 30s minus five the plattest lets look at a couple of charts of ten a oneweek chart the reason we are looking at that, we are very close to testing last weeks low yield. You can see why that is important. It is a low yield close of the year if you open it up to november, like 30year bonds, they are leading the way. We are hovering at leads we havent seen since november. A oneweek chart shows not only is it not losing ground, it has overtaken its levels from last weeks fed meeting so thats the contract you want to watch michelle, back to you. Thank you i will watch that contract, rick tomorrow marks the first day of summer it is already getting hot out there. Much of the western u. S. Suffering a vicious heat wave. Temperatures are expected to reach 129 degrees fahrenheit in some desert areas. In albuquerque, new mexico, First Responders are getting calls for heatrelated illnesses. Sacramento, california, seeing triple digit temperatures following the wet winter in las vegas, the hot weather makes it difficult for planes to take off with not enough power to get through the thinner air resulting from hot temperatures. Dozens of flights being delayed or canceled. People stranded in phoenix, arizona. An Airlines Spokesperson says some of the aircraft have a limit of 118 degrees it is hotter than that extreme heat affects the planes ability to take off, because the hot air is less dense than the cold air the hotter the temperature, the more speed and thrust and power a plane needs to take off. When it is hotter, the difference between the pressures above the wing and below the winget less, diminishes. So, therefore, the plane needs a longer runway to accomplish the higher speeds. Because that difference gets it to come off the ground. That causes the lift. You can expect this heat to continue in the days ahead we are joined by greg postel from the Weather Channel it is a dry heat. It is going to be really impressive todays forecast, check this out, for some of these locations. We do expect record highs. 120 in phoenix, 116 in vegas, fresno, california, tying a record set in 1920 at 110 degrees. If you look at the setup, you have this dome of high pressure. A hot air mass with sinking air loft that is suppressing any kind of moisture from moving in. We have highs well above 100, everywhere shaded. Some of the desert location that is you mentioned in the high 120s that is ridiculous heat. Tomorrows forecast, palm springs, 120, vegas, 116 death valley, 122. Flagstaff in the low 90s it doesnt change much on thursday or friday for that matter we evare dealing with this heat wave travel restrictions will probably be in place if you are thinking about traveling out to the southwest, keep that in mind the heat will be there at least through friday aside from that, the travel problems, dealing with sunburn issues and dehydration, heat exhaustion and heat stroke heat is a dangerous part of summer unfortunately, they are dealing with it in a record way in the southwest. Michelle and melissa, back to you guys awful stuff thank you. Lets check back in with brian in washington, d. C. With more on what he has ahead including Speaker Paul Ryan, of course yes he is coming up. A lot of real heat in the southwest. A lot of heat over tax reform in the Northwest Side of washington, d. C. Coming up, House Speaker, paul ryan, you just heard him give that major speech on tax reform will be our guest on cnbc. We are going to talk to him about when they think they can get it done, where should Corporate Tax rates be, how many individual brackets should we have and whether all the distractions going on in washington are going to scuttle their plans. Wl t to discuss weilbe back with House Speaker, paul ryan power lunch will return after is this short break. [vo] when it comes to investing, looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. Our 18 year old wase army in an accident. 98. When i call usaa it was that voice asking me, is your daughter ok . 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He should have been brought home a long time ago. President trump making those comments during a news event with ukraines president israel broke ground on its first west Bank Settlement in two decades a day before President Trumps soninlaw, jared kushner, is scheduled to meet with israeli and palestinian leaders. A swedish plane made an emergency land in poland smoke appeared in the cabin. Nobody got hurt. A california man admitted his role in a scheme to steal nearly 100,000 debit and credit card numbers from Michaels Stores in 20 states. The 27yearold angel angelo says conspirators installed devices at dozens of point of sales equipment in 2011. Thank you very much. Lets get a check on the markets after House Speaker ryan gave that speech they are lower right now the dow did manage to set another record high before pulling back very little reaction on the back of thatspeech. The dow down about 15. Oil also back to preoriginal opec cut levels back in november we are also watching shares of sprint and tmobile. Earlier, there were rumors that moved the stocks saying sprint and tmobile were readying their merger moments ago, we got a tweet from john legere, the ceo of them tmobile customers and employees with a winky face. This is a story we are watching very closely that presumes they are going to buy them. Thats the way i read this tweet. They are going to be all under one umbrella we heard from House Speaker, ryan, emphasizing the need to get it done this year. How important is the progress . To the market, lets bring in kate warren, edward jones, principle Investment Strategies and jerry casilina, principle Investment Officer i will start with you, kate. We are getting headlines from jared kohn saying he expects a tax reform bill to get to the floor of congress in the first two weeks of september from your standpoint, is the market factoring in tax reform already to get done this year in any way or be addressed this year or is it not . I think the market has basically decided that well expect tax reform when we actually see it. Im from missouri, thats the showme state. Rather than having expectations. We always thought it would be 2018 but looks like it may get pushed off to so late, it may be later in 2018 that we see any impact from any tax reform i would say, show me when they get it done. Right now, the market is not pricing any tax relief so if they did get it done, we would be off to the races very positive so record highs even without tax reform with no expectation of it coming this year thats correct. Investors