Thats not going to happen on the supply side. History is replete with examples where we dont get the kinds of growth effects. I agree but moreover, were going to have moreover, were going to lose much needed revenue i think thats really a problem. You and i might agree that if were going to improve the supply side of the economy, one of the things we need to do is infrastructure investment. It is hard to do that if youre hemorrhaging, you know, red ink because you cut taxes by trillions of dollars without getting merely the growth effects that you and art and steve are advertising. Okay. Remember, on infrastructure, Trump Administration approach, no legislation yet, is private partner. And theyre saying private public rather. And theyre saying that number, a trillion dollars over x amount of years we dont really know. Only a small percentage of that is going to government from government spending. The rest is supposed to come from private spending. I agree with you that going from 40 to 35 is no big deal. And the income tax im a steve forbes flat tax guy. I take the whole thing to 20 . But, but, but, jarrod, these states that i mentioned all are great business and growth success. And they lower tax rates time and again. Wisconsin and ohio, maine, okay . North carolina which has become one of the hottest states in the country. So you can talk about kansas but what about those other states, the low tax states have better growth rates than the high tax states . Good question heres what im going to do for you and all of our other listener whos have had heard this debate for 30 years now when i get back to my office, im going to put up a scatter plots that show both changes over time in tax rates and Economic Growth at the state level and National Level and what youre going to see is like the kind of war shock test the psychiatrist gives you its a random scatter of points. The kinds of correlations youre suggesting, youre right sometimes they show up and im right. Oftentimes they dont. Over the course of history, when were talking about moving taxes to the to the degree were talking about. Youre not going to get more growth youre going to get more after tax inequality i accept that challenge were going to put up our own not for you. And when you look at us, youll have to take a couple of xanax there is no question about it i do want to raise one other point. I think jarrod and i agree, 15 or so very distinguished economists, democrats and republicans, put out a letter today or last night really arguing against tariffs on steel. Steel tariff protectionism particularly on National Security grounds the 232 clause but also in general. And as i said, these are guys that jarrod worked with, i worked with, distinguished people i am concerned the administration is in a heated argument internally. Im not going to name names. Im just saying, theyre in an argue bment wh argument about what to about trade. Im a free trader. I hope they go light, light, light. Because my tax cuts could be very damaged in terms of their growth effects if we have a whole bunch of protectionism i dont want that i think the stock market mike santoli said they dont want a trade war thats one of the biggest kind of, you know, negative wild cards hanging out there. Theres not a lot of evidence that there would be an all out war, maybe just picking off product groups here and there. That is definitely considered something that is a risk, not a potential benefit. I think that is an important nuance i think that is an important nuance if forever politicians on both sides of the aisle, im talking about, you know, obama, george w. Bush have implements small tariffs on narrow items, you know, rubber, tires, grade four, Something Like that because there are some, you know, pretty clearly obvious dumping case i dont think there is anything wrong with that i think thats just kind of status quo trade policy at a very granular level. When you start to talk about significant tariffs on a Large Production group like steel, i would agree with layery. I dont think thats the way to go see, there is 150 some odd duties on Steel Products right now. And youre right reagan put on temporary targeted tariffs a couple times if my memory serves me on motorcycles and steel but i think more on semik semiconduct semiconductors the argument is they want resiprocity. They want resiprocity. Im not exactly sure what that means. But there are advantages lets say germany may have advantages over automobile imports we dont have with german car imports i get. That i looked at numbers this morning. The United States imposes a 24 tariff on imports of some european shirts, okay . The eu tariff on six lar shirts from america is 12 now they made more shirt tariffs, American Shoe tariffs, okay American Shoe tariffs, 37. 