Transcripts For CNBC Squawk Alley 20170309

Squawk alley. Morgan, thank you very much. Good morning. It is 8 00 a. M. At snap headquarters in venice beach, 11 00 a. M. On wall street, and squawk alley is live. Starting from the bottom, now were here starting from the bottom, now my whole team here startied from the bottom, now were here started from the bottom, now the whole team here good thursday morning. Welcome to squawk alley. Jon fortt, sara eisen with me here at post 9 along with Business Insider ceo henry blodget. Good to see you this morning. Good to see you. Eight years in and still going strong. The s p rallying nearly 250 since hitting that closing low of just over 676 on this day in 2009. This is the second longest bull market ever. Oil, on the other hand, falling below 50 for the first time this year. Of course, had the worst day yesterday in about 11 months. Just to put the rally into perspective, henry, would you have been skeptical of for a long time, more now than ever . Yes. The higher we go on valuation basis, the scareyer it becomes. Valuation tells you nothing about what stocks will do next, and clearly thats played out over the last three years, where ive been cautious. But it usually, unless something is fundamentally different, tells you about your returns in the long term. And today, based on todays level, if you look at the market on a cyclically adjusted basis on many measures, not just the schiller pe, many other measures, it basically says were not going to have any return from here for another ten years. That means we could double from here and then crash, we could move sideways, go down and up, but basically, stocks will be about here in ten years, according to traditional valuation m valuation metrics. Dont things like deregulation, rising rates weigh on you, things that are pro business, pro friendly . Well, rising rates absolutely do. And back in history, usually when the feds raising rates, thats a break on the stock market. After a while. After a while, absolutely. Hard to time. Again, none of these things tell you whats going to happen next. Regulation. If we reduce the right regulations and do it in a way that doesnt have everything suddenly overheat, absolutely i think taxes everyones talking about, oh, going to cut the rate, profits are going to explode. The effective tax rate is already way below the statutory tax rate. So, unless we actually cut the effective tax rate, thats not going to be a big difference. Lets talk tech. Second longest bull market ever. Snap cant seem to get much of a tailwind. Alibaba is up, what, 10 maybe in 2 1 2 years, well off the highs, well off the lows also. What does this say about where techs going . Hard to argue that, say, apple is trading at a really rich valuation, but you could argue that about amazon. How should investors think about it . Very interesting. Ive been at conference this week with institutional investors. One of them said look, when i look at the market, i have to say, companies that are not growing, serial Companies Trading at 20 times earnings you look at facebook, google, apple and others a little bit more expensive but growing 20 , 25 per year. He said those are my favorite stocks. Apples the same way. So a lot to say that pop snapchat, its interesting. Talking to the same institution because that, a lot of sensitivity around valuation. David tepper on cnbc, i think yesterday, said i look it at the ipo price, not at 30, and that is the way a lot of folks on the institutional side are looking at it. Theyre saying, look, even if you think this could be a 100 billion company in four or five years, at 30, youre only getting a 2x return. At 16, youre getting 3, 4 or 5x, so its much more compelling. The other thing investors track is sentiment when it comes to the rally, and it does feel like a consistent feature of this bull market over the last few years is its been heated and not embraced, and there have been plenty of worries out there. How exuberant does it feel to you, versus, say, the number one longest bull market in history, 90 for 2000 . It is nothing like that. Right. And that really is the missing ingredient. And i think a lot of people do say, look, when youre really at a blowoff peak, youve got everybody, uber drivers and others, recommending stocks to each other, thats what it was like in the 1990s. We definitely dont have that. But still, on a valuation basis, numbers are closing in on that peak on the cyclically adjusted basis. Well talk about that all day long. Meanwhile, the president s meeting with the ceos of small and Community Banks at the white house. Yesterday sat down with infrastructure ceos, including teslas elon musk. Our eamon javers is watching developments at the white house. Eamon . Reporter yeah, hi, carl. The Community Bankers are here. They just walked in behind me here a few moments ago. A few of them had never been to the white house before, so this is a big meeting for them. A couple told me that they have some legislative and some regulatory ideas theyre going to pitch to the trump white house, and the expectation that they might be able to get some change that could help Community Banks ramp up their lending. Theyre also curious to hear what the president himself has to say about all this. They dont know what his message to them today is going to be. I can tell you that the secretary of the treasurys expected at this meeting. Reince priebus, the chief of staff, is expected there. Ga gary kohn of the National Economic council and Jared Kushner all expected to be in this meeting, which should get under way here momentarily. Eamon javers, thank you very much for that. Your thoughts on this . Again, more white house optics at play, working. This is an area where i do think theres a real opportunity to roll back regulation, and applauding the white house on this. I think Community Banks in particular, Small Business lending is incredibly important. This is a case where you can actually let the banks figure out their own risk profile. If they get too crazy and they go out of business, its not going to harm the system. And we do have a problem in lending to smaller businesses. So, this is a great opportunity to roll back. You think banks should make their own regulatory