Transcripts For CNBC Squawk Box 20170222

Overnight in asia, the nikkei was flat. The hang seng and the shanghai were slightly higher. In europe, in early trading right now, youll see there are mixed messages. For the most part the major averages are around the flat line. In italy things are down by 0. 9 . If you check out crude oil prices, right now it was up 1. 2 yesterday, giving back some of those gains this morning with wti at 54. 02. Lets get you updated on some big stories today. Earnings just out from Toll Brothers. The company earning 42 Cents Per Share in the first quarter. Revenue was better than expected. Home building deliveries about flat in dollar terms. Increased 12 in terms of units. The company says the average price of homes delivered declined due to changes in product mix. Carl icahn bought a large stake in bristolmyers squib. Its unclear how big his position is, but he sees the drugmaker as a potential takeover target. The report was released after they announced they would add three new Board Members and buy back some stock. I remember bristol has been on the takeover target list for as long as ive been on. A long time. 10, 15, 20year project as a takeover target. Bristol has a market cap of 90 billion, but thats down significantly since august when it announced disappointing results of a Clinical Trial for a lung cancer drug. More on this story. Squib was an independent company. Were you there back then . I candidate myself that far. You cant go back to squib . Might be able to. They were all you know, glaxosmithkline. They were that i was there for. You remember when bristol and meyers got together. I dont remember that. Glaxosmithkline one of the first front page articles i wrote. That you wrote. Yeah. Is it somewhere in your house framed . No. Its not . No. Would that be a good present for me to get for you . Yeah, it would be joe. Yeah. I wrote it with melody petersen was the other author. We all missed your birthday. It with you sunday. It was sunday. The kids came on the show yesterday it was a surprise. A surprise. Once you pass your birthday, its over. You should have waited 363 days before you were entitled to im sad i missed the boys. Its the one day i get to see them come in. What about your new daughter sydney. They came. We missed the baby, too . She was sleeping on the set. Like a lot of viewers when theyre listening to one of your no. We missed the kids. You put her to sleep, too . Were trying all the time. Yes, you are. He doesnt put you to sleep. He gets you riled up. He is starting already with me this morning. Because you were doing some on todays agenda january existing home sales are out at 10 00 eastern time. At 2 00 p. M. , we get the minutes from last months fed meeting. I missed you, joseph. Long weekend for me. Jerome powell is speaking about the economy this afternoon in new york. And dallas fed president rob kaplan speaking this evening. Results before the open, we have tjx, parent of tj maxx and marshalls and six flags. After the close, tesla, hp, l brands and square. You know when bristolmyers squib combined . 1989. I was in the business. Just barely. Not this business, the previous business. Investing business. Like so many people in that business, i was helping make people small fortunes. From big fortunes . No, no. We would invest their money until its gone a lot of times. Have you heard all these jokes . Okay. This is bad but ironic. Jerry brown told me the drought was permanent. Its just really weird that now theres flooding. I just what am i supposed to believe . I dont know. Andrew, did you ever think there would be flooding in california again . Didnt you think i thought it was a permanent Climate Change induced drought . I cant take this one. Now its flooding. I dont know. Floodwaters overwhelmed homes and cars in lowlying neighborhoods of san jose. The hardest area hit was along coyote creek. Dozens of families have been impacted by rising floodwaters. Rescue crews are going door to door in boats searching for stranded residents, people trapped in their cars. Officials are worried that the standing water will become toxic. Crews are decontaminating those who come in contact with the floodwater. Rain and mountain snow began to taper off last night. Officials caution that the swollen rivers will continue to threaten lowlying areas. This is highlighted, the infrastructure concerns. Theres another dam now that theyre worried about. Dams all over the place. Dams all over the place. Dams all over the place that need to be upgraded. Yes. Coming back yesterday, we went across the tappan zee. Youre supposed to try to avoid the tappan zee now because its supposedly thats a great infrastructure project. The new one is going in. Its unbelievable what those people do. Looks great. If it was up to me, i look at the scaffolding where people are walking up and down. If it were up to us, no structure could be above two stories. I couldnt work on anything above. I couldnt. The tappan zee is supposedly not the existing one, the one we have thats why theyre building the new one. Its sinking. Apparently its sinking. I hope thats all. I hope it doesnt sink in one i dont think that will happen. But there are 80,000 bridges that need upgrading in the United States. Thats going to be expensive. Talking about dams, we will talk about you make this segue. You will get to eamon with dams. This is not a clever segue, and this is going to d. C. The white house preparing to roll out a streamlined version of President Trumps immigration order. Eamon joins us with the latest from washington. Dam, thank you. Let me start with this new poll, we have a new survey monkey poll out at the top of this hour. I wanted to bring you some highlights here. Walking through the numbers, including the Approval Rating for President Trump, which is a number that everybody in washington will be looking at. Approv approval, 43 . Disapproval, 54 . The Approval Rating of a president plays into his ability to get stuff done in washington. Also a couple of interesting stats here on the feelings that people have about the federal government. According to americans, check out these numbers. 31 say theyre angry. 42 say theyre dissatisfied by the federal government but not angry. 18 satisfied but not enthusiastic. 7 are enthusiastic about the federal government. Worried about a new war, this is interesting. A war possible in the next four years. 66 say they are, in fact, worried about that. 33 say theyre not worried about that. President trumps travel ban, this is an interesting one. The opinion on the executive order breaks down this way. 50 approve. 47 disapprove. Andrew that ties into what you were talking about with the department of Homeland Security issuing two new memorandums yesterday, blasting through a thicket of restrictions on Immigration Enforcement that had been put in place by the Obama Administration instructing dhs to hire 10,000 new immigration agents, and allowing in some cases local Police Forces to be used as immigration agents. Thats something thats not exactly popular in cities around the count are including new york city where mayor bill deblasio said he wont aloud the nypd to be used for immigration services. Sean spicer at the White House Briefing yesterday said they are unshackling Law Enforcement around the country in order to deal with immigration issues. Your buddy, charles blow yeah. Talking. Eamon calls him spicy. Spawn spicer. One of the spice girls or i saw some people tweeting. When you have the last name blow, you shouldnt be making fun of someone elses last name. Why . I think its from saturday night live. Spicy . She calls him spicy. She . She calls herself she calls herself spicy. Her character. I call you spicy sometimes, too. Yeah. Yeah. We have a lot of names for each other. Eamon, thank you. You bet. So much to talk about, but eight Straight Days of the dow. I was talking to wilfred about this. Thats the back drop. You think the world is ending, chaos. Thats different than saying are you predicting a where or worried about a war . Who is not worried about a war at all times . Weve just been through about six of them in different places. I dont know if were predicting one. The dow, s p, nasdaq, russell 2000 all notching new record closing highs. Markets are more than 10 higher than the president ial election. I thought we were saying 13 . Joined by Karen Cavanaugh from voyeur investment management, a 215 billion plat for, and ed keon a multi asset manager with 116 billion in assets under management. I had so much guys and gals i will be non i dont care about gender. So, ive heard so much about not chasing this, not getting on board. Im about ready at this point to s say, like buffett, if its higher five years from now, buy over time. Buy when it goes up, buy when it pulls back. If youre young enough, just keep investing in equities. Can we say that much . Absolutely. I dont know why everybody is so worried. Its normal to worry but data, global acceleration, manufacturing is good, consumer is good, no signs of recession, earnings are growing. Looking to be even better for next year. People are worried but worried about things that they were always worried about ffrn. If youre told the market will go down 10,000 points, and it happens and it starts going up, first you cant believe it, youre not in. You missed the first 10 , its natural to say i cant buy now. But many times a lot of times, if you vowrote the oppose ticket, a lot of times you look back on it, and you say i wish i would have done the opposite of everything i should have been doing. You should have been buying this. Should you still . We have been. Were a little nervous. Any time you have a big run in a short period of time there could be a pull back, but thats the nature of the beast. If youre concerned that if you buy today, you may be down 5 a few weeks from now, youll never buy stocks. If youre concerned about buying because you could be down 5 , the market moves 15, if you would have bought, you would have still made ten. You have the pro growth policies which we expect to get. But you also have a strong Underlying Fund mtdal store. Earnings are growing at a nice clip. Growth is picking up in places. We have been rotating towards nonu. S. Markets. Because youre getting about a three multiple point difference in valuations. A little cheaper. We think the dollar will get stronger. We think buying those markets in future ssz a mors is a more att option because you get the currency hedge. Weve been right in there, riding the rally because the fundamental story is good, and we expect the pro growth policies, were hanging in there. As we always do, where are the worries . Greece . I thought we worried about greece. What about italy . Europe . Worried about europe what we vent been worried about is china. Maybe worry about that, too. We should remember were looking at good fundamentals, if we get any pro growth policies, anything at all, especially tax cuts, earnings will go up. That will be a great story. So the uncertainty is to the upside. The bias is to the upside. The risk is that investors are not in. If we see any kind of pro growth policy earnings will get better. The market will go even higher. If you are worried, you have bonds. They are your risk and balance. If you want a reliable portfolio, you make sure you have those bonds in there. Like ed said, emerging markets have been so beaten down for the last couple years. Thats where a lot of the value is. Same thing with other parts of the spectrum, mid caps, small caps, so get out there and get in it. We were tweeting, youre 40 now. You have to grow up. Well talk about a lot of this. Yes. Change some of your opinions. Get more wise. Youre at a poeint now where yo will start to have some wisdom. One thing we agree on, i dont know about this border tax deal, to do this, theyll say well grow faster, we dont need to make it revenue neutral. That will add on the deficit spending, a trillion in infrastructure, hiring border agents. Blow out all this spending wow, i dont even have to be here. Andrew is a deficit hawk. And his party has always been deficit hawks. N now a man who is not a social list before 40 has no heart, after 40, has no head. Has no brain. I prepared you last week. Yes. The excuses are over. Excuses are over. I left the lights on for you to come home. Okay. Inflation, we had some hot numbers. Yes, we are underweight bonds in our portfolios because we expect inflationary pressures to continue, but there will be counter balances. I dont think well go back to the 70s, but we might see inflation creep up above the 2 target that will have a reaction from the fed. Go back to the fed again in a month or so. You think the border adjustment will happen . I think its not going to happen. Well just go it and not just say it i think the lower Corporate Tax rate and reforms higher Corporate Tax rate no, theyll take it down from the level to a lower level. Not 25 . Yeah. Higher than expected. It may not be as dramatic, just politically i cant imagine retail would be hurt by border adjustment would be sitting on the sidelines that looks unlikely. We may see a lowering of rates. Any cut in taxes is positive for corporate earnings. Thats good news. Everybody is concerned about the deficit, everybody is concerned about the debt. We have not seen growth out there in 10, 15 years. If we can get tax reforms, tax cuts does that have to happen this year . I think it is going to happen this year. I think things like healthcare repeal and reform, that will take a while. But tax cuts, i think its going to happen this year. Trump said there will be a massive package out there. I hope its a tax cut. That will be great for earnings. All the investors sitting on the sidelines would say, wow, i wish i got into the market. I think its a positive thing. Political risks, greece now. Always risks out there. Its important to have the bonds. Do you buy the rumors, sell the news, so we think well hear something from the Trump Administration, whether that plan