Transcripts For CNBC Squawk Alley 20170301

Were going to talk to larry kudlow about this in a moment, but Steve Liesmans at hq. That speech working in concert with a bunch of other data points around the world. Yeah. Well, you know, carl, heres what i think we learned about the market in the past 24 hours. Its okay eating a few more Brussel Sprouts when it knows there are some big, large slices of chocolate cake about to be served. The Brussel Sprouts are fed rate hikes. Before President Trump took to the lectern and congress, federal officials seriously looked at a rate hike. But that was offset and then some by a president promising historic tax reform, a 1 trillion infrastructure bill, and sounded far more moderate on trade and immigration than he has in the past. I believe strongly in free trade, but it also has to be fair trade. Its been a long time since we had fair trade. And lets note that the president did not mention punitive import tariffs or the Controversial Border adjustment tax. He also didnt say he would lower the Corporate Tax rate to 15 , only that hed lower it, and that may be a sign the president s already moving to compromise with higher rates of house republicans, although they are, in fact, lower than the existing rate. Most of it was old ground as far as economic proposals were concerned. Details remain lacking, but it seems that investors believe a more moderate trump has a better chance of getting his proposals through congress, and that makes the chocolate cake part of the meal a little closer and a little more realistic. Were going to talk about the Brussel Sprouts tomorrow. A quick programming note were going to have an exclusive interview with fed governor j. Powell live on this show tomorrow at 11 15 a. M. Carl . All right, steve, we cant wait for that. Thank you very much. As we said, joining us now, jared bernstein, former economic adviser to Vice President biden. With us at post 9, cnbcs senior contributor, larry kudlow, who has had his own recommendations on legislative priorities. Are you winning that battle or not . Well see. Well see. Im going to win a few and lose a few on this. I just want to say from my personal standpoint, i have not always agreed with mr. Trump down the line, in fact, on this program. Probably got me into some trouble. But in any case, watching that speech last night, heres what occurred to me. Great president s are optimists and project an optimistic vision. Last night, donald trump was brimming with optimism. Brimming with optimism. Start, middle, finish. Reaching out, asking for unity, directly asking house and democrats in a bipartisan way. His speech was full of civility and respect and persuasion. This is lost arts. Its things that weve been talking about, particularly the idea of civility and bipartisanship. It is by far the best job hes done, and the country i think the stock market today represents the country rallying behind President Trump. How long it lasts remains to be seen. Theres a million details going to come out from his budget, but it was just a magnificent, magnificent performance. I just wanted to say that, because you know what . I think it was riveting. Im watching this thing, and you know how people, like, sometimes you watch it and youre waiting for a train wreck . Wrong. Wrong. What you got is president ial modulation, as i said, and civility, and it worked. It was riveting. You couldnt take your eyes off it. Really quite remarkable. Investors, jared, seem to agree. Theyre pretty optimistic today, were seeing a stunning rally. Best day of the year for the dow, s p and nasdaq. Youre on the other side of a lot of these policy issues. Right. Would you agree with larrys characterization, especially as it relates to the markets, the economy and the view forward on the country . Definitely up to a point. And i was just thinking, listening to larry, of the contrast with the american carnage speech that trump gave in his inauguration. So, larry definitely has a point about a kind of a more moderate approach. Now, the problem is that that was kind of an isolated incident for donald trump, but people here have longer memories than just last night. Also, i think its really important. One area where i disagree with what larry just said is that the stock market doesnt represent the country. I mean, im not saying its unimportant. Im not saying it doesnt matter to people who arent rich because we have Pension Funds in there, but remember, 80 of the stock market is owned by the richest 10 of households. So, as the stock market goes is not how the middle class goes. And the problem that donald trump is going to have is that his policies have yet to really connect with middle class people, especially given the legislative barriers that he faces, which are really very tall. Jared, my friend, my love, my friend. I can see where this is going. Here it comes, jared. 50 . 50 this is a true fact. You know this. 50 of american households own shares. Own shares, right. And its not all direct. Most of its indirect through Pension Funds, et cetera, which are middle class. A lot of them are unions. Now, im not saying the stock market every day is perfect, but when you see one thing, you see another, there is causality today. Lets face it. I guarantee you let me just say one thing i guarantee you, jared that trumps approval numbers skyrocket after this. You may well be right about that. I guarantee you. I want to make a distinction for our listeners. There is the share holdings, and larrys right, its a little bit below 50 , about 45 of households hold some shares of stock. What i was talking about is the value of the market. 