rules . Not completely, but with regard to lending, thats what a bank used to do is figure out what risks are worth taking, what arent worth taking. But what about mortgages, for instance . They make a lot of Mortgage Loans and theres been more regulation and some would say its a good thing. What happened in the past bust is banks would make the local mortgages and package them and sell them, they didnt have to hold the loan and that changes everything. But that is what a bank is supposed to do. You have Loan Officers who evaluate each credit and decide whether to take it or not. And if theyre too aggressive and go out of business, fine that is capitalism. You just have to be able to absorb the shock, and we can absorb Community Banks. It gets tougher when youve got a massive, global institution. Then its hard for even the government to take over. But even then i think thats the answer, let them fail. Youre in the camp of arguing that we overregulated absolutely. Post on lending. On lending. Lending specifically. We went through a heart attack, near death of the economy. Obviously, we erected a lot of systems to make sure it never happens again, but now we have swung way too far the other way, and youve got to let again, that is what a loan officer at a bank does. Thats their job. They figure out the credit. If they do it badly, they go out of business, tough. Thats certainly what you hope they do, thats for sure. Its been one week since snaps ipo. Doesnt feel like that long. A wild ride for shareholders. Stocks up better than 30 . Now fbn has this note out initiating coverage at sector perform with a 23 target. Tepper, of course, had comments yesterday. Part of fbns thesis is that facebook would love to buy them and theres protection in there on that. Do you buy that . Yeah, i think so. Really . Facebook has wanted to buy them for a while. I still dont think theyre for sale. Facebook could afford to buy them. Snapchats 25 billion, 30 billion, but they could certainly do that. This morning jim said he thought these guys would rather die than sell, and they have the voting rights. They will decide. They have everything. Its amazing the control the snapchat Management Team has. At some point, if the market is working correctly, that should actually be factored into the price. There should be a discount as a result of that, because investors just dont have the same kind of control. Heres what i think about snap thats interesting and different from say facebook or twitter. I think snap and snapchat by extension, is far from fully formed at the point of its ipo. When facebook was ipoing, they had the facebook platform, they had the like button, they had already at least begun to sketch out their blueprint for global domination. We just didnt know about mobile yet. Twitter, i mean, twitter is twitter is twitter. It hasnt changed that much since. But snapchat, get the feeling if theyre going to have a platform, if theyre going to have this advertising strategy writ large that capitalized on the popularity among millenials on the smarts that they have around content, we havent necessarily seen all the tricks in the bag yet. And if you believe that much in evan spiegel, then perhaps theres up side. Thats right. And they are a Communications Network more than a media company, so they have a network effect. In our household, the devoted Snapchat User you know, i hear people are dumping snapchat wouldnt know it from her. She says, no, absolutely not, back and forth because of communications, and theyre doing a lot of cool stuff on the storytelling side. Theres no question that a lot of millennial and younger focus is on that. And the bull story on snapchat wi, what the smarter investors believe is that theyll be able to go from a few dollars per average u. S. User to 20, 30, 40, 50 over the next few years per year, driving huge economics. Going in, the big question was, if this did well, would it open the floodgates for more ipos . Its been so quiet, especially with technology ipos. Was it a success . Whats the verdict . So far, a tremendous success. So, hopefully, we do see a lot more. The thing thats definitely happened in the ipo market for ten years now is companies are waiting so long to go public and they have to be so mature or they get hammered. Its too bad. Were missing out on a lot of very cool younger just reported that airbnb raised another 1 million. Do you believe if facebook were to truly pose an existential threat to snap, they would have done it by now, and thats what that early offer was about . No, i think or they exited some sort of window where they could quickly be either destroyed or bought . I do not think snapchat has permanent protection by any means. People abandon networks very quickly, especially a network like this. Its a Communications Network. If your friends leave, youre gone. And facebook has created a lot of the same functionality on instagram. Theres a lot of popularity there. And some people think that folks are moving. So, no. In this business, it can change incredibly rapidly. But snapchat has what it needs to build a very Good Business if they continue to iterate youre betting on the rich kids if youre betting on snapchat. Unlike twitter, which is just sort of globally everybody loosely connected, facebook, which has tried to expand in india, in Southeast Asia and places like that, and actually done it in africa with whatsapp especially snaps not interested in any of that. Theyre saying developed markets, the places where big brands want to advertise. Thats all we care about. There are some potential weaknesses in that strategy, are there not . Absolutely, starting with that is the story that you would tell when your growth slows in all of the other markets. Well, its intentional and we just want to focus on this market. Yes, that limits it. On the other hand, if they do what they want to do, there will be a huge opportunity in this market. The big warning side for snap is if the user growth in the u. S. And europe slows, it is over. They will have huge Revenue Growth for a little while, then theyll platt eau and fall. That is the bear case weve been getting some analysts, total Addressable Market is a fraction of what it is for some of its larger rivals. Thats right. Although