Transcripts For CNBC Squawk Box 20170329

Trading, youre already going to see that things are fixed there as well. The dax is higher as well as the cac. Ftse relatively flat. The tenyear note. Yesterday the yield was settled in, back above 2. 4 . This morning still sitting at 2. 416. If you check out crude oil prices, which were slightly higher yesterday, this morning wti is up 28 cents to 4. 65. Couple big stories to watch this morning. British Prime Minister theresa may triggering a brexit. Signing a letter to invoke article 50. The letter with be land delivered to the European Council president in one hour from now. Todays actions mark the start of official divorce talks between the eu and the uk. Wilfred frost will join us at the bottom of the hour to talk to us more about brexit. Fed impending home sales come out at 10 00 a. M. Charlie evans, Eric Rosengren and John Williams will start to speak later today. Well watch for that. In an interview on cnbc yesterday, which hopefully you did not miss, because we told you not to miss it, Steve Liesman asked you not to miss it. Told nicely. Suggested. We suggested. He spoke with fed vice chairman Stanley Fischer and asked if the average fomc member forecast for two additional rate hikes this year is about right or if the markets had to prepare for something else. That seems about right. That is to say thats my forecast as well. Yes, you have to be you know for sure that you dont get everything right, particularly about the future. And you need to think about what happens if the economy is growing more slowly or if the economy is growing faster. Fischer said the feds current outlook la nhas not cha much from the march meeting. Also a bit of corporate news. Joe mentioned at the top of the hour, i mentioned it briefly in the prior show, blackrock announcing plans to overall its actively managed equities business. This time cue the terminator music. The Worlds Largest asset manager will cut jobs, drop fees and rely more on computers, ai to pick stocks. Planned fee cuts will cut roughly a 30 million hit to revenue and the company will take a 25 million charge this quarter reflecting severance and otherexpenses. At a time when everyone says we have to get away from actively managed and go towards these funds, now were letting the robots do it. What does Warren Buffett say about that . We were talking about it yesterday. Its sad to see anybody lose their job. This is not automation. These are guys whether we always wonder if the emperor has clothes. If youre no good, if the computer can do better than you the computer can only do as well as programmed by people to do. I dont understand how the computers work. When youre trying to do your emotion like selling losers. You wanted a quick profit. A lot of things human nature causes you to screw up. I would feel better if there was a completely i wouldnt mind a screen that ran it on something. Maybe thats what theyre doing. They still have people making final calls. The most successful hedge funds have been doing this for how long . Decades. But a lot of those guys were picking up pennies, half a penny here and. There. I understand this is different. This is using input to decide whats a good longterm buy, i guess. Right. They must have doing research. Its gigo, garbage in, garbage out, but when we do screens, earnings per share, sales growth. With you i would still rather have a human looking at the screen things at the end of the day. Yesterday, i dont know if we have an intraday chart. It was weird. The eightday selloff sort of coincided with the obamacare failure, and what it meant for tax reform. Yesterday in the middle of the day, suddenly paul ryan and others said, you know, some of these Freedom Caucus guys may come back. Have come back to us and said we wanted ideas on how to get this done. The president said it could be back on the table. Suddenly its back on the table. I was watching. It was up 20 points, 30 points, suddenly 80, 90, 130, 140. Its a reflection of how effective this administration is going to be or no, i didnt going to be. Its tax reform. At 28 i dont want your 28. Keep your 28 and your stupid column. 28 for the Corporate Tax rate. We were supposed to go to 15. I know. I will take 20. Ill settle with you at 20 . At 15 well compromise. Look, if you can pay for it 20, god bless. Get your magic wand. We are will grow so fast. Ill hire david blaine. Well have money left over. We will have money left over. I do think what you watch with the market is the market gauging, is this administration able to get things passed or not. When it looks more likely, the market takes off and runs with it. Between the big economic bounce back from coal, you just watch. You did see what Mitch Mcconnell said . I did. He said the whole thing is a nonstarter. He goes this is the law of the land. We have to live with it for a while. You never know when these guys are posturing. He has the senate. We havent gotten into the senate yet. Thats where it becomes a real fight. For more on the top political stories, which we have been talking about, a guy who has real insight on it, eamon javers is in washington. Speak for yourself. I will speak for yourself. They havent figured out how to have robots operate washington, d. C. , so well muddle through with the human beings. For now this administration is struggling to find a way to recover from the defeat of the healthcare bill last week. Whether they move on to tax reform, take another bite at that healthcare reform apple. The president hosted a reception last night for senators and their spouses at the white house. Sort of a social gathering but also with political overtones. He made some remarks there. I have some special friends up in this room especially, i must tell you, we have the republicans, but even a couple of democrats. A lot of people showed up that people werent expecting, which is a very, very good thing. And i know were all going to make a deal on healthcare. Thats such an easy one. The president suggesting there that healthcare is back on the table. He said its an easy one. You got a sense hes extending an olive branch to democrats saying its a good thing that some democrats came to the white house. This is an administration and president who called some Democratic Leaders losers and clowns over the past several months. He will have to do more olive branch extending. But that kind of reception is the kind of thing that barack obama was criticized in washington for for years of not doing enough of. Lock look at the president s schedule today. 11 00, he will host an opioid and drug listening session, at 3 45, he does a drop by by the womens empowerment panel. Not a lot on the schedule. That suggests that the president is taking time behind the scenes to meet with staff, make phone calls, find out where theyll go on healthcare, if theres an opportunity to revive that or what to do in terms of tax reform. They have not said what this administration would like to do on tax reform. Sean spicer did say this white house is driving the train on that bill. Eamon, thank you, sir. All right. Eamon. Hes not like a robot. Not at all. He knows stuff. Hes a long way. 0011, thats all you have to do if youre a robot. I dont envy robots, i envy sigh borg cyborgs. They get all the benefits of being human. I would like certain things indecembstructibleindestruct . Yeah. Wow. A day after the dow snapped an eightsession losing streak, joining sus mius is michael tyl. And michael farr, ceo after founder of farr, miller in washington, also a cnbc contributor. I dont think michael farr, i never called you mike. Have you . No one does, do they . For all of the other things you called me, joe, mike is fine. He called you mr. Vice president when we were going to run. And mr. President , yes. I was going to pick you. Look who we got, we got pence. You guys were separated at birth. Its like i had the right idea there. With the gray hair. Its still about the hair, joe. Can i call you mike . Youre michael, and ill call Michael Tyler mike. Does that work, mike tyler . Thats fine with me, thanks. Okay. Michael farr, i actually saw you on one of the other shows eventually. You didnt sound really that bullish. Are you bullish now or are you worried about being able to effect all of these things that the market already expects will happen . You know, i think the uptrends in place and people keep trying to call a top that wont happen. It hasnt happened for years. So, yeah, im worried about the level of prices. I think things are expensive. I think that weve been going up on stimulus for years on the fed. Praying well get stimulus now from the congress. Can it come . Will it come . I guess at some point 2018 well see real benefits from tax reform in the economy. But until then i keep waiting for the market to get inpatient and saying were sick of it and were going back tofu fundamental level. Its not happening. So i continue to be cautiously optimistic. But a correction would not bother me at all. I tell you, watching the last eight days, you can watch these different financial websites. I saw this slump is likely to continue. Why it is best to fade the trump trade. They were wrong for 14 . From november 8th, totally wrong, fighting it the whole way, they got less than a 2 selloff, theyre ready to call that they were calling that the top. Just like you said. Which makes me think were not there yet. I dont think youre ever there as long as people are still calling for it. We always seem to get blindsided by these things. I continue to think this is no time to go out and be too aggressive and too speculative. You have to make sure you own companies with real Balance Sheets and earnings. It will happen sooner wraor lat. Maybe were beginning to see it but i think you have to be cautious still. Mike tyler, this was we probably preinterviewed you before all the events of yesterday. In your notes you say growth expectations were moderated after the failure of obama repeal because of what it could mean for tax reform you also think, i guess, staying bullish, right . Absolutely. You know, it seems to me that most if you look at the dollar, if you look at currency markets, bond markets, they retreated substantially back to the levels where they were around the election. That tells us the markets have pretty much discounted any meaningful action out of washington. When you see the stock market Still Holding itself together really well, thats because corporate earnings are strong. Well have a good earnings season now. Were shaping up for a good rest of the year in terms of corporate profits. Thats driving the stock market. I dont see reason to back away from that now. If we get a correction, it will be a shallow one, not difficult for us to get through. Well ride through it. Rnlgt we ha we have a lot of stuff to think about. Mike tyler, around the world you think the growth story or the improved growth story is still intact . We have seen earnings beginning to pick up. As the ecb begins to back away from longterm quantitative easing, it starts helping the european banks, that helps the rest of the european economy. We are seeing demand pick up there as well. Of its own volition. As that happens, i think you will start seeing better returns coming out of europe than youve seen in quite some time. Theyre still cheaper than the u. S. In terms of pe ratios. We think europe does have some life to it. It is beginning to revive. Thats a story that also benefits u. S. Exporters as well. Joe, just quickly. I have to feel more cautious than this. Prices are still near alltime highs. Theres a lot of air under the market. When it goes down from any unforeseen event, there could be a 20 drop out there, no question about it. Iny nthink investors have to b careful. You seem like youre looking at it since 2009. Go back to 1999, took 18 years to double. It felt like this, didnt it . I dont know if theres a huge air pocket like that. You have low Interest Rates, fath fairly moderate inflation, stimulus on the horizon. But we couldnt quite understand why it was going up as much as it was. What was driving it . Because of the fed. Now the fed is actually going to get bailed out hopefully by where the economy actually does take the baton finally. Youre a nervous nelly, worry wart, thats why you have white hair. 40 years old. You went gray at 28, didnt you . I have been gray a long time. But its not in this business. I know. We think youre wise. Joe, one other thing to think about. We have to go. That was a wrap up. I shouldnt have started talking about his hair. Usually they play the music over me. They didnt this time. Keep talking, they will. They will. Thank you mike and michael. Thank you. You bet. Lets talk about stocks to watch. Shares of Vertex Pharmaceuticals are soaring. Its Cystic Fibrosis combination therapy improved lung function in late stage trials. The stock is up 17. Sanofi and regeneron scoring a win as the fda approved a new drug to treat eczema. The therapy could bring in more than 3 billion in annual sales. The fda also approving roches multiple sclerosis drug. The green light puts the drug back on track after a threemonth delay by regulators over manufacturing issues. Meg tirrell has more on the pharma news at the bottom of the hour. New Economic Data out from chi china paints a more worrying picture out of bay sing. We bay jieijin beijing. Well reveal those numbers next. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Kevin, meet yourkeviner. Kevin Kevin Kevin Kevin Kevin Kevin Kevin kevin kevin trusted advice for life. Kevin, hows your mom . Life well planned. See what a Raymond James Financial Advisor can do for you. Welcome back. Important data from china later this week, while our next guest expecting a strong read hes worrying about how big a price beijing is paying by projecting a stable growth. Were joined by leland miller. Lets talk about the official numbers that have been reported. Theyve been pretty good. They have been doing good. When you see manufacturing doing well, people will be bullish on china. Gdp is good. Manufacturing looking good. A few bits and pieces housing data looking good. So china is looking good for us. Thats not what were seeing in the data. What are you seeing . They have been doing everything they can to get this level of stability. What we saw this quarter is manufacturing and commodities cranked up. But we saw a really strongie but its unsustainable. What shows you that . If you look at the sales prices, youre seeing firm metrics go through the roof. We have done a phenomenal performance in goal, steel. Commodities have done fantastic. The Balance Sheets of firms have not gotten better because cash flows have deteriorated. Youre saying this is faux demand created by the government . Its a faux demand. Were seeing the same things in property. Property may have peaked. Commodities may have peaked. A poor performance in the Retail Sector in q1. Theres a lot to be worried about, particularly with the credit environment unsustainable at these low rates. You say things like that, if that is true, its bad news not only for china but the rest of the world. Theyre a big part of the global gdp. Its a major problem for that. And people have gotten complacent on the yuthe yuan. If you have the fed hiking, if you have global inflation looming overhead, the chinese will not keep their rates and not just their normal low rates, but the lowest rates in years this last quarter. What is the Tipping Point . Where does this become more clear publicly rather than through your numbers . Theyll have a hard time keeping up they can also push the stimulus button. The reason people are worried is that theyll just do something to make this go away. She have to do that in the fall. They wont deal with chaos. You have a weird doughnut hole in the spring. In the months coming up, in which the labor market is good enough so they cant stimulate. They probably wont stimulate. At the same time you will see falling growth in some key sectors. Flgs theres a weird potential doughnut hole in the year. If they are thinking about stimulus, are you talking about something that will be a year before we see any real cracks . Thats what they want. They want to put this off until 2018, have the new team in place and deal with this front and center, not before the party congress. Who is buying up these commodities . If you say theres a boom going on, is it the empty cities all over again . Its party that, but its the money ball. Were focusing on this captive ball of capital within china. Weve watched it go to properties, equities bonds. Were seeing its been in property for a long thyme but widespread sales falls. It is moving out of property, should move out of commodities soon. So well see a new destination soon, but that means some of these sectors will fall. It reminds me of a snake its a snake ball thing. Did you see drudge . No. A snake hate a human. No. A man was swallowed by a python. Right now . Big headline . Its not the headline, its in there. Dont look at it now. Youre in the middle of an interview. I sort of want to see this thing. What what happ what happens . Will we see these problems beyond, is it things that shows up in the Global Markets, putting increasing pressure on commodities . It should. Were not looking at this saying the economy will fall off a cliff this year. It wont happen. People have become so complacent because they believe china cannot have anything other than an uber stable 2017. When you see weakness and pressure on outflows, china not announcing immediate stimulus, people will think whats wrong here . People will question their assumptions. You are already seeing shops call for an acceleration of growth into the party congress. Were certainly not seeing that. Thank you very much for joining us. Thank you. Says graphic content. Dont look. Dont look . Indonesia. The guy was missing. Okay. During the commercial break, go to drudge, check it out. Is it work safe . Its horrible. The guy was 25 years old, he vanished from work. They saw this big snake, they got pictures. Hope youre not eating breakfast. Coming up, new work being done on alzheimers and its radically changing the treatment options. A new start up using gene therapy to fix the disease at the dna level. Meg tirrell has a special report next. As we go to break a look at the s p 500 winners and losers. The greatest population shift in Human History is happening before our eyes. Sixty to seventy Million People 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. Will your business be ready when growth presents itself . American express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. 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Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Welcome back. Youre watching squawk box, live from the Nasdaq Market site there times square. Just wait until you see what we have coming up. Good morning. Lets look at the u. S. Equity futures. Looks like things are weaker. A big up day for the markets yesterday. The dow up by 158 points. Right now dow futures down by 38 points. S p down by 3. The nasdaq off by a half point. On the watch list, samsung is set to unveil the galaxy s8. The Company Holding an event in new york today. It is expected to feature design changes and a Voice Assistant named bixby. No word yet on the price. Good name, bixby. More than 5 million americans at this point have alzheimers disease. That number is expected to triple by 2050 if there is not some type of effective intervention. The failure rate in alzheimers Drug Development has been 99. 6 . Meg tirrell is here with a look at new ways that researchers attacking disease in our series mo modern medicine. I heard theres a polygenomic way to test for it. But then what do you do . We dont have any drugs that can help you even if you are predisposed. Just things that improve cognition a bit . There are a few drugs on the market that work on the symptoms and maybe temporarily improve thinking but they dont change the course of the underlying disease. Thats why the drug industry is working hard. But the failure rate on alzheimers is terrible. In the last decade eight drug trials have failed. Merck in february and lily in november. Those trials tested analoid beta. This is one of the biggest controversies in medicine what is driving alzheimers . With each failure you hear whether this is the right thing to be pursuing. Its still the prevailing sentibility in the space. We talked to researchers in the past week. Listen to the different of opinions. All the genes have one thing in common . Excess analodi pop signadeposite brain. None of the pathways have improved patients cognition. Clearly amaloid is a player, is it the only player . Is it the best player for us to target for therapeutics . So the director of the nih there summing up is it the best target . We decided to look at what else is going on on in the field. Voyager therapeutics in boston, they are working on a gene therapy approach to tackling alzheimers. They are a small cap company, before 3 300 million market cap. We wouldnt normally mention such a small company, but this is early investing in new ways of treating alzheimers. They are using viruses to get into the brain and deliver therapies. The cool thing about this approach is that because the vector gets into brain cells, neurons or glea, it sets up shop, with a single injection we can produce antibody for many years. To the protein . Theyre focusing on tau, another important they tau gets implicated in later forms of the disease. First you get the plaque build ups and then the tau tangles, and looking at other jegenes. Tau is not something that results from the protein being broken down . Im not sure how the cascade works, they think there is a cascade. Someone could win a nobel prize for this. If you could definitively prove amaloy is the cause rather than the result of the underlying disease what if its the leftover alzheimers, you would see it all the time but it wouldnt have its an amazing debate going on in medicine. Something people have been pursuing in decades. Weve had no successful trials. Every time theres a failure they say should we step back . We need to treat earlier in the course of disease. You have biogen, roche, ely legally and merck going at it earlier. Is it a question of when you know its there . It builds up years before the onset of alzheimers. Dr. Perry in san antonio says he thinks it might be protective, and by removing it it could be dangerous. Bam but if you go after amyloid, you should be able to go after the disease. What fizz the underlyin abou . Shares are up this morning. They are data that came out on the combination pill for Cystic Fibrosis. They already had two drugs on the market. Shares are up 18 . This combination looked good. Even better than a single drug alone on improving drug function but also on safety. This also sets the stage towards getting a triple combination for Cystic Fibrosis where you could extend treatment to a majority of treatment to patients with cf. Half the patients now dont have a real good treatment. This is not just treating the symptoms going after the underlying genetic causes of whats going on. Meg, thank you. Thank you. When we return, the Biggest Challenges ahead for the next generation of Business Leaders. Well talk to the dean of Duke University business school. Tax reform is in the news. Well talk about that and the implication of repeal or not of obamaca obamacare. And later, senator rob portman will tell us whether there will be a bipartisan tax bill that could get through the senate. Time for the executive edge. The uk will invoke article 50 today and start the Brexit Process. Wilfred frost has more on what this exactly means. A signed letter from theresa may invoking article 50 will be handed to donald tusk, the president of the European Council by sir tim barron, the British Ambassador to the eu at 7 20 a. M. Eastern time today. The key provision is in the absence of a unanimous agreement to extend negotiations by all 28 eu members, a country activating the clause will leave the block two years after notification, that means britain will be out of the European Union by april 2019. A twoyear period to settle divorce terms may seem like term but the deal will require a super qualified majority of the 27 remaining eu countries and of the Eu Parliament or a 72 vote of the states representing 65 of the population. And any new comprehensive forward looking trade deal would have to be separate and require unanimous votes. What to look for . Financial onably cases. Number two, changes to freedom of movement laws. Number three, with that, rights for expatriate citizens, whether in the uk or in the eu. Number four, trade terms. In particular for the allimportant financial sector. Number five, time frame for the new agreement after april 2019, will the uk fall off the cliff or an extended period of time. Most of todays ceremonial actions may have already been priced in. Guys . Thank you for that. Thank you for helping us understand what it means. Pleasure as always. Coming up, the Biggest Challenges ahead for the next generation of Business Leaders might not be the same challenges as have been in the past. And got a special guest, bill boulding joining us next. Hes the dean whoa, really . Of Duke University . Of duke . I wonder if he brought me any generic Early Admission letters . We will talk to him. See if he has pull at the undergraduate school as well. And as we head to break, a quick check on whats happening in the european markets right now. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track. And thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed. Daniel you need to cool your brakes. Understood. Brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. It is prom season. Many viewers know my daughter from when she was this big. Its gotten to the point now where people get something called a prom poposal . I did not know about this. I didnt hear about it. I didnt. I knew about it. You knew about it. Yeah. People do a big thing. Like they surprise the person theyre going to ask with well, check this out. This kid, hes a great kid, paul, came over in the back of his suv, has a disco ball, has a prom question mark, flowers involved, steamers coming down. Really i would have failed miserably. If i had well done. This would add so much extra anxiety. Blake looks beautiful. I want to see the other picture. Can we see the last picture . She looks gorgeous. Youre right, seeing her for the first time as a teeny baby, there she is. You know, it was very weird. I have not cleaned my gun, seriously, in months. The kid shows up, there i am. What timing. Yeah. Coincidence. Who would have thought. You actually contributed to this. There are some guidelines. A friend sent me this picture, now that i have a daughter. These are important rules for dating my daughter. Got to have a job. Got to have a job. Understand i do like paul. That didnt hes a good kid. You hurt her, i will hurt you. Be home 30 minutes early. Get a lawyer. Shes my princess lets skip the last few. I think i will do you what you do to her. You make her cry, i make you cry. This is not long. This seems last week, we were holding up a 3monthold she was here. Then a promposal. You never heard of that . No. I had such a hard time picking up the telephone to get the date. What happens if they say no . I would have to prewire the whole thing. You know what happens at the same time the prom goes on . Youre looking at colleges. One of the best colleges around . Yeah. To look at . Duke wow. Duke this is a segue. This is a segue. This is a business school. Got to have some pull at the undergrad he probably does. Our next guest says the intersection of business and politics is the next biggest challenge for executives. Bill boulding is dean of the business school. Good morning. Good morning. Did you know about a promposal . I did not. But congratulations to your daughter. You mean youll do something . Oh, congratulations on the tal just Business Leadership and particularly activism. We can get some stuff thats going on in North Carolina and the politics of that. Which i want to talk to you about, as well. But in terms of what youre seeing in terms of how ceos are reacting to the sort of wave of activism, has it changed over the past year or two . I think it has changed. And, youre seeing this collision between the worlds of politics and business. Part of it is that business has been in the crosshairs. Im sure it has not gone unnoticed that business has been demonized in the political world. But at the same time, there are political actions that have been taken that have caused khosts to jump in ways they have not done in the past. It used to be the reason why you would get involved in a political issue was it had a district impact on your business so we call that lobbying. Right. But now there are things that are happening because the political world is so divided, that divisiveness is carrying over into areas that affect businesses in terms of what i call the indirect impacts on employee morale and so on. Let me ask you about that. There seems to be oftentimes two different constituencies. Which is that the ceo has to look out for the customers on one end, by the way, which have oftentimes have very different politics. And then employees, which sometimes, the politics may be more similar. Im thinking of Tech Companies. A tech Company Might feel they have to Say Something on behalf of their employees, but then the ramifications may be different for the customers. Yes. Or vice versa. Yes. So the question of do you weigh in on an issue is very complicated. Because there are these different stake holders where you kind of have to make judgments about how people react. But i think if you ask a question, when do people weigh in, it is because fundamentally they believe that there is a threat to their longterm business