5 truck tariffs, 25 in other words, whats good for the goose should be good for the gander i dont see the resiprocity. I just see protectionism in steel, which correct me if im wrong, steel has done pretty well, hasnt it . I dont see why we need to do this its a much smaller part of this of course, question is whether the white house is listening to you which well get to in a moment were getting the cbo score. Interesting numbers. Good morning, carl. The cbo is estimating that president trumps budgets will reduce deficits over the next decade by about air third. However, they say that budget does not balance that by 2027 the deficit would still be about 720 billion of course, the white house said that it was presenting the first balance budget in quite a long time those deficit reductions are mainly achieved through cuts to mandatory and discretionary programs the mandatory spending cuts they estimate would total 2 trillion that compares to 3 trillion that administration had said they would cut from those entitle ment programs. And, of course, the white house and the cbo are currentsly locked in a balttle they criticized the methodology. Well see how the white house responds to this latest round of numbers and keep digging through them for you. Thank you for that. In fact, larry, cbo says we use different forecasts reflecting differences in projections. Yeah. Look, actually, well, what she just reported is actually easier on the white house than i feared i got to go through the details and take a look at it. I just want to draw everybodys attention, especially my pal Jarrod Bernstein to the oped piece in the journal what theyre saying is its not revenue neutral you should worry about, its deficit neutral. What i do mean by that okay in the early years, the lower tax rates on business might lose you some money i believe youll get it back in four or five years however, theyre lowering spending as elan reported. Theyre also taking a look at asset sales, okay, and other measures, privatepublic partnerships, energy lease thats would have good feedback on royalty so the federal government and the states. In other words, look at the whole picture. Its not just revenues its all things. And this is something that steve moore and i and Newt Gingrich is working on this and others we need deficit reduction. Youre not going to get revenue neutral right away its not going to happen. I think the problem with the trump budget as it were, is numerous fold. First of all, many senators and congressmen on the republican side of the aisle have said this thing is dead on arrival and that reason they get the deficit reduction they do is because theyre implementing large cuts in programs that help Vulnerable People in part to help offset the tax cuts that larry and i were just arguing about. Now this is just robin hood in reverse on steroids. Basically, youre cutting medicaid youre cutting food stamps these are programs that are really important to vulnerable moderate and low income people and youre paying for tax cuts with that. And we can argue about the growth effect, cbo clearly doesnt buy them i didnt get a chance to ask elan id be interested in the growth rates that cbo assumed i suspect they have gdp growing a little bit south of 2 versus 3 im sure thats the case theyre not buying, nor should they, the speculative growth effects and this, you know, massive redistribution of spending away from the poor to pay for taxes for the rich there are a lot of even moderate republicans are not going to buy that. All right i appreciate your point of view. You know im going to disagree look, you say there are massive cuts im going to say in the big entitlement programs and im going to add to that even the socalled smaller entigtle ment like ssi theyre not cuts theyre lower growth rates of spending theyre not cuts only the cbos goofy Current Services baseline call them cuts they are not the level of spending in all those areas is still going to go up i cant believe youre saying that im saying it and im a former associate director of omb. Thats why i cant believe it. Im going to add to that, im going to add to that that part of the trump strategy is to go back to the bill clinton welfare reforms. Im talking about welfare at large and begin to reimpose all the various workfare and Training Programs that have been abolished so that you cant stand assistance in the short run, fine. I believe in the safety net. What weve witnessed over the last eight or ten years on the republicans and democrats is an xbloe explosion in programs that need reform badly finally, medicaid, look, jarrod, what theyve done to expand Medicaid Eligibility is unbelievable its a lousy program its bankrupting i mean thats the worst entitlement story right now. And i give trump credit for going after it. We have many fundamental disagreements on these points. The bunt that youre defending basically solves the problem that poor people have too much in america and rich people dont have enough. And, look, i look out on the world and i simply dont see that in fact, you know, the one group that is doing great in terms of their share of premarket growth, im sorry, theyre share of pretax Income Growth is the top 1 soichlt dont see that they need more help meanwhile, im very clear that folks at the bottom, you know, they need the kind of coverage that medicaid and snap provides. And ill tell you, where i dont like this argument, i think its really kind of interesting that growth that a Slower Growth rate doesnt equal cuts. What the cbo is telling us in medicaid is that Something Like between 10 and 15 million fewer people will have medicaid ten years out than would have it if you didnt engage in those cuts. Right . So that seems awfully relevant i dont buy the cbo numbers i think in the last four or five years theyve