80 of the markets value is held by the top 10 , so the people who do well when the stock market goes up isnt the middle class. But the other thing id like you to address, larry, is this idea that donald trump can certainly put forth some optimism and talk about his policy agenda, but man, the Republican Party is way ungovernable, and its really pretty chaotic down here. So i dont see how he gets from a set of ideas, even repealing obamacare. Theres no plan. Theres no tax plan. Theres no budget plan. All right, jared, fair enough. No, its a fair point. But look, i just want to weigh in. Were talking politics. I want to get to Economic Policy in a second. But the gop is much more united than folks think and that newspapers are writing about. And by the way, im not going to like all of it, but theres much more united on this. The house, for example let me put this on the table. Controversial measures, of course, the border adjustment tax, which i happen to strongly oppose for a variety of reasons. I am told late yesterday afternoon, or it might have been early this morning, a meeting of conservative activists with white house representatives were told that the white house does, in fact, favor the border adjustment. The president last night went to the waters edge, didnt quite mention it, but in fact, inside the white house, the b. A. T. Is winning, and through legislative games, theyre going to allow votes for and against, but its going to be part of the deal. Including the current form that its laid out in the gop plan . Basically. That is correct. Basically. And that senator Mitch Mcconnell is going to make it easier. Hes got members who are violently opposed to it. Hes going to let them vote against specifics, but then hes going to let them vote in favor of the larger package, which will have the border adjustment tax, which, you know, jared, i think you probably like it more than i do. I dont like it at all. Well, i mean, first of all, youre definitely hearing different politics than i am. And you may well be right. My sense is that its just too heavy a legislative lift, especially given the opposition from those who would be hurt by the proposal in the sense that they can no longer expense their imports, so its very tough for businesses that are able to do that retailers, some energy folks. I agree. You know, its a very tough lift. I think more importantly, larry, senators from the states the important point about it is that this was their main pay for, so its really hard to do their tax plan without either the bat or some other pay for. Otherwise, youre really looking at seas of red ink thats going to lose a lot of republicans. Look in a pinch, you could cut spending to get through the payfors. And by the way, reconciliation is going to be whatever they want it to be, but thats just what im hearing, okay . The other thing that was so interesting is, last night was not a budget speech, so you didnt have heavy, heavy, heavy detail. Right. No question. But you had a lot of areas of detail, like immigration, like health care, for example. I loved his Health Care Section very, very much. Its promising. He laid out five or six principles. Theres broad agreement inside the gop on those principles. But let me raise one issue, all right . Nothing is perfect in life, okay . He mentioned a tax credit, all right . Which a lot of republicans have put in their bill. Many friends of mine and myself worry that a refundable tax credit or a straight tax credit is, in fact, a new health care entitlement. Right. And i dont want new entitlement. I thought we were in the era of getting rid of entitlement. And the congress has said that already, they basically want to draw that line in front of that. Im their spokesperson this morning. I dont you know, gop, were talking about the b. A. T. , now entitlement. Republicans are supposed to be for lower taxes, not import taxes, and theyre supposed to be for less entitlements, not new ones. Hold on. The health care thing has really been pretty distorted. I dont think that you could really say, larry, in good faith that republicans have unified around some replacement for obamacare. All they know is they want to get rid of it, and the problem that theyre facing kind of gets to what you were talking about. When trump says i want to make sure that you have better coverage than you have, and its going to cost less, you really cant do that. The only way you can have the only way you can increase access, which is the difference between republicans and democrats when theyre talking about coverage, is by and spend less money is to have tax credits and highdeductible plans and Health Savings accounts. And what that means is people now have to pay much more out of pocket to get health care. Theyre trying to really ratchet up, to really dial up the costsharing. Now, some republicans, i spectaculary likes that idea, but im going to tell you, trump voters themselves have said the highdeductible Health Savings plans, theyre not the kind of insurance we want. We want better coverage, more comprehensive coverage and for less. Thats not whats on the table. And they want cheaper coverage and lower premiums, more coverage. One of his best lines last night was were going to end the mandates. Were going to end the mandates and thats a