model. So the Tech Companies weighed in on executive order, immigration, why . Because they understand that innovation is the key to the longterm success, and the key to innovation is to bring people together with different backgrounds. And so, theyre thinking about, we need to be able to protect the idea of having access to the best and brightest talent from wherever we are, wherever they come from in the world. So youre thinking about the longterm implications of talent. Because over the long term, talent is even if you say anything political these days, im thinking of the ceo of under armour just a couple weeks ago made a comment and steph curry who was one of his sponsors then came out on the other side, i mean, so its its very dangerous to some degree. But at the same time theres an authenticity thing, and everybody wants so, i mean, going from steph curry to the nba. Right. One of the things that has been very prominent in my home state is house bill 2, and im sure it has not escaped anyones notice that the nba pulled their allstar game from North Carolina. Yeah. So in talking to adam silver about that. Why did you do that . He essentially said, look, if you ask the question, is house bill two consistent with our values, is it consistent with the values that we promote within the nba, within our employees, is it consistent with the values of our customer base, his answer was no. And as a consequence, they took this action, because the feeling is, if you are leading the company and youre talking about the importance of diversity and inclusion but then you say im on the sidelines on this issue then the question is, well how many how many times will you onnen the sidelines and how genuine are these values that youre espousing. Complicated. Very complicated. Are there times when you would actually tell somebody like an adam silver, dont speak up . There are times. I mean, so ill give an example of where we saw this very interesting phenomenon where the thing that i think is critical that the Business Community brings thats lost in the political world is the Business Community knows how to bring people together with common purpose. And we seem to have lost that on the political side of things, where theres so much divisiveness. So how do we bring people together . How do we work with the same common purpose . And so, we saw this example, this is more of a political example, where you get yourself in trouble. But the most respected institution that we have in this country is actually the military. Right . Why is it the most respected institution . No one questions their purpose. That they represent all of us. And so what we saw was different generals getting involved in the political conventions. And we saw the former chairman of the joint chiefs of staff, who happened to be now and he weighed in and said, dont do this. Youre undermining the ability of our military to retain respect and sense of independence, and so, dont weigh in to these issues. Stay out of the political arena, because if you if you do jump in, then youre going to harm your longterm success. What about supporting a political candidate . So one of the things that happened this time around was you had people more vocal than normal. Yes. Supporting a political candidate, i think, is really complicated. Which is, in my opinion, and this is just an opinion, its fine to do that personally, and all of us should weigh in in the political world with your own beliefs. But to but to represent your company, understand that you will represent your company in whatever you say personally, and publicly, and thats where things get complicated. Because reality is, your company is going to have democrats, its going to have prurepublicans, i going to have people of all different religions, race, genders, sexual identities and if you take actions that make people feel like youre ignoring some of us. Right. Or youre diminishing some of us then thats when you lose the ability to have people make a donation, it becomes public, complicated issue. Appreciate it. Come back. Okay. Youre in new york a lot. Im here all the time. Wed love to see you. Thank you. We need to talk to you as it gets closer. Look it up were going to step off the set right now and have a little talk. Yeah. Thank you for joining us. Thanks. Appreciate it. When we come back, the prospects for tax reform and what it means for the markets. Were going to talk to texas congressman Roger Williams about his tax plan which is called jumpstart america. Also later senator rob portman will tell us what it will take to get a bipartisan tax bill through the senate. Stick around, squawk box will be right back. Ack. Markets snap back. The dow breaks its eightday losing streak and financials lead the way. What you should be watching in todays trading session is straight ahead. The rise of the machine. Blackrock overhauls itzhakively managed equities business, cutting employees. They go high tech. More on this story in just a few minutes. And jumpstarting america. Congressman Roger Williams joins us with his plan on tax reform for Small Business. 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, welcome back to squawk box right here on cnbc. Were live at the Nasdaq Marketsite in times square. Im Andrew Ross Sorkin along with becky quick and joe kernen. Dow off about 25 points, s p off about 2. 5 points and nasdaq looks like it would open up slightly to the upset. Lets get you caught up with some of the mornings headlines. The Brexit Process officially has begun. Prime minister theresa may has signed article 50 formally triggering the process of britains departure from the European Union. The official letter will be delivered to the European Council just a couple of minutes from now. Also black rock has announced a significant revamp of its equities business. It will slash fees, cut some jobs, and this is probably the most interesting part of it, theyre going to start using computers to pick stocks. Blackrock is trying to boost the performance of itzhakive management business and is looking to ai and robots to help them. And President Trump thinks a deal on Health Care Reform can now be reached. Despite last weeks events which resulted in that proposed bill being pulled. He told a group of senators that he thinks a deal will happen, quote, very quickly. He did not give specifics on how he thought differences within the Republican Party might be ironed out. But that clearly moved the market yesterday on expectations that maybe the deal was back on the table. On todays economic agenda, the february pending home sales are out at 10 00 a. M. Eastern. Chicago fed president charles evans, boston fed president Eric Rosengren and John Williams will all be speaking today. In an interview on cnbc yesterday Steve Liesman asked if the predicted 2 hikes this year is about right or if the market should prepare for something else. That seems to me about right, that is to say, as well. But yes you have to be you know for sure that you dont get everything right, particularly about the future. And you need to think about what happens if the economy is growing more slowly, the economy is growing faster. Fischer said the feds current outlook has not changed very much from the march meeting. Over the course of march weve seen a lot of favorable stock sectors and Industry Groups show signs of weakness, and one of them is potentially could be trump rally related. By the dip shopping list. Dom . Andrew a lot of the sectors, the transportation stocks and infrastructure plays have taken a big beating as weve seen markets take a little bit of a rollover. But, are there people stepping up to buy some of these beaten down sectors . You can see here with the s p 500, since trump got elected up about 10 , but then kind of maybe flattening out over towards the last month or so here. So we decided to take a look at the s p 500 and look for the stock that perhaps shows signs of at least strength on some of this recent weakness. We looked at the s p 500, we looked at which stocks of those had negative monthtodate performance so far in march and then which ones just over the past week since the whole turmoil happened last tuesday have shown some signs of relative strength. About 50 stocks passed the screens. But there are some real themes that have developed here. Ill bring in a couple of these stocks to give you an idea of whats going on. First of all, youve got some big names out there in terms of the overall schemes of transportation, norfolk southern, some rail companies. That might be shortcoming. But it could be fundamental buying. Keybank, Regional Bank and other financials showing signs of strength over the last week or so. Keybank up about 3 . Retail, maybe trump, maybe not trump related but some beaten down retailers like gap stores up 3. 5 , as well. And then, three of the best performing stocks in the s p over the past week are airlines related. United, continental leading that list up by nearly 8 . Joe, as we talk about the trump train and whether or not it is still intact some of these sectors may be key barometers for whether the markets will be going higher, especially if some of these sectors continue to do well. Its got to be, you know, the eight session losing streak its going to take more than that to derail the notion of a trump train. Dom came right back yesterday. Do you just real quick. We dont want to dwell on march madness anymore. Obviously. But you had kentucky didnt you . So you need nobodys got South Carolina i dont think. Or oregon. So you could still win if there if one of them win. No. You have North Carolina. I can still i think brian steele has more points, so even if North Carolina wins i think hed be first, maybe id be second. I think what it comes down to is if North Carolina wins, somebody in the Nbc Universal family is going to win that tv newsers pool. Thats good. Most likely going to be a cnbc person. I think it will be brian steele. But if South Carolina wins you still cant win. I dont think i can win. I have no more ability to garner any kind of points whatsoever. North Carolina Guys still do. I dont know about myself. Well, not that it will completely make up for that but you do have a new daughter. A baby. So that cushions the blow of not winning. It does make up for it. And yes, i say a small way to be facetious, but it consumes me right now, my daughter. Unbelievable, isnt it . Its fantastic. Youve got to give me parenting tips. I know youve got a daughter. Tell me how to do this thing. Youll be, you know, interviewing possible prom dates some day, as well. It will come before you know it. You know what . You do diapers, joe . Did i . I did you mean oh, with the im fine. At this point. You know, whatever that stuff is called. Depends . Its not easy to make it three hours here. That would help. No i did those. I changed a couple of poopy diapers, did you . Yeah, thats whats going on in my house. Do you change any . Are you kidding . I changed 40 a day. I know, i know, i know. On the baby. Yes. Okay. Its always something, isnt it . Sam . I know, joining us to put the market in perspective sam stovall chief investment chat gist at cfra. Sam, as of yesterday, the day before, we thought health care was done and you said you were glad because it was quicksand. Someone talking and trying to do that and people really want tax reform so were actually happy that maybe its back on the table now. Would that be a negative for you . Its back on the table . Well i think really that the market wants to look if something is going to stimulate the economy, there its infrastructure spending, tax reform, repatriation of foreign earnings, et cetera, thats what the markets are really looking for and are building into valuations, equity price movements, et cetera. So my feeling is, lets really give reasons to support these valuations. If you look forward, you look backwards, you look at operating results, we are trading at very expensive levels. And unfortunately, all weve been seeing so far this year is earnings estimates come down for 2017 and 2018. So, i really think we need to see some sort of justification for the hype. I almost wonder, look, its maybe read into it too much when were looking at daytoday moves. Talking about 150 points or something. To me its almost a gauge of how effective this administration is going to be in being able to get anything through the congress. And i guess my question is, is that what the market wants at this point . Just something to pass through. For years and years weve talked about how a donothing congress was a good thing, the market sees it in a good way. Are we past that . No i dont think so. First of all historically a donothing congress has been good for bonds but bad for stocks. Traditionally before the Obama Administration the average price gain was only 3. 5 whenever we had a split congress. Which was the worst performing scenario of executive and legislative branches. Mainly because nothing gets done, theres no leadership whatsoever. The opposite of pro is con, the opposite of progress is congress, thats what always comes up. I like that. I hadnt heard that. The opposite of progress was congress. Yes. So thats the worry right now. Is that because they still have a sequestration mindset, that the possibility is that theyre not going to allow for any additional expenditures unless you have cuts along the way, and what legislator wants to go back to their constituents to say, good news, i just lost you some jobs. Is there anything that if i say true or false, this statement, were in a goldilocks environment right now in terms of Interest Rates, and the dollar, and inflation, and increasing global growth, is there something wrong with that statement . No. Nothing wrong with that statement. Its like goldilocks, not too hot, not too cold. Right, right. And its usually that you then start to say to yourself, well what can go wrong . Because goldilocks cant stay forever. That was the next question. Do you have anything . Is it well, i is it brexit, or italeave, or grexit or Something Like that . Right, or whether greece is a fait accompli. So, yeah, i think you do have to worry about europe. But i think that weve been worrying about europe for more than a year at this point, and so, thats pretty much built into the markets. Maybe were embracing a scarlet ohara mindset where were saying fidelitydy ill worry about that tomorrow. So its the unanticipated events europe has another leg to go down . Who did we have on yesterday saying if you have any money on the sideline, wouldnt invest in the united states, would invest in europe. Im actually saying it from a worry perspective weve got a lot with europe in particular, and internationally in general. But i think thats where most of the attractiveness is. You look to earnings growth, you look to valuations, dividend yield, things look so much more attractive internationally on a rolling tenyear basis, the mscie is rivalling its alltime low of february 2009. And on a rolling fiveyear relative strength basis, the efa and emerging markets are trading at excessive lows relative to the u. S. Thats where youre looking . Yes. At Cfra Research we have an overweight recommendation internationally. Mainly because of that we think that the dollar appreciated well too much in the Fourth Quarter up more than 25 . Our expectations, weve already been seeing a decline in the First Quarter, thats going to continue in the second quarter. You are a i like the tie. Yep. Nehlenburg college. Alumni but not the most distinguished and most famous and most successful graduate. Someone related to you, im sure. Nick yogan. Our boss. Cool, all right. You are youre like second, a distant second. Ill just try harder, thats all. You just have to try a little bit harder. Thanks, joe. Like that tie. Yeah. Coming up, Financial Services committee member, congressman Roger Williams. That was roger miller. I was going to play that song. Aint got no thats not Roger Williams. Thats a different guy. Anyway, roger not roger miller. Roger Williams Joins us after the break to talk taxes and Small Business. Then later, rise of the atms. Not just at blackrock. Ebold owns nearly 40 of the atm market globally. These are what you think of with atms. Companies looking to build on that market share. Banking and security with the companys ceo in just a moment. Stay tuned youre watching squawk box on cnbc direct from squawk square here in new york. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back, everybody. Investors staying optimistic about some of President Trumps key proposals that won him the white house. Particularly, tax reform. Our next guest has been working on a plan to try and save Small Business. His jumpstart america plan would lower the Corporate Income tax by 20 . Bring down Capital Gains and dividends rates to 15 . And allow companies to repatriate cash with a tax of 5 . He also wants to allow 100 depreciation of fixed assets and preserve last in first out accounting. All of which he says will benefit Small Businesses. Joining us right now is congressman Roger Williams a member of the house Financial Services committee. Sir, thank you for joining us this morning. Thank you. Good to be on the show. Why dont we talk about your experience, your background, and why that brought you to this tax plan. You are somebody who is a Small Business owner himself. I am a Small Business owner in texas. Ive been in business almost 45 years. Been through a lot of things from dollar gasoline to 20 interest and i can tell you, since september of 08 with the obama economy, its been really hard for main street. And weve got to send main street a message that allows them to begin to make money, take risk, get reward. And the government needs to understand main street america can cash flow our country. The government needs to make government smaller, less to pay for as opposed to continuing to take taxes away, raise taxes. Thats not a good message to spend Small Business. We have seen Small Business optimism rise pretty significantly since the election and i think you can probably tie that back to the idea that many in the marketplace think that tax reform is going to get pushed through this congress. However, weve seen how difficult that can be with health care. With the policy bill that came through, and i guess i wonder what makes you optimistic that you can find more Common Ground on the tax bill than was found in the Health Care Bill . Well i think when you talk about tax reform its a little bit easier for people to understand than health care and i think we see that the main street america is ready to go. I mean half the payroll, half the workforce is generated by Small Businesses. This promise President Trump wants to deliver on, its a promise i want to deliver on and we need to get it going now, because the economy is frankly ready to explode. If we get real tax reform, that lets Small Businesses take risk, and get rewards, look if Small Businesses make money, they hire people, they buy equipment, they generate income. We put more people in the market. We create more taxpayers and thats what we need to do and thats what we do with my program jumpstart america. Thats certainly something that would find a welcome audience to a lot of our viewers. Many of whom are entrepreneurs and Small Business owners. However, youre going to have a hard time, i think, selling this to some not just on the other side of the aisle but some in our own party when you start looking at ways to pay for this. We had Grover Norquist who joined us earlier this week and said because Health Care Reform got shot down that means a trillion dollars of potential savings that would have gone into tax reform, by his estimate, that took us from a 20 potential rate on businesses to 28 just by not having those savings. How do you prepare to pay for these . Well, i will say, first of all, grover has blessed this plan, so hes a good friend of mine. But look, to pay for necessary doesnt come from ideas like a border tax. The pay for needs to come via Small Businesses hiring people, creating more taxpayers, and then all of us out there getting serious about cutting expenses and making government smaller. We just sometimes people dont realize the nower that Small Business has to create jobs, and to create income, and create taxpayers, by turning them loose. So when you talk about payfors, its not necessarily border tax or an idea like that. Its getting government smaller, and letting Small Business cash flow america. Again, what youre talking about is dynamic scoring and there are certainly people within the administration, too, including the treasury secretary, who have told us that they have a lot of people working on their own ideas about dynamic scoring. Have you talked to other people within your party, though, and is there a agreement within republicans to do Something Like dynamic scoring to get you there . I think when you start scoring, dynamic scoring is the way to go. But i must tell you being a Small Business person they use terms up here that we dont use in business. Nobody uses revenue neutral in business. They dont say were going to be revenue neutral to their shareholders. They dont say were going to be revenue neutral to their employees. They say were going to grow and we grow this economy by not worrying about terms like static and dynamic and revenue neutral. Lets turn the greatest asset that we have, main street america, loose and let all of us in government make government smaller. Sir, lets talk a little bit more about your own history. I mean the reason you feel so strongly about tax reform is when you came in to being a Small Business owner it was because your father has passed away. The irs showed up pretty quickly at your doorstep, right . They did. We have a family owned business, operated by three generations. When my father passed away, in 1990, i was one of those that we had some assets he left me, i was the only child, but we had no cash. The irs was in the office three days later wanting their taxes and back then, a 600,000 threshold, 55 tax, i didnt have the money. So we were able to make a deal with the irs to pay them out over about 20 years. Which is just wrong. So part of our plan is to do away with inheritance tax and let people pass net worth onto their families, rather than lose the family business, and continue to create more taxpayers and more job opportunity. Weve had judd gregg, the former senator who joined us earlier this week and talked a little bit about it, he said the only way he thinks that you actually get things through is by basically stepping on everybodys toes like was done back in 1986 which there are no sacred cows. Seriously looking at cutting back there would be no more things like charitable deductions, mortgage interest deductions, in the tax bill. Do you agree with a plan like that that would basically inflict pain on everybody all the way around . Well we talk about loopholes. But i think we need to talk about cash flow before we talk about loopholes. When you Start Talking about doing away with charitable giving, and Home Mortgage deductions, that goes to the very heart of main street america. Yeah. And Small Business owners and people. So, i think theres other ways to do it. Like cutting the size of government. And, quit spending and addressing what nobody wants to talk to, about the entitlements. The entitlements themselves, though, that is obviously a huge issue. And youre right, nobody wants to talk about them, including the president , who has said he is not going to cut some of these issues. Is that a place you see eyetoeye with him or sounds like you have a slightly different perspective on that. I aagree with President Trump on everything. Hes a businessman, too. But nobody really wants to address that. I mean im one of those that wants to do away with the department of education and other areas and drive it down to the states. But at the same time that doesnt get us to the number of the debt. So weve got to begin the cash flow. Who do we ask to cash flow our country . Small business owners. Lets get them hiring people. Lets get them taking risk. And then lets get serious up here about cutting expenses. Congressman, quick question about the irs, given your interaction with them years ago. The trump budget calls for reducing the budget of the irs. It was a fascinating piece in the paper yesterday that talked about for every additional dollar thats spent at the irs, this is something Steve Mnuchin talked about, theres actually 4 of additional revenue thats brought in and on the enforcement side, up to 10 of additional revenue. Would you in favor of more funding for the irs, or less . Well, no, im one of those that would love to do away with the irs. Its a rogue agency that is deals, scares the heck out of the people. People are scared to death of the irs. So thats the whole thing from the government, im here to help you. The fact of the matter is the irs along with some other agencies should be downsized and basically made a Collection Agency. But theres typically Something Like 450 billion in terms of a gap that people dont that is not captured by the government, even though we should be getting that. What do you do about that part of it . Well, i mean, look, we need to capture whats needed. But we dont need to capture whats not needed. The irs does a pretty good job of going after people that really have done nothing wrong, and so forth. So they need to have the rules rewritten, they need to be smaller, they need to be a agency that people dont fear, and just like i said, be a Collection Agency and collect what were due and not what were not due. Congressman, great to have you on the program. Hope to see you again soon. When we return, blackrock is putting machines before people. Were going to take a closer look at that move straight ahead. And then President Trump promising to slash any jobkilling regulation from the Obama Administration. Were going to talk to the founder of Economic Consulting firm money strong. Danielle demartino booth is going to join us. at corning, i test smart glass that goes all over the world. But theres no place like home. Theres always Something Different to do like skiing in the winter, jet skiing in the summer. We can do everything. New york state is filled with bright minds like samanthas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Search for our page, at crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. Usaa gives me the and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. Say hello to at ts best, unlimited data deal ever. Its a total gamechanger. So now the whole family can binge,. Surf, shop, navigate, listen, game, stream and more. All without the hassle of worrying about overages. Or running out of data. Its less than 40 per line per month with 4 lines. And remember, its at ts best, unlimited data deal ever. So get at t, get unlimited and get everyone more for less. With e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com it is official. British ambassador tim barrow has delivered a signed letter from uk Prime Minister theresa may to the president of the European Council. That letter and the acceptance of it actually triggers article 50 and officially launches a brexit. The talks between the uk and the eu will now begin. They can take as long as two years. Right now in london Prime Minister may is making a statement to parliament. A bit later this hour well have the European Council president donald tusk making a statement in brussels. Among the other stories front and center this morning, Mortgage Applications falling 0. 8 last week despite a drop in Mortgage Rates. New purchase applications did rise but refinancing activity fell. The average 30 year Mortgage Rate declined to 4. 