Good morning. Welcome to squawk alley. Im jon fortt with post nine, sara eisen and wilfred frost. Worldwide alley we can call it this morning. Like it. Squawk exchange. Lucky wilf another hour with me. Meantime top story stocks tumbling here you might have caught early in the premarket action this morning after Trumps Health care fail. So whats next for the markets as it weighs its next step in washington . Joining us now to discuss it, terry haines, evercores isi political analyst. And joining us ceo of labenthal holdings. Welcome back. Thank you. Lets start with the narrative in the markets that the first test of the trump agenda doesnt bode too well for the next pro growth policies like tax reform and infrastructure. Is that right . How are you telling your clients to trade it . Well, what were telling clients is the story is still to be written. I think this is a stumble and not something thats irreversible politically. But congress and trump have about four to six weeks to execute this pivot to tax reform and actually make it go. They can still be on schedule for at earliest in august tax reform date or the latest by the end of 2017. But theyre going to have to get moving pretty quickly. And we will see that start to play out over the next say two weeks. Im sorry, sara, go ahead. No, i was going to say thats a pretty optimistic take, al i alexandra. Do you agree . I think he made a point, its a stumble. How big a stumble to be seen. Look, just because this failed doesnt mean that congress and the president just throw up their hands and say theyre not going to do anything going forward. You know, to me the biggest thing now is not only tax reform but infrastructure, which has very significant potential for what happens with the economy, what happens with jobs. I saw guggenheim study that said you could see 1 increase above the normal gdp, i think in 20182019. So, you know, thats really where i think they need to be focusing now. Terry, you say theres 80 chance that tax reform gets done in the next 12 months. Today were making a distinction between tax reform and just a tax cut. How have those odds changed over the past week from where you sit . And how will they change if this pivot doesnt happen in the next four weeks, as you say it needs to . Well, weve always been pretty bullish about tax reform happening in 2017, paradoxically clearing the decks on the Affordable Care act makes that more likely because theyll focus on that and pivot towards that, as ive said. Really, you know, in a strong way, but theyve got to show real action on this. They need to finish the 2018 fiscal 2018 budget first. That needs to happen over i think about the next six weeks. Then what happens is the committees set to work on tax reform, and they could still make the august date that both secretary mnuchin and speaker ryan want if they do that. But if not, the practical reality is that youve got the august congressional recess, september and october get taken up with spending and with debt ceiling, so you cant really get back to tax reform again until november december. So the next few weeks in my view are really crucial. Alexandra, banks are selling off sharply once again. Clearly Health Reform doesnt affect them. Is there more that could be done to benefit the banks in terms of policy, the deregulation type conversations without the need for congressional approval than perhaps the declines weve seen in Bank Stock Price over the last week or so . Well, sure, and obviously theres still pro deregulation stance across the board. And i think if you look at even this somewhat separate from financials but the announcement today that Jared Kushners going to be working with the Business Community. Certainly if theres been anything positive about the administration, i think it has been overall reaching out to the Business Community and really trying to find ways to improve those businesses. Look, theres so much regulation on the Financial Services side, whether its the d. O. L. , dodd frank, you can go on and on, i think overall if you look at some of the banks and increased come plins personnel over the last number of years, its millions and millions of dollars. I think thats where youre really going to see benefits to financial institutions. I wonder, terry, if speaker ryans role in all of this really matters to the markets. I mean, when youre talking about some of these policy agenda items on a weekend that was dominated by some influential folks out there saying he should resign even if the white house is backing him up. Does that matter into how all of this will play out . Well, what i think markets should understand is that speaker ryan will remain speaker. Theres a big difference between what happened this time and fights with conservatives over the debt ceiling in 2011 or government shutdowns or the budget. He really worked with them. He represents all republicans. He was elected by the entire house. And hes going to stay there. But the tax reform fight certainly takes on new meaning. And it will be incumbent upon speaker ryan to help corral his entire caucus and make whatever tax reform is finalized a consensus