done a terrible job estimating aca, obamacare and all that goes it with. Come on, lets go bad to medicaid im in favor ive always been in favor of federal assistance and states for that matter for people who are ill, who have preconditions, who are elderly and poor all right . Im a safety net guy i learned it from ronald reagan. You know that the best republicans are the old democrats. Including me but, but, but, jarrod. You have expanded the medicaid story so much now that those are not the people getting it. The people are getting it are infrequently ablebodied people who should be either outlooking for work or going to tech and trade training schools or at least show some progress for community service. Thats been lost weve lost all those bill clinton reforms. I think youre last word. I think youre con flating medicaid and disability insurance. Most ablebodied people on medicaid are working you know the no. The Medicaid Expansion, the Medicaid Expansion took medicaid up to 140 of the poverty line those are low income people and theyre getting affordable coverage so that they can go back to work but there have to be limits, jarrod you understand that. There have to be limits on these programs and what you got is ablebodied people who have no workfare limits and requirements and thats got to be replaced in my judgement. Listen, i wanted the republicans to give larger tax credits to the low end people. We agree with that. Its a good place to end. We agree on that we should expand the tax credit the earned Income Credit and well see what the Senate Health care bill says about that very ning a few moments. I agree with him on that point. Guys, thank you very much. We continue to watch yellen here some comments that 3 gdp in the next two years would be difficult. The vix trading under 10 briefly. I got the ten year ticking up just a touch and the dow close to the highs ckn mite8. , up 1 ba ia nu eal time . Wait, our data center and our clouds cant connect . Michael, can we get this data to. . Look at me. Look at me. Look at me. You used to be the yes guy. What happened to that guy . Legacy technology can handcuff any company. But yes is here. So, youre saying we can cut delivery time . Yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. A lot of pots boiling today. The president with macron in paris. We have the cbo budget score for 2018, and then janet yellen continues to testify in front of the Senate BankingCommittee Steve liesman is watching that. Interesting exchange with senator cork eastern the fed chair about whether or not we can hit 3 growth. The fed chair was asked, what is productivity been . She said its about half a point. How about before about 1 and then senator corker led her counsel this road of saying, you know what . 3 growth for the overall economy, yellen said would be wonderful but she said quite challenging in the overall conclusion was you cant get the productivity growth in order to get the 3 growth that was very, very unlikely. Also a lot of the questions today are about doddfrank and doddfrank reform. One of the questions that is always a clue to what theyre interested n a lot of talk about doddfrank reform. Less so about the idea of tax reform although senator tillis from North Carolina is questioning the fed chair about the ability to use tax reform to perhaps increase productivity in the economy. Carl yeah, steve, not as many questions today about her tenure or whether this would be her last time appearing before the committee. Asked quite a bit though about the feds ability to gauge risk outside of normal fed parameters yeah. That was a question. By the way, its also an expectation. If you regulate the Banking System and regulate it hard, then some of the risk is going to go outside. The fed was aware of that before the authors of doddfrank are aware of that. Thats a big issue she didnt really talk about seeing a lot of risk out there for recession and saying, you know what . Recessions dont die of old age. And tried to defend the current fed policy by saying the idea of current fed policy of raising rates and reducing the Balance Sheet is to prolong the expansion. Steve, thank you very much for. That lets take you people back to the Senate Banking committee and chair yellen we experienced would have been substantially the scale of the crossice wois have been substantially reduced . So thats a difficult judge ment judg judgement to render. I think we have much stronger capital and liquidity. I think its important to recognize prior to the crisis we had many significant large stand alone investment banks that were very highly leveraged. Now i try to develop a reputation of being close on time i want to close because i got a great response in the meeting, in our personal meeting. I wont ask you to repeat it but what id like to see are right sized applications of these regulations. I would like to see rational thought placed on how these regimes are applied to institutions, not based on some arbitrary number of 50 billion today or 250 billion, whatever the number it seems to me that that should only be a data point and the nature of the business is and the risk that they represent should be the driving factor in Going Forward and right sizing the regulations some of which i think are absolutely essential do you agree