33 . Buzzfeed is reportedly making plans to go public in 2018. Thats according to ax yoes quoting industry sources that comes in contrast to competitors like vice which want to sell themselves. We should mention that our Parent Company comcast is an investor in buzzfeed. And a proposed merger between germanys deutsche bourse and the London Stock Exchange has been rejected. They say the combination would create a monopoly in fixed income clearing and the two exchanges did not offer sufficient concessions to resolve those concerns. Andrew. And blackrock laying off 13 of its Portfolio Managers. More expected to exit as the investment manager turns toward low fee Computer Generated portfolio management. Leslie pickard joins us with that. Gone are the days of oldfashioned stock pickers and enter the machines that may be the takeaway from blackrocks plan to overhaul a big part of its Asset Management strategy. Blackrock is taking traditional investing methods, but fusing them with technology, and data science, and in doing so the firm will be cutting its fees in half. Its perhaps the most aggressive repudiation of the traditional stock picking by a major asset manager to date. And a direct response to criticism from clients across the industry about high fees, and underperformance among fundamental stock pickers. U. S. Based actively managed equity funds experienced record withdrawals last year, with much of that capital flowing into passive investments such as etfs and index funds. Blackrock is known for their etfs with more than 1 trillion in assets. But active equity investing still contributes 16 of the firms revenue. The new strategy impacts about 3 billion worth of blackrock assets and as part of the revamp, blackrock is introducing what they call advantage products which gives Retail Investors access to their Quantitative Investment team. Now seven out of 53 active Fund Managers will be leaving their posts as a result according to a person with knowledge of the matter. With dozens more employees expected to depart. Guys . So, but how are what when we talk about the computers taking over, are we talking about some of the stuff that you talk about Renaissance Technologies earlier. Which i was always under the impression, basically a big firm trying to pick a penny here, a penny there. Is that what were talking about . Thats exactly what were talking about. Were talking about a mixture of quantitative. A mixture of data science. A mixture of fundamental stock picking. Now the difference here is that they will be in mutual funds. Retail investors will get access to this where at a Renaissance Technology its more on the highly qualified investor side of things. Becky made the point you still need somebody to tell the computer what to do. Exactly. Somebodys got to build the algorithm to make this happen. Are there other people being employed . Are they hiring new people . They have not said theyre going to hire new people to employ these strategies. They did say they would invest in technology but i think their plan as of now, at least whats stated, is to redeploy the people that are currently there, toward this new strategy of utilizing the technology. Okay. Thank you. Thank you. So, yoegen didnt go to moulinberg. That is kind of fake news. Kind of fake news. He went to muskingom. Which is in a better state, in ohio. They had another hero other than nick yogen grat outed. John glenn. John glenn. So its actually better. I wouldnt have been able to bring it up and suck up to yogen if i didnt make the mistake with moulinberg. Although its still, you know, yogen getting his name out there. Exactly. And now we got the right college and i think its all good. Alumni hall of fame. The trump administrations committed to reshaping americas Business Environment with progrowth policies. Joining us now to discuss the deregulation effort Danielle Dimartino booth, founder, money strong founder, author, and former adviser to Richard Fischer at the dallas fed and we think of you and your book, mainly concerning the fed. Well talk deregulation. But just one initial point on the fed. On monday, we said that weve got ten fed heads speaking this week. And i was like, will there come a day where i dont have to say that . Where were talking about underlying business fundamentals. And theyre there. Theyre there watching price stability. Whether they need to do something occasionally. To get back, you know, to get the balance back. Yep. But theyre not every part of our life theyre involved with. No. Is the day coming . One of the favorite things ive heard in the last few years came out of Portfolio Manager who said i wish we could go back to the days that i didnt have the names of all the central bankers memorized. I know. And where they could just go back into the background. It creates so much noise, and confusion for the markets. Is it going to be two . Is it going to be three . It really i think the fed has come to a point that they could use a spokesperson. One person. And that that would help them be a lot less confusing for investors. Its a weird sort of a, i guess its a sort of a its not a democracy. We know that the chairwoman or chairman is the person that decides. And yet they all get to, sometimes i think theyre working this, too. Theyre Good Cop Bad Cop and im going to say this. Because were partly responsible. I know. Because we say please tell us what youre thinking so we can try and divine whats being thought around the table. And its so compelling that our ratings just surge whenever we take one of those guys speaking. It does so well for us. We claim we want the transparency and then we claim we dont. Well, it was interesting, because bernanke came in saying that he was going to increase transparency, and you ended up with the exact opposite of that during his reign. He actually became, as a factor of time, more iron fisted than allen green fan himself if you go back and read the transcri transcripts. He was very much opposed to defense. Any insight into when or who or will trump make an imprint on the Federal Reserve . You know, look, i think one of the most disturbing things about the beginning of this administration is how very little weve heard about how trump and his Administration May or may not reshape the fed. But dont you think, i mean, during the campaign he made certain comments about janet yellen, and toward the end. Towards the beginning he made opposite types of comments. I think somebody has whispered in his ear to say ixnay, dont talk about the fed. Mnuchin was very balanced in his comments about yellen in his most recent interview. I found that to be telling. If there were comments it would just upset the markets . Look, i think after the failed legislation from last week, that theres bound to be some element of paranoia in the administration. That theyre going to have to pick and choose their battles. And if theyre not going to be able to push through whatever legislation they choose to push through, then theyre going to have to have an eye on what the borrowing costs of the country are. Its just a matter of reality. You really think someone could ask President Trump, would you just cool it hes never tweeted a word about the fed. Its like somebody took his index finger away from him. I think also the other he wants lower rates. Right. He said it. Im a debt guy. But hes saying he wants higher rates but he hasnt worried about ruffling feathers in other well hes been very quiet about this. He has. But who knows why. Okay, so as far as deregulation goes. Yes, we do need it. Yes. And your view is that that has been a one of the reasons that job growth even though were at 4 and change, maybe the wage growth look at selfemployment. Its literally crashed over the past decade. We just had the congressman from texas speaking a few minutes ago, i really appreciated a lot of the things that he had to say about the need for Small Business owners to feel like they can grow and expand their payrolls again. Its needed. The problem is, when you start looking at that, look, there are so many if we had all 535 Congress People on our air, theyd probably give us 535 different tax plans. Are they going to be able to get things together and actually agree on one . And thats what the market is kind of waiting to see. I think thats a fair question. It was interesting that he said that Health Care Legislation was complicated. This is pretty complicated, too. Youre talking about one large group of lobbyists when it comes to health care regulation. When youre talking about tax reform youre talking about everybody. Thats a lot of special interest groups. Given its value of a trillion dollars over ten years . You know in texas where i live its not very popular. I mean the amount of commerce that goes on across the border, there was a really interesting picture out recently of what the supply chain that compromised a boeing 787 and all the different places in the world that sourced this one product. So i think they need to be really careful about it. Especially given how much more rapidly retail is in the decline than had been anticipated. You had a guest on a few mornings ago that basically said this is going to happen a lot more quickly than people realize. This is a day that not one, not two, but three companies basically raised the red flag about potentially bankruptcy. So the promise of trump, the deregulation promise, whats still left, what has he done thats good so far . Well, theres a lot more red tape yet to be cut. And again, you know, i wrote about this last week for cnbc. Its not just a matter of executive orders. I think hes going to have to stand and deliver when it comes to also proving that he can push legislation but doddfrank hes got to do something with . Well, look, the number of the number of banks has decreased by about 15 . Since doddfrank. And the accessibility to small banks to Community Banks has decreased for 40 of americans. Its a big number. And clearly theres too much regulation out there for your small, midsize banks. And thats really impinged access to credit. So he cant the theres a lot of regulation that was put on the last eight years. Can he use can he just reverse it with economic or with executive with a pen . Or does he have to he cant do it . Look at the newspapers. Theyre already saying oh, the lawyers dont know how elegantly and simply, you cant just flip a switch and make it all go away. Questioned. Thats going to be probably challenged. Some of the environmental stuff from yesterday will be challenged in court. Thats the thing. You get all the lawyers involved. Right. All right. Thank you. Thanks. Good to see you. All right coming up, the atm experience is about to get even easier. A new feature to help you stay connected to your cash. I thought even these were going away, what do you us benmo. The ceo of diebold is here to explain. Squawk box will be right back. Welcome back to squawk box, everybody. This is cnbc. And we are live from the Nasdaq Marketsite in times square. Lets take a look at the futures this morning after a rally day for the markets yesterday, some givebacks this morning. Dow futures down about 24 points below value. S p futures just over 2. 5 points and the nasdaq down by half a point right now. Okay, diebold is pushing the boundaries for connecting commerce. With more on the extreme atm, a new machine and other automation initiatives, andy mattes, the ceo. Good morning. Good morning. So what is the extreme atm. Its a combination of digital, with physical, in a very small what do you mean . You combine your cash. Right. With your mobile phones. Right. With your mobile apps and you do that in a footprint thats as small as 1. 5 times the size were showing one of these machines here. So you would go up to this machine here, you would, what . You wouldnt use a card . Theres no card. Theres no card reader in this thing. Correct. And its going to use my fingerprint, its going to use my phone or how does it work . You identify yourself with your smartphone. You can swipe your phone. You can identify yourself with a biometric, a fingerprint. It recognizes you. It has a personalized interface thats special to you and then you can perform any transaction that you prestaged on your phone or you want to do there right on the screen. Okay. What about what we were talking about before the break, joe was making a joke about venmo but its not a joke, i carry, i will tell people this in case they want to mug me on the street. I carry no cash. Zero cash. Nothing to get. I dont have a dollar. There are other reasons that you do that. Because im cheap. Right. I dont have any but no but these days, in a taxi you can use the atm. Let me get the check, like an alligator. But what do you do what does a company like yours does in a cashless world . Well, a lot of people saying that death of cash is imminent. But it sure is not happening any time soon. If you take a look at the number of u. S. Dollars still in circulation, theyre actually up 60 over the last 13 years. We track the number of atm withdrawals. We correlated the curve, 15 over 16 and it spikes every other week. When people get their paychecks. And theres no change in the amount the average u. S. Household goes to the machine every other week to pick up money. Is there any demographic number on that, im curious, dare i say the milan yams. Do millennials use the atm machine as much or more than their parents . Interesting enough, they have a higher likelihood of using cash than any other age group. Really . But it has a lot to do with the fact that they dont get credit and they dont carry credit cards. All of us probably went through that at that age, too. And the other question i was going to ask, what are these machines going to start doing more and more . Not just about getting cash but getting other things . I know theres some machines now you get stamps and things like that, at what point does it explode into other items . We can automate just about everything in a retail bank but a note rised signature. You can do loan, you can do inquiries, you can do stock picking, you can connect the machine to any channel there is. How much does it cost to buy one of these machines . Its about 20, 30 grand. 20, 30 grand, and using it it replaces how many people in a bank . It can easily replace the work that the teller does, and theres around about 500,000 tellers in our country. And theres around about 3 or 4 million cashier clerks in our country. Do you expect them, not all of them to lose their jobs, you look out five years and what do you think happens . I think that the teller in a branch is going to go the same way that the ticket agents went at an airline. And whats going to happen to the branch itself . Because i know you look around new york City Real Estate and theres a bank virtually on every corner. The banks are getting smaller. The interesting thing is you ask people why they bank with the institute that theyre with, its always proximity to their home or proximity to the office. So the banks cannot leave the neighborhood. But they want to do that at a very small, very efficient foot print, ideally you do a branch in a box, in a machine, and the machine in a Retail Outlet in a store. What do you think . I like using atms. I was actually thinking, are you youve seen the guys tie the rope around and pull the whole machine out and steal that. Have you seen you have the strangest mind. Have you seen you know, you cant do that with a diebold machine, can you . No, theyve got pole set about a foot long into the ground. Weve its a constant race against the bad guys. Its amazing. In brazil they like to put a stick of dynamite into the dispense slot because its so easy to get to. We developed a machine where the upper part would explode, but the safe would stay intact. So you guys youre kidding me. Youre staying one step ahead of the bad guys. Thats exactly the race were in every day. What about the security, though . Did we ever talk about this. Someone had skimmed my card. You know about skimming . Oh, yes. A 2 billion problem. They put a thing inside where you put your card in. Oh, and it steals your number. They steal the number and they took out money, in israel they were taking out money from my account every week. Just little bits. And i wasnt really paying attention to be honest must have been very little. All right. But but how big an issue is that for you . Is there a liability for you or a liability on the bank . The liability is on the bank. Were here to help the bank. So here you go back. The minute that you use biometrics, you cant skim your fingerprint. Right. The minute you use your mobile phone there will be a day where people can figure out the fingerprint. Even on the fingerprint we actually check whether theres blood in the veins so the people wont cut off your finger and take your fingertip to the machine. Ah wow. Youve got to think through that. Last question, would you use a machine thats not in a bank, meaning theres all of these sort of offpiece atm machines, right . Whether theyre at a deli or in vegas where they like to charge you ransom for every dollar you try to take out. Would you use those machines or not . If theyre from diebold i definitely would. What do you do to make sure my eye is still in my socket before you get into optical it reads the eye. Nobodys taking that either, right . Nope. Okay, thank you. So if you ever if you know theyre going to charge you 2. Yes. You take the maximum amount . Yes. Always, i do. Everybody does that . Is that what you do . If theyre going to take 2. You take the maximum amount. So its only a percentage. You have to. But you go to those ones, you know what im talking about in vegas. Like five bucks. Whats the highest charge youve seen . Probably eight bucks. 