product. I think that i wrote this morning that i think augers poorly for the boarder adjustment idea that the speaker and others have been championing because neither the white house nor the senate will be inclined to merely accept the speakers policy view or political view about what will sell in the house. Alexandra, how closely are you watching just sentiment . We had this amazing runup over the past several months since the election. Some people were feeling, boy, that was awfully steady, awfully far pretty fast, but now weve had eight Straight Days on the dow not looking so good s. There a point at which you wonder was u was there exuberance that got punctured here . Does that have implications for how we trade over the next several weeks . Right. Thats a great point. And i actually probably because im not a market technician or an analyst have always looked at sentiment, Investor Sentiment and of course dealing with individual investors over the last 30 years. You know, how they feel is sometimes more important than the facts themselves. So, you know, i do think it goes in sort of ebbs and flows. Look what we saw since november up until now. So i do think thats very meaningful thing. Terry, one area where sentiments improved over the last couple of weeks is in europe. In fact the euro bouncing back significantly. Do you put that down to improvement in the political situation across europe, or other factors . We do put that down in part to investors feeling better about the Political Sentiment in europe. And we also think that the ecb has done a variety of things to shore things up generally. And contribute to a positive Market Outlook there. Its a little of both, wilfred. I wanted to ask you, alexandra, because of your expertise in muni bonds, is that how this infrastructure package will get paid for . Well, there are a bunch of possible ways it could get paid for. 70 of infrastructure now is financed through Municipal Bonds. Whats being looked at is a gas tax which would raise 17 billion for 17 billion worth of 30year bonds. There is repatriation holiday, if you will. And then theres a whole Public Private partnership angle which mnuchin and cohn and wilbur ross have all come out in favorite of. And thats a very different game from issuing tax exempt bonds. Its important to look at the stability of the small bond market and new ways to bring in infrastructure financing. How important is there some private funding of this . Because if that doesnt come through, are we going to find there are as many hurdles for republicans to get over to Fund Infrastructure as we see with the Obamacare Repeal . Well, whats interesting is you are seeing Interest Rates now increasing. And if Interest Rates go up, Municipal Bonds or any bonds obviously become more attractive to investors. At the same time we do need to bear in terms of tax reform that there is talks of capping exempt interest or lowering it altogether those make them lest attractive. I think anything new, look at build america bonds during obama which created a federal subsidy, and thats something thats been talked about. But i think we have massive, massive infrastructure needs. We all know 1. 4 trillion over the next eight years or so. So any creative form of financing that will help make that, and bring jobs. I mean, think about fdr and wpa in the 1930s. It was those public projects that really brought the economy back and then the war of course helping that too. Terry, quickly, two words i heard over the weekend that i hadnt heard in a long time when it comes to gop strategy, moderate democrats perhaps becoming more important to actually getting things done. How closely are you watching engagement of this administration now with moderate democrats as far as how it affects the likelihood of all these things happening that the markets wanting to see . Well, thats a very smart question. And i expect the administration to engage much more with moderate democrats. The difficulty that the president will have in engaging with democrats is that so far democrats have made a decision not to engage with the president on major policy matters. So hes going to have quite a job to do. And if youre talking about breaking the democrats in half, thats going to be difficult job for them. May have more luck with democrats than members of his own party. Finally, alexandra, since youre here beyond the market commentary we did want to get an update from you on the business. Youre selling a stake. And theres been some really controversial personal stuff out there including your dealings with former behr sterns ceo, jimmy cane. Where is that are you . I cant comment on that part. Its an ongoing legal suit, obviously sad and disappointing. But on the sale tremendously excited. Were selling a stake in our Capital Markets business. We continue our women owned status as number one women owned firm in Capital Markets and all our asset business which my a e ablebodied brother jim on at 12 00 runs. Were doing the transaction with a terrific firm. Theyve been around for a long time. Really in the repo market, but theyre expanding their business and were excited about the next