Transcripts For CNBC Squawk Box 20170517

Theres an me in team. Always has been. Well, im happy to be here. Youre fired up. If youre up at 4 00 a. M. , you might as well get fired up. Why not. If you put in that what time did the alarm go off . 4 05. So you im a 3 handle. Me, too. You say you can do this. You did it once. Try five out of five. I can barely do this. 52 out of 52. Youre a stud. I say it all the time. We have a big market day. Good to have you here. A check of u. S. Equity futures. This is what weve been matching all morning long. This could be the biggest move in the markets. About a half percent move or so. This would be on the s p 500. That would be the biggest oneday move. Weve been 0. 3. The dow looking to lose 100 points at the open. The nasdaq looking to lose 24 points at the open. The volatility index is surging this morning. Thats an interesting turn of events. Up by 11. 25 , almost 12 at this moment. Action in asia, big development. Here is long eem is snapping a sevenday advance. The nikkei finishing lower bay half percent. Hang seng down by 0. 2 . As for european equities, we have got red arrows for the dax as well as the cac down by a half percent a piece. The ftse 100 managing a slight gain here. Italy and spain feeling pressure. Look at the action in the tenyear yield. This is telling as well. People are reaching for safety this morning. We do have the tenyear note, 2. 292 . I believe that would be the lowest since early may. 2. 292 . So, 12 , 11 on the vix, its like 1. 17. Yep. So the low, that 25year low was 9. 56, youre somewhere at 11 and change today with the yearly high of 27. Big move, but from historically levels. Well see if this amounts to anything. Who knows. Nobody has even seen the meomee. Thats right. Great to have jim jordan come on. Senator thune coming on as well. Reading the cut issscuttlebutt. Democrats think this rises to something. If you express the desire, i hope you see clear to let this go, thats a different thing than quid pro quo. This is after he resigned. At the time, even the Washington Post wrote a piece that said in terms of actual criminal or elicit behavior, there wasnt any. It was that he lied to the Vice President. And they looked at what flynn actually said, and there was nothing there. So at that time when trump in february, when he already resigned, unless there really is a russian connection, a collusion, a collusion with the administration, if thats why he wants comey not to pursue it, thats one thing. If it was just that do you think that matters . I think thats the key issue. I think the fact that he if you want to make the argument that him inserting himself into this is obstruction of justice, it doesnt matter if the charges are truly substantiated or not. Its the notion that he is simply stepping in. Think about the motivation. This is a good guy, he shouldnt have lied to pence, he shouldnt have done that. Thats one thing. I hope you see fit to let this go, im tired of it theres no russian connection, or if he knows, wow, he had some knowledge that flynn was coordinating a wikileaks who knows what people think the fire actually is. If thats the reason for trying to drop it, thats a far cry from trying to say the jump would be obstruction of justice could be the basis for impeachment proceedings. In the closer term it could impede the republicans enacting the agenda. I would say 100 points, even though like, weve been questioning it every day. Okay, you got the leak of the now looks like from israel. You have that. You get 20 points. You get this, you have comey firing. You get 20 points. Nothing at that point looked like the market was sitting up and taking notice. You have 100 points. 100 points is a 100 points. Its not 500 points. But in the context of the volatility market but a constitutional crisis, when you actually start to think theres a a something doesnt this speak to him being a political neophyte, which is why he got elected in the first place . Words have meaning. I learned that back in the day on wall street. His words really dont have meeting. Im not surprised he had people leave the room and said, look, hes a good guy. You are going to let this it does not surprise me he said that. And if he did say it, which theyre denying the white house on background is denying that was said. This begs the question, if there are tapes right. Release the tapes. Right. This would be a grade time. The other thing, well bring in john harwood. If i were comey, and if at the time that the president told me, if i saw that as him trying to obstruct justice, and telling me to drop it, i would have resigned or immediately have told someone. I dont know if i would have waited however long. If it rose to the level of what were talking about here, then comey just did he tell the assistant director . I dont know. John is listening to all this. John harwood is in washington. Lots of questions. We need the memo, i guess. We probably need comey to come and talk to guys in kochcongres. And we need his colleagues who we are advised by comey associates that he did advise colleagues of what his conversations with the president have been like. We have been building for this moment for more than a week, ever since President Trump fired fbi director comey. It got a little more serious later in the week last week when he did an interview with lester holt and said he had been thinking about the russia investigation. Yesterday we had the news that james comey kept con tem rain u contemporaneous memt mos of the conversation with the president and one of them said can you drop this the white house put out a statement saying while the president said that james comey is a goo and d and decent guy, d not asked comey to end that or any other investigation, but there was a markedly different feel to the reaction from republicans. Jason chaffetz immediately put out a statement saying he want all records of james comeys memos and conversations with pem at the time. Chuck schumer went to the senate floor and urged other republicans to inquire deeply into this as chaffetz did. Concerns about our National Security the rule of law, the independence of our nations highest Law Enforcement agencies are mounting. The country is being tested in unprecedented ways. I say to all of my colleagues in the senate, history is watching. Whether or not the ground which has been softening under President Trump gives way and you have a flight of republicans towards a most tposture like ja chaffetz and john mccain saying yesterday this is approaching watergate levels, in addition to the question of President Trump on the republican agenda its not possibility in washington for a president to be fighting for survival in office and to be pressing an ambitious legislative agenda at same time. Just not going to happen. So well have to watch and see whether or not President Trump can somehow engineer this blowing over as opposed to consuming the entire town for the next several months. John, there are a lot of people that are looking at like, what chaffetz says, i didnt interpret it as what you said. I interpreted it as saying he wanted to make sure comey obviously it was read to the New York Times reporter. They dont have a copy of the memo. He wants to see it to make sure it said that. I didnt see that as him getting ready to throw trump under the bus. Investigate. Schumer, we ive known schumer a long time. Likes cameras. That was very dramatic and everything else. Mmhmm. But heres the thing. Democrats, if it is obstruction of justice, they will try to prove that. Theyre like a pit bull on the throat of prey. If it rises to that level, fine. At this point, saying i hope i hope you see clear to drop this, hes a good guy. That would be a tough one if there was no quid pro quo, if there wasnt ill fire you if you dont do this, or im ordering you to drop this probe that would do it. Saying its my hope that youll see clear to let this go, i dont know whether that rises to the level that where where that would happen. And if the memos are produced thats a he said he said. Right. And the tape wildcard. I was trying to figure that out, comey calling the bluff, i dont believe you have tapes. If you do have tapes, this is what is said. Theres all these nuances to it, too. Yes. When you talk about the consideration of what james comey wrote and what President Trump did, its possible theres no tapes and its the president s word against the fbi directors memos and his word. One question is how would that go in a criminal proceeding with a jury. And the other as a political matter, if youre a member of congress trying to figure out whether to support your president or not. All of that will be subjectively determined by the mood of the republicans in congress. What we saw during watergate was what finally brought president