8. And how much can you take out . It depends on what the bank or the institute allows you to do. We can set up the machine any way you want it to. But the machines for instance, weve got machines that can spit out 20,000, 30,000 at a time. Oh, wow. These machines carry a quarter of a Million Dollars at any given point in time. Which is why you have to think so much about the security. Right. You probably dont even go to a machine. I try to find a machine of my bank. I try to find one thats free. Right, right. But youll drive i mean youll the benefit, i dont like im a chase. And they have free ones at duane reed and theres a lot of duane reeds in new york city. So thats a big benefit. All our software sites. Diebold, these machines . Different hardware but our software. Okay, great. That was interesting, thanks. All right, thank you. We all want to talk about money for some reason. Cnbc. Coming up stocks to watch ahead of the opening on wall street then at the top of the hour, the trump snapback. David wu of bank of America David lynch and ubs will join us to talk investor optimism and how that affects the markets next move. Squawk box will be right back. The power of innovative thinking. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Take a look at a couple of stocks to watch this morning. Integrated circuit maker xr has agreed to be acquired by max linear in a deal that values that company at 13 a share. Better than 22 premium over exars Closing Price on tuesday. Morgan stanley was upgraded by Deutsche Bank to buy from hold. Deutsche bank says Morgan Stanley is a good value following a recent 10 drop in the stock, as well as faster than expected improvement in the companys fixed income business. Okay. Coming up, we will return in just a moment on squawk to talk about the trump trade. Is it back . Well be back in just a moment. Yes . Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. Were on the move. Hey rick, all good . Oh yeah, were good. Were good. Terminix. Defenders of home. New this morning, it is official, british Prime Minister theresa may triggers a brexit. The first step in the uks divorce from the European Union. The Market Impact straight ahead. High tech stock picking. Blackrock bets on robots over humans as the Worlds Largest asset manager revamps its equity business. Plus a house flipflops. Screaming wont get this job finished. What i am going to do is take action. Real estate mogul sean conlynn is pulling properties out of the red. An indeed look at cnbcs new primetime show as 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 and welcome back to squawk box here on cnbc. Live from the Nasdaq Marketsite. Which is in the center of manhattan. Squawk square. Squawk square. Times square. The squawk roads of the universe. And the wall street Journal Editorial Board square times square. Im joe kernen. Name for that for a reason. Time magazine . Newspaper called the new york times. Timex watch . Futures right now will take a quick if i had known that i wouldnt even have let us move here. Down 21 dow jones. We love the nasdaq though. Did i mention you did. All right. Were down 21 on the dow jones. Havent seen any bacon in awhile. Down 21, down 2. 5 on the s p. The tenyear oh, back under 2. 4. 2. 398 . British Prime Minister theresa may officially triggering a brexit delivering a letter to the European Council in the last hour. Wilford frost joins us right now with more on what this all means. Becky, yes, indeed, so the uk has invoked article 50 of the eus lisbon treaty. Heres Prime Minister theresa may moments ago. A few minutes ago, in brussels, the United Kingdoms permanent representative to the eu handed a letter to the president of the European Council on my behalf confirming the governments decision to invoke article 50 of the treaty on European Union. The article 50 process is now under way. And in accordance with the wishes of the british people, the United Kingdom is leaving the European Union. This is an historic moment from which there can be no turning back. May delivered an optimistic and forwardlooking speech, saying that she approached the talks constructively, and optimistically, saying she believed britains best days were ahead. Meantime, the president of the European Council, donald tusk who received that letter about an hour or so ago is delivering his response as we speak. Check in on the market reaction, and the intraday chart of the pound shows quite clearly initial fall about 0. 3 at the open today and then it rallied as the news of the delivering of that letter was delivered and theresa may finished her speech. To finish the day or at the moment up at 1. 2457. Proud of you, wil. Proud of you. I was going to sayic bin ayn britainers now. Were all were all were all Great Britain types now. Were all from the uk. But then i said it would be wrong to use german because youre kind of getting out from underneath german rule. And be careful you might call yourself a jelly doughnut. Yeah, i might. Youre shaking off the unelected yo eed eurocrats from countries away trying to tell you what to do. Im surprised youre not in a much better mood today, wil. Joe, i dont deserve the congratulations. And of course many people arent in a congratulatory mood. Its still a divided tone. Oh, be happy. Historic day for the uk. Serious big news, and still two years of negotiations. They dont call call us in a decade. They dont call it Great Britain you know what . They dont call it Great Britain anymore. Its just britain now. But now theres a chance it can be they do call it Great Britain. The name of the country is youve got a chance to be great again. Its Great Britain or the United Kingdom. Got your sovereignty back. How can you not want to do that . Andrew, to your point, it could be two years. Its meant to be two years. It could be longer. Either way well still be here. No i said a decade well know whether this was a good idea or bad. When will we know its a good idea or bad idea . If we look at the market reaction, the ftse is clearly up about 15 , 16 since the day of the vote so a significant bounce back there. Joe is smiling, gloating. The pound the pound though has delivered most of that. Falling a similar amount. Okay. Joe, let me get to it ive got all the data. What everyone does ive got all the data. Go ahead, wil. Most of the rally in the ftse coming from a translation effect of international companies. We look at the gdp figures, joe, yes they are a lot better than people expected. But 1. 6 growth here. Forecast for 1 for 2018. Not the same as the 15 ftse return. Beautiful. And to answer your question, andrew, we will know if this is a success or not not on these growth numbers, but in the future once that uk is out. The trade deals it strikes moving forward. If they deliver growth better than the 1 numbers. And in the short term just very quickly even those one percentish growth forecasts, the thing to watch is inflation which just last month went above the bank of englands 2 forecast to 2. 3 because of that falling pound so those forecasts for the next couple of years in growth are slightly reliant on loose Monetary Policy from the bank of england. If we saw inflation picking up, maybe the uk has to face tighter policy as well. Lets have this conversation in 2020. I look forward to it. Always something bads going to happen down the road. You know, global everyones globalism is so yesterday. Were just looking kind of being embraced by america. I think he looks like captain america today. Why . What is captain america . I dont know you do, just with your hair. Oh, well. I think youre being absorbed by america. I think thats a great thing. I will always be british. But i love being absorbed by america. He doesnt want to be captain america. Thank you, wil. Were going to talk more about the markets and whats going on. David wu head of global rates and Currencies Research at bank of america. David leff cowit is also with us. Let me go to you on equities first, briefly, which is to say, we had the pullback. Right. Then we watched yesterday as the market moved effectively on the news that maybe health care was back on the table, which meant maybe taxes were back on the table. How do you view it . Yeah, i mean, i think theres these competing narratives in the market right now. Youve got the cyclical recovery. The ism has been rising for over a year. Earnings growth in the First Quarter is likely going to be the best in six years. Growth in the u. S. Is also picking up. So i think thats also an important factor thats been driving markets since the election. Obviously you have the trump reflationary policy. So i think what our takeaway is that the cyclical is what people are focusing on a little bit more right now and thats why the selloff was not so extreme or very modest. What kind of premium do you think is built in or not into the market on what might be described as trump policies . I dont think its that much to be honest. High Tax Companies have performed in line with the rest of the market since the election. So they came out of the gate very strong and theyve given up all of their relative gains over the last four plus months. Expectations are not as high as some people think about tax reform. Dr. Wu we need to talk because you told us, repeatedly that the republicans owned washington, everything was going to happen, boom, boom, boom, boom, boom, now it hasnt happened. I put out a big report yesterday called new lease on life on trump trades. I think the failure to push through Health Care Reform last week was about the best news you could possibly have for trump trades because we save ourselves having to spend another five more weeks doing the impossible, trying to push through Health Care Reform. Some actually believe were not from the very beginning he has been very skeptical about doing Health Care Reform without having supermajority in the senate. So i think he has emerged as the biggest winner of last weeks basically failure. I would argue if anything hes gained some leeway in how to drive tax reform going forward. Are you happy, unhappy that this may be back on the table . No, im not happy. I dont think back on the table lets put it this way its always on the table. The only issue is are you going to do health care before you do tax reform. I think if you actually listen to trumps interview on you know, bloomberg, bloomberg on fox on super bowl day he said he was confident were going to do tax reform this year. He was less confident he was going to do Health Care Reform this year. So i think that he was sort of dragged into doing Health Care Reform first. I think he put an end to it by basically declaring ultimatum. That in some sense forced the party to focus on tax reform. He gave the party a way out. That has to be seen in a very positive light. So confused. Because i thought the last time you were here you thought that health care was going to happen. No. I didnt say that. I wasnt sure. I thought that health care was actually a bad thing. I much like the president ive always had very, very basically reservation about whether you can do health care. You think about this trump ran on basically tort reform. He wanted to basically allow Insurance Companies to sell policy across state lines none of which you can do without 60 seats in the senate. Whats your math on what Corporate Tax policy and rate could be in this country . Arguing that the Health Care Issue is off the table at the moment and lets recognize maybe its always on the table but not on the front burner. I think first of all, timing for the market times everything, because majority of our clients not believe that tax reform can be done this year. Certainly nobody this it can be done before you know august recess. And yet ironically you think about this, the failure of tax Health Care Reform last week makes august deadline much more realistic. Because for one thing, we know that you know what . The debt ceiling is going to be binding by august. You know that the tea party hates the idea of raising the debt ceiling and then theres no way trump is going to allow the debt, basically tea party to hold him hostage over the debt ceiling which i think theyre going to have to basically do a real fullcourt press. I mean a fullcourt press on basically tax reform. I think next four weeks is going to be very crucial. Theyre going to start big, and then you know, see what happens. But also another thing, remember, another thing thats on the table now that wasnt the case a week ago is the possible bipartisan deal. Thats what Reince Priebus said on sunday on Chris Wallace show. You know what . Im saying because trump wants to do a middleclass tax cut. Remember trump says he wants to do a middleclass tax cut. He doesnt want to give tax cut to anybody in this room. He says hes going to get rid of deductibles do you believe i dont no put the fox farther aside. When they say these things youre taking them all at face value. That bipartisan thats impossible. Its impossible. Listen, im not saying its impossible or possible. Im just saying at this point all the pieces now on the table. Because at this point, to doing a bipartisan if trump would reach out to democrats you know what hes not going to be called by the tea party as a traitor. Because what happened last week. Yeah, but i saw schumer say yeah were willing to compromise. You hear what his compromises were . Public option. Caps on drug prices. Everything he said was not a compromise. It was all further left and more government and it was obamacare on steroids. Almost another step to single payer. Theyre not going to compromise. Look at the gorsuch thing. Take them at their word. Its possible. Im just seeing you know they do have two major things in common between trump and the democrats. One is they only want to do because remember the ryan brady plan wanted to give most of the tax cuts to the rich. Trump said over my dead body. Mnuchin said this he only wants to give tax cuts for basically middle class. Number two, infrastructure spending. You want to do the dean repatriation to Fund Infrastructure spending. So already a very big part of the entire tax reform theres more agreement between trump and the democrats than he does with the tea party. Ive got to give a word or at least the final word to david. Lets put aside all of what happens in trumpland, and just given that you think the markets are just what they are, where would you put your money right now . Well, i think equities will be higher over the next twelve months. In the u. S. . In the u. S. But also outside the u. S. Too. Things are definitely picking up in europe. Obviously you have the french elections which is a binary event to be mindful of. But were seeing a globally synchronized recovery. Thats one of the key drivers of why markets have been up since the election. Within the u. S. , energy looks incredibly attractive at this point. Oil prices have sold off. I think a lot of this is because what people dont understand is that refinery maintenance has been higher than expected. Thats lead being to less demand from refiners. Once those refineries come back online were going to see the demand come back. Dr. Woo thank you, sir. Youre welcome. That was fun. When we come back, washington watch. Ohio senator rob portman will join us. We have a lot to talk to him about including tax reform and trade obviously. Thats what the markets are watching. We want to know what that impact will be. Plus why one analyst says the snapchat Parent Company has nothing to fear, not even facebook. And sean conlin tackles house flipflops in cnbcs new prime time series the deed chicago. Hes going to be joining us ahead of tonights show to talk housing at 8 40 eastern time. Stay tuned. You are watching squawk box on cnbc. Cnbc. 