twofer. Judge roberts back in 2012 said the mandates are a tax. I just want to amend the distinguished judge by saying theyre a tax hike. The problem is [ everyone talking at once ] one last point here. Its caused the death spiral for obamacare. Thats all. Larry, youve been pretty resolute that you want taxes tackled before Even Health Care . Or at least at the same time. But it doesnt look like its going that way. It does not, but im going to be the last guy to turn the lights out on that. All im saying is this, reconciliation can be whatever you want it to be. So, hear me out. Obamacare is a huge tax. Thats what it is. Thats what the judge defined it as. So, that belongs in reconciliation. And by the way, business tax reform, not the whole package, but the business tax cuts, which trump featured prominently last night, could go and be a tax to the same reconciliation bill as the mandates and the rest of the aca if i can [ everyone talking at once ] i wish we Economic Growth i wish we had time. Jared, make it quick. Okay. You cant maintain the preexisting condition coverage and get rid of the mandate. You have to have now im going to give it to you. You have to have Healthy People in the risk pool, and thats insurance. Yes. Listen to me, this is a key point the healthy have to subsidize the ill. Thats how insurance works. Listen to me, buddy, im closer to you than you think. Good to know. I am in favor, i am in favor of transparent subsidies by the federal government to those folks who are ill and preexisting conditions. I want a straightout spending subsidy. This is a great country, and we need to take care of the ill. I am with you on that point. Yeah. That is not a problem for me at all. Okay. Its a social safety net. I learned it from reagan. Just give it to them. Just give them the money and then lets get on with the other free market reforms. And the gop should make that clear, but they never seem to make it clear. Jared, larry, thank you, guys. Larry moving walmart shares a little bit here on that news about a border tax. Well watch that. Im just telling you, theres a meeting, nasty little meeting i heard about just before i got here. I would discount that prediction, but well see. All right. I hope so i hate the thing. Guys, thanks so much. Thank you. As were talking, we are still waiting but i love jared. For news pending out of mcd. Those shares are halted. Once we get the news or trade resuming, well get that to you. Steve easterbrook, ceo, joins us tomorrow on squawk on the street, 9 00 a. M. Eastern time. When we come back, were hours away from snap pricing the ipo tonight, trading on the nyse tomorrow. Will it be enough to spark a rally in tech, or i guess, a further rally . Then, ubers ceo, travis kalanick, says he needs help when it comes to his leadership skills. A lot more on what the president said last night, and more importantly, what he didnt say, when squawk alley continues. Dows up 245. 90 of the wors largest supercomputers run on intel . That means you can taka universe of data in your case literally and turn it into medical discoveries, diagnostic breakthrohs. Pi dont know whates colat is. But yes. Ngulity. Innovation runs on supercomputers. And supercomputers run on intel. You are super smart. And super bu ooh ufo false alarm, eyelash it is set to be the biggest tech ipo in years. Snapchat Parent Company snap inc. Pricing tonight, will be trading on the nyse tomorrow. How are we set to capitalize on snaps success . Jon fortt is in barcelona. Going to be a busy night, jon. Reporter yes, it will, carl, but first of all, a question about snap is whether its going to have the kind of global appeal that will have to really power its growth after the ipo. So, here in barcelona, its a great place to figure that out. This three years ago is where College Students told me that whatsapp was their number one musthave app on their phone. So, here i caught up with dominique del por. He is a board member at avendee, general manager of content for havas and i asked whether that has buzz with european millennials. Heres what he said. Absolutely. Uk, france, germany, south europe. Its really trendy. The big brands are coming in the discover part, and so, its perceived as the growing brand. Reporter the question is whether theyve got the sort of business momentum that they need to really make money here as well. Delport pointed out that they really just a few months ago started their big push here, but theyve got to be careful not to jam too many ads in. Still, he feels pretty bullish. Take a listen. This is the moment of truth for the platform. Im still bullish. At avast, we see that platform from day one. We see how the engineers are invested in creating new stuff, something that doesnt exist, and i think that its the right way to go. Reporter sounds promising. Sara . All right, jon. Stick around, because were going to talk more snap now. Lets bring in insight. Com founder Jason Calacanis and luke ventures managing partner gene munster. So, gene, what were hearing right now is there is Strong Demand to raise pricing ahead of the official pricing which well get after the bell today, but some Big Questions longer term about whether snap is a good investment. Whats your take . I think who knows what its going to do tomorrow. Its probably up just because, as you said, a lot of hype around it, but i think that next year is going to be challenging, because this is going to probably feel more like twitter than