i do agree with that. And as i said in response to an earlier question, one way that congress could approach this is to increase these dollar cutoffs. Yeah. And the alternative is to look at jid organizations and the factors that determine their riskiness. Id like to get to a more one thing well do is put more meaning to. That i think everybody agrees in the abstract but we really need to get to a point to where you regulate based on the risk of the specifics of a targeted business instead of us feeling like we lets say we raise the number from 50 billion to whatever and then index it at over time, we can pretend that were done. I think were missing the opportunity to make sure resources are focused on the areas that represent the most risk and away from the business thats dont think thank you, mr. Chairman. I went over. Thank you senator kennedy . Thank you for your service, madam chair. Thank you i think i read the last couple of days that First Quarter growth excuse me had been readjusted to 1. 4 does that sound right . Yes if you had unfeddered discretion, what you would do to improve on that . Growth is variable from quarter to quarter and we expect significantly stronger growth in the Second Quarter so i would certainly in looking at the performance of the economy smooth through the volatility but doing that we have an economy that is grown over the last number of years by about 2 per year and 2 is tough to create a very large number of jobs and a tighter labor market of course, its good to have more jobs in a tighter labor market but the fact that that could be accomplished with 2 Economic Growth points to what is very disappointing, namely, the potential of the u. S. Economy to grow is very low most i believe cbo and our committee estimates that the economys longer run potential to grow is currently under 2 . But my question, madam chair, apologize for interrupting my question is, if you had unfeddered discretion and were averaging 2 growth and you wanted to get as close to 3 as you could which was considered would be considered normal before 2008, if you had unfeddered zbregs, what would you do . Well, this is really not a job for the Federal Reserve. Its a job for congress and the Administration Im asking for your advice. I would my advice would be to focus on all of those factors that determine productivity growth and that pertains to tax reform and the efficiency with which the economy operates i would focus on training on education, the quality of Human Capital in this economy. I would focus on investment both public and private i would focus on policies that impact the pace of technological change and research and development. And there are wide range of policies that bear on everything in my list and so its that set of that set of channel thats i think is important in boosting the economys potential to grow. Okay. Did we make a mistake moving away from glass steagle . I dont think it was responsible for the financial crisis so i dont see that as a major issue that was responsible for the financial duffleiifficultie zbhchlt did our move away from it contribute at all or just irrelevant in your judgement well, look, the largest distress was suffered at stand alone investment banks what bear stearns and lehman that, you know, there was a product of glass steagle the fact that ib vestment banks are now all major investment banks are part of Bank Holding Companies and subject to stronger capital regulation is an important safeguard okay. Has the volker rule worked . The volker rule was designed to stop propriety banking organizations and a goal in which i agree. It was intended to permit Market Making the implementation of it has been very complex. And burden some weve suggested that kmubt banks be exempt from it entirely and should we get rid of it i wouldnt get rid i wouldnt get rid of it i think the and i believe the treasury report suggests maintaining the restriction on propriety trading and depository institutions so i wouldnt get rid of it but i would look for ways to simplify it. Okay. Last question quickly. Would you accept reappointment excuse me you would accept reappointment, miss chair . So its something that i really dont have anything to say about at this time im really focused on carrying out the responsibilities that congress has assigned to us and havent really decided that issue. Thank you for your service, madam chair. Thank you thank you thank you and chair yellen, we are approaching 11 30 which was the stop time. I hope we will be able to meet senator brown has asked for one more question. He certainly is welcome to do so thank you this wasnt my intent. The first part if she reappointed, i would be happy in supporting your reappointment. Thank you. Im not sure he said that but i think he did thank you. And im very mindful of the chairmans 11 30 meeting that the republican conference has. Im grateful for the one series last questions which will not take the whole five minutes. Doddfrank require the cfpb to make a rule protecting consumers from the practice of doing so would be in the Public Interest n 2015, the publicly released a comprehensive study of the impact of forced arbitration, consumers, bureau released a proposed role limiting consumer contracts. Monday they released the final rule during that time, cfpb