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. President trumps tax agenda is taking center stage on wall street. Joining us now ohio senator rob portman. And another how you doing, senator . Good, joe, doing well. How are you . About Skyline Chili and i never heard back from you about it. Ive seen some crazy stuff about that. But you dmd because we follow each other. Senator probably has his own senator do you do your own tweets or do you have staff for that . When im at skyline i do my own tweets. Im such a big spender every valentines day there. But weve got one in the neighborhood and joe youre welcome any time. Thank you, thank you. So i just read the possibility of another Freedom Caucus member exiting that group. And just off camera we were talking about who won last week, whether trump actually is maybe trump is in a better position because maybe theres some recrimination with those guys. What are you feeling just the zeitgeist around both houses right now with what happened last week . Where are we . We doing it again . Or really doing tax reform now . Well i think probably tax reform is now the higher priority. But i do think, you know, we kind of touched gloves you know. Republicans and some democrats as well on health care and you know, its a complicated issue, obviously. And we cant give it up. Because right now the satous quo is not acceptable to everybody. Even to democrats by the way. They cant just have higher premiums, higher deductibles and lack of choice. But i think health care is the thing people are more focused on for after a tax reform discussion. And tax reform is going to be tied up into other things now, including i believe infrastructure, but also getting through the debt limit, and so i think were more on the fiscal side of the house now. You need it would be better to have the trillion because then youre going to, 28 , you dont want 28 is not enough is it . Thats obama. President obama was ready to use 28 supposedly. Although he never pushed it. You know, he focused on the other issues. Joe, he never pushed it, and he also did 28 on the business side which coupled with a 2 trillion tax increase. Right. On the individual side. And Climate Change i think was in there, too. Yeah. Its all we talked about. So many times on the show, such a Great Potential here to improve the tax code to make it more competitive and to help u. S. Workers increase salaries, which is, you know, the big issue now is how do we actually get this economy moving in a way that actually gets salaries up. All the studies show that our tax code has become so antiquated and out of date with what the rest of the world is doing and just make some changes to lower the rate, broaden the base, do the repatriation that we talked about earlier in the show, send some of this 2. 5 trillion back you could improve the economy. I think theres more consensus around that than there was around health care. You said Something Weird though, senator, that is you touched gloves with the democrats. I thought a different way. I thought the Freedom Caucus came back and said look, maybe we can get the yes somehow, and are you saying that center of gravity moved even further towards the democrats with Health Care Reform . Or do you think its now possible to do something to get the Freedom Caucus to say yes, and then keep moderates on board . Yeah, when i said we touched gloves with some democrats, not a lot of democrats, but some democrats were interested toward the end there saying maybe we could work with you on something. But no i think youre right. I think if were going to do health care probably it will involve the Freedom Caucus. Yeah. And the tuesday group and all these groups coming to the. I think thats going to take some time, joe, as you know i always believe this needed more time. Just because its not only incredibly complicated, its so important to the lives of all of our constituents. The medicaid issue is really a separate issue in my view from the Affordable Care act issues. If you look at exchanges and mandates and so on in the private sector. These are complicated issues and i think weve got to keep working through it. The status quo doesnt work. In the meantime weve got a looming fiscal issue here. How do we deal with the budget, the debt limit, and the urgent need for us to change our tax codes. Your prediction on gorsuch whether it goes nuclear or not . I think half have said no. Theres still a possibility of getting eight or nine. Or is there . I dont know. Of democrats for gorsuch. What do you think right now and do you think the nuclear thing is the only way to go . Well, i dont know because it depends, obviously on the democrats. The sense is that senator schumer may have done his vote count and decided that he has the votes to be able to block this nomination. That would be a shame. Because this is not the way the senate traditionally over 200 years have dealt with Supreme Court nominations. You have to look back to abe fordice the last time that a Supreme Court nomination was successfully blocked on a partisan basis by filibuster and that was bipartisan with abe fordice. Hasnt been the tradition around here. Probably most controversial one recently was clarence thomas. He was voted in without a filibuster. So i would hope we would avoid the filibuster. Have an up or down vote. Hes incredibly qualified. Across the spectrum in the judicial world. People respect him and like him. So lets let this guy have an up or down vote and get him on the court. Senator real quick, have you called for a formal position yet on the border adjustment tax . Well, my feeling is that we have to do what we can to get tax reform done and the border adjustment tax, although i understand some of the economic reasons for it, and the fact that it does bring in more revenue, because of the tax that importers would be paying, so lets go for more traditional approach this point and build consensus around that. That would be lowering rates, broadening the base, doing the stuff weve talked about for a long time to get a territorial system internationally. Lets simplify the darn thing on the individual side theres a great opportunity to get down to three rates. And to actually get rid of some of the code. And so the point of distribution, whos going to pay and whos not going to pay, you know, i think your previous person we talked about that is probably right. Probably at the end of the day the distribution on the individual side is not going to favor the wealthy. Its not very bold. Its not very bold. You know what . I think its impossible to do anything bold anymore. You cant even do anything plain vanilla in that place. Its pretty bold if it ends up stopping American Companies from taking their jobs overseas. Pretty smart people saying its worth a lot of money and it actually would transform a lot and other people do it anyway. You kind of you know, youre timid on that. Bold, think bold. Bold. Its its bold to get those rates down, and to get rid of the preferences in the code that shouldnt be there. And to go to a territorial system. Lets get on with it. Senator im with you on this one. Yeah, see. Thats andrew is with you. How do you feel now, senator . Wheres becky is what i want to know . Im im very hesitant about the border tax. I am. Do it. Sorry, joe. Be bold. Be bold. Senator, thanks great to see you as always. We can be bold. Bold. Guys. Well be back in a sec. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Know you have a dedicated advisor and team who understand where you come from know you can craft an Investment Plan as strong as your values know that together, you can establish a meaningful legacy with the guidance and support of your dedicated pnc wealth management® team. Still to come this morning, facebook launching new features that might look a little similar to what snapchat users are used to. Well talk about the facebook threat. Threat. Good morning again, everybody. Welcome back to squawk box here on cnbc. We are live from the Nasdaq Marketsite in times square. Among the stories front and center this morning wells fargo has reached a tentative 110 million settlement related to last years sales practices scandal. The Class Action Settlement would cover customers affected by those practices. Starting at the beginning of 2009. The settlement still needs court approval. The s. E. C. Has rejected the idea of a bitcoin based etf for a second time. It turned down a proposal for a bitcoin etf. Earlier this month the commission rejected a similar application from the winkle voss brothers. One economic report due today with the National Association of realtors set to report february pending home sales at 10 00 a. M. Eastern time. Still looking for a 28. 1 increase which would reverse the 2. 8 decline we saw from january. Pending home sales as a measure of home contracts signed but not yet closed. Home prices in denver are at an alltime high. Builders are facing new hurdles for labor and materials, and i dont know why it took so long. People figure out 300 days of sunshine every year. What a great andrew has called has said denver is not a real city. Thats not true. You said that. I love denver. Your sister is there. My sister lives in denver. Can you confirm brotherinlaw. It is a real city, people. It is a real city with demand. Its a real city with real demand and as you can see outside in the dark you would see a sprawling Residential Home construction site just barely 15 minutes from downtown denver. There are a lot of different builders here, both public and private, and they all say they have the same problem. Not nearly enough labor. They all thought that the labor crisis would get a lot better this year. Its gotten worse. Builders here tell me they could be putting up 50 more homes if they just had the hands to do it. And competition here is so fierce that there are higher wage offers on scrap lumber and some are poaching workers off each other. Wage growth and Residential Construction is twice the National Average but americans do not want this job anymore. The vast majority of workers here are mexican. Some documented, some not. And a lot of them are worried about new policies under the prumz. So much so that some are actually buying property back in mexico and getting ready to leave. Which would make things even worse. More than half the Housing Labor force left during the recession. The expectation was that they would return when the business recovered. But they did not. Ive never seen anything like this. Especially the fact that it seems like were at capacity at such a low level of actual absorption in previous recessions when weve recovered we tend to see prices go up, labor start to get tight, after weve recovered to at least an average absorption. Now builders here are building just barely half of what they would in a normal production level. They dont have the labor to do it. The demand is so high as you guys were saying that home prices are up over 10 in denver. Thats second only to seattle and portland for price growth jump. And gene myers tells me that hes starting to hear that some companies are looking to leave denver because they cant find enough housing for their workers. A severe shortage here and spreading around the country, as well. Okay, thank you diana. I want to pledge my allegiance and love to denver, by the way. And youre actually going to start youre going to say you never said that. I didnt say you said that. Didnt you say its okay now because you said denver i am from cincinnati. Do you really see me saying denver is not a city. Its a wonderful city. You said its not a city. Not a city like new york. Dont double down on it. Lets move on. Well move on. Weve got some headlines to bring you this morning. Buzz feed reportedly making plans to go public in 2018 the Company Began as a viral content sign. We should mention come cast our Parent Company is an investor in buzzfeed. That means brought to you by axios today. But i should say our next guest, this company also by the way has a stake or our Parent Company has a stake and this is vox. Were going to talk about snapchat for a second. Snap we have a copycat, facebook unveiling new features that may look familiar to snapchat users for the fourth time this year. Putting pressure on shares of snapchat Parent Company joining us right now is james, and he has a buy rating on snap and ed lee managing editor and contributor or at least you told me earlier, reported months ago. Months ago. That buzzfeed was looking at 2018 ipo. All right. So its been out there. We were and nbc and comcast has a stake in vox. Also in buzz feed. And in snap. And in snap. So basically nbc just is taking over comcast nbc is taking over all of media. Lets talk specifically about snap. Which is to say, how much of a threat do you think that facebook, all of the features in facebook are . So its a definite threat. If youre evan spiegel, head of snap, youre nervous, and you should be. I think at the same time snap is still a unique social network in the sense that the people who are on it love being on it. Theyre not necessarily on facebook. Even if theres a lot of overlap sometimes, and so social networks are live and die by their character, right . By the other people that are on them. And so despite facebooks massive size, the one thing for snap right now is that theyve got, you know, a nice user rate. People have their friends and family on it. They like to communicate that way and i think thats sort of the thing they can grow from. You liken it, is snap a messenger do you think of snap as a