facebook. And the reason is that this is more about improving rpu versus growing the base, even though there is interest in europe as jon fortt was reporting. But the strategy is more about improving rpu. I think that sets up a valuation 30 times revenue. Facebook was 19 times. So, this is an expensive stock, so i think its going to be choppy for the next year. After five years i think it looks more promising as they get more into the camera. Whats your take, jason . What are you hearing about demand, how big of a deal this is and how snaps been doing on the road show over the last few weeks . Yeah, its this is a tremendous company, and i think this is really the story of the artist and the thief. If you look, evan spiegel in the five years that snapchat has existed has created four incredibly delightful features. Obviously, efemale raleigh messages, where the messages disappear, stories where you create short little videos that tell your life like a documentary, filters to put flowers in your hair, like jim cramer loves to do, and the final move, the spectacles, where you can record your life. And the thief, mark zuckerberg, has stolen three out of the four features and tried to destroy snapchat. So, the question is, you have snapchat, which has an incredibly artistic, fantastic founder in evan spiegel, who is up against a juggernaut in facebook that not only has zuckerberg stealing every feature and putting it into facebook, but hes convinced the instagram and whatsapp founders to try to kill snapchat as well, and you have instagram and whatsapp now stealing their features. So, the question is, do you want to bet on the thief, the artist who created these, or the den of thieves who are stealing all these features . And that is a really problematic issue for evan spiegel, but still, even with all of their might, facebook cant kill snapchat, and they keep trying. That to me says that snapchat is an Amazing Company and worth buying. Jon . So, i guess, gene, the question is do we have enough evidence that cincinnati is able to outrun facebook in its various forms . Its like terminator 2, i guess. Instagram, the most direct competitor, but also whatsapp. Have they shown enough in their innovation that facebook has been following that they can stay far enough ahead to command this kind of valuation . Theyve given some hints. And again, i think the next years going to be choppy for snaps stock, but longer term, the hints are spectacles and what theyre doing around the camera and the hardware. This is the first really usable ar. And when facebook on their last call was talking about improving the camera, theyre talking about doing some of the same filters. So, theyre playing catchup with snapchat. So, as an investor, i think you have to look at what theyre doing. Theyve got many hardware engineers and i think thats probably the cutting edge thats going to give them a longterm advantage. Did you get the joke about evan spiegel being really tired, by the way . Hes been exhausted from the road show and also by fulfilling his duties as the vp of product at facebook. Oh, thats a good one. I think that his fiancee, miranda kerr, would agree with you on that one, jason. Yeah. Be sure to stay with us. Cnbc all over the snap ipo tomorrow live at the new york stock exchange, where the stock will debut for trading. And also, be sure to tune in to closing bell today for the actual pricing. We say thank you to gene with all that jargan, rpu, average revenue per user. Well be sure to watch it. Jason, you were an early investor in uber, so stick around to talk about this one. Uber Ceo Travis Kalanick formally apologizing to his staff after a video emerged showing him arguing with one of his drivers. Heres the video originally obtained by bloomberg. I lost 97,000 because of you. Im bankrupt because of you. Look yes, yes, yes. You keep changing every day. You keep changing every day. Hold on a second. What have i changed about black . You changed the whole business. What . You drove the prices. On black . Yes. Bull [ bleep ]. 20. Started with 20. How much is the mile now, 2. 75 . You know what . What . Some people dont like to take responsible for their own [ bleep ]. They blame everything in their life on somebody else. Why didnt you email for good luck. Good luck to you, too, but i know youre not going to go far. So, in response, kalanick writing to say that i am ashamed is an extreme understatement. My job as your leader is to lead, and thats not what i did and it cannot be explained away. He continued i must fundamentally change as a leader and grow up. I need leadership help and i intend to get it. So, jason, as an early investor in this company, whats your reaction . This is just the latest in whats been a string of bad reputational blows for uber lately. And, and i have to give a quick disclaimer. Im an Angel Investor in the company but i have no operational role or inside information, and obviously, i do not speak for the company. I only speak for myself. That said, ive known travis for close to two decades. Ive known him through three companies. I dont think the tape represents him as much as the apology does. I think hes taken ownership of this. He knows he has to improve. And hes not blaming anybody else. Now, i will tell you that in the arc of history when you look at these technology companies, you can count on one or two hands the number of executives who have built a company from 5 people to 5,000 or 50,000 bill gates, Larry