again, as they move into video and television, and if they can continue to control this particular audience, there is a huge market in just these markets in that audience. You could argue theyre netflix and facebook is network tv, you could argue, right . Because theyre premium, theyre focused, they understand content at this deeper level, theyre willing to invest in it, other people are copying them. I mean, hey. Absolutely. And thats why when you come back to valuation on this, reasonable scenarios for the future give you a massive difference in the stock price today, and its hard to know. And thats what the market is doing right now is arguing back and forth. Well get new idea at the quarter, obviously. And each quarter for the next several years, there will be a massive recalculation of what that longterm got to see if theyve got a game of thrones up their sleeves. You were with us on ipo day, right . And has the past week played out essentially as you thought it would . I think its settling down, and we hit a peak where, again, david tepper came out, seller here, bottom of the ipo seller, but if it gets back down to the ipo price, im a buyer. That is good. That is people thinking, analyzing the future. Thats what you want. Do they have to turn a profit where i mean, do they have to become profitable . Eventually. Look, every stock eventually is going to trade at 20 times earnings, Something Like that. Thats where facebook and google over many, many, many years i just want to know what the patience level is for that. So, the smarter investors, as they analyze snapchat, theyre going out five to ten years and saying, look, what can this company earn . Lets put a reasonable multiple on that, in this case, 2025 times earnings. What does that get you in terms of market cap . And there are reasonable scenarios that get you to 100 billion in market care. Farthest thing from gauxted, but thats how theyre thinked about it. I would argue the biggest thing this news cycle, airbnb, looking mature compared to uber and profitable compared to snapchat. Absolutely right. The only pushback i got from a smart institution on airbnb over the last couple days is total address ybl market. They say how big can this company get versus an uber . Interesting question. Everybody needs shelter. Yeah. A lot of people travel. Its big, no question about that, its just how big. Henry, thanks. Henry blodget. Thanks. When we come back, why the house plan to repeal and replace obamacare may be hanging the president s most loyal supporters out to dry. A first on cnbc interview with the head of athena health, Jonathan Bush, an outspoken voice on the health care system. And later, speaker ryan live on his pitch to the gop plan. Thats coming up later this hour. Squawk alleys back in a moment. Moment. Uh, yeah. Its over, larry. What is . The whole wheelie thing. What do you mean . I just got this baby to get around the plant floor. 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. Im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. The house plan to repeal and replace obamacare clearing its first hurdle late last night, but the new plan could come at the expense of president trumps most loyal supporters. Our john harwood is back in washington with the details. John . Jon, the old political saying is to the victor belong the spoils. Donald trump himself repeated that during the 2016 campaign. But for the Largest Group of his supporters, this bill turns that maxim on its head. First of all, lets take a look at where the trump votes came from. Only 10 of them came from people earning more than 200,000 a year. 48 came from whites who did not have college degrees. 51 came from people 50 years old or older. Now lets look at the tax cut winners in the obamacare rollback. By rolling back those obamacare taxes, you get an average tax break of 33,000 for the top 1 , 179,000 for the top 0. 1 . Lets look at the losers in terms of Health Benefits for people who enroll in those Affordable Care act exchanges. The average aca enrollee would lose 2,409 in benefits in the year 2020, because the tax credits in the republican bill are less than the subsidies they get under obamacare. The average 55 or older enrollee would lose almost 7,000 in subsidies through the shift from obamacare to that bill. There would be further cuts from medicaid reductions. Those would hit especially hard to Trump Supporters in states like arkansas, kentucky, ohio, west virginia. Senators from all of those states are opposing this bill right now. The bill is not dead by any means, but its got big political problems, guys. John, you mentioned arkansas. Of course, we all paid attention to cottons tweet this morning. Does that mean that you expect big elements of this draft to bend in the coming days . Well, theyre going to have to bend. The challenge is how can you bend them and preserve 218 votes in the house and 50 votes in the senate . If they respond to the objections that the benefits should be greater, if they respond to shelly moore capital, will that further drive away people in the Freedom Caucus who dont like entitlements and had complained that this bill creates a new federal entitlement . So, you push on one end and you have to pull on the other. Its not an easy situation theyre in. Its a great story, john, and its not the first time weve heard Something Like this. Same analysis goes for the republicans tax plan and president trumps tax plan. But his base is so loyal. You just wonder whether its really going to impact it. Well, that is the question. It is possible that the loyalty to the republican party, loyalties to donald trump, will overcome some of those direct impacts on voters. But you do have to wonder, as paul ryan said yesterday, were transitioning from being an Opposition Party to a governing party. When youre the governing party, youre the one whos handing out benefits or taking them away. That is a different circumstance than when youre trying to rally voters against someone like president obama. Well see whether they can complete that adjustment, get this bill over the finish line. Maybe thats why they dont like branding it trumpcare at this point. John, thank you. Thats right. John harwood in washington. When we come back, etna healths chairman and ceo. The always outspoken Jonathan Bush. His take on the house plan to repeal and replace obamacare. But first, rick santelli, what are you watching this hour . Well, of course, im watching the calendar and thinking about the eightyear anniversary of the haynes bottom. But not all bottoms are created equal. As a matter of fact, the bottom in 09 has a lot to do with commodity bottoms and tops. Well talk about that after the break. Break. Online u. S. Equity trades. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. President trump is currently meeting with Community Bankers inside the white house. Were just getting some headlines as the president welcomes some of the bankers to the white house. He said they are crucial to my jobs agenda and to the American People. They provide half of loans of small loans to people and theyre dwindling. We money ensure access to capital. President trump says we are going to support our Community Banks to create jobs and create business. He was asked about the document dumped from wikileaks. No response there. Well monitor this, bring you headlines or comments if we get them from the bankers outside this meeting. Taking a look at markets, dow and s p hanging in there in positive territory just barely. The nasdaq also. But wti crude is a weight, down more than 2 on top of yesterdays more than 5 decline. Energy stocks, no surprise, are the worst performers on the s p. And speaking of the bankers, financials, again, the outperformers on the s p 500. Lets see if our gains stick. This would be four days in a row of losses, if stocks do turn negative, something we havent seen all year. Lets get out to the cme group, check in with rick santelli, the santelli exchange. Rick. Thanks, sara. You know, we all fondly remember our peer and fellow coworker mark haines. Eight years ago, of course, he called the bottom. The haines bottom. Theres a lot of important things, though, about bottoms. Like many traders on this trading floor, i started out trading commodities gold, pork bellies. And what we learned about commodities is that there was a lot of vs, okay . And there was a lot of upside down vs, meaning that Commodity Prices could move in very fast ways and they can correct in very fast ways, creating v bottoms and upside down v tops. But whats really fascinating is how that word now describes so many markets. How many times have you heard the commodityization of the stock market, of the bond market . Because now many of these markets kind of move like commodities. Now, lets go to the whiteboard here, and im going to actually start out with nasdaq. And mark santoli did a wonderful job on this earlier in the day. We all know the 5,000plus top was made in 2000 and how long it took to get back to that point, okay . Now, this isnt necessarily a v, but it really underscores the crossthecanyon mentality. Our economys resilient, and the main reason so many people care about trying to handicap exactly when, how, where, length of recoveries is because they want to peg it to a certain president or a certain congress. I dont really care about any of that. Im a market guy. When you usually get things like this, usually markets kind of correct on their own. So, basically, talking about the return or the length of a normal recovery or a bull market or a business cycle, distorted not only for these reasons in the crisis, because many of the men talents that tried to address it. You even heard the likes of Mohamed El Erian talk about manipulated rates. Theres a lot of things that have been managed and manipulated. These distort these cycles now, lets go to the king here, the Dow Jones Industrial average. This is what im talking about, you know, these vs, whether its this way or this way. Theyre not supposed to happen in stocks, but sometimes they do. But the notion of why this recovery occurred, trying to measure it. A lot of times you will come back. So, whether its the length of time or the continuity of these charts, by taking out certain segments, you can actually come up with better technicals. Quickly, lets look at that chart from september of 2014. You see it on your screen right now for 10year note rates. This is super critical. Youve heard me talk about 2. 60 to 2. 62. The far left of that screen is september 17th, 2014. Right now were very close. These are huge levels for a variety of reasons i dont have time to go into, versus where the next move is. The next moves probably a test of 3. 03, but how do you deal with this . Tomorrows your last hurdle. Many times in front of big reports like the jobs report or fed meetings or ecb meetings, markets go to tops or bottom arranges. Thats why the auction went so well. Many people think youre going to see a chance for price to bounce and rates to come down. Will it be true . Im not sure. But if you get tomorrows close, which will also be a weekly close, above 2. 62, yellow lights should be flashing if youre looking for lower rates. Jon fortt, its all yours. All right. Thank you, rick santelli. We continue to wait on more news out of washington. And guys, its an interesting setup. President trump has met with so many different groups, ceos of technology companies, hes been through manufacturing. Now with these Community Banks, especially at a time when were focused so much on the local impact of these changes coming to obamacare, it will be interesting to see what we get. But well see, especially what the president has to say around these issues that hit close to home. Yeah. We know that the Community Banks dont want to be regulated like the big banks. They dont want to be regulated like the big, complex, bold bracket firms and thats been their right throughout the post financial crisis era of dodd frank. So, it will be interesting to hear from them and the president. Also Steve Mnuchin and gary kohn in the meeting as well. On a busy day for the president. Of course, later on, he has a working lunch with regards to the budget. Hell later on meet with secretary kelly, pompeo, and the Vice President before making some remarks tonight to senate youth. So, well watch all of that, but it is all about the financials for now. Lets take a listen to what the president and kohn still 45 seconds. And mnuchin said about the banks. And