consulted with experience r experts at produce deantial regulators like you f any of your staff a couple of questions and then one brief comment f any of the staff had safety and soundness concerns about this rule, do you think they would have raised those concerns with the cfpb during the rulemaking progress i mow any staff consulted and i assume that they would have but im not certain just with what those consultations were. Okay. And one more question. If the rule were to impact the safety of the u. S. Banking system, do you think it would be unusual that no staff of any of the prudential regulators would raise concerns about the rulemaking process i assume that they might well have okay. I thought thats why i thought it was unusual i was surprised to see the acting controller understand he had a short time there and short hor eyeson to stay there that he raisedish wuz this rule so late in a two year long process and mentioned safety and soundness and i thank the director he clearly explained the effort thats they made to consider input from safety and soundness regulators so mr. Chairman, i just close with asking unanimous consent to enter the letters on this issue into the record. Without objection thank you. If i had known you were going into the arbitration rule, i would have rethought going back into that issue. In the cra. Thats right. Well discuss that further probably chair yellen, thank you again for being here with us to day. We always appreciate the opportunity we have to discuss these issues with you. For senators who wish to submit questions for the record, thursday, july 20th, is the due date and i encourage you, chair yellen if you receive questions to please respond promptly with that, this hearing is adjourned. Thank you, chair. Thank you that is janet yellen wrapping up her testimony today in front of the Senate Banking committee. Lets turn to steve liesman. What is the headline today you know, i think the headlines, i dont work for a newspaper. Its not much redirection from yesterdays dovish commentary. Im seeing the markets okay it with i saw the two year and the ten year yields up just a little bit. But pretty much intact this idea that the Federal Reserve is on track to reduce the Balance Sheet sometime this year they didnt get into the exact timing there and perhaps raise rates if the inflation data were to behave. And that means go back up to 2 and well get a cpi number tomorrow a lot of talk about Regulatory Reform i think its high on the senators mind and just to recap that issue, everybody agrees that some of the rules should not affect the smaller banks. But nobody can agree or neither side can agree on what the right number is for the cutoff for the smaller banks. Somebody mentioned 125 billion in assets. There are numbers on the republican side of much higher one of those amazing places where both sides agree something needs to be done but they cant seem to get together on what needs to be done yell en, of course, trying to defend a lot of the Regulatory Reform rules she generally supports them. But also supports some reform when it comes to the volker rule and the other thornier issues out there in terms of reducing regulatory burden. I dont think there is much there except for that debate they had that we talked about a couple moments ago about can the economy get to 3 . It needs population growth and productivity growth. Yellen said if you get a couple tenths of productivity growth from a policy, you should count that as a success. And remember the president and his budget are trying to get to 3 and 4 growth. Yeah. Rick santelli and bob pisani joining us as well you said this morning that for those who we dont have rick yet. But i think bob pisani is here watching the market. Bob, ill turn to new terms of Market Reaction that steve mentions any turn really in either yields or financials . Anything beyond the bit in tech we saw this morning . She did make an interesting comment related to the banks she said she open to tests for strongter formers. The kbe, the bank index did move up a little bit on that of course, anything reducing regulatory pressure object banks will be a positive overall. So small move up in the bank stocks on. That also she made a very interesting comment on the labor market the labor market is quite tight. We may see pressure on cages these are things concerning people in the second half of the year margins are very high level right now, 10 and wage pressure will erode the margins. I personally, of course woshgs love to see wage pressure happening. But bottom line is a number of companies have already come out and said theyre seeing pressure on wages darden made a comment recently fedex made a comment about this autozone mentioned higher wages as a potential issue i think shes trying to get out ahead of that even though its still modest so far. Those are the two things that i saw that i thought were most interesting in terms of the markets. Yeah. I would also point out in ermz of it the financials leading, it is the the investment banks up more than 1 some of the retail brokers as well thats been a strong group in the last month, last three months really. Asset managers as well its a wall street trade who knows if there is also a little take away there that says, you know, all the