Ellison, larry and sergey, zuckerberg. And if you look at those individuals, they all had this kind of crises of leadership and having to look in the mirror and ask themselves, hey what got me from that 5person company to this 5,000person company is not serving me to get to that next level. What got you here will not get you there is what we say in silicon valley. And so, i think travis understands this very well. And im encouraged by the fact that his team and the people around him have rallied around him and they support him. And i am 100 confident and certain that travis is going to turn into one of those legendary, and i believe he is to a certain extent, legendary ceos that weve seen like bill gates, like Larry Ellison. People are not perfect. They need to improve. And i think hes on that journey. And i think hes surrounded himself with some great people bill gurley, arianna huffington, and other folks who are around him. And hes listening to them and he understands he has to improve. And you know what weve seen the last couple weeks, our selfinflicted wounds. They need to be healed and they need to take these things very seriously and they are. So, im very encouraged as a stakeholder and a shareholder. But as Travis Friend and its a longtime supporter of his and fan of his, i think hes going to do fine. And im rooting for him. Jason, it is just its gutwrenching to see the ceo of this multibilliondollar Valuation Company treat not just anybody on the street but one of his contractors this way. To me, its notable, not only is there the threat of alienating the customer with this delete uber thing because of the way the company has been behaving, alienating employees because of the treatment of women, and then you have this contractor issue. Isnt this the litmus test for, as Technology Gets closer and closer to our everyday lives, whether we expect better behavior than perhaps we got from steve jobs and Larry Ellison and bill gates in their heydays because this is closer to us than their products were . Jon, its all fair points. You know, i think when you look at a company like uber or airbnb, a lot of these companies have had to fight and fight and fight just to exist, right . Theyve tried to stop these companies from doing what theyve done in terms of innovating with transportation, or in airbnbs case, housing. And if you spend all of your time fighting and youre constantly fighting to try to just merely exist, i think sometimes you get a fighter mentality. And i think what happens is at a certain point, you have to hang up the boxing gloves, you have to hang up the fighting and say you know what, now i need to be the leader, the elder statesman, i have to be magnanimous. And i think thats going to be the next phase of travis career. I think hes got the right people around him. And yeah, its gutwrenching. And i can tell you that i dont think travis feels very good about it. I think hes ashamed, as he said in his statement, and i think sometimes its this kind of pressure and this kind of crises that actually makes the individual. Ive seen it over and over again in my career, and im rooting for him and im rooting for the company, you know. On a business level, the business is on very sound footing, but we do need to get these leadership issues worked out, and were going to do that in a very short period of time. So, im confident about it. Obviously, im not happy about whats happened, but im also not the type of investor whos going to come out and throw the ceo under the bus or just attack them to do virtue signaling and make myself feel good about myself. I know the individual, i know hes a good person, and i know hes going to work on these issues, and im rooting for him to succeed. Because what they did to innovate in transportation and the amount of effort that took is, you know, tremendous. To solve these internal problems is a fraction of that effort. So, this is going to be not easy, but theyre going to be able to get it done and theyre going to get it done quickly, and were going to rebuild the reputation and rebuild the goodwill, because you are right about the goodwill issues. People are now not giving uber the benefit of the doubt and we have to rebuild that trust, and were going to. Jason, well see how it handles it. Its been a pileup lately. Thank you for weighing in on this. Jason calacanis, insight. Com. My pleasure. Still ahead on squawk alley, the record rally. The dow surging past 21,000 for the First Time Ever after the president s speech, his comments on creating a level Playing Field when it comes to tax reform. Well dive right in with the s p now up 1. 2 . Were back in a moment. We need o we can lock down the system. My password . Yes, sir, we need your password. The password that i use . Yes, sir, your password. Theres been another breach sir right. Okay. Iha. Temyjob1. Ihatemyjob1 . Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Sfx clap, clap, ding lower than td ameritrade, schwab, and etrade. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. A lot of dow components in the green. Were going to have our eye on this one, though, for a while. Still halted for trade, mcd, mcdonalds, for news pending on an analyst day in advance of what we believe was an investor presentation. As soon as we get the news, which we assume is material, well get that to you. In the meantime, the other components carrying the dow to a 262point rally. Lets get the european close with seema. Hey, carl as u. S. Markets hit new highs, stocks in europe are jumping in a rally of their own. Just look at the map here. Its the best oneday performance of the year for markets in france, germany, spain, and the uk. In fact, the german dax hitting its highest levels not seen since april of 2015, so this is definitely a global rally. In terms of where were seeing the action, european banks rising on expectations of a u. S. Fed rate hike later this month. Take a look at stock gen, deutsche bank, Credit Suisse and commerzbank all up in todays trade. Basic resources stocks getting a lift on last nights comments from President Trump, pushing for a 1 trillion infrastructure program. We also had upbeat eurozone and chinese factory activity reports also adding to this positive sentiment. Bhp billiton and glencore, those miners among the best performers in the basic resources space. Now, while the equity market is showing resilience, politics continue to weigh on the european bond market with a gap between the french and german yields continue to spread. French conservative francois fione refusing to drop out of the president ial race despite a judge placing him under investigation over a fake job scandal. He insists hes done nothing wrong, calling the probe a political assassination against him, but some analysts believe that fillon saying in the race would aid candidate manuel mick ron, who analysts show would defeat Marine Le Pen in a runoff. Thank you, seema mody at post 9. Lets get a news update with sue back at hq. Sue . Good morning, everybody. Heres whats happening at this hour. Newly minted commerce secretary wilbur ross greeted employees as he arrived at the department this morning where he also delivered a speech. Ross told workers they would be involved with rebalancing a trade system that has gutted american manufacturing. Millennials looking to buy their first home may want to steer clear of california. A study looked at affordable, income and inventory, and found the golden state is the worst market for firsttime buyers. Iowa ranked the best. Fliers going coach on delta should bring their bags and their appetites. Starting today, the airline is bringing back Free Meal Service for select coasttocoast routes. Delta plans to expand the service next month. And would you pay nearly 15,000 for a piece of mold . Well, someone did. A ukbased auction house says that was the winning bid for a piece of mold used by Alexander Fleming to create pencilon, which was the worlds first antibiotic. Thats the news update this hour. Back downtown to squawk alley. Carl, ill send it back to you. All right, sue. Thank you very much. Lets get over to dominic chu for a market flash. Carl what were watching right now are shares of carmax. Carmax shares are now taking a move lower here, this after a report from our own scott wapner. His sources tell him that short seller jim chanos has taken a short position in carmax, and thats the reason why youve seen the reversal in the stock. Were going to follow this closely here. Im sure, carl, its something that scott and the gang on the Halftime Report will talk about in the next hour, but again, thats a reason why carmax shares are moving lower. Back to you guys. Dom, thank you. That is news. Dows up 261. This will be the best first trading session of a month since the first day of march last year. Back in just a moment. Rywhat are you doing . Oh heyso we can share our coamazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas,ven actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. Back to this mornings rally and the president s comments last night. The president calling for massive tax reform to create a level Playing Field. Our ylan mui has the latest on that. Larry kudlow made news this morning, saying the white house is now in favor of the border adjustment tax. And of course, everyone is parsing the president s speech to try to find some hint of where the white house is going to land on this. The key phrase that President Trump used was level Playing Field. We must create a level Playing Field for American Companies and our workers. And what the president talked about, obviously, on the same page with the lowest rates on jobcreators in modern history and leveling the Playing Field for madeinamerica products here and abroad. So, that was house ways and means chairman kevin brady using the phrase one more time in our squawk box interview this morning. Level Playing Field, thats his main argument for why tax reform and border adjustment are so important. So, glimmer of hope there for supporters of this plan. And the problems the president identified u. S. Products getting taxed overseas but imports coming in free of charge border adjustment would fix that. Now, heres the response from exporters to the president s speech. They said, we welcome a fairer tax system that will level the Playing Field so American Workers and businesses can compete in a global marketplace. Guys, there is that phrase again, one more time, level Playing Field. Retailers responded by saying that they are focused on a growing opposition to border adjustment on capitol hill. Main street didnt vote for higher prices. Back to you guys. Ylan, thank you very much for that. The dow hits 21,000 today. Stocks surge to record highs. Joining us this morning is Washington Crossing Portfolio Manager kevin caron and libby, head of public policy. What a morning, guys. Libby, let me ask you whether the rally its so broad how does it square