have said, we have heard a lot about it but many things have to happen for it to happen i dont think it is priced in right now. Jerry, you say that earnings are expanding, stocks are cheaper than historical standards. At the same time, we are watching the price of oil and bank of america, Merrill Lynch have an interesting tactical note today saying that the trend, the risk of oil is that it trends to the 30s what kind of impact could that have on the markets . The rest of the markets could maintain that. I think oil is a unique place here basically, opec botched the job they took on last fall they are going to need more time to get it done i dont think it will be a problem longterm. They have the ability to take out the barrels to stabilize it. They will need a 50 price rather than a 30 price. The more important question is how this market is doing so well in the face of that kind of weakness and the lack of progress in washington on so many things. We tend to side with the idea there is much more Economic Growth in the Global Economy today than was currently or even historically viewed as possible. Thats what i think is so exciting we are starting to discount that growth yearend this year and all the way into 18 and 19 and the impact on earnings and how we are going to drive the market further from here. Kate and jerry, our thanks to you. Ahead, we are going to hear more from House Speaker, paul ryan, when he sits down with aconrostraight ahead and reti fm our own larry kudlow and Jared Bernstein thats next. Im here at the Td Ameritrade trader offices. Steve, other than making me move stuff, what are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. Welcome back to power lunch. The association of manufacturers summit with a special guest, House Speaker, paul ryan thank you for joining us thanks for having me. Lets talk tax reform one of your biggest speeches you have given in a while. You said, we will get it done this year. We need to gary cokohn earlier said we wan to wait until september to get it on the floor to have the details put together what makes you so confident we can get this done this year. We have all agreed on the timeline, gary, Steve Mnuchin, we believe this is the time to get it done before the end of the calendar year. Americas tax system is one of the worst in the industrialized world. It is a huge anticompetitive force. We know we need to get it done it is the basics of tax reform we agree on almost all of that we are narrowing our differences between the house, the senate, white house getting on the same page we are going to be delivering tax reform in the fall the reason i am confident about doing this, every republican i know in congress is dedicated to getting tax reform done. We realize this is excess tension for the future growth of our company and the competitiveness of american businesses, big or small amongst the gop, lets leave the senate out of it there are still differences of opinions and different goals and Different Things people want you and the Trump Administration seem fairly aligned on a few things everything, actually. Three tax brackets down from seven. Corporate taxes, vicepresident pence speaking before you said we need a 15 Corporate Tax rate would you get behind that . I would love it if we could get the numbers to make it work. Im all for it i think it is actually possible. It is something we are going to spend all summer long drafting and getting scores getting the numbers to work. We, being the house tax writers, the senate tax writers and the white house and the treasury department, getting these numbers to work. We want to get these rates as low as we possibly can get to a territorial system, the basics that we all agree on. Thats what we are working off of right now so we can stick the landing this fall. You capital get to 3 Growth Without this we think the regulatory relief thats occurring right now combined with comprehensive, permanent tax reform is sort of the key to getting us north of 3 growth. Thats what we need to do. People are going to disagree about the details. Thats what congress is like thats what legislating is all about. We all, 100 , all in agree on getting it done. Many disagree we can get to 3 growth regardless ill take that at any time. I love the fight to try. You are that confident . I am confident we wont get it if we dont do tax reform you capital get close if you dont get this policy put in place. It is essential to longlasting Economic Growth. There is no way we can come close to 3 if we dont get comprehensive tax reform. We are on the business end of tax competition. We started in 1986, a great system relative to the rest of the world. The rest of the world has reformed the tax system to the fact that the average tax rate is it 22. 5 our c rate is 35 and on passers it is 44. 6 . It is killing us republicans are dedicated to getting this done. You referenced in your speech, 1986, the last year we got real tax reform, thats the year you got your drivers license. Even then, it took a couple of years. Why the urgency and why are you so confident you can get it done this quickly, specially because we have a break for the fourth of july. Im not worried about the recess would you work through the summer recess . I am not worried about the recesses that doesnt bother me. We can stay as long as it takes to get this done we are in session more than we usually are. I am not worried about that whatsoever the reason i feel confident, number one, it is not like we just got started on this this year we have been working on this for years. The ways and Means Committee, i used to be chairmen there. This is a sixyear project President Trump ran on doing this we, the house republicans, Senate Republicans, ran on doing this this is a one of the most prominent commitments we made to the public guess what we won the election. We have this absolute transformational opportunity in front of us. The white house, the house, the senate all lined up. We have this budget rule, legislation that gives us the ability to pass this without getting filibustered is there a big excuse about getting it done in the probe and all the headlines, mr. Speaker no. Does that hurt your agenda and your ability to get it done . Nope. How so . Why not . We can walk and chew gum at the same time, honestly. Ill take a shot at the media. This, this, this will derail the trump agenda let me give you a sense of how things work. The Intelligence Committee isnt writing tax reform the ways and Means Committee writes it. The ways and Means Committee is not involved in this