ultimately is the plan is a different question. I think we go back to what joe said, buy. If we have a shortterm pullback, thats a normal part of the market. Markets have corrections a couple times a year. Thats normal. Were used to the fed settling things down. Volatility has been so low. But i think what you do is buy because the back drop is getting betterment corporate earnings are getting better. Global growth is accelerating. The rally stalled, as becky told me i heard it on the radio. I heard that every day. Its stalled. And the s p futures go up. Futures down a point, the rally stalled. I heard that almost every day. Im not sure. Thank you. Youre welcome. Voya, not voyeur. You wouldnt name a thing voyeur. Thats not like those like the watch . Yes. The orange money. Working it. That little jingle. Ed, thank you. Voya. When we come back, baseball could be coming to your facebook feed. That story next. And a programming note, treasury secoretary steve mnuchn will join us tomorrow at 7 00 eastern time. Welcome back. We have an update on the scandal at uber. Arianna huffington released a statement after claims of sexual harassment. Huffington said she is serious about leading the investigation into the claims and will hold the Leadership Teams feet to the fire on this issue, including ceo and cofounder travis calkalanick. According to reports from the verge, they noted the meeting yesterday was rare to see kalanick exhibit so much emotion at the staff meeting. Apparently there were times where he teared up. If you read the blog, it was laid out clinically by a woman who detailed these things. I talked about this with wilfred. Olive oil, if thats on your shopping list, if you buy genco thats my brand. Genco. Genco. You can get virgin olive oil. One thing i remember about one of my Favorite Places over there is where on the emolfi coast, its all olive oil. Thats where it is beautiful. But bad harvest this year. So you might be in for a shock if youre in the market for some olive oil. Prices expected to jump as much as 20 because of a bad italian harvest due to a combination of bad weather. Also pests in southern europe. Wholesale prices up 64 compared to a year ago. Shelf prices in italy are already higher now by not cheap to begin with. Its not. Yeah. And its you make pasta sometimes . Yes. When you make the spaghetti, do you put a Little Olive Oil in it so it doesnt stick . A little bit. Do you salt the water . I do. I done always salt the water. Sometimes youre not supposed to. Why . It raises or lowers the the temperature at which it boils. Raises it. No, lowers it. One or the other. Because it doesnt keep it the same. That is true. Someone wrote in lose the duran duran ties. You didnt see that one . No. You got a regular one on. You mean those little the ones you wear. The duran duran her name is rio the boy band ties. Boy band ties. And youre not, as of sunday yeah. You cannot be in a boy band. Its over. You can manage a boy band. Joe is so glad you have come to this side. I am. Most of the i wont say. 40s some managers of boy bans ended up in trouble. 40 is the new 20. It is. Yeah. 60 the new 40. Ill take it. Life expectancy in the near future will hit 90. Expected to hit 90. Still not enough. I think wed like to be higher. Youve been talking about age and boy bands, i have run out of time to talk about my story. It was about the mlb, which is going to be on facebook. Well talk about that. If the multiple of facebook goes up on broadcasting an mlb game, one per week. I like the reds and the world series, if a random game is on do you hear whats playing . Duran duran. Bristolmyers squib, more on the activist battle next. As we head to a break, a look at yesterdays s p 500 winners and losers. Welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Good morning. Take a look at u. S. Equity futures at this hour. After what was a remarkable run, well see whether the run continues. Right now the dow looks like it would open down 15 points. The nasdaq off 3 1 2 points. The s p 500 would open up higher, 8 points higher. Activist news to bring you. Starboard value has taken a 6 stake in tribune media. Starboard says it believes the stock is undervalued but doesnt have plans to push for changes. Thats how these things usually started but not end. The investment follows the surprise announcement last month that tribune medias ceo would resign after four years at the helm. Saudi aramco selecteded jpmorgan, hsbc and Morgan Stanley for the initial underwriters for its ipo. The Public Offering could fetch 150 billion, making it the largest ipo ever. Snap is holding its ipo road show this week. The company is targeting a valuation between 19 billion and 22 billion, lower than the initial range following negative investor feedback. Some potential investors say they remain unconvinced by snaps claim that it is more valuable than facebook based on revenue at time of the ipo in 2012. Carl icahn taking a stake in bristolmyers squib. The activist investors putting pressure on the Company Following recent company disappoints. Meg tirrell has more on the story. Yesterday was a busy day for bristolmyers. When the news came out about carl icahn taking a stake in the company, the stock jumped a bit in late trading. It did settle down after that. This follows news that Jana Partners had also taken a stake in bristolmyers. Both activist actions taking place after the company had a tough last half of the year. In august, the company had disappointing lung cancer data for its lung cancer drug, opdivo. Yesterday bristolmyers coming out in response to jana taking the stake and announcing three new directors for its board and a 2 billion Share Repurchase program. Late yesterday the wall street journal reporting that carl icahn taking a stake in bristolmyers. We dont know the size of that stake. The company is not commenting on the situation. Carl icahn saying that he thinks bristolmyers could be a good potential takeover target. The stock has come down so much since august. Carl icahn is no stranger to bio pharma. He engineered a lot of deals a couple years ago, agitating at biogen where he got directors on the board. So he was active in the space. He did have a guy, alex denner in house, who was working on pharmaceuticals and biotech for him. Denner has since left and is working on his own fund. But hes certainly no stranger to the space. Meg, stay here. We have more to talk about with this. Lets look at big pharma and some possible deals. Calling in on the squawk news line is barbara ryan. You heard what meg was talking about. Carl icahn thinks bristolmyers is a takeover target, do you . Yeah. Good morning, becky and meg, thank you. As meg said, you know, obviously bristolmyers has had some major disappointments with their lead drug in lung cancer. The stock has gone from an exalted growth stock to one severely punished in terms of multiple compression as expectations have fallen. That said, this is a very well run company. With an important opportunity in front of it in lots of other indications for opdivo. What drives m a in the sector is the need for companies to grow, difficult giving their size organically and the reductions in synergies that can come from these combinations. Bristol clearly would be very attractive from that perspective. Also one of the smaller pharmaceutical companies. So at 91 billion, it is equal in size to roughly gilead, but substantially smaller than pfizer at 200 billion. This is rumored that bristolmyers could be meaningfully undervalued given that it was a pure growth name in the sector and Growth Investors have become less enchantd e enchanted. Yes, i think consolidation could be happening in the sector and bristolmyers could be a company. You mentioned pfizers size at 200 billion, is that because acquirer . I think pfizer looked at birth bir bristolmyers before buying wyeth. One thing investors wanted from them was to separate into separate components. Thats not an alpha opportunity for pfizer now because the generic sector in specialty pharma has come under such pressure, that spin would not create incremental value. The company does have the impetus to drive some kind of strategic acceleration and certainly m a is one important way to do that. Barbara, its meg tirrell. Hi, meg. How important do you think it is for us to have clarity on u. S. Tax policy before a big u. S. Acquirer might jump in for bristolmyers . Thats a great question. I personally think that, you know, tax reform and specifically repatriation would be important and beneficial to pharma companies. They have such a large concentration of revenues outside the u. S. And a lot of cash is locked there. Its a substantial penalty to bring that back. I dont think tax policy drives strategy. It can enhance it, right, but the strategic rational of m a stands independent and healthy and its just complimented by tax reform. Outside of pfizer who are other potential acquirers . I think the other rumored company is gilead. That would probably be more of a merger of equals. The reason there, they have suffered from a similar situation. So it went from very rapidly growing company to one now that, you know, products are maturing, and it will have more competition, pricing is going down. There, too, how does gilead facilitate growth Going Forward. One question i had, relates to politics. This is an american company. Some companies we talked about as potential buyers, some look like American Companies but theyre not. Some are abroad. How easy or hard would it be for transactions to take place . Personally i do think at end of the day, its all about achieving the right value. I think if there were an offer on the table that demonstrated substantial value for opdivo for lung cancer, and theres no execution risk for investors, i think that ultimately drives the deal. I dont see there any issue irrespective of geographies. Clearly, as you mentioned,s this a lot of companies that are u. S. Based or u. S. Dominant in terms of revenues but no longer u. S. Based because of inversion. Pfizer is a company thats still u. S. Based and so is gilead. Thanks for joining us today. Thanks for having me. Have a great day. You, too. Meg, thank you. Coming up, the squawk ceo call. Tom fanning will join us to talk earnings, energy prices, and maybe a little politics. Then made in america, our cameras are live for the First Time Ever inside a factory building or a factory that is building the f35 fighter jet. And later, Republican Congressman tom rooney is taking a hard line on vladimir putin. He will tell us why he doesnt want President Trump to water down sanctions on russia. Youre watching squawk box on cnbc. Welcome back to squawk box. U. S. Treasury secretary Steven Mnuchin is urging imf managing director Christine Lagarde to use the Fund Surveillance powers to police the Exchange Rate p l policies of members. Trump said he wants to challenge some of the United States largest trading partners. The imf has been accused of manipulating its currency. Mr. Mnuchin will be joining us tomorrow at 7 00 a. M. The government tracks all kinds of data on imports, exports and Domestic Production of goods, but in terms of what qualifies for the made in the usa label, its not so black and white. Measuring a products domestic content is a careful calculation of the sum of its parts, not just whether it was assembled or manufactured on u. S. Soil. The government considers many factors, origins of raw materials, value of labor to make a widget, and the many processes that go into creating the final product. The federal trade Commission Says in order to label a product made in the usa, all or virtually all of those factors must originate at home. Though theres no true quantitative measure of what virtually all is. So in terms of what consumers and businesses buy, just a little over half of the value of those goods are made domestically. Nearly 80 of food, beverage and Tobacco Products bought in america are made in the usa. Under a quarter of computer and Electronics Products fly the american flag. Just 7 of apparel and accessories sold are u. S. Made. Courtney reagan, cnbc. Courtney will be taking a look all day at some Consumer Product segments where a buy america mantra is a challenge for consumers to fulfill. Heres some of the imports that we buy as a percent of consumption. We have auto and auto parts, 75. 