nixon down was not news that he had or proof that he had directed the watergate breakin. Because no such proof ever s surfa surfaced, but him talking to his chief of staff about dissuading the fbi from going forward. Right. Its a you know it when you see it type of thing. John, one thing democrats have done, they went with the i word early. I think january 21st was a little early to started talking about impeachment. Theyve been talking about it. When they had nothing, the entire time, maxine and whomever. So when you Say Something, and you say the i word. Weve been hearing it for the past 120 days. The other thing, we have to figure out you remember that poll, 92 , 94 said i have seen all this, i would still vote for him again. That was before the last two, three weeks. During the campaign we had a tendency to say, thats it. Second amendment with hillary. He just asked about the hacker. Every week, we had something that was going to derail his candidacy. We saw that the voters felt differently than what the echo chamber in washington felt was significant. I dont know whether its changed from 92 or 94 , but i wouldnt assume that the people that voted for him are when they hear i hope you see clear to drop this, whether that rises to impeachable the question is not the core Trump Supporters who believe him under circumstances its a high bar to impeach a president. No question. But republicans, they have a special election in georgia, midterm elections next year. All of their careers are on the line. So theyre going to be making a judgment against that back drop. The people to watch are republicans or people who lean republican or senators up in two years. But the people who voted for President Trump, who might peel off. You had corker mccain, graham. Who two days ago the white house was in a downward spiral. One problem for the president , as this is played out with the highest attention possibility, james comey has a stronger reputation for telling the truth than President Trump does. You mentioned the wall street journal poll a little over a week ago what it showed was that only 25 of the American People said that President Trump gets high mark force being honest and trustwort trustworthy. That goes to how people will process this information. But if the exact quote that na theyre not even copping to at this point, i hope you see clear to drop this even that quote. Its the deft is ready to go quickly on the i word. The question is not left. The question is the right. Its been resist. Resist. Resist. In their view its been an illegitimate presidency from day one, november 9th. Nothing has changed there. Thats true. Thats why the people to watch are those republicans. 2018 senators. In the house, theyre all 2018. Every one of them. What a system. John harwood, thank you. The markets are a story today. They are, thanks in part to this. Look at vix. Its showing signs of life. Surging by just 11 . Were almost at 12 right now. Joining sus caus is kathy wood paul hickey, and our guest host for the hour, guy adame. Kathy, you are in the camp that the market gains have been made in the back of fundamentals, improving economy, better picture for earnings. Any dip because of political whatever you want to call it in d. C. Should be bought in your view . Yes. Weve been watching the vix like everyone else. And i think the complacency out there, its known as a fear index because since the tech and telecom bust it has always heralded when its at this level a correction. Prethe te the tech and telecom the vix was going up in an up market. The politics now creates another brick in the wall of worry that were climbing. Yes, we think the fundamentals are terrific. Evenmentals are the drivers, politics could present a headwind . It has to have some or the of impact or not at all . Its been part of this wall of worry. The la every step of the way theres been a crisis. We need to keep contemporaneous memos. I get confused, what was it back then that we were worried about. Are we done with the leaking . Well who knows. If you were cynical, you could say at least were not talking about the leaking of Israeli Intelligence anymore. Changed the narrative . Yeah. Moved on. Whats your take, paul . When you look at washington, theres a lot of partisan disguised as subjectivity here. We saw it eight years ago. Republicans were against the democratic president. Now democrats are against the republican president. So you take a step back from washington. We had a great earnings season. Weve seen earnings beat since 2010. Revenues are the best since 2013. Guidance more companies are raising guidance than lowering guidance. If theres a worry about this trump agenda derailing stocks, its not there. When luke at stoyou look at sto performance, outside the United States theyre performing more than stocks inside the United States. Two months ago i was asked if the market if the trump policies dont get passed l that hurt the market . Most of that is not priced in european markets are outperforming the u. S. At this point. Its more of a distraction. When clinton was impeached it was 1988 1989, and the markets did well then. President obama, say what you want about him, people thought he was the most unfriendly market president. When he took office, the s p was 700, he walked out at 2300. Say what you want, his report card was outstanding. Im with you. I could be elected president , i think the market would be rallying. Its a continuation of the last seven, aibt yeeight years. Im not so sure. Yeah, ruchlt. We looked at getting back to even does not mean he walked in and which policies orchestrated that gain in the market . Which ones . Thats the exact point. None of them. Thats my point. It doesnt matter. I think in washington, it is not the be all and end all of market performers. We have to leave it there. Thank you very much for sticking around. Coming up, a mountain climber my knees got shaky preparing for this. Tommy caldwell made history in 2015 when he climbed he and his partner climbed the hardest rock, the most vertical 3,000 foot el capitan and it was all followed by social media. Dont look. Im afraid. I have the gene. Tommy joins us next on how Live Streaming changed the climb and well talk about the climb itself. Dear predictable, theres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced, our senses awake, our hearts racing as one. I know this is sudden, but they say if you love something. Set it free. See you around, giulia a used car, social media has had a transformative effect on politics but also changed the sports world. Were not just talking lebron james and his 35 million twitter followers. Social media has become a part of less mainstream sports. We are joined by tommy caldwell. You may remember him from when was that . 2015. World renowned rock climber. After the time that free climbed yosemites National Parks dawn wall of el capitan, the subject of an upcoming documentary and caldwells new book is called the push. Just preparing for this, looking at some of the shots, just googling it. I got nervous. My knees get weak. They set up a that is your weakness. It is. Im afraid of heights. What is that . Youre in the bed . You look like you are just lounging, youre at its called a portaledge. You build that, and you can sleep there . Youre perfectly comportible there . You haul it up the wall with you when you climb. Its like your little nest up there. You took seven years to plan this route going up. Would go up and see if this was the right way to go, repel back down. And map out a path that would get you to the top successfully. Yeah. It was about a year of swinging around, peopfeeling the holes, s the specific route and six years practicing it. The climbing is so difficult you have to execute it perfectly. Its like a gymnastics routine. Its free climbing. There are still ropes, but only to prevent a fall. In other climbing, someone can pull you up. Is that the difference . Historically when you climb el cap, you aid climb, so you climb the equipment. Free climbing is climbing the rock face. Like if you go in a climbing gym, thats free climbing. Where you put tsecure the ros to be part of the structure of the mountain itself or can you you carry up a rack of different shaped pieces of metal that fit in the cracks in different ways. You place that. Sick. Im more interested in the the social. No the mental preparation. This takes seven years. Not many people plan seven years for anything in their lives, including courting their spouse. Right. In terms of the mental challenge, at what point is the most difficult mental moment where youre like im not sure if i can do this . When youre on the face or in the planning stages . I think the execution and the end is the most difficult. This was a paradigm shifting climb. Most people go and do climbs