i wonder, too, what sort of promises or guarantees they can make in return regarding lending practices in exchange for some looser regulations. Also keep in mind, treasury secretary Steven Mnuchin has a lot of experience in this area. He ran the west coast bank one west, of course. So, hes talked about in his confirmation hearing getting banks to lend. Lets listen. Thank you very much. Good morning, and greatly appreciate you being here. We have some real experts with us and we have some great bankers with us. Todays discussion is crucial to my jobs agenda and to the American People. Community banks play a vital role in helping create jobs by providing approximately half of all loans to Small Businesses, and thats been dwindling because the Community Banks have been in big trouble. Nearly half of all private Sector Workers are employed by Small Businesses. We must ensure access to capital. Small businesses, and for Small Businesses to grow, Community Banks is the backbone of Small Business in america. We are going to preserve our Community Banks. You probably noticed i signed an executive order on regulation on february 3rd, i believe it was, and thats a big executive order and a very powerful executive order. Its taking a lot of the regulation away. Youll be able to loan. Youll be able to be safe, but youll be able to provide the jobs that we want and also create great businesses. So, its an honor to have you with us today, and perhaps we could go around the room and well start with dorothy and say who you are and who you represent. Thank you, mr. President. Im dorothy savarese. Im from Cape Cod Five Mutual Company on cape cod, massachusetts. And im Leslie Anderson with the bank of beneton. Standard bank, suburbs of pittsburgh, pennsylvania. Great. Rebecca romero from Sentinel Bank in beautiful new mexico. Im luann cundiff of First State Bank of st. Charles. [ inaudible ] nice guy. Lorraine stewart from the other [ inaudible ] seattle. [ inaudible ] good, thank you. And im ken burgess with First Capital bank of texas in midland, texas. Great. Thank you. Okay, thank you very much. Thank you. Thank you. Talking about the dump from wikilea wikileaks, any thoughts . Wheels of the white house continue to turn as we are there for the roll call and not much else, eamon javers. I guess well wait for the potential readout on this meeting later on. Reporter yeah, im going to talk to some of these Community Bankers as soon as they come out here and ask them what the president said in the part that we werent allowed to have cameras in on, because thats often the most interesting part of these meetings, so well wait for that. This one was short and sweet. I stalk etalked to the white house before the meeting today and they said their goal is to get ideas from the Community Bankers. They want to hear from the ground up how to move on regulation, move on legislation. Really what theyre looking for is increasing lending from these Community Banks because they think thats the key to Small Business success and thats the key to driving this economy. So, theyre in listening mode here at the white house, carl. I wonder how much, eamon, the Consumer Financial Protection Bureau will come up in this conversation. Thats a target of republicans, and it has made life difficult for some of these banks as far as an added regulatory agency. Reporter yeah, thats an interesting one. My sense of this meeting is that its sort of wide open for any ideas that these bankers want to present. I know that some of the bankers have specific ideas that they wanted to pitch in here, so well see what those are when they come out after the fact. But a lot of these folks, as i said earlier, this is their first visit to the white house and here they are meeting with the president of the united states. So, it can be a little daunting, a little intimidating, but they know they have their agenda and want to get to it so theyve got to take advantage of this time. Eamon, know youre hard at work. Well come back to you in a little while. Market remains in a bit of a range here. When we come back, well talk to Jonathan Bush of athenahealth about the markup with the new American Health care act in a moment. Moment. Good morning, once again, everybody. Im sue herera. Heres your cnbc news update at this hour. A federal judge in hawaii agreeing to hear the first legal challenge to president trumps new travel ban. Hawaiis attorney general commenting on his states lawsuit. There is a significant Muslim Population that lives here in hawaii. Ive met them. Theyre amazing people. So, they are people who live amongst us, who are great, who shouldnt be discriminated or treated as secondclass citizens just because theyre muslim or from a certain country. Russia is rejecting u. S. Accusations that it violated an arms control treaty. A kremlin spokesman said russia will always abide by all international obligations. Yesterday the u. S. Accused russia of deploying a landbased Cruise Missile that violated, they say, the spirit of that treaty. And breaking a 70year tradition. Harvard law school will now allow students to submit scores for admission from either the lsat or the graduate record exam. The Pilot Program is an effort to expand access to the school because the gre is more commonly used globally. And that is the cnbc news update this hour. Back downtown to you, carl. All right, sue. Thank you. Sue herera. We are awaiting some comments from House Speaker ryan, holding a News Conference in about ten minutes, of course, on the gop plan to repeal and replace obamacare. Thats going to be front and center. When that happens, well bring it to you live. In the meantime, the American Health care act dividing members like the aarp, the American Hospital association and the American Medical Association against the proposal. What do insurers think of the new Health Care Plan . Jonathan bush is cofounder and ceo of athenahealth, joining us again. Great to see you. Good morning. Good morning, carl, not an insurer. Thats aetna on a different day. Athenahealth certainly has an opinion. Thanks for having me. Good to have you, jonathan. Whats your opinion . One of the things thats worth noting is a lot of this debate uses the word affordability. And by and large, most of