3. Amazing. We teased this briefly. I ran out of time to talk about it earlier. We will bring you this nonetheless. Facebook wants to bring you closer to the action on the field. Reuters reporting that the social media giant is in talks with Major League Baseball to stream one live game per week. This could give mlb access to a younger audience. That was the main reason univision struck a deal with facebook earlier this month to live stream 46 mexican soccer matches. We were talking during the commercial break about whether this makes all of these guys broadcasters, and whether switzerlandn aggregator. I need to know more, number one, is it a generic game in is it a game of the week on facebook . Or would it have the game in your area . I dont know. That i could understand a lot better, if it had baseball has become increasingly thats where all the money is. In cincinnati, everybody watches a reds game. I cant imagine it would be local. They couldnt do that. That would hurt the local regional channel. Can you in your wildest dreams global world. People in china will watch it. I can find a baseball game at any given time on one of my thousand cable channels, i would never be able to sit through a nineinning baseball game, lets say its 20, world series . Playoffs, love that. Out of 162 games of teams that i dont really follow, it just wouldnt be maybe the same as the nfl. I do wonder if it starts to get to the point where it brings down what broadcasters are willing to pay for some of these properties. Thats the thing. If its too dilutive, its too far. This is a question about the nfl. The nfl ratings. Why would it be better on facebook . If i wanted to watch it, i have plenty of opportunity to watch a baseball game. Matt watched some of the nfl stuff on twitter because he was in bed, trying to get kyle to lay down. You do everything on your phone. Not baseball. Love the commissioner, love the world series, if you care about the two teams, the most you know, nail biting, exciting so many baseball games. When we come back, well talk about our favorite topic, robots. Ai. Here it comes, the rise of the machine. Robotic workers challenging americas work force but also providing opportunity for investors. Well tell you about that next. A quick check on whats happening in european markets right now. This car is traveling over 200 miles per hour. To winevery millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share c ctical information about every inch of the car fr virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your akes. Derstood, brake bias back 2 clicks. Giving them e agility to have speed precision. Because no one knows like at t. Welcome back to squawk box. Theres a rising tide of concern over robotics with warnings from bill gates and elon musk about the rise of robots in the workplace. Joining us now for more on the automation challenge and more importantly where investors can find some opportunities, the president and cio of roboglobal. I want to talk about the opportunity, but i wanted to mention to you and get your view on this. The New York Times in an editorial yesterday said dont blame the robots. I dont know if you saw this piece. I didnt see it, no. They said the data indicates that todays fear of robots is outpacing the actual advance of robots. If automation was rapidly accelerating, Labor Productivity and Capital Investment would be surging as fewer workers and more technology did the work. They say that Labor Productivity and Capital Investment has decelerated in the 2000s. Interesting topic. I think the important thing to recognize is its a Foundational Technology thats being applied to all markets, all geographies, all the industries. And its happening now. If you think about some people wanted to find it as a niche. We think its broader than that. You think about the scope of the productivity benefits. A weak productivity environment for years, if not close to a decade. This is the tool to help drive productivity and to drive growth. So whats with so whats within this etf . Its an index focused exclusively on robotics and automation. We did this roughly four years ago with the foresight and anticipation that robotics is going to be this disruptive capability we need. But at the time, it wasnt an investment vehicle. How broadly are you defining robotics . What are the Portfolio Companies . Either technology so simplistically, what makes the p robot work. Then we have the applications, which are the use cases, simply defined as logistics, health care, 3d printing to name a few. But youre talking about individual companies that are affecting the Technology Companies behind the robotics. Youre not talking about the teslas of the world, which has its own robotics anding turn into one of the great Robotics Companies of our age but wouldnt constitute a Robotics Company for you. Were looking at companies that make money from selling robotics technology. Obviously Companies Like amazon have used the Technology Better than most companies to enable their business. For us, its that segregation. And how much of it is a Software Versus Hardware . For us, broadly speaking, the Technology Part of our portfolio is 50 . The applications are 50. Not by design. Whats the return been . Pretty spectacular. For the last 52 weeks, the index is up a little over 40 , maybe 40 , 45 . Year to date, probably up close to 10 . Thats a reflection of the market. The market is up 10 year to date. It is a reflection of the market, but if youre looking at the underlying characteristics, these companies have higher Earnings Growth than other companies in the market. Do you have longer than 52 weeks . Yeah, i dont know the numbers off the top of my head, but the performance has really kind of inflected roughly a year ago. What have the returns been its only been around for four years. Whats been the overall return for the past four years . Its up low double digits. When we launched the strategy, we launched the peak of 3d printing where we had like a 90 sell off from peak to trough. We sustained a big blow from energy prices. 60 of the index is international. So we sort of absorbed three pretty big body blows, yet the performance has been interesting. The expectation is that the dollar will continue to strengthen, at least thats the conventional wisdom in the market. I guess that would be an additional question. The dollar has strengthened and is expected to continue to strengthen. Will that be a headwind . Well, we dont hedge. Its not something we want to take into consideration. Were looking for an index of companies that want to make that sort of calculation. It could clearly be a headwind. I would hesitate to think it would be a 1200 basis point headwind like the last couple years, but theres a risk that could negatively impact the returns. Okay. Thanks for coming in. You saw elon musk. Theyre all weighing in. If we dont get a grasp on ai, were all going to be irrelevant. Humans will be absolutely obsolete. Ive seen the case made for universal income. You dont get any other benefit. When we come back, were going to talk about earnings in the energy sector. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. D since we planned for it, that student debt is the one expeen, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise the rally rolls on. Stocks hit alltime highs again as investors await clues from fed minutes. We talk Market Strategy straight ahead. Trumponomics. One week until the president delivers key policy prescriptions to congress. We talk about the border tax coming up. Plus, its electric. The ceo of utility giant Southern Company is going to join us to talk earnings, energy, and regulations, as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Good morning, everybody. Welcome back to squawk box here on cnbc. We are live from the Nasdaq Market site in times square. Im becky quick along with Andrew Ross Sorkin and joe kernen. Lets get a check on the markets. Were watching the futures, and they have been mixed this morning. S p futures up once again, looking to open up another seven points this morning after being up for eight of the last nine sessions. The dow has been up for eight sessions in a row. Its indicated down by about 27 points this morning. The nasdaq right now syndicatis indicated down by 5 1 2. First well look at european markets. They are relatively flat across the board. Italy is down by about 1 . Other markets are just at the flat line. If you look at the currency charts this morning, youll see the dollar is up against the euro at 104. 98. Down against the yen at 113. 05. Up against the pound. Top stories today. Several fed related events are going to be on the calendar for today. Were still following them. Guys still talking about things. Some day, maybe in the not too distant future, the fed may not be as big a part of our life. The fed releases the minutes of its most recent policy meeting at 2 00 p. M. Eastern time. Also, Jerome Powell and rob kaplan have public appearances. Recent fed commentary has many investors now thinking a march rate hike could be possible and is more likely. Saudi arabias staterun oil firm has reportedly picked jpmorgan and hsbc as lead underwriters for its initial Public Offering. The public listing is likely to be the largest ever at up to 150 billion. How can there be three lead underwriters . No one is in charge . We have three anchors on the show. One economic report on todays calendar, the National Association of realtors. Realtors is out with see, realtor to me is like nuclear. It hurts your ears to hear . I think i say realtor. No, i think you say realtor. January exhausting home sales at 10 00 eastern. That number is expected to rise by 1. 2 . A few stocks on the move this morning. Bristolmyers squibb. Carl icahn has reportedly bought a large stake in the company. The wall street journal says its unclear how big icahns position is, but he sees the drug maker as a potential takeover target. This comes after the Company Announced it would add three new Board Members and buy back 2 billion in stocks in a deal it negotiated with another activist investor. In earnings news, Toll Brothers earning 42 cents a share, topping estimates. Revenue was also better than expected. Home building deliveries were about flat in dollar terms and increased 12 in units. The company says the average price of homes delivered declined because of changes in its product mix, meaning some of the cheaper homes sold a little better. By the way, an answer to your question. The bank we keep forgetting to mention. Mollison company. I think in a weird way, they may be orchestrating a lot of this, in terms of whos technically in charge. They werent even mentioned. That name wasnt even there. I know. Theres sort of a shadow lead underwriter . Im checking some stuff out. That would be interesting. We reported on them a week ago, how they were a small bank. Our buddy. Eric cantor. Anyway, well talk more about that. So lucky. They did him a favor. Who . The voters in virginia. Who wants to be in this mess . Market still marching higher. All three major indices closing at alltime highs. Joini ive been you know, joe every morning says to me yeah, i do. Every morning says, you know, there was supposed to be a pullback. When was the pullback . Youve been calling for it. Every basis point. This goes back to that phrase you also hate, the train left the station. Everyone always worries the train left the station. Is there going to be a pullback . When we first started talking about it, the train wasnt even in philadelphia out of newark. It was in that stop before philadelphia. Okay. Mark, where is the train right now . I think the train has left the station, but it doesnt mean that it might not go back for some repairs. Like you, i think this elusive correction here remains front and center in terms of what the market is right to experience here. If you think about it, the market bid on and bought about every piece of good news that could possibly come out of the administration and or economically. I think were rain for disappointment on either front. On the economic front, we see the citigroup u. S. Economic surprise index breaching a level of 50, but it typically doesnt stay above that level for too long. That doesnt necessarily mean we see bad economic news, just comparatively softer. We bid on deregulation and Corporate Tax reform, nothing to do with trade, nothing to do with protectionistic policies, nothing to do with the strength of the dollar as a consequence of a border adjustment tax. I think that what were going to see is some pullback, some retracement of these gains. Not necessarily deep or long in duration, but something to restore some value. Mark, i want to get to michael, but i want to ask you this. What kind of premium is in the market based on the expectations of what may or may not happen in washington . In my view, andrew, its something on the order of 5 to 10 . I think were looking at almost now 18 times forward earnings based upon where estimates are for the remainder of this year and even maybe baking in some of the Corporate Tax reform benefits. That seems a little rich to me. I think peeling it back five to ten would be rational and therefore restore some value that would make equities, given the validation. Did you miss the entire 13 . Did you ever say after the election, buy this with both hands, or have you been saying this the entire time . Weve been saying stay long but stay tuned. So when do you say pullback is imminent and dont buy . When did that start, today . No, joe. Weve been on board with that thesis really over the last couple months. Weve had that doubledigit move really since the election. Youve been wrong for two months on looking for a pullback. Weve been early. Okay. All right. Michael, is mark right or wrong . Well, hes been wrong for two months. Sooner or later, its inevitable, but the market has not had a single down 1 day since the election. Its remarkable how steady this climb has been. Yes, pricing in a lot of good news, but you have to stay invested. Weve been long, overweight stocks since the election. Were staying that way. We know sooner or later there will be a dip. Wed like to buy that dip because the Underlying Fundamental are fine. The thing i would be worried about are longer term in nature. The first couple quarters of this year well have really easy earnings comparisons. I think the earnings basis for the stock market is fine. Thats going to keep us going for a while. But comparisons get tougher in the second half of this year and into next year. That may be a head wind. Some of the issues that mark raised in terms of the politics of when things happen, whether they happen exactly the way theyre supposed to, those could also cause a pullback somewhere along the line. Frankly, the immigration and trade issues that are dominating the political headlines potentially can have very negative repercussions for the stock market because they could really be very negative for gdp growth and corporate earnings down the road. Okay. So michael, if youre right, what are you supposed to do about it . Stay invested. You really cant afford to be out of the market. Nobody is a perfect market timer. If you say invested but ride through the down blips, youll make it back up fairly quickly. The underlying strength of the economy is pretty good. You know, were looking at home prices. Were looking at construction. Were looking at Business Investment starting to pick up finally. The consumer is very strong. So theres no reason not to be fully invested right now. But pay attention, as mark said, to some of the longer term issues. Thats where theres potentially going to be problems down the road. For right