that theyre certain they will succeed at. This was like ive picked something that was so far above me, i just worked for seven years to do it. The moral of the story was it was great for free climbing, it was all on social media, but not so great for you, you didnt bond with your partner, you made the point, as you would have if you guys were not constantly posting stuff. You also said those kodak moments caused you guys to take more risks than you normally would just to get a good shot . Not more risk than otherwise, but the bonding with the partner thing. I climbed deep in the mountains without any sort of media with me. Talk about the meaning of life instead of how many hits youre getting. Right. That was different. It was interesting. You introduced me as this social media thing. I never intended for that to happen. And you dropped your phone. Yeah. You lost it. And you were glad. Somebody mailed it to me. It was a thing that totally took off. I was basically posting on facebook so my mom would know what was going on up there. But you made the point that if it happened to you and it hurt your real life experience, having everything on social media, what about normal kids constantly living their life and missing so much of it. Either that, or they look at that and take bigger challenges or risks than they normally would. Bigger challenges may be a good thing. Bigger risks. Like millions were inspired to go out and live their dream because of social media two sides of. You must be in great shape still. He would appreciate the story. Good luck with the documentary. Thanks. Coming up, target set to report and well bring you the numbers and reaction from wall street. That stock down sharply after disappointing results from other retailers. And reaction to the new stockpile data straight ahead. Its not just a car, its your daily treat. Go ahead, spoil yourself. The es and es hybrid. Experience amazing. Looking from a fresh perspective can make all the difference. 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And down 21 on the nasdaq. Gold is up a little. Tenyear yield down a little. But it almost seems like maybe target even helped a little. You think . We werent expecting great numbers from a retailer. We are seeing target shares surge in the premarket after reporting earnings. Just crossing the wires now. Adjusted is 1. 21, thats compared to the estimate. And samestore sales down 1. 3 . They are just out with q2 estimates here. Adjusted q295 ce 95 cents compa with 1. 15. They say they are facing multiple headwinds in the landscape and will continue to plan business prudently. Theyre preparing their team to chase business when they have the opportunity. Still looks like good news so far for target. Up 6 . Yeah. 75 stock at one point. Nice rebound. Time for the trading block. Dollar slipping to the lowest level in seven months. Crude prices falling after new Inventory Data showed a surprise increase in u. S. Stockpiles. Joining us is christian malik. I will not ask you about whats going on here. That makes it harder, christian. Confine it to those areas. Boris, i will start with a similar question to you. The dollar, you just talked about, its dropped to a level we have not seen in more than a few months. France was a big part of it. What happens in europe is influencing the your ro moeuro whats happening in this country. Whats moving the dollar, domestic things in washington or the content. Cumulative. The whole dollar decline started way before the troubles in washington, d. C. This is just cherry on the icing as far as the trade for the dollar shorts. From here on out, whats more important . I had a crazy thought coming in today. Not unusual for you. Exactly. Why such a muted reaction in all the market against the news today . Perhaps its because not because the market thinks theres a constitutional crisis, because it already assumes impeachment. If you chi of think of it, president pence and a republican congress, you have an agenda for tax reform and fiscal spending. I think thats a low probability. But the point i would make to some of our democratic friends, you may get this guy eventually, maybe he gets himself. But youre not getting Elizabeth Warren if hes gone, youre getting pence. Thats what im saying. To say the markets have impeachment in it is ludicrous. Maybe. Is that why markets have rallied . Youre saying if hes impeached, theres a better chance of getting things done. What are the chances now of any agenda getting through washington, d. C. . This has been a political trade, not an economic trade. Thats a the long their thing goes, its like a wound. Thats a why is the dollar long because the bond market is the only one that was smart enough to buy this whole idea. The whole idea of the bulls has been 3 gdp. Keep talking. The bond market has not bond you think hes nuts . Its ludicrous. I knew it was ludicrous, thats why i brought it up. Its an interesting assessment of whats going on here. Otherwise somebody turn off his mike. I will turn off your mike if you dont shut up. You sound like bill oreilly, look what happened to him. Whatever. Thats a goldberg analysis. The market is up because its assuming that pence would be ability to get things the question is why isnt the market not down so much more . Because were in a low volatility environment . How much will the market move if the vix is 11 or 10. Thats been an interesting and separate issue. I feel bad for you, christian. I feel bad for myself and you. Lets talk about oil. You think oil is rallying on a pence presidency . Now i feel like Anderson Cooper rolling my eyes. The context of not just the pence presidency, but the tug of war on opec deliberating whether they should roll over and the time frame and the eyes on expectations for draw downs. You have a tension and oil price is swinging back and north in terms of expectations on both fronts. Yeah. So, with oil though, i mean, its even hard to do the political back drop. Every time we hear about supply, production cutbacks whether theyre serious or not whether people cheat, how many rigs we got back in the United States, those are more of the things to watch. Arent they. Absolutely. I think in terms of opec and the meeting next thursday, the 25th of may, the key leer is whethhe we can get opec to roll over. Expectations have been pushed out to nine months. If they can deliver six months and 100 compliance, thats a success. The best case is they do roll over, but theres a departure from compliance in the second half that will weigh on prices. Putting it towards the low end of the range which is 40 to 60 a barrel. Against that, you have invent y inventories f thoinventory s fsh s, if those come off, and there are stronger refining draw downs, we may see that offset. I think as we go into next weeks meeting, we should we should use that as a pinch of salt even if they talk about compliance, we need to see delivery of the compliance particularly in the summer months when you see stronger seasonal demand and the propo s propensity to increase production as they have to offset that domestic demand. Quickly, theres a notion that with the saudi aramco ipo next year theres an implied put in the crude oil market. Do you buy into that at all . Whats important from a saudi aramco perspective is the fiscal policy which is to generate sufficient cash to drive Economic Growth in terms of the timing of that, its still clearly un the details are not given. But if they were to list the second half of next year as the press are talking about, then prices are important, but i dont think its necessarily at the top of the priority. Whats key now is saudi deliver a lowering of the fiscal deficit through diversifying and thats on the Critical Path in terms of mitigating low oil prices. Christian, thank you. Well check back with you. We said demand one time. Thats weird. Demand, its all about supply right now. The whole world is recovering, you figure we would talk about demand picking up. Boris, im not tossing to you to talk. Just saying goodbye to you. Goodbye. Will you have him back . Of course he will. God almighty. Thanks, boris. Our guest host at the top of the hour is the master of management jack welch. He joins us to talk politics, the trump economy and more. Johnson and johnsons alex gorsqi jo gorsky will join us later, and jim jordan will join us to talk taxes, healthcare and this comey memo. Youre watching squawk box on cnbc. Whats the value of capital . Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley 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. I count on my dell small for tech advice. With one phone call, i get products that suit my needs and i get back to business. Welcome back to squawk box. Time for the executive edge. Amazon reportedly considering whether to get into the multibillion dollar pharmacy business. Why not. Its inhired a general manager formulate a new team and develop strategy. Amazon recently started selling medical supplies and equipment in the u. S. In april. Reports said that the Company Expanded the prime now Delivery Service in japan to include sales of drugs to patients with the approval from normal cysts. I wo pharmacists. How do you get into the pharmacy business . Dont know. You can already get it delivered to you. They had the logistics in place. If it would help in terms of pricing and make things easier, that would be good. A couple months ago they said they were getting into the auto parts industry, Companies Like auto zone got obliterated. Johnson and johnson holding an analyst day, and the pharma giant is making news this morning. Lets go to meg tirrell at the meeting in new jersey. Good morning. Coming to you from Johnson Johnsons new museum this is the building where j j was founded, the original Head Quarters from 1886. The focus today about the pharmaceuticals business. The company putting out news saying it plans to file for approval of ten new medicines between 2017 and 2021 each with the potential to be blockbusters. Already they filed for approval of two drugs expected to have fda decisions this year, those are in psoriasis and rheumatoid arthritis. Additionally over the next four years theyre expecting to file for approval for drugs for cancer, depression and certain viral diseases. Pharmaceuticals are a big part of j jshgs bs revenue, abouf the profits. Well be hear being their pipelipip hearing about their pipeline and drugs today. Well hear from alex gorsky at 7 10 a. M. Stay tuned for that. Back over to you. Quick question, how big a deal is the black box warning on the diabetes drug that news coming last night . Fda putting a new warning on j js diabetes drug, and analyst says this is a big deal for that drug. Its the only one in the class with that warning. The risk of amputation taking this drug. Other drugs dont have it only about 2 of sales for j and j, not a big deal for the company. Meg, how would amazon i know youre on the j j beat, would they need a pbm or a form lai formulary . Would they need doctors or prescriptions . Would it be that much better for amazon because of the Delivery System . Whats the advantage . Im confused. Its a great question. This is reporting from cnbc about amazon getting into the pharmacy business. It was reported in the story they could compete with the pbms, express scripts and cvs health. Several retailers provide mail order pharmacy type services. Right. Already. Exactly. Amazon haas a tech company, people get excited about the idea of Tech Companies disrupting the healthcare space. Maybe they wouldnt be so close to trying to keep prices under wraps. Thats been a main criticism of the pbm model. They dont disclose relations p relationships and pricing. Maybe deliver doctors, like house calls. On a drone. Order i need a you know, i need a proctologist. I knew you would say that. No, you didnt. I thought i was going to say a dermatologist or something. I wasnt going to is a proctologist. Podiatrist you were going to say proctologist. No, i was not. I got you here. Coming up thank you, meg. Had boris here. Target out with Quarterly Results. Well dig through the report with an analyst. As we head to break, heres a quick check of whats happening in the european markets. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Target is out with Quarterly Results beating on the top and bottom line. Joining us is michael lasser, analyst over at ubs. Obviously markets so far like what target has said with the surge in the stock premarket. Whats your biggest question for that Conference Call coming up . Good morning. Thank you for having me. I think the biggest question for the Conference Call will be about the pace of investments, and the degree of improvement. So the company beat the consensus by about 30 . And so they really walloped what the market was looking for. Driven by all points and models. Gross margins, samestore sales. Expenses. The question is, did they layer in some the investments that they promised at a slower pace than what the market was anticipating, and so well still see those over the course of the year. With all this being said theyve talked about seeing an improvement in the business, particularly in march, but traffic was still down 0. 8 . And so theyre not out of the woods yet in the road to improvement is going to be long. The average amount was also down 0. 6 . In terms of the investment, whats your number one investment that youre looking for target to make to actually turn things around here and catch up, if it is catching up, with the likes of a walmart . The number one investment area has got to be price. Thats stakes for everyone in retail at this day and age. The gross margin was down modestly by 45 basis points year over year. However they talked about really that being driven by an increase in fulfillment costs which is the cost of doing business, when your ecom business is growing about 20 . The question from here is do they have to lower prices and use their p l to fund those price adjustments in order to deal with the effective price wars going on in retail. We think that most likely pace is they will have to. I see inventory is down 5. 5 year over year. It means potential margin improvement against a backdrop where maybe they figure this out. Is this an investable stock here . The stock is inexpensive, and does reflect some risks that its facing over the long run. Plus, got a 4. 3 dividend yield. So the way we look at the stock is the downside here is pretty limited. To really get paid, theyre going to have to show a sustained improvement in both sales and margins over time. And our argument is, given whats happened in given whats happened in retail its going to be hard to see that. At least in the near term. So, we think that downside is limited, upside is probably limited, as well. Its really balance risk reward here. Michael thanks for joining us. Do you think its investable . Yes. We talked it on the show at 5 00 where we sit right here. I sit where joe would be, but we have said look at where it bottomed out. 2014, 54. 5, which it traded against that. If you like walmart at 16. 5 times forward earnings target at 13 especially if theyre turning this vote around which this quarter makes it appear as though they are. Hmm. I think well get a trump tweet . I hope so. I feel like we should be any minute. Right . Are you watching . Youre watching. Im also looking at alien covenant. Friday. Friday. I mean the greatest scifi series one of them. Were you a Sigourney Weaver fan in the day . Yes or no . Yes. Yeah, me, too. In the original alien. Some people like the sequel and say it was better. The original was amazing. Mels never seen it. Ridley scott, too. I wouldnt normally sell a fox offering, but i love alien. Thank you, guys. Thanks, guys. Have you fun see you guys. Welch getting miked up over there. He is ready to go. Master of Management Joins us for the rest of the show, jack welch is here to talk about everything, politic, the economy, educational, all straight from the gut. A lot more squawk box in a moment. Okay, well lets see you get up from the couch. Im sorry, what . Grandpa come. At cognizant, were uniting doctors, insurers and patients on a collaborative care platform, making it easier to do whats best for everyones health, every step of the way. You may need more physical therapy. Ugh. Am i covered for that . Yep. Look. Grandpa catch grandpa duck woah ha there you go grandpa. Keep doing that. Get ready, because were helping leading Companies Lead with digital. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Again here market alert. U. S. Equity futures pointing to a near triple digit decline. Recovered a little. Was down over 100 earlier. The latest on whats driving this mornings move is coming up. This is part of it. The battle between President Trump and former fbi director james comey taking yet another ugly turn. This time reports of a memo from comey claiming the president wanted the investigation into former National Security adviser Michael Flynn dropped. Saying he hoped it would that he would see clear to drop it, mr. Comey. We will talk politics, markets, and the economy with our special guest jack welch. Plus amazon considering breaking into the multibillion dollar pharmacy market. What would that mean . How would they do it . That story and a list of stocks to watch. Thats straight ahead as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Good morning and welcome back to squawk box here on cnbc. Were live from the Nasdaq Marketsite in times square. Im melissa lee along with joe kernen and wilfred frost. We want to take a check on the futures market. Were looking at a lower one although futures have improved just a touch over the past hour or so. S p looking to lose about 11 points at the open. Dow looking to lose about 84. Nasdaq looking to be down about 20 points. We did see an improvement once target reported that stock is higher on the back of better than expected First Quarter earnings, Second Quarter guidance in line with what analysts were expecting. The oil markets reacting initially, to api data. Although were seeing a bit higher for both wti and brent. Brent is up about half a percent. Were getting eia later today. The 10year note, bid for safety so were seeing yields down this morning, 2. 