it doesnt actually apply to affordability in terms of cost. None of this is going to make none of obamacare did anything to make the cost of care, the amount that a consumer pays per each thing they consume cheaper, and the ahca does a little bit there, but not much. There is one aspect that says health plans are allow to create Cheaper Products than the minimum acceptable definition that was in obamacare. So now you can invent a lowend product to try to get lowend consumers who dont have as much money to buy something less expensive. Now the people selling expensive stuff have got to consider reducing their price to bring in consumers. Thats called a market. Youve seen them before. They tend to work. And so, i like that aspect of ahca, because the first time ive heard discussion of actual cost as part of affordability, as opposed to who gets subsidized for what by the government. Right. So, all the criticism and worry about the comprehensiveness of the coverage, right, or the number of people covered, does that come secondary . Obviously, that comes secondary. If you want a market to work, youve got to have people not in market. So, the notion is we as americans probably dont want to have people completely left out of health care, but if they were allowed to have Cheaper Products so that the expensive product people were incented to get cheaper this is the reason, by the way, why you go into the Doctors Office and the experience is identical to 40 years ago, is that theres been no market force driving innovation cheapness because everybody is already in market. Remember, all of this is about the individual market, which is 6 of americans. So, pretend half are, you know, priceimpaired, costimpaired, talk being 3 of americans. The rest are in employerbased or governmentbased plans. So, it doesnt really move a giant social safety net needle in the grand scheme. Obviously, that 3 of americans matters, but the ability to get a wider range of products at the low end of the Product Marketing continuum is definitely going to afavorably affect cost for everyone. Jonathan it seems like were still dealing, of course, with the legacy of obamacare, which set the bar at a different place as far as peoples expectations of how many people are going to get covered, levels of coverage what happens with preexisting conditions. Politically, is it even viable to expect that the gop can walk too far away from that immediately with the ahca . This is the birth of social science, right . The patron client interdependency problem. Once you create a group of people, you know, that are in receipt of a government dollar, its very hard to come in and vote that out, and this is why i think the government the republicans were so panicked about obamacare, is it creating a huge, new Entitlement Group with no new cost controls, no particular cost controls on them, and its a real dilemma. I mean, i dont know how it hands. It must be good for ratings, because we all want to know how it ends you know, can the republicans actually roll a bunch of people out of government entitlement only three or four years after they were rolled into it . As you know, some of the loudest critics of this new plan have been republicans themselves, jonathan. Would you go so far as to say that this is obamacare 2. 0, that its just a cheap knockoff of obamacare . Whats that song . You know to the left, to the left everybodys shifting. Now its republican. Oh, no, now its democrat. These are little, tiny movements. And the rand pauls are going, hold on when did we think it was okay for all Health Services to be wrapped under a number called a premium . Every visit to the doctor. You look inside athena net at the kinds of things doctors are doing because its the only place patients can go to get them, its kind of appalling, really, the kind of things that doctors have to do, that any technician or a social worker or a nutritionist could be doing better, and the markets would be healthier. But its not allowed because weve built this box. And the rand pauls of the world are saying, why is this box here at all, you know . Why cant we unwind the whole concept of an entirely shrinkwrapped, subsidized box with everything in it . Yeah. And its intellectually completely viable. I completely sympathize. And i dont know how you get the, you know, genie that far back in the bottle, the toothpaste that far back in the tube. I think what ryans doing is trying to cheat his way over there a tiny little bit and see how he does there. Meanwhile, athena and the marketplace will create some shopping power within the rules that exist. Were creating a National Calendar asset. Thats my next question. The last time you were with us on set, we talked about the number of man hours your Software Engineers had spent trying to prepare for what was then reality. So, how does athena play this calculus now with we have no clue where this is all going . Sorry, i just swallowed a little puke. Its done now. [ laughter ] yeah, up to 100 r d years per year complying with programs to generate data that then the government actually never consumed so, remember the Meaningful Use Program as part of the hightech act . None of the data that we generated did the government even though they paid our clients still 39 billion for it none of it did they collect and use. What were doing with the time that we used to spend doing that is so much more interesting. Were tracking whats going on clinically in the chart. You know, if charts could speak could be a whole new blog by athena. My favorite tidbit, by the way, which is just such a laugh iud insertions since the election of donald trump up 21 what . Just saying i know thats not the thing we should be doing with our r d time no, its not. But isnt that interesting . America is speaking through its charts, at least a female america. But theres so much more. I just want to ask about your stock price, which we always talk about. Oh it is still down double digits i was just in the middle of talking about calendar assets and you yeah, its too low. Do you think your business is being affected by all of this . Its peaked out and not gone anywhere in the last four years. Well, in the period since the end of the hightech act rush of the obamacare, which created