investigation. They are busy working on tax reform the Intelligence Committee the investigation and the Senate Intelligence commit intelligen Intelligence Committee is doing theirs just like the commerce, the committee is working on Energy Reform thats the way congress works. They bring their bills to the floor and everybody comes and votes on it. Thats why i am not worried about these thing that is the media gets sucked into the vortex as a distraction of one subject after another one at a time is the border of justice tax dead it is not dead. We acknowledge the administration in presence form of full fazed in of day one. We think that would be very disru disruptive so we dont want to do things thats severely disruptive to companies and led alone of Foreign Holdings of u. S. Companies. There is a lot of issues that you have to deal with. What we want to do is we want to have International Tax reforms that is last ing and putting america in an advantage of going forward. With the problem of bat, would be a whole, i guess 600 million how do you fund that offset . If you go none, that means you are not adding a destination basedtax you are going through an income tax that you have today. That means when you switch to a territorial system, you have to work on new rule to guard against that if you have a destination based tax, you dont worry about that. It does not matter what you do over seas. We work on both. On the Senate Finance working on an alternative right now what we are doing right now, the tax writers, we are comparing and contrasting of various versions of reforms to get the best possible one. The lowest possible rates of the most International Competitive tax system and the best one that we can pass. The analysis right now we are going to stick to handing and we know well get to. I am confident that well learn how to do this they all seen links and many ways of you would agree with that so yeah, what it does is getting obamacare first and lower the revenue base by a trillion dollars that you have to hit for tax reforms if for some reason it does not happen, if the healthcare bill does not pass then the trillion dollars of taxes that we all decide to do and we wont incorporate those in tax reforms. Those obnoxious taxes, well have to put those to the side and be gotten to when we get to healthcare reform and reform the rest of the tax codes. Also, you talk about tax fairness and certain deductions and rich people like itemized deductions, you want to reduce the number down. The one thing that was loud and something you did not say to our audience is something Steve Mnuchin has proposed of the local and tax reductions from federal taxes. Thats the single biggest reductions most tax risk takers take would you support that yes i am saying yes new york hold you are not politicians giving you quick, clean answer, do you i am not. New york, new jersey, massachusetts and california there are still republicans in those states, what would you say to them . Is that not going to whack those states i would say two things. First of all of all look at the totality and getting tax rates as low as possible for everybody and not based on where you live and third of all, lets stop masking profit governments, lets stop disguising the in efficiency of some of the State Government that you just mentioned and make taxpayers and all of those states of full pensions, why do wisconsin taxpayers, we went through recall after recall with a full funded system and with the surplus and we are lowering tax rates. Why should the taxpayers in wisconsin, thats a high income tax paid for these things. We got to go. You favor three deductions, mortgage interests, charity and retirement account you would double the standardized deductions. Those personal exemptions, it makes the gaps up. Yes what it does is it dramatic over hall of tax cuts. We think some where in the neighborhood of 96 of americans, they can fill up their taxes on a postcard. You clear a lot of the brush up by raising those exemptions and standard deductions. You have to do that to make up the room to lower the tax rates. What would you rather have this one deduction because your state is a high tax rate or a lower tax rate are you saying you as in me because i live in new jersey the final question, we have got to go. This is light hearted, we debate this a lot on cnbc which is how much tax markets, how much do you think as speaker of the house of the stock market on the referendum on you guys getting your jobs done and i do believe it is getting vacant system that we are doing the tax reforms because we control the house and the senate, we are all for this. We ran on doing this we have a prominent display on what we would do if we got elected and we have the chance to do this now we are executing it. Because people know that and more importantly because it is really important for americas competitiveness. We have the worse tax of the industrialized World Everybody knows this Everybody Knows we need to repatriot rates. We have the Political Awareness and we are going to execute. Thats why i think it will work. House Speaker Paul Ryan, it was a pleasure to have you on cnbc, it is a good discussion, thank you very much. Well take a short break on power lunch and well be back with more and i will have a discussion with paul ryan. And tax reforms with job creations in the United States, we have a lot more to do dont go anywhere, you are watching cnbc, first at business street talk is sponsored by wisdom tree. To learn more visit wisdomtree. Com and the wolf huffed and puffed. Like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. House Speaker Paul Ryan talking to cnbcs Brian Sullivan of his plan to over hall the tax system lets bring in our analysts, what do you think can they get it done its got to be done this year. Ronald reagan says give me half the loaf now and i will get the other half later i dont believe he will get the full loaf now. I love it but i dont believe. I would break it up. I would do the business tax cuts right now and put it on the healthcare house conciliation, it is legal and it works why not the whole thing. I think they can get to business and everyone in the Republican Party favors it the larger question, it is going to take months and months to handle out we dont know what everybody is going to stand for i am just saying your half loaf now but in reconciliation and as i was pleased to hear ryan say can jump in the economy to 3 and you will have much less tax avoidance. Why dont you get what you can get and thatll be the growth