292 and that is the lowest level since the beginning of the month or so. The dollar, this is an interesting one, has lost all of its postelection gain. So we are seeing we are seeing the euro higher against the dollar here, so bits of the euro. And take a look at the vix. This is really the start, if we can say that in terms of action. A surge in the vix so we havent been at this level for quite some time. Off of its highs. Yep. But 11. 59. At this point. Like so many things, that 10 when youre a 10 stock its not what it used to be when the vix was up in the 20s. On a percentage basis its a big move but sort of bouncing off a close which is saying something. That the volatilitys been so low. We pointed that out a week ago monday, when it was the 20 i dont know. However long 20 year low. Heres some made lines at this hour, something we havent heard often lately a retailer beating estimates by a wide margin. Target reporting quarterly profit better than estimates. Revenue topping forecasts, same store sales down less than expected. Apple has assembled the first iphones ever to be made in india. The initial production run of iphone se models will begin shipping to customers in that country later this month. Local manufacturing is considered key to the push into one of the worlds Fastest Growing smartphone markets. Mcdonalds is expanding into food delivery. Theyve expanded Delivery Service into four cities, los angeles, chicago, phoenix, and columbus, ohio. Using ubers service to make those deliveries. Our guest host this morning is a titan of industry and one of the Business Leaders who has President Trumps ear. Joining us now is jack welch, executive chairman of the Jack Welch Management Institute and a member of the president s strategic and policy forum. Jack, like so many of us, youre at home sometimes, watching cable, i know. You know, typically youre watching squawk box but you watch everything. So my first question is going to be what have you wanted to say as youve been watching everything thats happened in the past week or two, have you been wanting to yell anything back at the tv . Or do you feel strongly . Where are we . You can talk about the market. You can talk about the administration. You can talk about the democrats. You can talk about anything you want. My view is polarized. I mean, i look at the president , and i give him an a on policy. I give him an a on appointments. I love the people hes picked. At every, betsy devos, scott pruitt, the military side, rex tillerson. I love those people. I think theyre great. So i give him an a there. I give him an a on the morale of the Business Community and the morale in the country, the spirit in the country. The consumer service. The salaries for kids getting out. Theres an air of confidence. Now when you read that i could go on and point out gorsuch, and the appeals court, and all these things that i love about what hes doing. I love where hes going, if he could get there. Now i go to management of a bureaucracy. I give him a dminus and im being an easy grader here. The firing of comey. I dont want to argue whether comey should have been thrown out or not. But clearly you dont fire him the way trump fired him. We teach at our school that we talk about all the time on this set, love them on the way out as much as you loved them on the way in. Love them on the way out as much as you loved them when you found them. Sometimes you dont bring them in. A severance dollar is the cheapest dollar youll ever spend. And know that. Because otherwise there will be customers, there will be recommendations, there will be all these things if they go out as the memo leak a consequence of not loving him on the way out as he loved him on the way in . Well, thats one of them. Clearly you dont make any friends doing it the way he did it. Theres going to be retribution. Its a minor league, its a rookie mistake. Its a clear rookie mistake. Thats the issue i was going to get to next. So hes an outsider, no polite clal experience. Theres going to be mistakes like this. Is that what it is. Or is there a malevolence involved in all this . Is there an is it youre wanting to go there. A d, a dminus. You have got a team. Youve got a white house team. Youve got to give obama credit. There was no trouble on that team he had. He had that team around him. They spoke with one voice. You have to have a team. You set the mission. He set a great mission. Make America Great again. Get jobs back. Stronger military. Lead the country. He had the mission. Now you align the troops around the mission. And everybody buys it. If they dont get on the bus, throw them the hell off the bus. Get them out. Dont fool with resistance. Why hes letting these people that are leaking everything hang around. I mean its crazy management. Should he have known that as a Business Leader . Or is Political Leadership different . No, i think he was an entrepreneur who ran his own shop, and he never ran a bureaucracy in my opinion. If you run a bureaucracy, theyre in the weeds, theyre behind the desks, theyre whispering at the water cooler. You got to nail them. And get them the hell out of there. And he didnt do that. He had a family business. He ran it beautifully. In the end he was very successful. But you cant keep doing that. Communication skills. You got to get your Communications Team all together with you and they got to live with you. So everybody has the same message. Everybody speaks with one tongue. This is crazy. He says one thing, they Say Something else, and the press has a party. And look, hes a victim of throwing mud in the president s eye for a year. Now if you you show up at every rally and youre pointed out as a bum and all those things, a crook, whatever you call it, and then you go home and you get the ink, man im going to get you when you get down here. Thats the story. Yeah. And now youve got these little things, russia. The russian thing, theyve made that up in the in the convention. Because hillary had the iranian mess and maybe he met with a russian somewhere in the night or i dont know, but he got 35,000 or 45,000 for a speech, bill clinton got 500,000. From the iranian related folks. And they got tens of millions of dollars to the foundation, and they approved the iranian deal. So i mean, come on. Russia is a wonderful collusion. Whats collusion here . How does whether the rot is justified or not, how does President Trump stop the rot in the short term . Look, the guy that screwed up, thats why i gave limb a d. Hes got all these things wrong now hes bill clinton had a mess in the first six months. And the last six. Well, but he pulled it together beautifully. Right. And lets hope he can meet without Chuck Schumers drama in the pit oh, my god. Crying that the immigration is now just Chuck Schumer used to be a good guy. Right. A patriot. These guys are tearing the fabric of the country. At what point does all that optimism that youve spoken about get eroded from all this . I think its going pretty well now. Its its being eroded somewhat now. Theres no question that his agenda is under assault. And theyll do anything to stop it. They couldnt stop it before unless they got some republican help. And now, have you seen i said earlier we need a list of senators that are up in 2018, because those are the ones theyre all worried about their own rear end. Come along today. And i want to mention to them how did they like being in the minority . Theyve forgotten already what it was like being in the minority. Would they like hillary in there now . What role would they have with their agenda . We will have them on. They were conspicuously absent last night when, you know, even and thats immediately you see places like media matters, which i dont even like mentioning, but their initial take was, republicans arent even going on fox tonight theyre so worried about, you know, sort of piling onto whether this how many times he screwed up. I know. But during the campaign there were probably 20 times, instances where oh, this is it. The guys toast. This is it. And it never was with the public. With the people that were actually going to vote on november 8th. I dont know it i dont know where we