with what some argue is the lack of specifics we got last night . Yeah, well, look, were not surprised that markets are responding well to President Trumps speech last night. He was president ial. His rhetoric was more unifying. He was conciliatory, and you didnt see as much nationalistic, incendiary rhetoric as seen over the last few weeks. However, and this is a big however, we dont necessarily think a good speech changes the reality of policymaking, especially around tax reform and a health care overhaul. These are two of the most complicated, complex policy issues that capitol hill can address. And while it was certainly a nice speech and americans are reacting favorably, it really doesnt change the policymaking realities around these two complex issues. And you know, kevin, this move today in the markets comes not just after the president gave this very wellreceived address last night, but also comes as expectations for a fed rate hike have really ramped up for march over the last, lets say, you know, 18 hours or so. And you also had some pretty good economic data. So, a lot of things coming together in a market that really has just refused to pull back, even though a lot of folks were expecting Something Like that. So, are we basically frontloading a lot of these gains, or do you think this is a pretty solid uptrend from here . We have frontloaded the gains. And if you think about where its come from, i think its one part feeling and one part fact. If you look at the data on the economy, and importantly, you look at earnings forecasts, those are facts and those have all improved very nicely over the last nine months or so. The election and the prospect for tax cuts and more spending and some regulatory reform, that is a little bit in the gray area. But then theres this feeling aspect of it, which has to do with the momentum of the market. Weve carried beyond the average multiple. Were now pushing up towards 20 times forward earnings on the s p. And the market is now worth almost 27 trillion on an 18 trillion economy. So, this is one part fact and one part feeling. Ultimately, i think things cool down a bit as we move into the second part of the year. Lets talk about the facts, libby, of tax reform, specifically border adjustment. Ylan set it up pretty nicely after the president s speech last night. Even if the white house is on board with the border adjustment tax, would it pass the senate . Arent there senators, republican senators from Southern States and states where walmart is based, for instance, that have to vote against it . Yes. And if they do, can we get tax reform without it . Yeah, thats exactly the point. I mean, while President Trump sort of softened, or i think wed say a more tacit endorsement versus a explicit endorsement of the border adjustment tax, keeps this issue alive, certainly on the house side. The senate, as you point out, this issue still faces huge headwinds. I think ten senators have come out, republican senators, have come out on the record already against the border adjustment tax. Walmart is the biggest employer in i believe 19 states, so those senators are going to be very much impacted by their walmart and other retailers lobbying efforts. So, this faces a lot of obstacles. But to your question, can you get tax reform without a border adjustment tax . Absolutely, but will it be as big, as ambitious as speaker ryans plan and Donald Trumps plan, presumably, will be no, it wont be. One last point, libby. Debt ceiling deadline is in 15 days. Our friend, art cashin, points out that will require action, not talk. Will the markets reflect that . You know, the debt ceiling issue, it really hasnt been an issue until just these previous sessions of congress. Before that, the debt ceiling was increased in the darkness of night. I think youre going it see something more like that. So, i dont think this is going to be as much of an Inflection Point from a markets perspective as it has been recently. But i do think its a good point, though, that you bring up. There are lots of other things that congress has to do. They have to fund the government, they have to raise the debt ceiling. Theres another government funding bill coming up in september that they have to address. So, there are lots of other things that congress has to do in addition to Obamacare Repeal and replace and tax reform. And thats why our view is that many of these things probably will get pushed more off into 2018, which could get complicated then by the midterm elections. Sure. Kevin, libby, thank you guys. Appreciate it. Thank you. Thank you. Still to come, pwc global chairman will weigh in on the president s promises over Corporate Tax reform, and well probably talk about the oscars mishap as well. Well be right back on squawk alley. The dows up 258. Only at t offers you all your live channels and dvr on your devices. Datafree. Entertainment. Your way. Only from at t. Im scott wapner. Coming up today on the Halftime Report, were debating how much higher stocks can go after President Trumps speech lifts markets to new records. Plus, financials are really on the move today ahead of the fed. Two weeks from today. Is there still time for stocks like jpmorgan, bank of america and others to climb even further . And wall street weighing in on several names in the chip sector today, including intel, palo alto and micron. The Halftime Report top of the hour. Mike, see you in about ten minutes. All right, scott, thanks a