chapter. Many chapters lebenthal, were a cat with nine lives, weve got a few more. Im sure well have you back to talk about it soon. As always, thank you. And terry haines to you as well. When we come back, snapping up snapchat shares this afternoon. Rbcs mark mahaney and sheridan discuss. And Travis Kalanick, Company Holds itself driving operations. Recodes kara swisher and Walter Isaacson weigh in on that in just a couple minutes. Squawk alley in just a few minutes. Minutes. Who understand where you come from know you can craft an Investment Plan as strong as your values know that together, you can establish a meaningful legacy with the guidance and support of your dedicated pnc wealth management® team. Its a down day for the broader markets, but snaps higher in early trade by about 4 . A largely bullish wall street coverage. Joining us now mark mahaney, rbc Capital Markets internet analyst whose 31 price target is the highest, and Eric Sheridan, internet analyst at ubs, more modest neutral rating on the stock. Welcome to both of you. Mark, i want to start with you. Your 31 price target applies a 20x pricetosales multiple on next years expected revenue. Thats perhaps within the same ballpark of what weve seen from twitter and facebook, but there have been questions about snaps growth rate especially after facebook started cloning some features. What gives you the confidence to put that kind of aggressive target on the stock now . Well, youre right, john, its an aggressive high pricetosales multiple. We think the growth rate sustains that or warrants it. What i mean is facebook trades around ten times sales with about 40 Revenue Growth. Snapchat this year is going to be about five times faster than that, almost 200 . We think it can be 100 grower for the next couple years. Keep in mind were talking small numbers, theyre small base. Facebook does 26 billion in revenue, google does dlshs 80 billion in ad revenue and snapchat just gave you a year with 600 million in revenue. If they continue to succeed and innovate for users and advertisers, we think they can easily sustain triple digit growth for several years. Eric, you look at some of the same numbers but come up with a different result 24 price target for you on snap, which is pretty darn close to where its trading right now. Which explains the neutral rating. Why are you less confident in snaps ability to grow from here . Well, i think its not a question of growth. Its a question of where the company is in its stage of maturation. I think to put very large multiples on a company this early we were a little reticent to do that, to go that far. This is a company that isnt going to be profitable until 2020 on our model. So i think we have a long way to go to sustain Revenue Growth before we get to profitability, to be able to put those kind of multiples. Facebook went public at a very different point in its maturation. It was still going very fast albeit still very profitable, still open for us user growth, modernization, eventually profitability and all feeds into valuation for us riegts here. Mark, how optimistic are you the current snap user base will continue to use it throughout their lives . I mean, have they just captured the millennials while theyre young, or as millennials age will they continue to use this platform . I think thats one of the key questions on the stock. So we do semiannual surveys, both of advertisers but of users too. By our numbers we think about 50 of millennials in the u. S. Are currently using snapchat. If the product continues to innovate as well as it does, if you want a quick example, were in the middle of march madness, check out the march madness content thats in the stories part of snapchat. I think its the most compelling content youll find online today on a phone today. We found over in the older generations, people younger than me, 36 to 50yearolds, we found already 20 pktd of them are using snapchat. Were seeing cohorts continue to rise. We think its a bullish innovator. They have to out innovate everybody so far they have, they need to keep doing it. Mark, the problem is yes they out innovate and have kevin spiegel, product genius, but if facebook can replicate a lot of these things like the stories at a big scale, thats a huge threat. It could be. If were wrong on this call, i think the single biggest reason, i talked with our sales force about it is instagram and facebook come in and cut the legs out of this. I think a couple other trends are important to keep in mind however. The biggest power alley today in terms of advertising growth, not just internet but overall advertising growth is mobile video advertising. Its the Fastest Growing channel. And the company with the best creative and when we did checks with advertisers just to make sure we were right on this, the number one reason that advertisers are diverting budgets and campaigns over to snapchat is thats the growth area advertisers want to be in. Im not concerned about the Revenue Growth. Longer term i have to worry about user growth. But theyre in the right space at the right time. Eric, mark mentions mobile video advertising at a time when a