now, got to stay invested. Michael, what would be a signal to you, a sign its not time to be fully invested . All the sudden the situation looks different. I think among other things, a blowup in price, in other words a real speculative bubble in price, which weve not seen. 17, 18 times earnings is not ridiculous by any stretch. Certainly thats one issue. If we start seeing some major changes in tax policy coming through that we dont fully understand, that could potentially be cause for a shortterm selloff. I think longer term, we really have to be concerned about is the fed going to act more quickly than people anticipate. We get two rate hikes this year. May or june. Then again in december. People are fine. You get three or four, i dont think its going to happen, but if it does, we have to be really careful. Okay. Were going to leave it there. Mark and michael, thank you guys. Thank you. Appreciate it. In any market, really the two decisions you have, either buy the dips or sell the rallies. Are you either trying to add to your position or okay. But the question now is i think most people would say you buy the dips. No one is really saying sell. The question is, do you not wait for a dip to buy, or do you just buy, buy, buy, buy. Buy the rally. Thats the question. Up to this point, its been keep buying. Mark grant is basically saying, look, its a whole new paradigm and youre missing out. 13 . Thats why i have little patience for the double speak. Mark has been right on a lot of issues over the last several years. When we come back this morning, the ceo callin session. Southern company ceo will be here to talk about the latest quarter and President Trumps impact on the utility industry. Plus, the case for a border tax. And bestselling author ed connors. Also later, how kind snacks is helping to hold the Food Industry accountable. The ceo will join us at 7 40 a. M. Eastern time. Right now as we head to a break, cnbcs Morgan Brennan is checking out the production of the f35 fighter jets. Reporter this is the fighter jet over which President Trump waged a costcutting war before even taking office. Well show you the hightech ways Lockheed Martin has been driving down the price of the f35 when we return. Energy producer Southern Company out with mixed results for its most recent quarter, missing on the bottom line, reporting better than expected revenue. Fullyear earnings outlook mostly above street forecasts. Joining us now is the president and ceo of Southern Company. As a big picture, tom, i dont think weve seen you since scott pruitt i dont even know if weve seen you since he was nominated. Hes already done some things. The president has already done some executive orders about coal that affect your industry. Youve got a lot of renewable projects that maybe make sense now, maybe make less sense if oil prices and coal comes back. I dont know if they make quite as much sense. Are you navigating sort of a new landscape right now . Well, look, i think scott pruitt is a great nominee for epa. Hes secretary now. Yeah, secretary. And look, i think what hes going to do is restore balance. You know, one of the discussions weve had in the past on the show has been this kind of federal overreach in terms of regulation. I think hes going to create the right balance between federal ov oversight and what has otherwise been the Energy Policy purview of the states. In terms of national Energy Policy, what we see out of the Trump Administration, i think, is changing the notion of setting Energy Policy on the basis of scarcity and rather setting policy on the basis of abundance. And therefore taking advantage and playing offense in the economy, driving growth, with a great advantage that america has. So i think youre going to continue with an all of the above, but in the near term tactically, i think a big emphasis on oil and gas. One of the rollbacks thats coming might be on the you can maybe make it clear for us, the effect on all the Power Companies in the Clean Air Act. Will the rollback take away some of your future Capital Spending you were going to have to do to comply and make it easier for you to comply . Well, it hasnt been rolled back yet. The current clean power plant is subject of litigation in the federal court system. But i think one of the criticisms and probably the fact why its in litigation has been this notion of epa using the Clean Air Act to supersede things like the federal power act. In other words, creating regulatory dictates that would otherwise preempt whats been the per view of the state. I think the Supreme Court has already ruled on the clean power plant that epa can regulate, should regulate Carbon Dioxide emissions. I think under Scott Pruitts administration, well do that in an appropriate way without the overreach of a renewable portfolio standard and Energy Efficiency standard. It really hassed to do with th approach. Theres no way the Trump Administration can roll back classifying co2 as a pollutant . Thats going to continue, thats done because its a Supreme Court dictum . Well, the Supreme Court has said that could be something epa can regulate. Now, how does epa regulate it . I think they can do it in a responsible way by evaluating, for example, what are the co2 emission intensity standards at any particular plant. But they should not take that, as they tried to do in the last clean power plan, to create a nationwide overreach in terms of changing how energy is generated and delivered across the United States. Where are you with coal . How much of what you do is coal based . Its gone way down. Before i became chairman, i think southern produced about 70 of our energy from coal. Were projecting this year for that number to be around 28 . Our biggest generation resource, frankly, is natural gas. That would be about 46 . 14 from nuclear. 3 from hydro. The biggest growing area for us, as you pointed out earlier, has been renewables. I think were the largest owner of Solar Resources in the United States. Were pivoting towards wind. Really . That would be about 9 . So you dont have any plans so its going to continue to go down. Coal continues to go down from 28 . What about clean coal . India and china are still ramping it up, arent they . Oh, of course they are. Absolutely. Are you going to be competitive doing solar and wind . Were competitive with the portfolio. Look, you cant pick one or the other. Well, you could. I know it. Its your choice. Youre the ceo. But just as you pick stocks, you want to make sure you have a portfolio that is resilient no matter what Market Conditions are visited on you in the future. Thats the way we feel about Energy Policy. We do that at southern, and we think thats the right national Energy Policy as well. Whats the percentage of natural gas . Natural gas prices have come down significantly in recent days again. You bet, becky. Like i said, i think for 17 were projecting 28 from coal, 46 from gas, about 14 from nuclear, about 3 from hydro, and about 9 from renewables, mostly solar, pivoting to wind. 9 , wow. So coal is still three times that, which is pretty unbelievable. You know, everybodys going to have a couple electric cars, selfdriving in their garage. Youre going to need power to put on the grid. Th thats not going away, is it . You know what, joe, i think electrifying the United States is the right thing to do. It displaces other forms of Energy Resources that are less efficient and more expensive. But you got to provide electricity for the grid somehow. Yeah, man, exactly. I drive an electric car, for heavens sakes. You do . You dont have a very long commute, do you . Oh, come on now. The range of my electric car is 235 miles. I bet you have a charging station when you get to work. I do. Theres a charging station right behind him there. Hes got a couple outlets there. Theyre everywhere. All right. That was an electrifying interview too, tom. Always good being with you guys. All right. See you later. Coming up when we return, Urban Outfitters is cashing in on the internet dialup days. Details on that next. And tomorrow you dont want to miss this. A first on cnbc interview. Were going to talk to treasury secretary Steven Mnuchin. Time now for todays aflac trivia question. In what year was the First Academy awards ceremony held . The answer when cnbc squawk box continues. My leg. No, this is a full blown me in to the basemen youre gonna be out of work without that money from. Aflac you might miss your rent. Work without that money from. Aww i just moved out. Hey i used to have my own place. Yeah . No, no i live with my mo but its cool. Health can change but the life you ve doesnt have to, keep your lifestyle healthy with. Aflac [dramatic ic begins] ready charge charge in chinese charge let your reign begin. Evony, the mobile game. Download now. The market. Redict but through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Now the answer to todays aflac trivia question. In what year was the First Academy awards ceremony held . The answer, 1929. Welcome back, everybody. Snap is holding its ipo road show this week. The parent of snapchat is trying to brush off investor skepticism. The company is targeting a valuation between 19 billion and 22 billion. Thats lower than its initial range following negative investor feedback. Some say they remain unconvinced that its more valuable than facebook at the time of its ipo in 2012. Urban outfitters cashing in on the 90s internet chic. This tshirt costs 45. Its going viral on social media. What . Many points out this piece of nostalgia stained gear costs more than it would for you to actually use aols paid service, the priciest comes at 25 per month. I probably have one of these somewhere. I want to know if steve case is getting a licensing fee for this, how this works. I remember that logo. Do you remember when the discs used to come with magazines and the newspapers on the weekends to sign up . Constantly. Before that, compuserve. Do you remember that . I do. I remember the sound. The modems. How ugly were those screens that looked like small tv sets . Coming up, trumponomics. Ed connor will talk about the road to tax reform. Squawk box will be right back. Are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. With e trade you see things your way. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. Gave us the power to turn this enemy into an ally . Microsoft and its partners are using smart traps to capture mosquitoes and sequence their dna to fight disease. There are over 100 million pieces of dna in every sample. With the microsoft cloud, we can analyze the data faster than ever before. If we can detect new viruses before they spread, we may someday prevent outbreaks before they begin. Good morning. Welcome back to squawk box here on cnbc. Were live from the Nasdaq Market site in times square. Among stories front and center at this hour, Mortgage Applications falling 2 last week. Thats according to new figures from the Mortgage Bankers association. Both new purchase applications and refinancing activity fell. The average 30year Mortgage Rate edged slightly higher to 4. 36 . Also, the maker of autonomous driving was well above street forecast. Wonder whether thats part of that robotic etf we talked about earlier. Also, shares of wearable fitness device maker garmin remember their company was like left for dead. Now its coming back. The company earning 73 Cents Per Share. Revenue also beat by a wide margin. Increasing speculation surrounds President Trumps plans for tax reform. Joining us now to talk taxes, trade, and immigration under the Trump Administration, the former managing partner at bain capital. Thanks for coming in today. Thanks for having me. Weve been batting around this tax reform proposal, what weve seen from the house, and probably the border adjustment tax is the most interesting piece. You border adjustment taxed. Why is that . I like the v. A. T. Tax, which is basically what the Republican Congress is proposing, even though they dont want to call it that. A destination based tax. Its the same thing. Tough a v. A. T. Tax, i think you have to border adjust it because it makes no sense for u. S. Companies to be taxed and then when they ship their exports overseas, they get taxed again by a v. A. T. Tax when it arrives. That really puts our companies at a big disadvantage. I do believe, as most economists do, that a border adjusted v. A. T. Tax will be offset by changing the Exchange Rate and basically have no effect on the border adjustment for imports coming in, which i think is a real advantage. Theoretically, that makes a lot of sense, but it also seems to assume we live in a vacuum and there will be no repercussions with other countries trying to adjust things to make up for what they see is punishment on their companies doing business. I think theyre already doing it. Were following their lead in doing i think all economists believe that taxing capital and taxing labor is a bad idea. Youd much rather tax consumption, which is what a v. A. T. Tax is. Other companies have moved there and lowered their Corporate Tax rate in europe down to about an average of 23 . Were still trying to tax at 35 . We havent put a v. A. T. Tax in place. Were basically obsolete. I think the only retaliation left after we follow their lead is for everybody to drive the Corporate Tax rate down to zero, which would probably get all of our economies to grow faster. If you tax capital, exporters are just going to move where the taxes are. One influential senator i think it was graham. I was talking about a republican. Mccain and graham, i feel bad. They get a lot of attention. It was somebody else. I think tom cotton. Theres like no way, its on its last legs. Why . These guys are in charge. Yes, and we have a small window to actually push through logical tax reform, which this represents. But when you get big Companies Like walmart and all the retailers lining up against it because they bereave its going to increase the cost of their goods because they dont believe that the Exchange Rate is it on its last legs . I think a small number of senators can block it, but i think we have to spend a lot of time trying to educate them and explain to them why this is far more logical than what were doing today at 35 . The president himself has said its confusing. Is there a chance this finally happens . 