questioning about potential recollect tor regulatory relief is holding up sent theyre expected to be big performers in the Second Quarter. Technology is expected to be up double digits. And finals are also about 8 on the upside here. Hoping for a little bit of growth and trading activity. And while, look, the spread in the yield spread is not very wide, it has started moving up a bl little bit on the short End Technology and the financials are expected to have fairly decent Earnings Growth for the Second Quarter thats one of the reasons the markets held up so well. Bob, tomorrow is a big day with citi, jpm and wells and pnc. Rick santelli, you said those who thought yellen was advancing a hawkish agenda probably instead you thought it was more like you called it a Michael Jackson thing. Looked like she was walking forward but she was walking it back does to take ratify that view . Well, i think it z i it this best way to handicap what janet yellen and how anything she said moved markets is how its been so parallel along the curve. Before she started speaking today, for example, we had a 133. 2 and a 23510 both are two basis points higher so i dont see curve implications n terms of the moonwalk notion, i really do think by doing less potential hikes and more Balance Sheet, i think that is a bit different scenario i do think the Balance Sheet ish use can be put off in such a way and she talked about emerging markets and global impact. I think thats what the consideration s i do think that say bit watering down. I also think that normal rate that they now can place fed funds is definitely been under review, especially if you look at some of the plots over the last several years i think all of that taken together doesnt mean theyre not going to continue to try but i think it makes gradual a capital case you know, capital letters, gradual, really gradual. Yeah. And, rick, trying to bring a couple of things together here we heard from janet yellen that 3 growth would be challenging the Trump Administration said theyre targeting the cbo. Theyre also saying that its gdp growth assumption is less aggressive than the Trump Administrations does that make a difference that we get, you know, a couple of different constituencies again challenging the notion that the Trump Administrations budget and other actions can get this economy to 3 gdp growth see, i think that line of thinking is pretty rich coming from anything that has to do with fed policy. To me, you could have any thought you want about the Trump Administration but some of the kudlow type issues theyre trying to put forth will give us potential to ultimately if theres a possibility to try to get to 3 growth i guess what im saying is i dont think fed policy if there was no Trump Administration, no tax cuts, none of the plans, i just dont think its possible i think policy in certain ways is inhibiting. That i think some of the way the fashion that Financial Sector has recuperated since the crisis has really undercut productivity so if you want to get to 3 growth, you need to do certain things if you dont do those, i dont think you have a chance. Can we get it . I dont know but if we have a chance to get it, it certainly isnt going to be in the next year or two no matter what passes im of the frame of mind, you need to put yourself in the Business Community shoes that needs continue to vest capital and put the corn and field to grow but its going to be down the road but planting those seeds and watching them grow isnt going to happen quickly no matter what yeah. Yellen did say theres general agreement, there are distortions in the Corporate Tax code that could be changed to improve productivity steve liesman, im curious, your view point on that debate about Balance Sheet reduction, whether or not that would be disruptive to markets weve seen jamie diamond weigh in and yell ton day tried to emphasize there is a way to do this without creating havoc or damage is that consensus view i mean, the consensus view is compare whats been happening recently with the taper. And flab is a reason why the analogy that is old. The fed may end qe and the market increase went up by 90 basis points the fed is talking in increasing detail to the point where this is now seen as a reality in the market about reducing the Balance Sheet and doing so gradually. And it appears as if the market has not reacted at all the fed is taking its cue from the Market Reaction. And has laid out a plan that is dwr gradually upward reduction theyre increasingly going to reduce the Balance Sheet steve, thank you. I can make a comment on that, carl just one moment here. Okay. Were getting some news i believe. There is a revised version of the partys bill we have that on the hill. Senators are trickling to leader mcconnells office awaiting details of this new plan we can tell you a little bit about whats in it according to some notes that are being passed around the hill and overview of sorts about the change thats have been made so far we have learned that this new draft will keep some of the Affordable Care act tax provisions in there, specifically the tax on net Investment Income and the payroll tax. Those are going to be sources of income to pay for some of the other increased sources of funding that are inherent in the bill specifically, a 