lot. Lets get you right out to the cme group, where Rick Santelli has the santelli exchange. Hi, rick. Hi, mike. You know, when i look up and see how the dows up 260 points and remember back not only to the conversations before yesterdays presentation in front of congress by the new president , but all the issues of the day regarding details, the complexity of legislation, but one thing really has been true, in my opinion, since november, you could even argue since a little before the election. But certainly, after the election, cemented it in stone. I still believe whats going on in equities is what we used to call the old thermostat trade. Its a repricing more than it is really a move. And repricings are very difficult. Theyre easier in commodities where you can just gaap move prices right out of ranges. But for the most part, the interesting thing about the equities is they usually pick off right where they left off, and ill use the analogy again, like a thermostat. If your rooms 60 and you want it 80, you can turn it up to 90, but youre going to pretty much go through every hashmark degree to get there, and thats pretty much whats going on with stocks. Now, yesterday in a cnn interview, william dudley, fed president for the new york fed, actually said animal spirits have been unleashed a bit since the president ial election. We just talked about this yesterday with consumer credit, a week ago at university of michigan, all the other issues. Yes, its something to be noticed and an aplus for them noticing. But the other noticing. The other thing i notice then with the fed. You know, if you look back at history, january of 1990 the target of rate was 8. 25. Thats it. If you look at 91 it was 5. 75. Right before the credit crisis in 2007 it was 4. 75. Something happened in december. Okay, of 2008. The range was zero to. 25 and then. 25. Now. 5 to. 75. Its now a range. When you think about how the fed fund futures contract works its like a bowling average, like a season. Where you end up, where its the targeted rate, the effective rate of where it changes now range, you have to make adjustments. Its more art than science. Thats for sure. Mike santelli, back to you. I wonder how many people remember those big numbers back on the old fed funds rate. Much more on this the president s comments when squawk alley returns. Sir theres been a breach. We need your password so we can lock down the system. My password . Yes, sir, we need ursword. The password that i use . Yes, sir, your password. Theres been another breach sir right. Okay. Iha. Temyjob1. Ihatemyjob1 . 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Right, but now Ge Technology monitors every machine. Yeah, it brings massive amounts of information right to you. So you dont need that. Well, it makes me look young and uh. With it. Time to move on. Oh ill move on. Right into the future. Backwards. Youre going backwards. The futures all around us not just on your little tablet, my friend. Lets get back to our jon fortt in barcelona. Jon . Carl, treasury secretary Steve Mnuchin told cnbc six days ago he wants to see Congress Pass tax reform before august recess. I caught up with global chairman bob more ritz. He says he doesnt think its going to happen. Take a listen. The reality of getting something through september, unlikely. Really . When you step back and think about the fact that youve got a white house ajend the da, a house agenda, those two things havent reconciled yet. We havent seen a bill yet. Reality is to get something there in 200 days is ambitious. Great if it happens because i think the administration is trying to move with speed, but the degree of difficulty to get it done is pretty high. And of course this is pwc so i had to ask the boss about that big oscar flub. Heres what he said. I was at home actually watching. So at that point in time we knew we had a challenge and obviously we spent a lot of time then actually working with the academy on the issue in terms of rectifying what happened and obviously the human error that came out of it and the apology that we issued as a result of it because we stand for integrity and trust. We had a human irshoe, human error. As a result we want to move forward it. Whats next . How do you bounce back . Ibility for tually to make sure what happened which weve done over the last three days. Second is to work with the academy to repair it. And third, the brand. The brand is about trust and integrity and the like. We have to double down and working for our customer or investor or government that were bringing good quality around the world. First, Public Comments from the top guy. Jn jon, thank you very much for that. We talk about big brands that had rough weeks. We are waiting to get more detail on mcdonalds. This investor day continues. Headlines appear to surround gna discipline, try to save money. Saying were on track with a lot of initiatives that have been in place in a while based on margins, refranchising. After a very long halt. Lets get back to wapner and the half. Welcome to the Halftime Report. Im scott wapner. Top trade this hour, stocks and the speech. The market hitting new records again. The dow crossing 21,000 for the First Time Ever. Did President Trump just give the rally a new lift . With us for the hour today steve weiss, jim lebenthal, brothers najarian, Eddie Perkins with eaton vance, and also with us today onset, anthony scaramucchi, confidante of President Trump. Lets begin with this trump