50 50 . Yeah, maybe 50 50. I think it would be optimistic. Andrew, you want to pay for all this stuff, but you dont really like the border youre worried costs will go up. I dont like the border adjustment tax. I want to try it. Virtually every serious think tank from brookings to American Enterprise institute to Peterson Institute have all come out for it, recognized its a much more logical way to tax tan what were doing today, which is a highly inefficient way to tax. There have been arguments of people who have said, look, if you put this into place overnight, its going to be a huge problem because it very likely will take the dollar time to adjust for Something Like this. Is this something that could be phased in over a series of years . I think you can definitely phase it in over years. I think most economists think it will adjust quickly. I think if you want to pass significant tax reform under reconciliation and have it be permanent so itll last past ten years, you have to come up with about 3 trillion of either Cost Reduction or tax increases. Dynamic scoring gets you a trillion. Repealing obamacare gets you a trillion. Heres my tactical question for you. You said repealing obamacare. Thats a big piece of it. Tactically, you have to do the obamacare piece first to get to take that trillion dollars off the table so you can make it appear revenue neutral. If you want to get it down to 20 , yes. So the question becomes whether you think from a timing perspective and being able to stagger the legislation youll be able to do that in this environment. I think you can if you can get consensus among republicans. I think theres going to be a lot of pushback when you repeal obamacare and dont replace it until after you do tax reform. Theres going to be a lot of pushback from that, but if you dont do that, you dont get one of the trillion you need to get the tax rate down to 20. You get the tax rate to 28 that makes it a fight about obamacare before taxes. You can repeal obamacare on reconciliation. You dont need the democrats to do that. You need the democrats to replace it. That becomes the problem. Poison the well with the democrats, so to speak, who might go along with tax reform. That just goes to the probability of whether it gets done. If you want any shot at negotiating with democrats over obamacare, you have to repeal obamacare. Otherwise, theyre not going to come to the table and negotiate. Once you repeal it, theres going to be a lot of urgency to replace it. I think people will be more cooperative in finding logical middle ground. How would you feel if i told you no border tax, but you have to do a 25 corporate rate. I think you havent done a flov a Corporate Tax an labor and capital to a v. A. T. Tax. Thats the thing you really want to do. Move towards a consumption tax and away from taxing exporters on their capital and labor or taxing workers, which just demotivates a lot of workers. I think you want to avoid those and push towards a consumption tax. You want to leave some income tax in place if you want to be progression in the tax code. Are you part of the process here . Have you been up the guilded elevators at trump tower . No, ive been in the guilded elevators up to paul ryans office to talk to him extensively. Becky wanted to call you a canard. But youre a connor. Probably a bit of both, to tell you the truth. Half and half. Ed, thank you very much for coming in. We appreciate it. Coming up, kind. We know this guy, dont we . We do. Kind snacks pledging 25 million to fight unhealthy influences in the Food Industry. Thats about all i have, unhealthy. I like everything youre not supposed to like. Th taco bell. The ceo will be here with more detail next. Tomorrow, dont miss a first on cnbc interview. Really . Mnuchin coming on tomorrow . Thats awesome. Hell join us at 7 00 p. M. Eastern. Coming in studio . No. Thats all right. Squawk box will be right back. And worldclass innovations. Like in platburgh, where the most advanced transportation is already en route. And in corning, wherthe future materig. T us help grow your companys tomorrow today at esd. Ny. Gov the guy says you picked the wrong insunce plan no, i pi the wrong insunce comp with Liberty Mutual new car replacement™, you wont have to worry abt replacing your car because youll get the full value back including depriation. And if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call for a free quote today. Liberty stands with you™. Liberty mutual insan. Welcome back to squawk box. A new Organization Called feed the truth is aiming to bring more transparency so the u. S. Food system. Joining us now is the founder and ceo of kind snacks. Hes making a 25 million personal pledge to the cause. Its always great to see you. Youve also brought some bars for us. Well talk about carbs and not carbs and all that. First talk about this project and how you got involved. For like two decades ive been noticing sometimes special interests are overzealous in advancing their narrow agendas at the expense of the consumers health. This last fall, you may have heard about the disclosure that for 60 years 60 years later, harvard scientists had been paid by the sugar industry to deflect attention. To think 50, 60 years a lot of people were dying and getting diabetes and obesity because we didnt know about it. We were told we couldnt use the term healthy in our products because of the fat content. When we researched the regulation at the time, it meant you could have sugar in childrens cereal and call it healthy, you could have stuff whose number one ingredient was sugar and call it healthy, but you could have a pound of steak or salmon or olives or half an avocado or a bunch of tree nuts, almonds, and you would not be able to call them healthy. Thats crazy. It didnt make sense. When we started researching it, we filed a citizens petition with the fda. We thought maybe we didnt know better 20 years ago. We found out we did know better, but people were pursuing their narrow agenda. Lobbying. Felt like sometimes you knead need to think about your children. It makes sense it happens. One pound of sugar costs 28 cents. One pound of almonds costs 3 or 4. So its understandable why so much stuff is made with refined carbs, but we as a society are paying for it at the end in the hospital. So we needed to try to give a voice to doctors, nutritions, et cetera. But the issue in this case with sugar, we knew or we thought we knew. But over the years, there have been different medical understandings. I remember when we thought pasta was great. Remember when everyone was having pasta diets . These things seem to oscillate. Theyre called cascades. Youve got some numbers with sugar and a link to obesity and a link to diabetes, but theyre just percentages. Theyre not definitive cause and effect links, even to this day. Well, sugar i think is much closer, no . I wont argue with joe too hard on this, but i want to make a point. This is not about sugar. Its a much broader issue. Every time that you simplify things done a the extremes or low carbs or low sugar, you end up getting in trouble. You need to have common sense and use balance and moderation. Every special interest tries to advocate for themselves. You also need to be thinking long term and not abuse the system. Heres the complicated part. What happens if feed the truth were to come back and do some reporting and decide there was something in a kind product that you didnt like . I mean, i purposely structured it so that committing the money, we create a Selection Committee of three independent voices. Theyre going to then select the board, without me knowing who the board is. I will never call, speak to, or communicate with that board of directors. Im cutting the cord and funding it but removing myself. Do you want other Food Companies to support this . At this point, it doesnt matter. Theyre going to be the ones that decide they want to bring in theyre going to set the guardrails. I gave them the vision for by the way, for me this is a ridiculous amount of money. I was talking to my wife. Shes like, youre doing what . I slept on the couch the last week. In the scheme of things, its a modest start because theres hundreds of millions of dollars going for everybody to advocate. Very little money for doctors, scientists, and nutritionists to tell us what we really, really need to know. Thats why theres this confusion. Hopefully its going to start leveling the playing field, but hopefully theyll find ways. One question, do you think companies should be able to lobby . So Food Companies how do you think that should happen . I was talking two days ago. She told he pretty much every food company does have that. The problem that happens is that the guys that dont have anything to hide end up hiring lobbyists. The guys formulating policy are the ones that have much more complex agendas. You end up with this farm bill policy where 28 cents a pound for refined starches and very expensive for the stuff thats good for you. All right. Daniel, kind. Feed the truth. I want to try the maple. We got to get him back. Theres a brand x he sometimes eats and shouldnt. Number one ingredient is a nutritional rich ingredient. Andrew goes full on for the fufu, nongmo. Anything like that he buys hook, line, and sinker. This bridges the divide. Damniel, thank you. Id have taco bell for breakfast if i could. When we come back, were going to go inside the f35 production plant. Lets get to cnbcs top gun covering this, Morgan Brennan. Good morning. Reporter good morning, becky. Top gun, so fourth generation fighter jet. Were talking about the fifth generation, f35. This is the fist time live cameras have ever been allowed inside. Were going to talk about the cost cutting and how thats dramatically bringing the price down of this plane when squawk box returns. With strategies that just track the benchmarks. But investing isnt about achieving average. And invesco believes its adog th todayng goals. Reques the art and expertise of highconviction iesting. Translation . Its timto bench thbenchmarks. Welcome back to squawk box. A few stocks to watch this morning. Dish Network Adding tv subscribers during the fourth quarter, surprising analysts, who expected a drop. The tv provider added about 28,000 paid tv customers. That compares to estimates it would lost 87,000. Shares of texas roadhouse under pressure, 9 cents below estimates. Restaurant chains revenue also missed street forecasts. Comparable sales up 1. 2 , short of the consensus estimate. Company points to higher wages as well as other expenses that negated the benefits of lower input costs. Look at this. Cnbc is going inside the Lockheed Martin factory thats assembling the f35 fighter jet. Love fighter jets. Morgan brennan is there in ft. Worth, texas. I wish youd also be able to go up in one too. Is that in the works, morgan . Reporter im not going up in one. I did get to see one up close and personal yesterday. We will see some fly today. I did do a flight simulator. I will tell you, even though i was doing the most basic level of the simulator, i did get a little nauseous. Maybe its for the best im not going up in one. I hear Something Like 98 of people who go up in a fighter craft for the first time throw up. But i want you to take a look behind me, joe. These are the f35 joint Strike Fighter jets. They are on the Lockheed Martin assembly line. Theyre all in various stages of production, all three variants of this selfaircraft are put together here on this same exact line. The f35 is the most expensive Weapons Program in history, and it is at a major Inflection Point right now. I say that not just because of President Trumps recent criticism and subsequent unprecedented involvement in contract negotiations. Lockheeds turning out four f35s per month right now, but thats going to jump to 14 over the next five years. Factor in a falling learning curve at the use of automation, thats how lockheed can still make money at ts the price of t plane continues to come down. We want an 80 million jet, so we have to take labor out of the aircraft build process, and we have to make that process more efficient without any reduction in quality and by eliminating waste. So we do that from very technological advances like this robot, which can do the work faster. Reporter now, for example, using robots to apply the paint that helps make this plane stealth, thats a process that shaves off two days of work. All of this has enabled prices to come down with the most recent contract coming in for the f35 at 94. 