a big sugar high, where everybody felt like they had to buy something and they were grabbing at whatever sort of emr definition they could find, and we punched above our weight class theres a little bit of a kind of post sugar low now in the world of people calling themselves ehrs. Athena is the only networkbased medical record. Its the only national singlebased instance medical cloud in the country. We believe that was too hard to differentiate when everybody was racing, panicked, at the tip of the governments gun to buy medical record technology. Now, the fact that ours generates cash for you and costs no capex, and everyone elses uses more staff and incurs big capex, we think were going to start to separate from the pack in a much more material way. Just the idea of being able to reach out to yelp and google and amazon and be out on the cloud pulling patients to our clients when the guys stuck on isolated copies of software cant do it, thats going to start to really help us separate from the pack, we believe, and i think were going to have a renaissance, another renaissance as a result of the backing off of the government and the opportunity for us to do our own unique product management. So, thread the needle for us, jonathan, back to the ahca. We know that theres some concern in the senate about what the house has put forth thus far. How do you get it better so that its palatable to the senate, maybe has a chance of passing . I mean, thats horse trading. I think the netnet is theyre trying to figure out how to pull back on the minimum required benefit design so that the sort of inevitability of price increases doesnt sort of go off into the future. Thats hard for the cbo to calculate because how does the cbo calculate the emergence of Market Forces in a place where there havent been any for years . I dont know what they end up, you know, trimming here and there to get it to be palatable. Obviously, the Provider Community has just gotten used to the idea that the governments going to pull money from elsewhere in the economy and into subsidy of patients. They like that. They dont want to see that go away. So, theyre going to lobby like hell against this, you know, but but to jons question, people want to know whether, at least in this case, is there any is any legislation really doa this early on, or is everyone just taking hard stances so they can get their input and get something resembling what they want down the road . Of course, legislation is not doa this early. Of course, the guys to the right of ryan are making sure that they point that out, which is actually probably helping ryan with his left wing thats going to be, you know, trying to trim the whole thing to the middle. And of course, a lot of that is, you know, blather. I know theres not typically blather in washington, but maybe now there is. So i dont see anything thats doa about any of this. Its a tiny, little trim. Its stick an h in the aca, you know, create a little more room for the market, a little less guaranteed safety net, a little less role of the feds in every dollar. Eh, you know, whats the difference really . Can you go back to iuds for a moment . Do you think if command is soaring because this bill includes defunding for planned parenthood . It soared before the bill. They may continue, but i think one of the factors is a genuine, you know, gee, is planned parenthood going to be there . Athenahealth proudly serves a lot of planned parenthood chapters around the country, so that is one of the things is, gee, i want to get into my planned parenthood place. And of course, you can make your own opinions about the desire to relax and reproduce in the general emotional climate today. I dont know. That was not where i was expecting you to go with the next question, sara, but any chart. I like a good chart. No, as we prepare 21 increase. Its amazing thats significant. As hear from House Speaker paul ryan, i wonder, do you think we end up with something thats different enough from obamacare that the repeople and replace promise ends up ringing true . Most people seem not to have understood what obamacare was to begin with. Is this going feel like something brandnew . Well build a bonfire and pound their chest and say repeal it . You know, thats what this is. You know, this is a fairy dancing on the head of a pin, in general. As, was obamacare itself. I mean, many more dollars for those 20 million and the size of those subsidies and the forced constraint of managed payment ms. That was a little more impactful. But generally, still, you still had employerbased Health Coverage for most people. Still had medicare and medicaid for most of the rest. And youre talking about what are you going to do with this little tiny pile. One thing that remains in the obamacare to ahca transition is that straight medicare payment to doctors is carefully designed to kind of shrink. Its harder and harder and harder over the years to make as much as you made last year. And thats designed to chase doctors off of straight medicare and ton to risk contracts. Either get into an aco, a care organization, or move your medicare patients on to Medicare Advantage plans. These are vastly more efficient with expensive resources than straight medicare. Better for life expectancy, better for patient satisfaction, and that stays in place, thats very, kind of, market friendly. If that keeps going, thats actually good news. That everyones quietly ducking that piece. Jonathan, thats really good insight. And a big, broad macro view. We look forward to talking to you again. Thanks, as always. Looking forward to beyonce. Got to be done. Jonathan bush of athenahealth. Dow is up in the mid20s as we await the speaker. Were back in just a moment. In. So let me get this straight. Youre a rabbit . In. Im vern, the orange money retirement rabbit, from voya. Riiight. And that means. . Im the money you save for retirement. I help you get organized so your money could multiply. See . Got it. Whos he . Hes green money for spending today. You know, paying bills, maybe a little online shopping. Makes it easy to tell you apart. That, and i am better looking. I heard that. When its time to get organized for retirement, its time to get voya. Oh. Ncome on. Och method whats going on