true social platform in the way that facebook is . Or do you think of it as a mess edging service . People message one to one, one to two or three . Think of it as more of a portal. Yeah. First of all, its a Camera Company in the sense that thats the hook to get people on there. But its a portal to decide what am i going to do with the images that i take. Do i share them. Do i send them to friends, do i post them. At the same time its a portal to content. I think thats really going to be the holy grail for the company when it comes to monetizing it, because when you think about mobile today, a lot of it is mobile content that you see, just tv content plug and play its mobile. Nothing is produced specifically for mobile. So what snapchat is doing is really going back in time to a more tv type of model, content producers, letting them do what they do best and aligning those interests with the user experience. Reflective of the idea that people are going to use it for that purpose as opposed to the messengering purpose . Well i think in order to justify the valuation and justify the financials you have to assume the content the content is going to be there. But to your point, on the competitive side its funny, i was joking, you know, facebook motto be move fast and break things now its more like move fast and borrow things because what youre seeing is taking every element of snapchat and integrating it. The question you have to ask is which hope has a better hold on what the customer wants before they know that they want it. I think what youre seeing from snap or from facebook is validation that snap may very well have a better sense of that. I think, you know, in the perspective snapchat were a Camera Company. I mean, the editor in me loves picking at the shortness of it but its inaccurate. Its a social network. The reason why theyre focusing on camera is thats the medium through which people are communicating on social networks. It takes pictures. The most interesting opportunity is for them to chapt your reality, people that are going to be in times square and take a picture. I think its also, the money is in reaching the audience. So having sort of a gadget aspect of augmented reality is a cool thing. Really keep those people and draw them in. I think what people are really missing on snap is look at it, time spent on digital is now 50 of time spent but tv dollars, offline dollars are still very much overindexed to time. Why is that . The reason is because the marketing product, the products that you see today are not aligned with the marketing goals because everything is about clicks and conversions. Nothing is about brand, building affini affinity, building awareness. I think snap understands that and by moving more toward a type of fully immersive mobile video experience i think they can crack that. Thank you. Appreciate it. Yep. When we return, what happens when a house flip face . Well talk to a man helping put property projects back on track. Loving this. Real estate mogul and host of cnbcs new primetime show sean conlon will join us. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats 10 times faster than slow internet from the phone company. Say hello to internet speeds up to 150 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. 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 . Fortunately the only company that could do the design i wanted manufactures in guatemala. Where . Guatemala. And what does it cost, the door . A little over 11,000. And then you add the shipping onto it. Wow. I suspect this is [ bleep ] spectacular. When it gets here its going to be the wow statement for the house. That was a clip from cnbcs new primetime series the deed chicago which premieres tonight. The host is near at the nasdaq. Hes going to be ringing the opening bell. Sean conlon is the founder of Real Estate Merchant Bank conlon and company, also the host of the deed chicago and youre already getting bleeped out on this . I was on my way here this morning and you know the way everybody says break a leg. So, this chopper who knows you, jim says break a leg, of course i think he may mean it literally. Because when he gives you his Business Card hes like ill call you, and got three exclamation marks on it. He said to say hello to you. And be nice to becky. Yeah. And you, too, obviously. Thank you. We are thrilled to have you here today. I guess your point in the whole series is that its not that easy to be doing this. All these shows make it look like its so easy to flip your own home. But theres some real education this takes before you can do this. Yes. Its quite a mine field. Its still the quickest way for an average person in america to make a fortune. The odds of me being mark zuckerberg, i could get hit by a meteorite quicker. So you can still do it in home flipping. Most shows show the pretty couches and the wallpaper. Sort of the collapsing wall, the ceiling that falls on top of you prior to getting to that stage. So there are a lot of issues. Particular episode. How long does it take to actually do it for real . Like for real . Yeah. So obviously give a lot of credit to the team at cnbc, because i think this part of it is new. Because there are projects, they have to keep coming back in, because murphys law tends to dictate home rehabbing. If it can go wrong, it will. And it generally does. But we did four deals, and i funded four deals, and two of them were successful already. And i suspect the other two will also. You come by this through pretty hard work yourself. You emigrated here from ireland. What year was that . Yes, i come to america in 1990. And i used to say on my resume, i was a janitor. But actually i was an assistant to the janitor. So i didnt want that to come out under scrutiny. And i was an awful janitor. So then i start selling real estate part time in 93. Whats the biggest mistake that flippers make . So, its a good expression, i think it came from one of your american president s, trust but verify. Theres a tendency for contractors, which might shock you, to take advantage of people who are new to the game quite regularly. And that is where you get burned. You really have to doublecheck everything anybody tells you. What types of things . Making sure that this is how much its going to cost and we can tell you that because of this plan yeah. Of course you should have a cost estimate. But better still, you know, i need 50 glass hammers. You find out after the fact that probably could need any glass hammer. Would you play any market or certain markets you would say in this environment are off limits because you think there are too hot or other markets that you think will just opportunistic right now . Oh, absolutely. And the old adage that all real estate is local. It is. I mean, i have done business all over the country. North carolina, california, florida. But i would be scared to jump in to miami right now. Really . Yeah. It would be scary. Thats a personal opinion. You know are california is still, like new york, it will always be okay. The other mistake people make, and you have been flipping a short time window but in investing in property, if you think outside of tenyear window, you rarely go wrong. And you should always buy your home to be your home. The upside of the investment, thats the little extra bonus. Thats another thing you have to Pay Attention to. Well that seems like its the opposite of flipping though it is. It is. But we just crossed lines there. Were talking about real estate. Flipping is a business. Buying your home isnt. So you want to know if its going to flood, i guess you want to know if planes are going to fly over the house. You want to know if youre next to love canal or a waste site . What else can someone not tell you and all of a sudden you find out oh, my god . And you already closed. Can they do that without disclosing it . Listen, again, that goes back to the trust but verify. Theres a lot of things people cant disclose. Are you going to go back and sue them . Thats hard, too. Its expensive. And two years lots of things people wont tell you. Things that are really important in america right now. School districts. School districts. Yeah, thats right. Very important. Biggest investment distake you ever made. Biggest investment mistake i ever made. Oh, my god, theres too many of them. Thats why im good at teaching people what not to do. Ive made every mistake they shouldnt make. So got it all done. What did you used to screw up as a janitor . Would you cut corners or something . Oh, no. Oh, yeah, i did that. No. You just were bad . No, i was just so damn nice. I would see the tenants and say how is everything . Is everything okay . And my boss would slap me and say dont ask a tenant if everything is okay. No, theyre not. Oh, ive got a little leaky faucet. I run up, break the pipe, flood four units. And the first minute i knew you were upstairs was when the ceiling collapsed on me in my office. Oh, no. That was not the business were glad youre in a Better Business for you and glad were going to get to see other people learn from all of this. Sean, thank you so much. Come back and well be watching at 9 30 when you ring the bell, too. Thank you very much, guys. Dont miss the premiere of the deed chicago at 10 00 p. M. Eastern right here on cnbc. Dont miss it. When we return, jim cramer is going to join us from the new york Stock Exchange live. Well get his take on the days top stories. Top stories. Just imagine if all the machines at work were constantly thinking. Always on the lookout for patterns and connections to make everything work better. I call it the internet of everything, but its really the internet of everyday life. The partnership between Dell Technologies and sap helps make the promise of the internet of things a reality for our customers. We know how powerful live data can be. We use sap at dell to run everything from finance to procurement to travel expenses. And thats the same kind of live insight we can now start offering to all of our customers. And as we get better information, better insights, it can improve virtually every aspect of society and the economy. Thats the opportunity of our generation. The next industrial revolution. Thats why Dell Technologies runs live with sap. Crude is on track to close out the month down over 10 after a move of that magnitude the slide lets get down to the new york Stock Exchange, jim cramer joins us yesterday. Yesterday we talked about how the nasdaq had done well. The nasdaq and the market is strong again. But it seemed like some of the policy stuff seeped back in yesterday with the notion that i dont know, maybe the repeal is back on the table. Maybe tax reform is going better. I dont know what yesterday was. Do you . Look, i think that when these days when Interest Rates go down theres a cohort of stocks going up. Which is the bond market equivalents and the high growth stocks. I guess the algorithm has found something to buy. It went up and then the banks went up a little bit. Then rates were kind of flat, the banks gave up a little bit. Look, were trading on nothing. We dont know whats a going to happen in washington. I can continue on the to believe that deregulation is the huge story out there. There was a huge deregulation story about environment and Climate Change. Watch reef single oil company go up. It was not related to the turn in the crude price. s related to the ability to be able to drill without the epa coming down on your head and saying you have too high methane levels. So this was an important deregulation for those who like the oil stocks. Very good. So we cant take our eye totally off of washington. But maybe less legislation and more dereg. Dereg, 25 regulations for every one law in the last year since obama. So i think thats what you have to stay focused on. Hey, jim, did your daughters get prom proposals, do you remembmber . Get promposals. A proposal to go to the prom. My daughter was homecoming queen. Thats pretty good. We didnt do this, jim. We were this is a brandnew thing, i think. Yeah. Thats where you show up and its a surprise and youve got to come equipped and they might say yes. If they dont say yes think about that. Think about it. Showing up i ran the preprom party. Thank you, dave, for letting me have a big bash and yeah, there were a lot of people who were kind of there, kind of somewhat together. Jim, look at the monitor. This is theres a disco ball. Theres a prom question mark. Theres flowers involved. I mean, what if they say really what if they said no. I think snapchat should sponsor in. This was snapped out. You know what . When i tweeted it, theres a promposal 2017, i think its a trending thing. I think we missed out. Ic we missed out although the pressure i wouldnt have wanted the prompos promposal. Learn something every day. Jim, see you homecoming queen, pretty cool. See you in a few minutes. Coming up well have stocks to watch before we go. We go. 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 . Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Stocks to watch this morning check out the shares of sonic. We have had sonic delivering food we havent had sonic delivering food. There is one right in new jersey. The drivein restaurant chains falling sort those are the two dorks that are constantly talking. I think wed so sonic in here a while ago. They blamed the sluggish consumer environment and weather head winds and lack of gratuitous advertising on squawk box. And shares of dave busters are under pressure. Im going to a Birthday Party at dave busters to help out the guys. Yeah. The arcade laser tag. Laser tag. Topped estimates. But same store sales theyre protecting the weaker growth. Not after the sorkin family shows up. Then shares of vertex jumping after a combination therapy for Cystic Fibrosis significantly improved lung functions in late trials. We have been watching the futures. Yesterday, it was an up day for the markets. Dow was up i 150 points. That broke an eight day losing streak. This morning a relatively mixed morning with the dow futures down 24 points. The nasdaq up by four. We have been watching the ten year and earlier this morning the yield fell back below 2. 4 . You can see its still there at this point. 2. 396 after finally pushing back above 2. 4 yesterday. See how that continues out throughout the rest of the morning. On brexit day is that what well call it . Is this go down in history as the day that happened. Join us tomorrow, everybody. Squawk on the street begins right now. Good morning. Welcome to squawk on the street. Im david faber with jim cramer. We are live from the new york Stock Exchange. Carl quintanilla is off. Look at that, its a mixed open this morning as we look at futures. European markets you ask. We answer by giving you the numbers. There they are. Largely in the green this morning. This after a rally yesterday both over there and in our markets here. The ten year note yield remaining though right around that 2 o r