6 million. Thats a more than 7 drop all in from the previous deal. Its a 62 drop since the first one was negotiated about a decade ago. The pentagon is looking to bring that number down to as low as 80 million by 2020. Thats an incredible number, especially when you consider that the cold war era f16, which the f35 is replacing, still sells for about the same price. And i should note, its not stealth. I should also just note that this plane in the recent red flag drill that was done by the air force, had a 20to1 kill ratio, which has never been seen before. Its pretty interesting to consider an 80 million price tag for that. Guys . I guess, morgan, somehow you get used to those g forces. I did it once at nasa. They say dont do it for more than 30 seconds or a minute. So i deliberately went over a minute. Im telling you, i paid the price for like two hours afterwards. You get shook up like a milk shake almost. Its very easy to get nauseous and stay nauseous for a while. Not a good feeling. Reporter im having a visual of that in my head right now. I will tell you, it was really interesting doing the simulator. This plane is extremely high tech. We had a test pilot tell us yesterday its like flying a super computer. Its all touch screen. They have Something Like only 20 levers and buttons involved in flying this plane. Its pretty incredible. The whole idea there is that tech is able to allow the pilot to more specifically focus on his mission. They say just about anybody can fly this plane, at least the simulator. The whole gets used to that g force is another thing. I threw up in that similulat. You throw up in a helicopter. You cant read in the back you throw up at the drop of a hat. Not the drop of a hat. Pretty much, into the hat. Couple years ago, flight safety. I got on this flight simulator. Afterward, not good. Anyway, morgan, well be watching you through the day. Thank you. U. S. Treasury secretary Steven Mnuchin is urging Christine Lagarde to use the surveillance powers to police the Exchange Rate policies of its members. The two spoke by phone yesterday. President trump has repeatedly said that he wants to challenge some of the United States largest trading partners. The imf has been accused by trump and previous administrations of failing to criticize china for manipulating its currency. And a programming note for you, treasury secretary mnuchin will be joining us tomorrow for a first on cnbc interview at 7 00 a. M. Eastern time. Okay. A big hour still ahead here on squawk box. Garmin making a bullish call for the first time in five years. What it is next. And later, snap holding its ipo road show this week. Going to talk to a venture capitalist about the companys public debut. Stay tuned. Youre watching squawk box here on cnbc. Say carl, we have afees . What did have . Your brokerageees. I dont know. 6. 95 per trade . Uhhh i was wondering if yr brokerage offers se sort of guara . Guantee . Where can getur fee and commissions back if were n hapap. Can y offer mewhat schb . Whats wh all e questis . Ask your bker ifewhat schb . Thre offering 6. 95 online equittrades and a sfactionntee. t le their an, asagaiat schwab. T le their an, we drowning in informati. Ere, in all of this, is the stuff that maers . The stakes are so high, your finances, your fute. How do you solvehis . S . Yout. You partner with a firm that adses governments and the fortune 500, and, can deliver inshterson to pern, on what matts to you. , Morgan Stanley house hunt. Mortgage applications drop as buyers are slow to start the spring shopping season. The real story on real estate straight ahead. Washington watch. Secretary of state tillerson heads to mexico today. Border security, Law Enforcement, and trade topping the agenda. Plus, going public in a snap. Well talk to a top venture capitalist about the snapchat ipo. Shes been on forbes list of the worlds smartest tech investors five times. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Good morning. Welcome back to squawk box here on cnbc live from the Nasdaq Market site, which in times square. This is a trip to come into work here. Theres things happening out there even in the morning. Im joe kernen along with becky quick and Andrew Ross Sorkin. You know what i like . A Police Presence that will blow your mind. Everyones out there working hard for a living. The futures right now indicated mostly flat after eight Straight Days. Actually, down 26 now on the dow jones. Now the other indices have moved. I think we hit the wrong fair value for the s p. Oh, we did . This has kind of been the reflection through the day. Before we had a fair value up ten. I think this is the correction. People that are really detail oriented, that actually pay attention. Theres the ten year. 2. 14 . Im pretty sure thats in the ballpark of where it actually is. Okay. Lets tell you about some of the head lines a tt this hour. Carl icahn reportedly bought a large stake in bristolmyers squibb. He sees the drug maker as a potential takeover target. Also, january existing home sales out at 10 00 eastern. At 2 00 p. M. , we get the minutes from last months fed meeting. Fed governor Jerome Powell speaking about the Economy Today in new york. Dallas fed president rob kaplan also speaking later this evening. Well be listening to that. Also following the snap ipo road show. A targeted evaluation between 19 billion and 22 billion. Its lower than the initial rage following negative investor p d feedback. A lot of people were also skeptical of the facebook ipo, and look where we are now. The luxury home builder raised the low end of its delivery forecast for the year. Wolverine worldwide beating the street on top and bottom line after theyre expecting Earnings Growth for 2017 despite what it sees as a persisting Macro Economic challenges. Norwegian cruise line sees Current Quarter profit above current consensus thanks in part to improved pricing. A mixed quarter for six flags. Earnings at the theme park operator fell short, show revenue did top estimates. The company says its seeing stronger attendance and increased purchases of season passes. The solar power developer also seeing its sales come in above expectations. Finally, garmin beating the street with its latest result. The maker of gps and fitness devices posting improved sales across all categories. More housing data for the market to absorb on this wednesday, february 22nd. National margarita day. Did you know that, diana . I never know what youre going to throw at me. Ill admit, i did not know that. You like margarita, a good one . Who doesnt like a margarita . Come on, on a wednesday. Really . Are you sick of national suchandsuch day . Little bit. Lets just make it National Housing day. We got existing home sales. Do you want to talk about the Mortgage Apps . Go ahead. Demand is high for housing, but that strength is just not showing up in weekly Mortgage Applications, which fell 2 last week seasonally adjusted. Total volume is now down almost 21 compared to a year ago, that according to the Mortgage Bankers association. Take a look. The weakness is mostly refis since that rate spike following the president ial election. They fell 1 last week but are down 40 from the same week a year ago. The refi share of mortgage activity is now at the lowest since november of 2008. Mortgage applications to purchase a home which are less sensitive to the weekly Interest Rate moves, they fell 3 to the lowest level since november of last year. Purchase applications are still 9. 5 higher than one year ago, but the drop just before president s day weekend, which is traditionally the start of the spring buying season, thats a little concern. Applications are not rising as fast as they typically do as this time of year. Now, this is as Interest Rates really fit in a very narrow range. They rose a few basis points last week, but really weve been around 4. 25 on the 30year fixed for just about the past month. Some are warning that rates havent moved in too long, and we could be in for a sharper move soon. Back to you guys. All right. Diana, thank you very much. We were talking about housing too. Yeah, we were. We were. We were talking about having a margarita in a house, normally where where you like to have them . Or in somebody elses house. Or a converted house that might be a bar. You love margaritas. Do you know how to make them . Yeah, i can make a margarita. You got to shake it. Im not the best at it. There are different you need to perfect it. Im in search of the perfect margarita. Do you do salt . I do. I do triple sec. I do some agave syrup. Surprised you dont have a big frozen margarita machine in your kitchen. I dont like the mix, whatever that stuff is. Youre a purist. Although, i like the lime juice. Okay. Lets focus this morning on commodities. Oil prices have been giving back a little bit after they were up yesterday. Our next guest is making a big call on oil, turning bullish for the first time in just about five years. Dennis gartman, great to see you this morning. Good to be seen. Thanks, beck. Youre turning bullish for the first time on oil. What happened . What made you change your mind . Theres a lot of things going on. First of all, the first thing one learns in the business of commodities is something that should be fundamentally going down when inventories are extraordinarily high should be pushing crude oil prices down, and theyre not. Thats the first thing that interested me. So its a technical. Its a technical circumstance. Secondly, i watch whats known as the term structure. What is the front month doing against the second. What is the front month doing against the one year back. In bear markets, youll have whats known as contango. Thats been narrowing over the past four or five months dramatically to the point where were almost at the observe of that. That tells you that crude oil is no longer being bid to go into storage but being taken out of storage. Thats very unusual, especially in a market thats been going sideways. So when you see that, add to that the third instance where actually opec and nonopec producers are doing a pretty good job of sticking to their supposed reduction in supplies. Those three things have me interested in crude for the fist time in a very, very long while. Can i be wrong . Oh, absolutely. I prove that on a consistent basis. But right now the fact we have gone sideways when the news is bearish, the term structure has narrowed, and opec is reducing supply. I think on a risk reward basis, we could see crude oil trade 8, 9, 10 higher, and at the most, 2 or 3 lower. A lot of these things you mention, people say opec doesnt matter anymore. It doesnt matter because theres so much production here in the United States and every time you get up to a certain level, theyre going to turn the spigot back on. What do you say to that argument . Theres no question that opec means much less than it has meant in the past and probably is becoming meaningless as we go through time. Clearly fracking, clearly the United States has become the dominant producer, the swing producer of crude oil. Theres no question that as we get up to 60 in spot month wti that there will be an increase in the amount of fracking exploration and production. So thats the one to me, the overwhelming bearish circumstances that has to be overcome. I dont doubt that for a moment. If we were to see crude oil prices go up 8, youd then change your mind once again and say this may be as much as we can get for now . Almost certainly. If we got if we moved 8 higher from here, the amount of new fracking operations that would be brought on stream in any areas of the United States also, let us remember, fracking has not been taken up in any other Foreign Countries around the world. Theyre going to learn how to use fracking capabilities because of what weve learned. You take crude oil up 8, my propensity to be bullish is going to be dramatically reduced. Youre also in the camp of people who thinks the dollar is going to continue to strengthen from here. How does that weigh into the other market bets youre willing or not willing to make . Well, clearly a strong dollar weighs heavily upon almost all Commodity Prices generally, as everybody should understand. Most commodities are priced in dollar terms. A strong dollar begets weaker Commodity Prices. A weak dollar begets stronger Commodity Prices. So if youre a wheat producer, for example, if youre a corn producer, hoping for and being dependent upon export trade, a strong dollar is going to be an anchor on your shoulders that keeps those prices from going higher under any other circumstance. I think wheat prices, corn prices, Soybean Prices are relatively cheap. They will overcome that. But its going to make it far more difficult to take Prices Higher than any other circumstance. And you like gold too, but there are some asterisks maybe to be placed around your bets on gold. I like the gold market, but i dont like gold in dollar terms because as i just explained, im very bullish of the u. S. Dollar. Im very bullish of gold in euro terms and bullish of gold in yen terms. Why would i wish to own gold in dollar terms when i think the dollar is going to value when i can use cheaper devaluing currencies to do the same thing. So im very bullish in gold in euro terms. Over the course of the last three years, for example, gold, gld, from three years to today is down about 8 . In euro terms, its up almost 19 . Thats a big difference. Nobody is paying much attention to that fact. Im bullish of gold but in euro and yen denominated terms. And it can be done. Are you bullish on the dollar because you think the fed is going to move more quickly than other central banks, or is it just the strength of the u. S. Economy . I think its the strength of the u. S. Economy, and i think its abundantly clear our fed is now at least going to err upon the side of being less expansion their and perhaps contractionary whereas the ecb and bank of japan have no choice but to continue their protracted experiments and quantitative easing. So and add to that the fact that all things being otherwise equal, money is going to find its way to the United States or to dollars, canada, austin tail ya, new zealand, the safer harbors, as it is fearfully leaving other places. Put that into effect. Put into effect the stronger economy here. And put into effect the fact that the fed is going to err upon the side of being contractionary, the ecb and the bank of japan are going to be expansion their. The dollar has to get stronger. Okay. Dennis, always great to see you. Thank you for joining us this morning. Thanks, becky. Always great to be here. You threw up on ross perot jr. s helicopter. I did. He wasnt on it at the time, but they were flying me around, showing me the properties. When was that . A viewer gave me that. It was when boon pickens turned 80 years old. I was dun theown there for his birthday party. So thats a fact. Was it in the helicopter . I kept asked the guy to end the tour and land. He kept saying theres one more thing i want to show you. So you didnt have a bag or anything. I threw up in a bag that i grabbed, but it was all over the place. It was all over my hand, then i shook his hand and said thanks very much for the ride. Did you know ross perot