number of advertisers, johnson johnson, verizon, at t are pulling away from youtube because of long term programmatic concerns, concerns about the types of content where their ads are appearing. Isnt snap kind of a hedge against that trend because its so highlycurated . Our extensive conversations, and we tend to talk to in excess of 70 advertising contacts every quarter would point most whats going on with youtube is more noise than reality. Theres a lot of opportunism going on. We believe theres a lot of positioning ahead of the up front that starts in four weeks from a negotiating leverage stands point. So i wouldnt overplay the youtube angle. I think its an easy story to scare people and the press has sort of picked up on it. We dont see much changing in terms of overall advertising trends for youtube. With respect to snapchat, again, its early days. This is a company that did 406 million in revenue in 2016. We think they get to north of a billion. But i think its early to say someones diverting a budget dollar especially with a digital out of an existing Digital Ecosystem into snapchat. Most of our conversations and in our note today is incremental spend, experimental spend. I think how that spend scales and grows over the next three to five years is key to snapchats growth. Eric, just a quick final question in terms of a factor that could support the share price moving forward as sort of wild card factor, is it possible were going to see more strategic stakes taken in the company . I mean, nbc has taken, our parent company, but still only a small one at this stage. Do you think there will be Companies Like that trying to buy up more stock . Its possible. I dont have any edge on that nor can i rule it out. Comcast my understanding was a participant in the transaction itself and is locked up for a certain period of time. That was in the pros pepectus a final pricing document we saw. But i dont have an edge on anyone coming in taking a stake on snapchat at these levels. Well leave it there. Thanks to both of you. Mark ha hanie from rbc and Eric Sheridan from ubs. Still to come on squawk alley, amazon reportedly putting brakes on the cash list and cashierless chain of convenience stores. Then, Jared Kushners new white house rule, working with the likes of bill gates, tim cook and elon musk. Squawk alley will be right back with the dow down 114 points. Points. Morning for amazon, new reports that the company delayed the launch of its cashless convenience stores, this as it looks to expand into appliances and furniture. Our diedre bosa has all the details. Someone has to track amazons every ambition, i guess. Which is a difficult thing to do. Well talk about the Grocery Store ambitions. Amazon go was supposed to open to the public in early 2017, but the launch has been delayed due to technical complications. This according to a new report. Now, will the company decline to comment on the delay, did release this video in december depicting a store that gets rid of the cashier. Since then its been open to employees only. But the journal report says the technology has had problems tracking larger groups of people and items moved from one spot to another. Now, amazon go is just one brick and mortar concept the company is testing. We recently checked out some of its other developments. Its most builtout physical presence so far is its bookstores. This is the first one in seattle that opened in november of 2015. It now has five in operation around the country with five more openings planned. Now, in addition to a book selection curated by amazon. Com metrics, it also showcases the kindle and echo and promotes the prime membership program. Also in seattle there was this drivethrough site under construction. Amazon will not confirm its for its Fresh Grocery delivery as widely speculated, but a Liquor License application lists amazon as proprietor linked to its address. Beyond those areas, sara, New York Times today details amazons ambitions in the brick and mortar space creating stores for everything from furniture to appliances to electronics and plans to open physical stores in india. But dont expect to see any of those too soon. Amazons approach to brick and mortar has been slow and cautious. The amazon go delay may signal that it still has some figuring out to do in the world of physical retail. Wilf, back to you. Ill take it, d bosa in san francisco. Thanks. When we come back, recodes kara swisher and the Aspen Institute wall Thor Isaacson weigh in and Jared Kushner white house rule. Dow down about 100 points, half a percent. Back in just a moment. Sports. And you dont wanna miss a thing. Stream all your live ncaa march madness games. Get directv for 25 a month when you have the new at t unlimited plus plan. Hi everybody. Im sue herera, heres your cnbc news update at this hour. The United States along with nearly 40 other countries are sitting out of early talks at the u. N. Today aimed at agreeing on a Nuclear Weapons ban treaty. The white house is still reviewing whether it will reaffirm the goal of a World WithoutNuclear Weapons. Cincinnati Police Searching for suspects in connection with sundays