kicker for everybody they plan to get some kind of bill to be voted on the house floor in september, do you believe it that sounds optimistic to me. I dont believe it i am one of those anywnaysayers that pie i dont know told usaun to hes a season politician and there he is saying no excuses. Perhaps he knows something we dont. I dont think it is likely he did not tell us anything that we did not already know. Obviously, i have tremendous doubts about any of those growth effects that larry is talking about. One of the reasons it is hard to put in and Corporate Tax cuts on reconciliations, you are not allowed to raise the deficit in the budget window when you do that add a window, there is no law about that window. Okay, senator pat toomey is talking about that thats point number one. Jared, you and i are going to disagree on the 3 growth. Let me ask you a different question are laffer and republicynolds ad others are arguing of lowering tax rate and ts and expenses ish tax avoidance. Thats why our loophole does not yield any revenue. Whats about tax avoidance this is a huge news. I am against it lets talk about it you make a good point and i am with you and with a lot of republicans and a lot of democrats and you may recall that barack obama had a plan to lower the corporate rate to 28 . I know thats not as low the statutory rate is too high paul ryan is being misleading when he says corporation pays all 5 but with that said, sure, i will be all about closing that loopholes and interestingly, territorial reality, it is not a loophole but it does give Multi National corporations a zero tax rate on its profit that makes it higher for domestic firms and making them less competitive to me thats a way to hurt Domestic Workers what about not being able to deduct your state taxes . Is that going to get through the process . I am for it by the way. I call it the antiloose state tax. I dont want to subsidize tax state spending and higher state taxes. I want to get rid of it. Thats one of these things to make it hard to get the full off. You got a lot of issues here. You know limiting the mortgage deductions, maybe . And no charitable, maybe, i dont know about that. Net expense out is going to be held on that. And state deduction is going to be a held of a fistfight into that i will repeat, three easy pieces thats all we are asking for lower corporate rate expenses between growth and tax avoidance. You will have the numbers and if it is not ten years, make it 20 years or i can careless. Two things, sully did a great impersonation of a new jersey senator right there. You are going to hear that from republican senators in a lot of places so larry is exactly right about that making the path harder and also, it is curious do you agree of not being able do you think it is a good thing of limiting the deductions of taxes . I think it is a complicated thing, i kind of like it but it is problematic i would be so quickly to eliminate it wait, wait. Was that a yes, jared, i need a yes or no. If i have to give a yes or no i will give a no there is a lot of stuff that blue states do that their citizens liked to do and yes, it costs money. By the way i am not you folded on me. Look at kansas. Let me rate kansas right now you are not in kansas anymore. No, we are in kansas. Yes, we are i will explain why. It turns out let me finish this it turns out there are things that taxes pay for that people really liked larry, laffer and moore have got to recognize, that will under mind the kansas thing, thats for another discussion i will fight kansas but not now. Ryan seemed open to ending the august recess vacation in order to get this done i like that a lot. We are still not going to gage a full loaf. I think working through august you only got 25 days left, june and july if you take august off. If you put august back in then you will have 54 days to work. Then the second half, the back end of the year, you got to do a budget and you got to do debt and there is not many days left. If ryans here is the thing about russia paul ryan was exactly right. The Tax Writing Committee is doing their work when we are all watching and obsessed about these hearings yes, they do their work, once their work is done, thats when you got to get attention of the other members. If you cannot do that, that delays the process take what you can, right now business and growth and boom just do it and stayathome. You have been saying that work something. [ laughter ] did not work in kansas. Thank you guys. Lets get back to the big market story of the day oil, the commodity falling of 40 buck as Barrel Energy tf, the ticker now is on its worst day of lower than 1 can you invest in this sector or stay away. Lets bring in our wolf senior analyst, good to have you there, paul sankey. We are in the middle of summer and u. S. Refinery is blowing a full blast right now we are dropping right when we should be approaching of the highs of the here. It is pretty scary we need some tightening in this market which well see tonight through the api and data, for the past couple of weeks, they have been disappointing and going in the opposite direction which we would hope. The moment, it is tough out there for oil analysts and invests if i can tell you. If i make a lot of profits in oil stocks right now, should i sell them . I should. There is no money you would make money along this year or any stock. The question is do you buy them anyway we do feel that the problem has been over supplied by opec and the saudi and russia for that matter resolved to solve this problem. At the moment it is not working. The more we go, the more we think they have to do more it is stunning though that watching brent levels radioiradiight now going back to prenovember opec levels. Right we saw the lows in the 30s a year ago or so, a year plus ago, can they weather in these oils much better than they had before thats what is fascinating. Thats what the price is testing. We had 52 on average and everyone says we are going to stop growing again everyone says our Balance Sheet is defined and well do in cash flows more or less oil remains and we have seen a good demand for low prices and the market is testing who can stand up and run, at 52, the answer is too many people. Now at 43, we are going to find out as we go into earnings who can get it done at 42. There is not Many Companies we like, for example, eog, pioneered the players that we believe work at sectors got awf problems here. Right if we start hearing, dividend cuts among the europeans which had very high dividend yield at this point