70 billion addition of funding to pay for what theyre calling state based reform, Creative Solutions to pay for specifically cost sharing, Health Savings accounts and other issues theyre adding 45 billion in funding to treat substance abuse, specifically treatment of opioid addiction which has been of increasing importance for many senators in states like ohio and West Virginia they are also adding funds to pay for higher risk individuals that will be buying plans on the exchanges under the Affordable Care act that have preexisting conditions that, have certain needs. Its unclear exactly how much that funding will entail thats going to be a point of convention that is language that is originated from an amendment put forth by senators ted cruz and mike lee that will exempt insurers from offering all of their plans on the exchanges theyll be able to sort of create plans for people off of the exchanges so long as they offer one plan that is compliant. But senator mike lee tweeting earlier that the entirety of the amendment will not be in the bill hes withholding his judgement until he hears exactly which portions of it will be included. Were going to wait and see which senators are still nos or are still potentially waiting to see exactly how this plays out with the cbo score s we expect some of that sentiment to trickle out over the next half hour to hour. Busy day to watch the cbo and that tweet from lee, youre right, it did raise some eyebrows as we await more specifics in terms whast market is looking for on this, mike, i guess well start doing a whip count again over the next 48 hours. To some degree, looking for it to be passed, meaning in the passed i think they want to get beyond it more than anything else, it seems like the insurers, people just assume theyre going to find their way to kind of do fairly well in almost anything that comes out even if there isnt much of a radical change and the hospital ones are the ones you look at in terms of people think really youre going to have that many people fall off the roles. Huge cuts to medicaid. And then attention will turn to whether or not this actually becomes a reality or appears to be one right. Whether or not that clears, foemz the runway for taxes. If there is an end point that, may be the decisive factor for the markets. 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The news flow in the last hour, yellen, budgets, health care, cornyn saying theyre going to have enough votes by the time its put up for a vote and we havent even gotten to the president in paris yet. And the things that really been a factor in the last half hour is oil again. It went down early this morning. Rallied back above 46. Thats what brought the market back here. Yellen didnt put anything to spectacularly new on the table i got a little piece of that discussion you were having with steve liesman. I think that the fact that market hasnt reacted yet, that they dont quite know when and how this thing is going to start. Theyre assuming the fed will give them a little detail. I think it will not be as easy as the fed assumes and were also. Narrator influence of a lot of talk that he is going to talk tougher and more hawkish i dont think thats going to happen either. So the markets may begin to see some adjustment over the next couple days. Youre referring to a story that suggests he might use jackson hole to set the table on an unwind in 18. Yeah. And there are other rumors around you see the yield on the boonz went ape little bit. I dont think hes going to turn hawkish. Art, just wondering, what is your take on the markets relationship with health care . There are some projection thats Health Care Spending could be 20 of gdp within the next decade and, yet, it seems like on the day to day basis there is not that much reaction to whether we actually get this figured out or not. As mike was saying, its moran issue wlf we can get passed it versus whether or not it gets fixed s that going to continue i suspect it will because they dont believe that theyre close to hammering out some kind of detail. Thats why you see the insurers and others go up because they dont think theyre going to be able to nail something down. If, for example, they said that they wanted to take away state borders in the sense of every insurance could be sold nationally, then i think its an impact you begin to see some definitive changes. Not sure thats really going to come about art, we have a new high in the dow yesterday. The s p 500 is still kind of hovering below where it hit a few weeks ago. Any significance to that are we still in a range here or do you think that the markets gathering up a little bit of a push higher . On several occasions, it has looked like it wants to push out. Se sentiment trader points out when we had bad days and had the kind of performance that weve seen, usually the next two weeks are kind of choppy yeah, for a while zwlchlt so well wait and sigh. Thats what history tells us maybe this time it is different. Rick santelli, i do want to give you a chance to squeeze in that point you were about to make before we will to get to kayla. And art such a smart gichlt he touched on it you know, when steve liesman, and hes right, the feds done their best to try to get the market prepared much theres been no reaction