jr. Was the first person to fly around the world in a helicopter . I did not know that. With his copilot. In 1992. He doesnt have the issues i have. Before we head to a break, a little news to bring you because were watching shares of unilever once again. The company will conduct a review of its options, coming days after they rejected a takeover bid from kraft heinz. They expect to complete that review by april. If you thought this company wasnt in play, perhaps this review puts it back in play to some degree. When we return, secretary of state tillerson heading to mexico. Were going to talk about the stakes. Tomorrow, a first on cnbc interview you do not want to miss. Were going to talk to treasury secretary steven nmuchin. E future of business inew yotate is alrey inotio growing the economy,aniese with theelp of the lowesxein da, a talented workforce and worldclass innovations. Li, where the mostdvanced trsportaon is ready en rout elow youcompanysmorrow anin corng, day at e. Ny. Gov welcome back to squawk box. A quick look at the futures. We do have some red arrows. First time in a little while here. Dow looks like it would open off about 13 points. Nasdaq would open down about one point. The s p 500 would open down about six points. Making headlines, shares of mobile eye are higher in premarket trading. The maker of autonomous driving systems making 22 Cents Per Share, 2 cents above estimates. Revenue was also well above street forecasts. Did you eat my cake i sent you . The picture of it . Yeah. It didnt arrive . The actual cake you baked me . With the make America Great hat and everything. Someone asked me if i made you a cake. You baked me a cake. You showed me a picture of a cake you baked. It did not arrive. It didnt arrive at home. Actually, ive been waiting. Ive been holding my breath, waiting. I was too cheap for the Delivery Service . Did you eat the cake yourself . No, no. Its coming. Oh, its still coming. Cakes in the mail. Youve heard that expression. Thanks. Appreciate that. But the entire twittersphere saw me wish you a happy birthday. Yes. I said youd even bake me a cake given im an enemy of the american people. Had to make it political. Oh, he made it political, yeah. Whats the expression . Keep your friends close. There you go. All right. We digress. Secretary of state Rex Tillerson and Homeland Security secretary john kelly are heading to mexico today. Theyll discuss border security, Law Enforcement, and trade with mexicos president during the twoday visit. Frances rooney joins us now from florida. Theres a tom rooney in a nearby district, isnt there, congressman . It gets confusing. Are you buddies . Related . Well, we are fellow Republican Coalition members. Toms district actually borders mine along the Charlotte County line. Thats interesting. All right. I like the name frances, i do, but do people call you frank . No, ive always been called frances. I grew up in a small town in eastern oklahoma. If you survive that with the name frances, youre going to keep it. A good catholic name. So we can talk about whatever you want to talk about, but if youve watched the stock market, it has gone up. A lot of that is based on the likelihood of some type of tax reform coming. Im not a lot of other things have already happened that may be using some political capital. Do you think capital will be left for the most important part maybe to the market . Well, i certainly hope so. I think americans are yearning for a tax reform kind of like what we got with Ronald Reagan that stimulated the economy and got us to 4 , 5 growth. Weve been stuck in this 1 , 1. 5 stuff for years now. So in terms of whether that comes before or after Obamacare Repeal, were sort of waiting for Obamacare Repeal then first. You have to do that first to make the numbers work. Well, the initial preoccupation has been to use the congressional reconciliation act to roll back the invasive regulations that were finding in all aspects of the government that the Prior Administration put in. I happened to lead the one last week to get the states out of the business of competing with the private sector for iras. There have been many of them in the area of veterans affairs. I think there are more to come under the cra process, which has a time limit on it. So theyve got to get those out of the way first before moving on to the Bigger Picture items. You had a business yourself. Would it have benefitted with lower rates, do you think . Being in the private sector itself, just from walking the walk, you can say this is something we should do. Well, we have a lot of businesses. Im in the construction and pipeline business, the Real Estate Development business, and the banking business. All of those businesses need a stable economy. I think lower rates and reducing the asymmetry between the stated rate and what is really paid by taking out some of the carveouts and special interest exemptions. I particularly am opposed to ethanol, which i think is a 6 billion subsu i didy for a very narrow segment. So when is cpac . Thats coming up, right . My part of it is friday and saturday. When is the president coming . Oh, i dont know. Im going to get to talk about Foreign Affairs friday morning and some other things, im not sure which, on saturday. I just read something very interesting about you. I hope we got the right rooney. Were you ambassador of the vatican for a few years . I was the ambassador to the holy sea under george w. Bush, when Pope Benedict was in charge. That would be an interesting position. Whats the most interesting thing that happened during how many years was that . Almost three. It was very interesting when president bush came. We spoke with the vatican officials about 16 Different Countries where the United States and the holy see had issues we were trying to resolve. Certain issues like human dignity, human rights, freedom, transparency in government, things that are of great concern to the United States. While ive got you here, have you had any town halls while youre back in florida . I did one town hall up in sanabel last week concerning the lake okeechobee watershed and restoration of the waterglades, which is a key issue down here. 16 years ago the federal government agreed to pay half the cost of restoring the everglade and cleaning up the okeechobee watershed where half the Real Estate Property in florida is affected, but they havent really come up with enough of their money. The state of florida has put in almost a billion more than the fed. Thats one of the big issues i ran for congress to try to work on. You had no one throwing tomatoes at you or yelling about obamacare or anything like that . Was there any of that at all . We had a few protesters. Fortunately enough, they were not paid protesters but were citizens of our district that had some legitimate points of view to discuss. All right. Congressman, thanks. Hope to see you again. Good luck. Dont get nervous. Thanks for having me. On. Youre welcome. All right. Well see you. When we come back, facebook wants to take you out to the ball game for a fraction of the cost. Well explain next. I have aess to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Coming up, unilever shares rising after the Company Announces its conducting a comprehensive review of options. And form, a first on cnbc interview you wont want to mis. Well talk to treasury secretary Steven Mnuchin at 7 00 a. M. Eastern. Thats going to be good. Stay tuned. I want to buy a vowel, though, for the last name. Uhhh and i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 6. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. The newly advanced gle can s in your blind spot. Okay, lets call his agent. Im coming over right now. Onboard cameras and radar detect danger all around you. Driver assist systems pull you back into your lane if drifting. Hi chief. Hi bobby. And will even help you brake, if necessary. It makes driving less of a production. Lease the gle350 for 579 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Good morning, everybody. Welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square. Unilever is back in the news just days after rejecting a takeover bid from kraft heinz. The Consumer Products giant says that it is conducting a comprehensive review of its options. It says that it expects that review will be completedly april. They also go out of their way to say the ends of the last week highlighted the need to capture more quickly the value they see in unilever. The stock price has something to do with that too. Shares of unilever skyrocketed on news of that takeover. As soon as that deal got yanked back, it brought shares back down. Apple says its new headquarters will be ready for occupancy in april. However, the company says it will take six months to move 12,000 workers over to that new facility. Apple park occupies 175 acres. The Main Building has plenty of space, 2. 8 million square feet. Wow. Yeah. Like the super conductor collider. The thing about a round building, you have to really think tough a meeting on the other side of the building. But nobody gets put in the corner in that building. Thats right. The fed is going to be releasing the minutes of its latest policy meeting a the 2 00 p. M. Eastern time. Investors will be looking for clues on future Interest Rate hikes, but there has been more hawkish talk from fed officials since that meeting took place just three weeks ago. Everyones got to ride on segues or something. The courtyard. Like a little hyper loop. It looks like a super conductor collider. Just put a little hyper loop in there. One of those tubes. Its also cool that a drone probably took that. Im scared of drones now. You are . Why . Terrorists are using drones increasingly in other parts of the world. Thats next. We got to worry. Im worried. You worried . You always tell me not to worry. Im worried about a biological drone. Yes, i agree. In a stadium or something. Youre bringing me down. Back to National Margarita day. Talking about being in a stadium, a little baseball news. Facebook wants to bring you closer to the action on the field. Reuters reporting the social media giant is in talks with Major League Baseball to stream one live game per week during the upcoming season. It would give mlb access to a large and young audience. That was the main reason univision struck a deal with facebook to livestream 46 mexican soccer matches in english. Twitter just finished its first season of livestreaming thursday night nfl games. Minor League Hockey team the ft. Wayne comets wanted to honor colin chalk by retiring his jersey. They went to raise his jersey to the rafters during the game over the weekend, and the jersey had been hooked upside down. It couldnt be fixed quickly, so the team decided to raise it anyway, upside down. The teams general manager said this is the most embarrassing thing ive ever been a part of in 27 years with the club. The banner was eventually righted. Looks like 16 was retired. Nope, nope, nope. Whoops. Its nice to get retired though. It is. The president of iceland reportedly told a group of High School Students last week that he was opposed to putting pineapple on pizza, saying he would ban the fruity topping. That caused an uproar on twitter. The leader now responding on facebook saying he does not have the power to ban pizza toppings. He did add, however, that for pizza, he recommends seafood, not fruit. Like anchovies. Yuck. And pineapple, usually you put it with canadian bacon. I dont know about just plain pineapple. Pineapple is fine. Its good. Its just too chewy for pizza. It can be good. Like hot pineapple is a little weird sometimes too. Its good with ham. That makes sense. Economic growth forecast presented to congress as part of the white house budget submissions are due from the trump team in coming weeks. I like the title of your most recent thing. The new uncertainties around an old forecast. Thats the world that were living in. So there were some things that we knew about 2017 before the trump train. Now theres some things that you need at least to adjust or to reconcile with some of the other stuff. Is it still overall netnet bullish, joel . Well, the outlook for 2017 before contemplating policies with the new president was sort of steady as she goes, growth a little over 2 , unemployment dipping below 5 , the fed gradually raising Interest Rates. Now we have the new uncertainties. Will we get fiscal stimulus or a tax cut . Will we get fiscal stimulus from infrastructure . Will we get a growth shot in the arm from deregulation . Those are the upside risks. On the other hand, will we have chaos from trade policy and what about immigration policy. Those are risks to the downside. So where do you come down when you factor you know, youre betting on it being higher. You dont have to be ill tell you what, in honor of National Margarita day, i have my margarita just out of sight of the camera. Im sipping it in between interviews, trying to figure it all out. We have a lot in common then, joel. Thats what were doing. Weve told our clients that we think its a little too early in terms of the shape of the legislature to come and the timing of it to work it into our central case. But i think there is a reasonable probability that well have stimulus from a tax cut later in the year with most of the push of that coming in 2018, not in 2017. As a private sector guy, why isnt just not being part of the problem why i always liken it to the guy hitting his head against the wall. Even when you stop that, you feel better. Its like, wow, i feel great all the sudden. Why isnt that an analogy for the last eight years . People get mad when i say that whatever. But there was a lot of head winds for the private sector. There was regulation. Theres the bully pulpit. Theres a lot of things. Why isnt just alleviating that reason for optimism . Lets talk about the economic head winds. Some of those are head winds that were the consequence on the backside of the great depression. Yeah, but thats no one knows the counterfacts. I hear