do you have any sense of whether or not some of these dividends could be in danger 43 of a major problem we got a choice of how much they can spend or staying flat or paying out dividends we would be worried that these levels are absolutely. You should realize that you are going to need more than 50 a barrel of the sustainable level with growth. They maybe able to eat out at steady payments. If we sustain 43 going forward, well have massive build in problems secondly, what people are talking about is the relation here of middle east and in sustainability we always say it is going to be a major issue if oil stays this low, what you can see across the board and i am not just talking of syria and yemen and nigeria, as you can see of the saudi issue, thats real tension rise ng t ing in the middle east paul sankey, thank you for joining us john is joining us now in atlanta. John harwood it is very close between the democrat jon ossoff and republican karen handel. Democrats need to win 24 seat to regain the house next year there are 23 republican seats that Hillary Clinton carries that district. There is another dozen where he came really close. It is one of those large number of college educated, republicans which are the weakest constituents for donald trump in the Republican Party in this district the last polls of a narrow of 2 10 for karen handel and one wild card for this afternoon of this pouring rain behind me and you can see water coming out of the gutter of this high school where there is a place where karen handel needs to win the election jon ossoff won the earlier vote. The real question is what then happens after this two republican agenda, donald trump is at 35 approval here in the district 26 of republicans disaprovprovd it could have effect on the debate thank you, john harwood ahead of the National Association joins us next. Cisco is launching a new network to help stop Cyber Attacks Chuck Robbins is joining us ahead. The big drop in oil is counting down on the trade all that and more is coming up on power lunch. At t i g with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Welcome back to power lunch. We have the Vice President mike pence and House Speaker paul ryan and our manufacturing in u. S. , thank you for joining us a lot of tax reforms a lot of people have trouble to make that link it is nice, you are going to enrich the owners, what does it have to do with jobs if you think of manufacturing and the fact they are supplying an enormous amount of jobs in this country, what happens when their money is tied up whether it is in government or the regulatory process we unleash the ability of employees and actually and not only create new jobs and opportunities but lift the wages of those already working with us this is an important issue for manufactures for sure. You have the Vice President , you are dialled in pretty good to capitol hill. Paul ryan is optimistic that we can get some kind of tax reforms done and gary comb thinks he can put a bill on in september what are you hearing do you believe well get tax reforms done this year i i do. You understand that the American People are counting on policymakers thatll get things done thatll get to investments and Economic Growth and a better quality of life for americans. Thats what we are talking about when we are talking about regulatory reform. Congress is under a tremendous amount of pressure and the add minu administration to get this done. A source from the white house told me a couple of weeks ago, paul ryan says it is not dead yet but maybe on life support. Do you think the bet is going to happen the key for us is lower the tax rates and enable more money to flow into manufacturing there is going to be a lot of proposals out there. Clearly, we have the Administration Proposals which are firmly behind. And also a territorial system, we are hoping that there is going to be a lot of process one way or another i would imagine that automation is a bigger risk to manufacturing jobs which peeked in 1979. I actually think automation is a great opportunity because as you seen the manufacturing work force and manufacturing becoming more automated, you also seen manufacturing employment increase. Why is that . Somebody has design the robotics and somebody has to maintain robots manufacturing, we are all peaked in 1979 i am talking about the last five years where we have been seeing an influx of growth and manufacturing employment if we do nothing over the course of ten years, we are going to see 3 million. Robotics is just another tool that well get to use to make it easier a big story, oils continue to collapse and a lot of your manufacturing, constituents are huge in manufacturing. Those who are in the business of oil development, they would rather see a higher price but you also have manufactures who rely on Cost Effective Energy Supply it is one of those cost drivers to actually make their product in a cost efficient way so it is a little bit mix match jay timmons, i have a feeling your new slogan is manufacturing make america thats not an incidenaccident no, thats not at all it is consistent of where we have been for a number of years. A little bit of a play on words there. Would you say very clever thanks guys. Ahead new report, tesla maybe closer to producing vehicles in china for the first time what does it mean for the company and stocks and energy, the biggest drop for oil, we got the closing trades, coming up. Here is tesla trending slightly higher today of 8 10 of a percent. Our senior auto of consumer research, james, it is good to you have now making the vehicle in china eliminates the tax, correct . Absolutely, thanks for having me with any automation in china has to have a joint partnership. So they are subject to this excessive patch. We dont know at this point of one meter report how theyre going to produce but it opens up a gateway of extremely high market for them. We g shing wan posted a photo of elon musk. Take a look at this photo. Do you have any sense as the company talk about china actively as the next area of growth not really. Elon is sporatic in terms of how he talks about projection of growth it makes perfect sense when you are in china, theyre looking at 20th Century Global climate. I get why they would want to because of the growth but are there risks as well . Risks as well for capitol raising but i think certainly china and most people think of consensus believes it is going to be the largest Automotive Market for quite sometime. They are dipping into four or five cities. Everybody guesses it is