my thinking is there was a reaction when there was a hint that drogy may start quantitative tightening. I think the key here is that when we did the taper, when we got the big signal, that was over a year and a half before the ecb even got into the quantitative easing business and if all stimulus is fungible, its not so much talking about what our fed is going to do. If the other Central Banks keep doing it, it will mate gate even our Balance Sheet issues its about what we all do in unison, look at lid wid ti globally thats when the market gets nervous f drogy doesnt do what art in that article talked about, if he started putting something on he actually talked about putting something on the table, then the markets behavior is going to be much different when our fed talks about Balance Sheet reduction. Arts nodding his head. As usual, rick is spot on i think thats what youve got to wait and see when it starts to come out and its interesting because suddenly mr. Abe is under a bit of a cloud and we may end up with electoral changes going on in japan and that could be a strategy, too. So a lot of cards on the table. Great to see you both weve got the cbo, Senate Health care and yellen under our belts. Were going to turn our attention to paris in the next hour squawk valley is back in a second. What if we could bring you better value by having better values . At blue apron, we work directly with more than a hundred family farms. So instead of spending on costly middlemen and supermarkets, we can invest in the things that matter most making farmland healthier. Cutting down on food waste. And bringing you higher quality, fresher ingredients for less than you pay at the store. Because food is better when you start from scratch. Get 30 off at blueapron. Com cook tracking your tax dollars. Steve balmer shows where youre spending your money. Im scott wapner coming up on the halftime report, upgrading snap right before a crucial moment for the company. Plus, shares of target are jumping today after the company surprises wall street. Is this the moment to take a big risk on retail we are covering president trumps paris News Conference live and the big meeting with gop leadership over the Health Care Bill as the stakes rise in that battle as well jon, see you in a few. Details on the new Senate Health care bill coming out and the cbo score on president trumps budget just a few minutes ago. For more on the budget, lets go to washington and ylan mui under president trumps budget, it would be 1. 9 , which is less than the 3 forecast that translates to 3. 6 trillion in revenue over the next decade and one of the reasons why the cbo says that the president s budget does not balance. It would reduce the budget by a third over the next ten years but doesnt eliminate it entirely in 2027, the deficit will still be 720 billion it also estimated that the debt to gdp ratio will reach 880 by the end of the next decade there is one piece missing and thats the impact of the president s tax plan because the white houses proposal, quote, lacked specificity, it could not provide an estimate of its impact also, unlike in previous years, the cbo is not going to be providing a followup Economic Analysis back over to you guys. All right just really quickly, we had a short debate here at the desk about what the headline will be out of this and what strikes you . Well, i think theres a key difference here, which is that the cbo score is static and the Administration Says they are using a dynamic score. Its a little bit of apple to oranges comparison here. The administration will find things that they can actually like in the cbo report but certainly they will be questioning some of the calculations not for the first time either, right . Ylin, thank you for that well get more about the president s meeting with macron as they get together for a bilateral and wsne conference in paris. Dow session is up 33 dont go away. Michael, can we get this data to. . Look at me. Look at me. Look at me. You used to be the yes guy. What happened to that guy . Legacy technology can handcuff any company. But yes is here. So, youre saying we can cut delivery time . Yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Taking a look at shares of sky, the londonbased Communications Company that is supposed to be acquired by Rupert Murdoch this will make sky more independent and fasttrack approval shares are down 2 that happened all at once. 21st century stocks are down as well the street has been interested in seeing this deal close. Increasingly they are getting scrutiny and you have to wonder, is there a Tipping Point for regulators here or abroad. They say thats enough. Well watch that. Meanwhile, dow is up 30 points and nasdaq is going for a fourth straight gain. Hasnt done that since it was up for seven days from may 18th to the 26th lets get over to scott wapner and the half welcome to the halftime report. President trump is in paris meeting with french president macron the two leaders will hold a News Conference shortly well take you there live. Were also following Senate Majority leader Mitch Mcconnell with gop senators are the Health Care Bill as pressurizes to pass that legislation markets are moving higher, albeit modestly for the day. Joe terranova, josh brown, steven weiss and jon najarian