nightclub shooting which killed one man and injured 16 others. It happened at a club with a history of gun violence. And so far no one is in custody. A new study finds the majority of children with appendicitis do not need surgery. Researchers in china say 90 of them can successfully be treated with antibiotics instead. And washington, d. C. s famous Cherry Blossoms reaching peak bloom. National park service saying it happened on saturday, but this years bloom was different from the past, unfortunately, because cold weather killed about half of the blossoms. Still beautiful though. Thats our news update this hour. Lets get back downtown to squawk alley, wilf. Sue, thanks very much for that. We are counting down to the close in the uk and across europe in fact just hit about a minute ago. Lets get to seema mody back at hq. Wilfred, good to see you. That uncertainty around President Trumps ability to push through on policies, hurting europe as well, major indices down about half a percent on the day. But the dollars decline has resulted in the euro rising above 1. 09, now about 1. 08. But still highest level since november 11th of last year, just daying after the u. S. Election. The move were seeing in the currency is hurting the european exporters like the auto industry, but just take a look at the banks also under pressure. Lloyds, Deutsche Bank and ubs all down, but banking still up 16 since trumps victory. Another sector getting hurt are the miners, theyre down sharply in london. Glencore among names pulling back. May find it difficult to push through on fiscal stimulus promises specifically on infrastructure, glencore down more than 4 . Policy will also be a big discussion today. Uk Prime Minister theresa may is meeting with nicolo strjurgeon pushing for referendum in opposition brexit. Wednesday kicks off the twoyear process for the uk to leave the european union. In a speech earlier today the Prime Minister said she wants brexit to lead to a more united nation. Look at the pound since the brexit its down over 14 but again enjoying a bit of relief today higher by nearly 1 against the u. S. Dollar. Wilf. Seema, thank you very much for that. Lets get back to u. S. Markets. This mornings selloff right now bob pisani on the floor with all the details. Hello, wilf. If i stand here long enough we may go positive. Weve been down 23 points in the s p, now only down six. A lot has to do with following the bond yields. Lets look at the sectors. Banks are still weak. It was a lot worse earlier in the day, believe me. Trump trade, banks, industrials and tech stocks weak, energy still cant get oil towards 50, health care is the lone bish e beneficiary. Show you that in a minute. Look at the bank stocks. There of course big trump agenda beneficiaries, less regulation, tax cuts helping them. Down 12 or 13 from recent highs. Again, its not a good day, but they are well off of their lows. Another trump trade, industrials and infrastructure stocks, caterpillar, ingersollrand has been recently week. Remember Martin Marietta and aecom also down 8 , 9 , 10 from recent highs. Whats the beneficiary . Its health care not surprisingly. You see some of the drug names, pfizer, bristolmyers on the upside, molina, centene and Tenet Healthcare among hospitals all bouncing back. Back to you. Thank you, bob. Meanwhile uber Ceo Travis Kalanick facing a fresh scandal this morning following reports he and a number of other managers visited a karaoke hostess bar back in south korea in 2014 sparking an hr complaint from one female executive involved in the outing. This as the company says its halting its selfdriving operations after one driverless suv crashed in arizona flipping onto its side. Uber is conducting an investigation into that crash. Lets bring in Walter Isaacson of the Aspen Institute and also recode executive editor kara swisher. Welcome to both of you. Kara, i want to start with you with this uber after seeing the story and the information, wow. Yes. Just the idea that Travis Kalanick took his girlfriend at the time, who has actually performed at your conference, shes a violinist, and a group of uber managers, the rest of them male except one Marketing Manager i believe was female, to an establishment that at best theres a range of different types of hostess bars but treats the hostesses in the bar as objects. They have numbers. And guys can pick a woman to sit with them and sort of flirt with them during the night. Your take on this. Well, bad judgment obviously. I mean, just to be fair and i dont want to be that fair on these kind of things, but this is super common. I did talk to a dozen executives about these kind of outings. They happen a lot across korea when people are visiting there. That said, you know, its just one of those things, again a question of judgment. Right now in the light of other things that have happened it looks even worse. I can probably uncover lots of people who have done this, but uber cant afford these kind of stories. Thats the real problem. I believe a big part of the issue, walter, was that gabby holsworth, Travis Kalanicks exgirlfriend, said she wouldnt have spoken up about this incident