huge. Tesla in particular still have a lot of issues they are dealing with the amendment to scability t lot of volume and know how helps reduce that cost some what as well this is not going to be linear and i dont think this sort of scuttle the announcement it is not going to be linear and taking several years and the risks and the cost of production it sounds that you are a little bit precautions i am surprised that people are not cautious on this prior this is a big void now getting this up and running give us a new growth of element to get behind. This helps us get a little bit more optimistic even and looking down of the longer term. James abertine, thank you for joining us coming up, the biggest firm, how can they improve jobs in the United States . And oil for the day is down well tell you what the final trade is we got those closing trade coming up right here in 2 minutes and 40 seconds ke all th. Itrovide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. baby crying fly me to the moon elegant music and let me play bell rings become a villain again. Mmm. [ minion babble ] [ minions cheering ] [ minions sighing ] [ minions cheering ] [ minions booing ] okay minions, were going back to villainy. [ minions shouting ] so bad so good that im so bad. [ honking ] so, youre villains now . [ nervous laughter ] i mean, hello sweetie. Despicable me 3. Rated pg. Right now Tropical Storm sidney is turning in the coast of South Carolina and targeting texas on thursday. The forest fire has been burning for three days, 125 miles or so from l more Flight Cancellations across the country due to record heat dozens of flights are grounded in phoenix where mercury is soaring past 120 degrees uber drivers, are you ready for this uber is adding the tipping feature to its Smart Phone App it is part of a broader effort to improve its relationship with the driver the question is what will it do with the relationship with passengers yes all right, thank you, lets get to the white house of developing story reporter the president will say whether or not there are tapes of his conversations with former fbi james comey here at the white house earlier this year you remember that conversation, the subject of some significant controversies of whether or not it amounted to obstruction of justice if the president was asking james comey to back off the investigation broadly. Micha comey kept notes of those conversations and the president says in a tweet that comey better hope there are no tapes of that conversation the president will reveal by the end of the week whether or not there are tapes. If there were, those will be requested by the senate Intelligence Committee and Robert Mueller whos going overall of this of a possible case of obstruction of justice thank you. All read across the board here for july contact of crude in august as well. At one point during the session, we have seen more than a 3 drop and we have fallen under 43. We recooped some of those losses this is a onetwo punch here those of us are production increasing of places of libya and nigeria. At the same time there are a lot of demand concerns here. Well get to the department of energy numbers tomorrow. Looking for bill and cruding and gasoline we are two weeks out of 4th of july and this is the peek of the season and prices are going down this happens to be a time where traders are saying three handles is around the corner back to you. Thank you very much. Jackie, cisco announcing moments ago of the new network, theyll use ai, Artificial Intelligence to learn new behaviors of the time we sat down with robbins in an exclusive interview to discuss the launch we are live ing in the worldo billions of new connections being add todd ted to the netwo. In 2020 there will be one million devices added per hour we want to get those businesses in minutes and not over the course of days or months what we announce today of learning Artificial Intelligence, automation, ushering in a new era of network and overtime continues to adapt and learn and become intuitive and it is connected directly to what our Customer Business outcomes are we are excited of what we announce today it sounds pretty large when you hear it that way, a new era for networking is it thatlarge at advance for you guys, chuck, to say a new era, why would you define it that way the best thing to do to share how a customer may take an advantage of this. Lets think about a Financial Institution wants to ensure the top tier of having the best experience when they are engaging of the bank or institutions they would define quality of service and we have hundreds of engineers going through and deploy those lines of codes throughout the infrastructure and with intent base infrastructure i want them to have the best experience and then through automation and through Machine Learning, the network will actually deploy that intent in an automated way in a matter of moments and overtime, the network will adapt and learn using Machine Learning so that it actually can optimize that experience for customers of the bank based on the policy of intent that the bank defines we think for our company, this is something we have been working on for the last two years and we are looking forward to help our journey what advances needed to be made for you to make this in advance in terms of network. We actually have announced today of new Security Technology that with 99. 5 efficacy will help determine the malware thats only through accomodation of High Performance hardware happening at wildfire spe speed network. We have a different quarter for the company to a certain extent, what do you tell them and how do they view this announcement which you believe is a great importance in terms of the changes that you implement at cisco we are always going to build the highest performance hardware because fundamentally, an internet that supports billions of connections is going to need High Performance of hardware we believe of delivering high value of software and as we have seen across collaborations in the past and how we begun to deplore it with cisco 1. We believe this is this right thing for the company to do longterm. It is a long transition for the core networking technologies but we believe this story is, this story that we told today to our customers and this launch that we deliver today is the beginning of a journey to help us build that software and encryption model of our core which our investors have been asking us about. Chuck robbins thank you for that we got to get to capitol hill of al new legislation moving through