are right now. Obviously its been a tough eight days. Thats for sure. Yeah, well, selfinflicted, most of it. Well what about this if, in your view, if the memo is correct, and it supposedly takes meticulous notes, if he said, in those words, i hope you can see clear to let this go, is that does that rise it doesnt rise anywhere to me. But thats the law and i dont youre not a lawyer. I cant comment on that. But ill tell you this, this whole idea of russia and collusion, this is a ginned up idea by the democrats because they had a hillary problem from the summer to the election on iranian. She approved an iranian deal that gave 20 of the iranians to the russias. Right. And her involvement with the russians ought to be invested because theres a check to him, theres a check to the foundation from the board of the uranium company. Thats real stuff. Flynn is a whisper in the wind. And now he may have done something. I dont know. Well find out. Coming back to the trump administration, and the leaks internally do you know who it is . Are those something that he is to blame for from a position of weak leadership and not something . Or is there a sort of malicious level of it going on underneath that he cant deal with regardless . You tell me. Youre the expert. Im not an expert on that. I wouldnt have anybody in a meeting that i didnt, believe in, and wasnt part of the agenda that we were pushing. That doesnt mean i want to do something corrupt. How do you find i mean if you were still the head of ge and stories were getting leaked to the press about ges strategy, et cetera and you had to close ranks how would you go about doing that . I had a mission and i had a set of values, behaviors, and i reviewed every person by their behavior. And i looked them in the eye and said, you did this, you go home. You did this, you go up. I mean, straightforward. This is not a rocket science. This is get people who believe in the mission, who climb mountains for it, who will fight for it, and hes got these guys, i think some of the obama people are still in the white house. If President Trump rang you for advice this week would you be telling him for quite a radical reshuffle of his team . I dont know about a reshuffle of his team. Hes got to go through the team, yes, and whos doing this, and he can find out, he can find out that pretty easily. You got enough of your friends there, i hope a lot of different factions. Name them, right . But i dont think thats necessarily true. Really . Youve got priebus, kellyanne, jared, youve got cohn, i mean youve got bannon. I mean thats five right there. But if you cant bring them together, thats your fault. Thats your fault. You dont become ceo or president by playing the favorites. I saw your tweet. You like huckabee a lot, Sarah Huckabee a lot. I thought she was charming. I thought she did a good job. The republicans who are always yelling sexist beat the hell out of her. I mean the democrats beat the hell out of her in the press conference. These beautiful beat the hell of this woman who was trying to do a job and filling in. Sexist, get out of here. Can i quickly bring it back to the market and the effect this is having on business optimism. Because so far the last ten days, the only real asset class this has taken its toll on is the dollar. And the equity markets have held up well. This mornings lots of factors, but the point my point being really is that it hasnt hurt equity markets until the futures market this morning. 80 points. And its only 80 points. Exactly. So ultimately it hasnt really hit equity markets. Do you think it will take its toll coming up . What more worrying factor would need to spark a bigger selloff . If we well, if they have something real, because impeachment proceeding would blow the market away. Not according to schlossberg. He says that it would mean pence, who can work better with congress to get stuff passed so the market would go up with an impeachment. You hear that . I missed that. You should pull the tape. Worth it. No, but i think i think without question we got got a guy thats on the right agenda, with crappy management practice. Weird, because it worked in the private sector. Entrepreneurs every day. Well have much more with jack. Jacks going to hang out with us for the rest of the show. Meantime coming up, first on cnbc interview with the cho of Johnson Johnson ahead of the companys Analyst Meeting and later the secretary of veteran affairs joins us to discuss the growing veteran population and the challenges facing the system. Another look at futures. They have been improving as the morning has gone on but it looks like still the dow will lose about 75 points at the open, nasdaq down about 10. Youre watching squawk box on cnbc. Folio. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Mobility is very important to me. Thats why i use e trade mobile. Its on all my mobile devices, so it suits my mobile lifestyle. And it keeps my investments fully mobile. Even when im on the move. Sign up at etrade. Com and get up to six hundred dollars. 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. Johnson johnson holding its pharmaceutical Analyst Meeting today. Meg tirrell joins us from New Brunswick with the companys chairman and ceo, meg . Melissa, thank you so much. Alex gorsky, thanks for joining us. Meg, its great to have you here in New Brunswick in the original powerhouse. This building has been around since 1907 and filled with a lot of great history. Today youre focusing on pharmaceuticals. 47 of your revenues last year and youre outlining these ten new drug you expect to file for approval by 2021. Do you expect that pharma will continue to grow as a portion of your overall business . Absolutely. Our pharmaceutical business, first of all, has had an incredible run over the past five years. I mean if you look over the last five years i think weve been able to introduce about 12 new compounds, 11 of which are block busters, billion dollars plus. What were really talking about today is how excited we are for the future. Weve got ten between now and 2021 we think weve got about 50 line extensions, 11 of which have about half a billion dollars potential. These are compounds in cardiovascular disease, immunology, Infectious Disease that really make a difference in patients lives. One of the things that j j has been emfalsizing recently, and today, is your focus on prevention, disease interception, and cures. And some people might say thats antithetical to the business model, you want chronic therapies that make you money for a long period of time. How do you make money if youre curing a disease or preventing a disease . If you talk to our scientists today and join us for the program youll see these are really committed people who ultimately want to help patients. Were finding across so many of these diseases is frankly, we get to the diseases way too late. So whether its stage three or stage four cancer, whether its alzheimers disease, we tent to be getting there in the seventh or eighth inning, we know if we can intercept earlier, detect it earlier through the right kind of molecular diagnostic that our chances and probability of having success and stopping that disease cascade from occurring is much, much better. Yes, that is a big focus of ours going forward. I want to ask you about an immediate concern for the industry. Everybody is saying that drug pricing is probably the foremost concern of the drug industry right now. How do you look at the pricing environment and the pressures youve been seeing . I think you have to take it above drug pricing and really look at Overall Health care. Health care is important to our country. Its 20 of the economy. And if you look within health care, of course, the pharmaceutical component only represents about 14 or 15 of total health care spending. Now id argue if you look over the last 50 years, 100 years, 1900s when this building was built the average life span was about 50 years old. Today of course its into the late 70s. Much of that due to frankly antibiotics, drugs for card joe vascular disease that have helped extend lives. First of all making sure that we innovate, price appropriately. I think the other area we have to pay a lot of attention to is the outofpocket component. Unfortunately for many pharmaceutical products it can be as high as 25 , versus 5 in the hospital setting when the pharmaceutical component is really making the bigger difference. So its part of the Overall Health care value, economics question. Joe, youve got a question . Just the comment and a question, alex. I mean, if you make that point again and again that you made so eloquently about Early Intervention in these diseases that end up costing so much money in terms of care in the hospital and doctors and everything else, then it becomes clear that