if another uber executive hadnt tried to silence her about this incident if she were asked about it if it came out in the press. What is your take on the likelihood of this causing additional problems for Travis Kalanick, as the Investigation Continues into the company . Well, i agree with kara, i mean, these things happen. And theyre endemic, especially in the technology culture, but also i would say among hedge funds and wall street where theres a lot of testosterone and people think they have to do things like this. Its a lack of maturity in many ways. That gets to the larger question you just asked which is company like uber, it needed that drive of a person like travis who could get this thing going and just push it into communities that were resistant. But like any great startup, it probably needs, you know, also some more mature leadership. And i think thats why travis has been pushing to bring somebody in just the way google folks famously brought in eric schmidt for a while when they felt they needed it. Kara, you said just before that uber cannot afford a story like this at this time. What does that mean . I mean, how do we measure that . Is there any impact on the business or on investors on uber . Its so hard with such a big private company. Well, theres a lot of stories running around about uber now, you know what i mean . Each of these as it comes out it shows, again, bad judgment. Shows a leader not in control. It shows someone who doesnt care about issues around sexism. So they cant you know, its sort of in a lot of cases probably unfair some of them. And at the same time it wont matter because people as ive written before people assume that whatever they do, they do it with bad intentions. And so no ones going to catch them a break kind of thing in terms of anything. And obviously startups are very messy affairs, most arent run very well and most have issues around hr, most startups have disgruntled employees and things like that. I think thats really the problem here more than anything is they cant make one mistake and startups make mistakes. Walter, do you think mr. Kalanick survives this . Or are his days as ceo numbered . I think he survives it. I think theyll probably be people brought into the company. You know, lets look at the larger picture. Im down here in new orleans. Im on the city planning commission. Hey, walter, sorry, i got to cut you off, walter, because President Trump is leading a women and Business Roundtable at this hour and theyve got tape from the white house. Lets listen. Good morning. Thank you very much. Its my pleasure to welcome such incredible women, including my daughter, and unbelievable entrepreneurs and Small Business leaders to the white house. And also, linda, thank you very much. Youve been doing an amazing job. Working 24 hours a day is what the word is. Trying to keep up with you. Im not surprised. I want to thank linda for joining us today. Shes doing a fantastic job leading the Small Business administration. And she herself as you know is a great, Great Success story. And a Woman Entrepreneur at the highest level. So thank you very much. Empowering and promoting women in business is an absolute priority in the Trump Administration because i know how crucial women are as job creators, role models and leaders all throughout our communities. As we conclude womens history month, i am thrilled that we can meet to discuss how we can continue this important mission. You all have incredible stories, many of you started businesses from scratch with very, very limited resources. Sounds like im writing about you, lisa, right . But you had the grit and determination to make your dreams become a reality, right . Yes. Thats fantastic. Now youre providing hundreds of jobs across our country. And thousands of jobs. Youre really an inspiration to everybody. And thats men and women. Believe me. Lot of men out there are not doing what youre able to do. Today, women are the primary source of income in 40 of american households with children under the age of 15 who are also know that companies that promote women to Senior Leadership roles realize significantly better profits, according to statistics, than their competitors. I wouldnt have known that. How does that work . Tell me. Sounds impressive. We must ensure our economy is a place where women can work and thrive. We will continue to address the barriers faced by women professionals and entrepreneurs including access to capital, access to markets and access to networks. We will make it very easy. Its going to be a lot easier. Youre doing an amazing job and for a while it was a very, very tough, almost impossible job. My administration will also continue to advocate for policies that support working families including making child care more affordable and accessible. Thats something that ivanka trump and now ivanka trumpkushner that you have really been working on and feel so strongly about. My daughter i actually talked about it a lot during the campaign. And ivanka was right up front. I also want to recognize ivanka for helping to lead a National Initiative to promote Women Business leaders and entrepreneurs