here . You know how Ge Technology allows us to fix problems before they. They slow production, yeah. Well, no more catchy business acronyms. Wait, we dont need to smooch . Im sure we can smooch a solution we just need to hover over the candice, problem until. Just let it go. Hey, sorry im late for team building. Smoooooooch that felt right. Whats wrong with you . Hes so trusting. Amid opposition from hospitals, doctors, seniors and members of his own party, you are looking at House Speaker paul ryan whos on capitol hill right now, making somewhat of a presentation and a case for his rewrite of obamacare. Lets listen. The key thing that a lot of people want to know, when i do my listening sessions, when i talk to people with various disease, advocaciy groups, is they just want to know when we pass this, the next day theyre not going to lose their Health Insurance. Thats not going to happen. We pass this law and the day after, americans who have insurance arent going to lose it the day after. We need to have a stable transition to conservative health care reform. And thats what were doing, so that we do not pull the rug out from anybody who is enjoying some kind of coverage they have today. So we want to have a stable transition. And a few of the points that i think are really important, to just bring peace of mind to americans who are concerned about all thats going on here, is we want to protect people with preexisting conditions. We think thats very important. That has actually been a cornerstone of Republican Health care proposals all along. In 2009, i along with congressman devon nunez, senator tom coburn and richard burr offered the patients choice act. It was one of our alternatives to obamacare. Again, like many other republican alternatives, we had an answer for people with preexisting conditions and we have one here. All of our Republican Health care alternatives have always agreed with the idea of letting yuck people stay on their parents plans until theyre 26. We can retain that. What our goal is to do is to provide universal access to quality, Affordable Health care. Heres another issue with obamacare. Obamacare is not just the individual market that you think of the obamacare subsidies. It was also taking over the medicaid problem program. Heres the problem with medicaid. Medicaid is a program that is washington controlled and it is done in such a way that it stops innovation and experimentation at the state level. It makes it harder for states to customize the Medicaid Program to work for their popular states. As a result, more and more doctors dont take medicaid. What good is your coverage if you cant get a doctor . And that is a huge growing problem with medicaid. Medicaid is as growing at an unsustainable rate, so its ballooning costs are threatening the very availability of the program and our fiscal future. So what we propose is to modernize the Medicaid Program. Modernize the Medicaid Program along the lines that we as republicans have been talking about for years. I think it was Ronald Reagan in the 70s when he was governor who said, the states should the take over control of medicaid. Every budget we have had as republicans, when i budget chair, writing my road maps or the path to prosperity, every one of our republican conservative budgets said, lets get medicaid control back to the states. And in honor to the principle of federalism, give the states and governors the freedom and flexibility to customize the care for their lowincome populations how they think needs to occur. Our problems in wisconsin are a whole lot different than the problems they have in new york or in nevada or in utah or california. So we propose more efficient spending, bring the spending on medicaid to something that is sustainable, so it doesnt go bankrupt. And have a safety net for the most vulnerable. Give local control to our states and our governors, so that they can craft and customize medicaid to work for their populations. How do you protect people with preexisting conditions . I think this is probably one of the most important issues of them all. Here is basically what happens today. Under the current system, we have costs driving up. In the current system, options are going away. As i just described, choices are fleeting, prices are going up, and under the current system, the fatal conceit of obamacare is that were just going to make everybody buy our Health Insurance at the federal government level. Young and Healthy People are going to go into the market and pay for the older, sicker people. So the young, healthy person is going to be made to buy health care and theyre going to pay for the person, you know, who gets Breast Cancer in her 40s or who gets Heart Disease in his 50s. So take a look at this chart. The red slice here are what i would call people with efr preexisting conditions. People who have Real Health Care problems. The blue is the rest of the people in the individual market. Thats the market where people dont get Health Insurance at their jobs or they buy it themselves. That is speaker ryan, a power point this time as hes walking us through the draft bill to replace the Affordable Care act. Of course, the congressman well versed in the sbrix intricacies legislation, with all of his experience on ways and means and the like. So hes no stranger to this. Looks like hes teaching a class. Trying to reassure the American People that theyre not doing away with peoples coverage, preexisting conditions, theyre concerned about, keeping 26yearolds and younger on their parents plan. But making more the case that obamacare is a failure and this is the alternative. Well see how this plays with senators later in the day. Lets get to headquarters and swapner and the half. And welcome to the halftime report. Im scott wapner. Our top trade this hour, crude crush. What oils drops means to your money and the state of the trump rally. Could stocks be next . With us for the hour today, joe terranova, steven wise, jim leventhal, john najarian. Lets begin with oil breaking below 50 a barrel. May go below 49 while were having this conversation. Theres the picture right now. It is down significantly, more than 5 on the week. Is that a warning sign for the markets, joe . Well, all right, first of all,