you dont want to do anything to hurt the innovation of the pharmaceutical group, because the longterm rewards will be so great. But theres something wrong somewhere. I dont think its pharmaceutical prices. Theres something wrong somewhere in our Health Care System, maybe its spending all that money for the last six months of life, im not sure what it is, but you probably know where is it that the key area where we need to cut down on what were spending fl were just doing it in a way that makes sense . Where is it . Look, joe, you bring up a great point. And if you look across health care theres several areas that we need to focus on. First the one that you mentioned, end of life care. I believe the statistics are up to 30 of health care can be spent within those last few weeks making sure that we understand and we frankly better manage end of life episodes. Secondly, its making sure that we get earlier intervention. Frankly some of that gets to wellness and prevention in the first place. Right. About 75 of many diseases, frankly, can be significantly impacted if we just live a healthier lifestyle. And we change and do certain things with our behavior. So a lot of those components, plus weve got to also move from a fee for service, where you know, basically were paying on each independent activity that makes up health care towards more of an outcomes, a value based approach, as well. I think if we do some of those things it can have a tremendous difference on health care, and frankly, make it a lot better for patients. Alex, its melissa. Just to follow up on your answer to megs question regarding drug pricing. You had essentially said that the cost of the pharmaceutical itself is not really driving the price higher. So where is it in the system . And were getting reports today that amazon could be entering the pharmacy business. Could a player like that, in your view, lower costs for consumers . Well, melissa, i saw the information this morning as well. Look, i think more competition would be a good thing. I think that theres still a lot of efficiency. That we could do better in the system. Of course we always have to remember that we ensure that we have high quality, we have the safety of the patients, and the products first. But, i definitely feel that theres a lot of complexity. Theres a lot more efficiency that can that we can put into the system to make it overall better, and less expensive. Well, alex we just about have to go. Cant leave without asking you about the current administration. What are your expectations for the impact on your business . Will it be a positive one . Or is Donald Trumps focus on drug pricing this issue saying the industry is getting away with murder going to end up in some kind of, you know, pressures you dont want to see . Its still very early days. Theres a lot going on. Were encouraged by some of the things were seeing around trade, regulatory policy, such as tax. I think were still very early on in the health care debate. And i think that regardless of which particular proposal we actually end up implementing, theres still going to be a lot of work to do and we look forward to working with them on that. But in the end weve got to make sure that weve got a Great Health Care system in the United States. And we can make it more efficient. We can make it more effective. Weve also got to make sure that we continue to create an environment where innovation was rewarded. Because thats whats going to enable us to cure alzheimers, your cancer and a lot of the things we were talking about earlier. Thank you so much for being here. Thank you so much, meg. Thanks, meg. Wilf, putin. Putin says trump did not past secrets to minister lavrov and said that they can give records of the conversation. They have records of the conversation, theyre willing to give to the u. S. Congress and the senate. So putin is like what are the records i wonder . The transcript. I guess of whatever it was that was said. This is like surreal, isnt it jack . The interesting thing about that, obviously, is there was an official comment from russia 24 hours ago then obviously President Trump tweeted this time yesterday when we were on air to suggest that some things were revealed. It was revealed that he was trying the rationale was that a plane had gone down balls of a lack because of whatever and hes trying to say, look, this is what we no, no, i get that. If it came from israel. Israel said we dont have a problem with it and we expect to get Even Stronger with the trump administration. This is another i agree. Trumped up as jack was saying earlier the issue is the mixed messages. You have someone deny completely, then someone say it wasnt illegal, the intentions were right and still these confusions about messaging that i think people are losing confidence on. Anyway, much more on that and other things coming up including Veterans Affairs secretary David Shulkin our guest coming up on squawk box. What happened . Dad kinda walked into my swing. Huh . Dont you mean dad kind of ruined our hawaii fund . I thud go to the thothpital. There goes the airfair. I dont think Health Insurance will cover all. Of that. Buth my fathe without that cash from aflac we might have to choose between hawaii or your face. Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac weve done well in life, with help from our advisor, we made it through many market swings. Sure we could travel, take it easy. But weve never been the type to just sit back. Not when weve got so much more to give when you have the right financial advisor, life can be brilliant. Ameriprise looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Breaking im not laughing at this, jack, im not laughing at jack, with jack. Breaking news on the battle between qualcomm and apple. Cnbcs jon fortt joins us now on the squawk news line. Tell us, jon, whats happening . Well, here it is. This battle is escalating. Qualcomm is now suing the manufacturers of apples iphone and ipads. And those names include foxconn, pegatron, and compile. Theyre suing them in u. S. District court for the Southern District of california. And for withholding payment on qualcomm licensees qualcomm sued apple several days ago. This comes after apple stopped payment on licenses of qualcomm technology. They dont like the fact that qualcomm charges a percentage of the total price of the device. Apple devices tend to cost quite a bit for a newer iphone and ipad. This is mostly about iphones. Now, qualcomm says you can contact manufacturers are still paying for these other companies that they make devices based on. So its just apple that theyre withholding payment from qualcomm says that the manufacturers say apple told us that we cant pay you. But qualcomm says hey youre supposed to pay us. You have to pay us. So thank you qualcomm trying to bring additional pressure to bear to bring this legal issue to a head. Often cases like this, a company like apple will indemnify the contract manufacturer, say hey, were going to pay your legal bills if this becomes an issue. But, well see where it goes from here. These folks could respond in a different way because this is another big company putting pressure on them from the other side. But just very, very quickly, john, lets be clear, qualcomm has already taken out guidance from their guidance the royalty payments from apple, correct . So its already reflected in the companys outlook . Yes, its already reflected in the outlook. Qualcomms not getting paid. This is them applying additional pressure. For the hope of getting some of that payment. All right, jon, thank you. Appreciate it. Jon fortt with that bringing news. More headlines after the break. Ok, lets call his agent. Im coming over right now. The newly advanced gle can see in your blind spot. [ dinosaur roars ] onboard cameras and radar can detect danger all around you. Driver assist systems can pull you back into your lane, if drifting. Bye chief. Bye bobby. And will even help you brake, if necessary. It makes driving less of a production. Lease the gle 350 for 579 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Good morning welcome back to squawk box here on cnbc. Live from the Nasdaq Marketsite in times square. Among the stories front and center, Mortgage Applications fell 4. 1 last week according to new figures from the Mortgage Bankers association. Those new purchase applications and refinancing activity fell. The average 30year Mortgage Rate stands at 4. 23 . Thats unchanged from a week earlier. Americans will be hitting the road in significant numbers this coming memorial day weekend. Aaa projecting at 34. 6 Million People will make automobile trips of 50 miles or more. That would be up 2. 