congress cayla. Hey michelle. Senate Majority Leader Mitch Mcconnell putting speculations to when the senate is drafting that legislation for healthcare will be put forward, take a listen we are going to lay out a discussion draft on thursday morning and you will be able to take a look at it. You heard some of my colleagues of the highlights of it. I would not want to compare it with the house bill, t speit wi speak for itself the bill will take a different approach when asked about comments made by the president that the president requested more heart in the senate bill. I managed to see senator ted cruz from the hallway from the location where those comments were made and i asked him whether the discussion draft is going to be put out on thursday has consensus among the Senate Working group or the Senate Republicans who have been toying over this legislation, he said there is still quite a bit of work to do of course, that discussion is going to continue as soon as that language is out thursday is when well get the draft of the Senate Healthcare bill back to you. Looks like theyll finally finish cooking it. Cayla. Got it a big event thats happening in washington, the 2017 Investment Summit is under way near by maryland the big focus is bringing jobs to america here is president and kate sncef north america, good to have you here it is good to be here to what percentage are you manufacturing here in the United States, mani iyer . We have 100 made in the u. S. And also there will be a lot of suppliers and dealers and customers and focus on the small ministry of Rural America where jobs are important this administration is focused on increasing the amount of manufacturing jobs that we have here in the United States are there things that we could do here that would drive your numbers higher when it comes to manufacturing here is that a worthy goal of the United States to achieve or does your Global Supply change determine that really parts should be in india or different parts of the world and the way it should be well the world is flat, you have to have a Global Supply change and take the best of all world. It is important to localize as much as possible we talked a lot of the last two days of how a branch should be located and how there should be investment is in the country you have to have local people and channel and manufacturing and local parts to be able to connect to the local needs mani, how do you think of a potential border if you are a assembly here in the United States and your supply change is around world and you are bringing the parts in, are you concerned . We are. I think thats not going to be in the benefit of growing and attracting foreigners in the country o f the u. S. There will be discussions in the washington area. We strongly believe thats not going to be in the interests of companies feeling confident of investing more in the u. S. All right, mani iyer, thank you for your time, mahindras, u. S. Ahead, thank you. Fedex has your all times high, tonight after the bell, is wi bro truo n . I lle right back online u. S. Equity trades. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. Welcome to holiday inn whether for big meetings or little getaways, there are always smiles ahead at holiday inn. A big day for chinese stock. Here on how to trade the decision is our trading nation team of, Craig Johnson bo boris, i will go to you. What do you think of the chances, we have been through this before . If it does materialized, you have no choice the massive size of the chinese economic market is notgoing to be a one or two days event it is going to take a while. Having said this, i think longterm, there are still tremendous amount of transparency problems. I will not be married to this trade. So even of 2. 9 billion mainland share purchase in the month of may yes, because i think once they make a decision, a lot will not have any choice but to absorb craig, what are your thoughts of which index are you looking at in terms o f the technicals so we are watching the eem. This index is over 21 so far for the year clearly there is some anticipation and the fourth time we are going to go through this for the charms where this finally occurs, based ton chaone chart, i would wait for a pull back i dont have to step up in buying here and perhaps well get the buyer and given off as far as our indexes are up. Whats the lower in the channel right now 35ish yes, correct. Boris and craig, lefor more to tradingscnbc. Com. Everything you need to know of a full fedex report coming up on power lunch. Now the latest from trading nation on cnbc. Com and the words from our sponsors. My brother [ laughing ] oh. This guy, the mansion and the cars. This is the best . I dont like it. Gru, villainy is in your blood. [ evil laughter ] [ minions shouting ] look at us, two brothers pulling a heist. [ upbeat music ] [ gasps ] im gonna be empaled [ chuckles ] im okay. [ exhales ] despicable me 3. Rated pg. Big Earnings Report on deck for shipping giant fedex expected delivery time, today after the bell the stock is up 10 over the past month alone and recently hit an alltime high can the stock keep climbing . Lets bring in an analyst at barclays and our own Morgan Brennan whop covers the sector brandon, ill start with you this tock is outperforming its peer, ups in the broader markets and how are we setting up going into earnings. Reporter hey, melissa, thanks for having us on again. You know, weve been on the show before talking about how fedex just is really undervalued from an investor perspective. Theres a lot of longterm fears that amon is disrupting the business when our view is really that amazon is adding a lot of contribution to competitors that are trying to compete online and creating a lot of inMarket Growth for fedex they have sent a lot of capitol that captures that growth and not a lot of cash flow but they have been compounding earnings at 13 , 14 for years and stock trading at 14 times per earnings this stock is trading oneonone for growth and thats pretty cheap compared to an asome thats a pretty good indication that people are looking at fedex as a good industrial stock with a lot of tailwinds behind it. And fedex has been investing very heavily in its residential Delivery System driving its spending up . Something like 5 billion something that everyone is watching in todays reports, whether the investors are beginning to pay off earnings expected to grow 17. 