that. But in previous deep recessions, the rebound was even better than in an average recession. People say, well, europe didnt recover. A lot of times the strength of our recovery feeds into the rest of the world. So when we have an anemic recovery, we dont get a better recovery over the rest of the world. Youre thinking thats the best we could have done, there were no selfinflicted wounds from the past eight years, joel . Obamacare, higher taxes, regulation. All right. Lets just back up. All right. Theres considerable Academic Research that suggests that when financial crises are the sources of the recession, the recoveries tend to be much more prolonged. Ive seen research from both sides. Everybodys got research to bolster their opinion. Okay. And the Obama Administration took policy actions early on to try to speed the recovery. I think theres a debate about how successful those policies were. But were in a different state now. The economys close to full employment. Inflation is close to 2 . The fed is thinking about raising Interest Rates. Growth Going Forward is really going to have to come from the supply side of the economy, not the demand side of the economy because theres not much slack to take up. So the focus at this point should be the debate should be centered around are we pursuing policies that will expand productivity growth and will lead to a higher Labor Force Participation rate. Now, the deregulation is something that could do that. How much extra growth we could get from that alone, i think, is hard to know. But i would measure is in tenths of percentage points. In terms of fiscal stimulus, the issue here is that, yes, the lower marginal rates would be good for the supply side of the economy, but it is also a tax cut, which will stimulate the economy when its close to full employment. I suspect that some of the force of the tax cut will be absorbed in higher Interest Rates, not necessarily in faster job creation. Plenty of room with Interest Rates. The rest of the world will hold down any increases in Interest Rates that we have. Theres a lot of positive things about can i just make one comment on that . Go ahead. Ive heard that comment, that the Global Economy is a wash for savings and that will prevent Interest Rates from rising in the face of stimulus. Theres a problem though. Interest rates jumped 45 basis points just on the expectation of stimulus. What are they going to do when we get stimulus . Were at 2. 41 on the ten year. Am i supposed to be shaking in my boots at 2 hadnt. 41 . It hasnt gone anywhere in a month and a half except down. But where were we november 7th . Its all relative. 2. 41. Say that again. Youre old enough to remember where Interest Rates normally are. Youre like a larry meyer acolyte. Im starting to see starting to make sense to me now, joel. All right, man. Thank you. All right. Next time. Okay, good. Well have liesman next time and you can finish each others sentences. Bring it him on. Coming up when we return, a venture capitalist whos been on forbes list of the worlds smartest tech investors five times. Were going to ask the investor what she makes of the upcoming snap ipo. Were going to do it next. Stay tuned. Youre watching squawk box right here on cnbc. Welcome back to squawk box. Futures right now are indicated lower, down 12. Who knows, b by the end of the session. Tjx posting better than expected earnings, rev nurenue, and same store sales. Retailer also announced a 20 hike in dividend and stock buyback. In tech news, the upcoming snap ipo will have a farreaching impact on startups in whats known as silicon beach. Julia boorstin joins us with more from venice beach, california, home of snap. Hey, julia. Reporter hey, becky. Thats right. Snaps headquarters are right behind me here in venice. This ipo could be a game changer, not just for other startups here in the los angeles area, but for unicorns around the country. Last years ipo market was rough with the lowest proceeds since 2003 and the fewest number of deals since 2009. Thats a 38 decline in ipos from 2015 to 2016 and a 62 decline from 2014, according to reconnaissance capital. Other big unicorns well be watching to see how snap fares, including spotify, pinterest, and drop box along with air bnb. Snaps ipo is a watershed for los angeles as ithe biggest eve for a Company Based here. While Southern California has had a number of companies that have sold for billions, the mayor says snaps ipo puts l. A. s tech scene on the global map. Folks who have the capital to begin and spin off from snap, their own ideas and their own companies, but it will also be that anchor that shows the buzz about l. A. You start a company here, get acquired, instead of starting a company that will become a pillar and future lynch pin of activity. That will be an amazing day for l. A. Reporter los angeles ranks third on the index of startup activity, measuring ahead of san francisco. As soon as the 150day lockup period expires, we could see dozens of new snapchat millionaires. Okay, julia. Thank you. Were going to continue the conversation. If you want to stick around to join us, do that, julia. The cofounder and managing partner of aspect ventures with 150 million in assets under management. Theresa was named to the top tech investors in Silicon Valley five times now. Thats something. Well, thanks for having me. It pays to be around for a long time, i guess. Lets talk about snap. Are you a believer . So i believe they have something that is very valuable amongst millennials and the content theyre creating. I know people have been talking about the 150 million daus, but its the supposed 2. 5 billion snaps created daily. Thats a lot of content, even if you compare to larger social networks. Thats the positive. From a financial hat, purely looking at the numbers, the numbers dont look pretty. The negative Gross Margins story, thats probably a thing that jumped out the most. As a venture investor yourself, if you could get in, would yo uu . If you were a venture investor like myself, investing in the early stages, the ones who did will do very well. Also, the other thing about venture, is were like five to tenyear time horizons. How will the stock trade the first day, the first week, the first month . I dont know. Five years out. I think if you take a longer term view, they have a valuable asset if they can retain, which so far they have. If they can retain the attention of these younger millennials, thats going to be valuable. What about the structure . In this case, the Corporate Governance structure in which no investor really has any influence over revenue . Well, certainly there have been a lot of Public Market investors who voiced concern over it. Then again, you would say at the time when google went public google and facebook. A new wrinkle with three tiers, but essentially the same voting structure. Its slightly different but in the same sense the real voting power of the public investors in the ipo will be overshadowed by the founders. Couple other value questions. We talked about in the 6 00 hour this situation at uber. I dont know if you saw the memo and the blogs and back and forth. What do you make of that, and what does that do to uber . So i havent been close enough to it. I only know what the media posts and those other things. I think its a very serious set of allegations, and i think that at least it seems like the company is having conversations. Again, i only know what you read, the things that leak out. It seems the conversations are happening, whether the allegations are true, whether things will change. Do you look at that and think this represents a larger issue . Is that something you see . I think there have been lots and lots of reported incidents of certainly at a minimum, i think, widely known unconscious bias, but sort of outright harassment, there have been a couple other highprofile situations that have happened at some of the opensource companies and in gaming. Certainly doesnt sound new. In private conversations, you hear about them. Is that a reflection of a clubby boy sort of sea thecenar . Is that a reflection of a company who hasnt put a proper hr structure in place . I think its a combination of both of those things, becky. A lot of times its just Young Companies growing very quickly without, you know, hr or even any training manuals, procedures, discussions happening. But it is definitely look, it is a very male, very close to h youre talking about Silicon Valley, the show . Julia boorstin is across the country and i think has a question. Julia. Reporter im sorry, what was the question, andrew . No, i was under the impression you had a question for us. Reporter oh, no, i thought you were going to ask me about the those issues out here. I think when it comes to diversity everyone acknowledges that diversitys something that is definitely needed at these Tech Companies in large part because all of these Companies Want to create products for all americans, no matter what they look like or what their gender. So i think theres a real concern about bringing in diversity to the companies whether its here in silicon beach or Silicon Valley. There are concerns about pipeline and there are concerns about sort of the environment within these companies. And thats certainly been a critique of all of them, of this idea there isnt a welcoming environment for women at various levels. But i think the issues like this uber lawsuit i think is really shining a spotlight on all of these Companies Going to force them how to figure out how to make the workplace more welcoming. My other question for you was going to be just how political do you think Silicon Valley is going to get given the immigration issue, given some of the lawsuits that have been brought and how thats going to play out . I think the immigration issue is something thats pulled together Silicon Valley from a political perspective. I think for many years, as for the last 15 years ive been there, theres been a lot of, i think, criticism, a lot of it grounded that, you know, given the amount of job creation, economic wealth creation, Silicon Valley does not necessarily get as involved in u. S. Political as they should. The immigration thing hits close to home for a lot of people, right . Google, ebay, but also household names like Proctor Gamble were all founded by immigrants. Theres a lot of talk about the h1b visa but also what hasnt been talked about is student visas. Theyre not only effecting my portfolio but my company personally trying to hire bright graduates from stanford who might not be able to get back into the country. Theresia, thank you for joining us. Thank you for having me. When we come back, jim cramer joins us live from the new york stock exchange. Stay tuned. Youre watching squawk box. With e trade you see things your way. You have access the right information at the right moment. And when you filter o theoise, its easy to turn your vision into action. Its your trade. E trade. Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business inntives, infrastructure investment, university partnerships, and the lowest taxes in decades are eating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at esd. Ny. Gov tech is one of the Top Performing sectors so far this month. So how have the f. A. N. G. Stocks historically performed in february . Netflix leads the charge up an lets get down to the new york stock exchange. Jim cramer joins us now. Theres certain you know, sometimes, jim, if its national whatever day, im not really sure, but National Margarita day hard for me to say anything negative about that. And ive never talked to you about what goes into your restaurant what goes into the top shelf margarita. Do you know . I mean, do you have the best margarita . Yeah, we have a wide range of a lot of different variations. We have some mezcal and some regular tequila margaritas. A lot of different fruits. People love that. Thats our signature stuff. But we always tell people to get into the cheapest, dont go just go into the basic 100 agave because it wrecks the taste. People want to pay up. Its ridiculous. Go with the standard. I know, why pay less. The good margaritas are not made with the others, not at all. Okay, lime juice triple sec. A good brand. Right. Some agave syrup or not . No. I mean, 100 agave because the syrup may have sugar in it. And then we put fruit in. Each season we do a new fruit. I think people really want that. People really want kind of a margarita that is much more tailored to an individual stores or bars taste because they just dont want off the shelf anymore. And then theres the fed. Anyway, thanks, jim. We didnt have any time to talk. Or san miguel. All right. Thank you. And on squawk on the street jim will talk stocks and everything that youre used to hearing from him. We cant use every moment of every day to try and get something but also, the new fcc chairman, ajit pai will join the gang live at 9 00 eastern. No matter howthe markets chge. At t. Rowe price. Our scscline proa remns. But you can feelay be confident. In invent experience around the world. Ca us or yr advir. Invest with confidence. Whats Critical Thinking like . A basketball costs 14 atseam spir wth . Thinking like . cheers atswhats iworth tonking like . Talk to o ur mom . What the value of a walk in woods . The value of capital , not juju wealth, but thingshat matter. Morgan staey thanks for joining us today, everybody. Make sure you join us again tomorrow. Right now it is time for squawk on the street. Dont forget we have the treasury secretary joining us tomorrow morning. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber back at the new york stock exchange. Little softness in the premarket as the dow shoots for its longest consecutive win streak since july. S p now a full 10 higher than it was on election day. Some Political Jitters in europe, the gap between the u. S. And the german twoyear with a record high. Oil on the year a sevenweek high, inventories are on deck. Our roadmap begins with a pause in the recor