and the chancellor of germany is going to has asked ivanka to go to germany and shell be working on similar issues with chancellor merkel. So that will be very exciting for you. Thats going to happen very soon. Very great honor. I look forward to hearing your stories and discussing how we can Work Together to help all of your dreams come true. And make it easier for those dreams to come true. And with that im going to turn it over to our great Vice President mike pence. And thank you, mike, for being here. Thank you, mr. President. I want to thank all these Business Leaders for taking time for a conversation with a president who i think is going to be the best friend that Small Business in america will ever have all right. That was the president at the white house with a number of female Small Business leaders. Talking about some changes that he wants to make in his administration to improve the lot of women Small Business owners and Small Business in general, talking about access to capital, expanded child care, he said ivanka trump is going to germany at chancellor merkels invitation to advance some of these issues. So rejoining kara swisher and Walter Isaacson, walter, sorry that you got cut off there, but its an interesting turn in the conversation, President Trumps soninlaw and key advisor Jared Kushner getting a new role in the administration. Hes going to head up the White House Office of American Innovation working to revamp federal agencies using strategies from the business world. And the white house has said hes expected to work with executives like tim cook, elon musk, marc benioff and bill gates. Walter, im wondering, how closely do you expect Silicon Valley to work with Jared Kushner . There were eyebrows raised when he was included in meetings with the president , then the president elect even earlier on, but i guess the white house gets to say this because they have some of these ceos in the past. How do you think this is going to work . Well, i think it should work. I do think that tech executives whatever they may think of the rest of trumps agenda certainly have to be kind of appalled at the way the federal government is still stuck in sort of 1. 0 operating systems. And, you know, people have been trying to do this for years. I mean, i can remember al gores reinvention of government operations. But the Trump Administration probably has more of an opportunity because theyre willing to kind of blow up the bureaucracy. Thats what they really want to do. I think, you know, they should probably stop short of blowing everything up. But there really does need to be a shakeup of the bureaucratic way the federal government operates. And, kara, im wondering, do you think tech is going to continue to be willing to participate in these things . Their fingerprints will be i suppose on whatever comes out of this office if there are federal agencies or programs eliminated, how do they stay engaged with the government but not get implicated in things they might not agree with . Well, they cant, obviously. If theyre going to cooperate, theyre going to be part of the solution and part of the problem is their problem. So i think the thing about this is they kind of trump has not renamed anybody to the office of science and technology, any of those things. Actually gone from i think 100 some people to zero. So hes got to restaff this area. Innovation is just a new name on that thing because president obama had a lot of that stuff going on and previous to that other administrations did. And this just happens to be run by Jared Kushner with a new fancy name. You know, American Innovation, they tend to use that name a lot. I think it will be interesting to see which ones cooperate, if its more than just sort of window dressing. They did put jared there because i think Jared Kushner is someone a lot of people in tech feel they can deal with, whos reasonable that has some business background. So i think hes probably the right person for there. Well see if they actually do anything or whether its another one of these committees that talks about changing the way government does business and never does, which seems to always happen. Or could fuel more questions about conflict of interest. I think it will be interesting to watch how these business lead rs advise the president on key domestic issues that also have an impact on their bottom lines. Yeah. I do think conflict of interest in a broader sense is one of the stenches affecting washington these days. And it does come down to, you know, trump and his family to some extent. I think its really important as kara said to have somebody like jared, you know, kushner, wlo is very smart working on these things. But you kind of want more of a distancing and delusion from all of the Family Businesses rather than him running around to every trump hotel and every weekend and people doing business deals overseas with the family. I think it really does start in the white house if youre going to raise the standard of conflict of interest these days. All right. Something of course we will continue to watch, kara swisher from recode, thanks. And walter isaac soson from the Aspen Institute. When we return, backlash may soon hit the companys bottom line at youtube. And social media outrage over the airlines treatment of two passengers wearing leggings. Squawk alley is back in just a moment. Weve got all those details. L t. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Ive got a nice long life ahead. With a clear advantage. Big plans. So when i found out medicare doesnt pay all my medical expenses, i looked at my options. Then i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it helps pick up some of what medicare doesnt pay. 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And could save you in outofpocket medical costs. Call now to request your free decision guide. And learn more about the kinds of plans that will be here for you now and down the road. I have a lifetime of experience. So i know how important that is. Im scott wapner, today with the dow down eight days in a row, we debate whether the trade almost everyone was touting is now apple analyst owe never hear from, plus, were grading our traders stock picks in the halftime quarterly report. Well see you then. We look forward to it in ten minutes time. Google has been under fire next to extremist videos and now, its problems may be getting bigger. Julia boorstin has the story from Los Angeles Google could lose 750 million because of its advertiser boycott. That would be about 110 of its 2017 revenue. The mass exodus continues amid concerns that ads are being placed next to extremist content. On friday suspended the ads and fx isnt spending any money on any of googles platforms. Proctor and gamble says it could make changes if it finds ads that dont go with dwlooins. They are taking steps to prevent this from happening, a friday record foupd google was still placing adding for high profile brands on racist youtube videos. Some say the boycotts Financial Impact is likely still modest. The longer it drags out, the more of a toll it will take. The timing is unfortunate. During the may, up front and new ad selling period is when ads lock in a chunk of their annual ad buys. Google may have to provide more accountability and brands are likely to push for a discount. They warn other special platforms that feature generated content could face higher skutny, but this could be an opportunity for them as well as broadcast and cable tv channels positioning thels as a safe option. Back to you. Thank you. Squawk is back right after this. T alpha seems more elusive today. Is it because so many go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential back. Want to show you whats happen ng the markets. Dow has cut lozs in half. We were as low as 180. Now down 79 points. Health care turned positive within the s p. Only sector trading up now, but some of those deep losses, especially in financials, looking a lot better. When we come back, why wilfred is going to wear leggings next flight back home on united. Well be right back. L right ba. United facing social media backlash after two teenage girls were barred from boarding a flight because they were leggings. They were flying under an employee travel pass that requires a dress code. Uniteds statement x quote, the passiers this were pass riders and not in compliance with the dress code. To our regular customers, your leggings are welcome. You know i have strong feelings about this. An issue that divides us. Sure, rules are rule, but everybody wearing leggings, especially women, especially on plane, especially teenagers. Its more comfortable. Everybodier wears a lot of things. Im all for wearing leggings on the plane, but buy your ticket. If wrour going to fly on the free ticket, check the fine print. It states clearly, no leggings. I also saw to get over, you know, wear your leggings, see p if they let you on, but have a nice pair of pants in your backpack. I think the issue was that they were 10 and 11. If these were full employees that were older, theyve agreed to the rules. Its a bit conflicting, they probably werent aware of it. Theyve come on a free ticket. I tell my kids what the to put on on sunday morning. They might want to wear sweat pants. I say no. You dont give your kids sweets. Tom, what weve learned is next time we go on a business trip with sarah, she wants to next to us wearing leggings. I always wear leggings on planes. My bigger question is there social media liability. The fact that united responed, they defended themselves, theres been this huge back bash lash over over the place. Its a bum market in outrage as usual. Not a big defender of airline, but in this case, come on. Im a legging defender. Its a womens issue because men really dont wear leggings. Also, the rule says no flipflops and that kind of thing. Its been a big overblown. Going to have to hand this one over to the halftime report. Over to halftime. Welcome to the halftime report. Our top trade this hour, the trump slump. Why the banks are selling off again today and whether the cant miss play of 2017 can stage a rebound. With us for the hour today, joe, jim, josh brown here as well. So ian. We begin with the markets. The s p down six of the past seven sessions. The