7 year over year, and everyone is also very focused on what the fullyear forecast for 2018 is going to look like as well both fedex and ups have been investing really heavily into their network because, as weve seen, ecommerce has been growing at double digit percentage rates for years now, and they have been really struggling to keep pace with that without the costs increasing. Speaking of cost increasing, brendon, what about having to raise prices we saw ups is now going to raise peak shipping prices will we see fedex do the same . This is the bigger issue with ecommerce all accustomed to getting prime deliveries at our house. Awesome, you order prime and it shows up at our house a couple days later a lot of that is largely subsidized by the u. S. Post office the hitting capacity, anyone that will upset your letter carrier, you can see their jeep full of packages as we reach the capacity max mums, the post office raise rates and ups implement a peak surcharge, i think that just says in the future well have to decide do we want to pick up that package at a whole food or walgreens location or do we pay for the luxury of having it delivered right to our doorstep. What does it do for the stock . If fedex raises prices is that good for the stock or not . The s p is trading 17 times earnings right now i think this is a big vote from institutional investors, you know, trading below a market multiple for above Market Growth that fedex doesnt have much of a Sustainable Cash Flow story here, but arguably if pricing is coming up and someone mentioned cap x, if they can keep that Capital Spending around 5 billion and give pricings and margins up, this is a pretty good cash generator. We were talking, brandon, about investing, and thats what we were talking about capx, investing in its delivery network. Does it have to at the same time lower the overall delivery costs . Its not as less dense for the residential so, therefore, its got to sort of offset that. See, these are the challenges that i think amazon and the post office and ups and fedex have been talking about for a long time youre going to pay someone on average 15 to 20 an hour to drive a package truck or van, and you have to have a lot of densetive to leverage that labor cost, and it doesnt matter if its aups truck or a post office i think everyone is realizing when you deliver one package to one house, again, for ostensibly free shipping, it doesnt, you know, drive a lot of marginal economics for the carrier so were all trying to figure that out. That socalled last mile of delivery to consumers doorstep is as much as 50 as the cost of shipping the package this is sort of the big battleground that everybody is focused on how do you drive the cost down for that one of the things thats been going on, fedex is a great example of this, is they have been striking partnerships with retailers to try and get folks to come into stores and pick up more packages there, because the more packages you put to one location the more you drive down the costs, right theres an argument that amazon acquiring whole foods, even if you get afraction of those amazon members, those prime members to pick up packages at the whole foods while they are shopping, thats going to drive down the cost of shipping. Interesting. All right morgan, thank you. Brandon, thanks a lot. Thank you. Check, please is next. Dont mohr move. I know yrexteabt oue cid ouit i think we should do that meeting tomorrow. Well wait. What did you think about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading Companies Lead with digital. Usaa gives me the and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. Check, please. Welcome bock to power lunch. Time for our check, please and guys, my check please about is an excerpt from our interview with paul ryan because we talked about the russia probe and Everything Else going on around the Trump Administration if thats going to be a hindrance to getting things like tax reform done, and rereminded our audience that its different parts of congress doing each, listen the Intelligence Committee isnt writing tax committee. The ways and means writes tax reform the ways and means is not involved in this investigation they are busy working on tax reform so Intelligence Community is going to go their investigation and the special counsel is doing his investigation. The senate Intelligence Committee is doing theirs. Meanwhile, the ways and Means Committee, the finance committee and the house and the senate they are doing tax reform. Just like the Commerce Committee is working on Energy Reform, just like Thejudiciary Committee is working on Immigration Reform im really not worried about these things that the media gets sucked into the vortex as a distraction. Well, i hope we didnt get too sucked into the vortex there in tax details, guy. Tried to pin him down on numbers. Well see what happens they are confident they can still get something done. A lot of skepticism out there and whats increasing the hope is they would work through the august research. Even then, larry kudlow, on his side, never mind Jared Bernstein on the other side of the aisle, but larry kudlow was skeptical they could get the whole thing done even using the august recess. Look, i hope hes right. The market hope hes right for sure exactly im watching shares of sprint as well as tmobil. Earlier today there was a report saying they are essentially getting red to merge and then we got a tweet from tmobile thinking about all the customers and employees with a winky face at the end and the session is up by 3. 3 right now, and this is something to watch, of course. My check, please. Were all significant thrill about whole foods and amazon and all the Different Things you know, the discussions weve had for three days about what the implications are Morgan Brennan had the most interesting one here picking up your amazon packages at whole foods while you go shopping thats the latest thing ive heard. Could cut costs by a lot. Okay. Well see. I dont want to pick up anything i want it delivered. Me, too. You better buy the Asphalt Companies because they will have to double the size of the parking lots. Good stuff, brian thanks for watching power lunch. Closing bell starts right now. Welcome to the closing bell. Im sara eisen leer for kelly evans at the new york stock exchange. Welcome aboard. Thanks, bill. Im Bill Griffith energy has been the worst performing sector. Today the oil market has entered bear market territory. Down more than 20 as its definition whats behind that move coming up in a moment here. Snap shares getting hit after strong numbers for instagrams story feature were released. Weve got early snap investor and star o