4 from last year and the most since 2005. Anheuserbusch inbev is in hot water with massachusetts regulators. They accuse the beer brewer of giving out free bar equipment to business on the condition they use it only for budweiser products. The company says it believes its actions were legal, and it is working with regulators to resolve this issue. Our guest host jack welch, executive chairman of the Jack Welch Management Institute. Jack i wanted to ask you a bit about the meetings youve been to, the strategy and strategic and policy meetings with President Trump. Youve spoken before on cnbc and elsewhere about how positive the tone was coming off the back of those meetings, how confident Business People were. Right. Do you think theyve lost confidence, those ceos in the last ten days or so, because of the political rumblings weve seen . Well, theyre concerned about the upset that could occur in the agenda. Because the agenda is right on the button. I mean, tax reform, wilbur ross has done a terrific job at neutralizing the chinese threat, if you will, in trade. Betsy devos is driving the school choice. The student, the customer, rather than the professor or the teacher. And so theres so many things going right. And were worried about that being derailed by these selfinflicted rules, and the democrats are playing this perfectly. The president may be the most thinskinned person alive. Maybe joe is worse. Were right up there together. I mean, the most thinskinned guy alive. And they yang him with the russian, and they yang him with this and he jumps and that throws people off. I mean, and the communications are terrible. I thought the white house celebration over the health care pass by the republicans, in the rose garden, was ugly. Those fat cats all have beautiful insurance plans. The congress is loaded with insurance plans. They passed something. They didnt articulate heres what obamacare does, heres what youre getting now, there was no sales. The only celebration is we won. But the consumer didnt get a chart that said, heres what you were getting before, heres what youre getting now. And the democrats took it away. They took the communication away. Youre stealing 23 Million People wont get health care. They started a rant, the democrats are outcommunicating, and they have a solid bar. Jack we talk a lot about whether republicans in congress will soften their support or give up their support for President Trump. What about the Business Leaders on the roundtable and the strategic and policy forum . Do you think any ceos are likely to resign their position . The reason i ask is because at the jpmorgan yesterday jamie dimon came under a lot of pressure from shareholders about his position on that forum given some views on policy, whether there are conflicts. Well, if they want to say, and where were going, and Prime Minister is wide open and listening, he has done that in every meeting, and hes organized us in groups around subjects we wanted to be involved in. I think youre better at the table, than you are in a back room. You might lose but you got a voice. What can the president do now in terms of communication to the Business Community to indicate that he is still working on that agenda, and as far as hes concerned is still on track . Talking about it, dont go to the russian argument. Dont go to these petty things. Stay on jobs. Stay on health care. Stay on tax reform. Talk about it every time. Send spicer out there to talk on that stuff. Not get in quarrels with everybody. But they take them off to the side. So its simple. We want to be number one not number two in every business, fix, close or sell the business. Everyone in the company walked around saying that. In their sleep. Get a message. Hes got a good message. And he says it when hes on message. And unfortunately the rest the chances of tax reform, have they slipped significantly in your eyes . Is it likely before the august recess . Well, we dont have it will depend on them. The republicans in reconciliation can make this all happen. They got to have all the republicans. Theyve got to have them. But they can do it. Theyve got to step back and say, do i want to be in the majority minority, did i like it over there when obama was doing everything and i couldnt have a voice . Because you dont have a voice in the minority. You have nothing. You might as well be selling candy in the street. And then so they got to take them and talk about what life would be like now, if hillary were president. Listen, joe no, i know. I know. Sit them down and say what do you think your life would be like now . If you didnt have the senate . You didnt have the presidency, and you were sitting out here now, going to work. Right. I mean, jack you answered will freds question about ceos worrying about consorting with the president. And did anyone ever ask jeff immelt or any of the ceos that were tight as ticks with the Obama Administration, as the Obama Administration talked down fat cats, talked down the private sector, tried to raise taxes, passioned obamacare without a single republican all the things that were done, did any ever complain to the Business Council . And did everyone ever ask him, are you going to abandon president obama because hes so antibusiness . Why ask about a guy whos doing all these probusiness things, and whether they need to abandon him when no one asked am i making a point . But the democrats have won communication. Thats what i mean. Theyve won the communication. But people dont they really dont ever ask themselves i dont think theres any introspection in asking about questions like that. They dont even anyway. Its a question, though. I know exactly what it is. But its a different world. One thing doesnt apply it applies to one thing, it doesnt apply to the other thing. Its a permanent one off the back of the jpmorgan agm yesterday. My point it is has nothing to do with you. It has to do with ive never seen, for eight years i never saw a single ceo thats because theyd won the communications battle. I understand it. And i said that miscommunications are why you get the d minus. Right. But its also, you have one foot you know its not a fair Playing Field from the start with mainstream media. We all know that. But you didnt say that. Jack, stick around. Youve got a thin skin, joe. Stick around. Coming up, you know, just because you have a thin skin doesnt mean people arent out to get you all the time. All right. Secretary of veterans afairs David Shulkin is our guest, squawk box returns after a quick break. Tomorrow on squawk box, a tax code built for growth. Congressman kevin brady joins us with his plan to grow jobs at the american economy. Plus, meet the rock star of biology. Number 7 on the cnbc disruptor list, the ceo of ginkgo bioworks joins us to discuss the world of biodesign. Tomorrow at 6 00 a. M. Eastern time. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley stand up for whats right. Experts are gathering in boston this morning for a conference focused on supporting veterans coping with the effect of head trauma and traumatic brain injury. For more lets bring in Veterans Affairs secretary David Shulkin. Mr. Secretary, thanks for joining us this morning. Lets go into, that was a quick two sentences i read. What exactly is happening this morning . Well, good morning. Were here in boston at a meeting that we put together called the brain trust which is bringing together people from the department of veteran affairs with Industry Leaders in technology, biotech, and other companies that can help us find solutions from veterans who have injuries to their brain. Certainly a worthy cause, and we wish you luck with that. We all when we talk veterans, though, now were all looking for a snapshot in time on where we are and trying to deal with some of the publicity the bad publicity and the bad things that have been happening, wait times, et cetera. Where are we on that process, mr. Secretary . Well i think that were on our way to bringing back a system that veterans can rely upon and that americans can feel good about. This is a crisis that started in 2014 with the v. A. Not having the resources that they needed to care for vaet rans. And a lot of these problems had been years and years, maybe even decades in building. And were now addressing these problems headon and making sure that we have a system thats modern and effective for veterans for generations to come. Is it a funding thing, mr. Secretary . If we doubled the funds, would that fix everything . Is it an organizational thing . Is it a is it problematic with a governmentrun program that you just dont get the accou accountability that you would get in the private sector . Because you know you can extrapolate a lot of what you find out and a lot of what you do you can extrapolate to how we fix the Overall Health care system. Well i think that when you are talking about an issue as complex as health care today and youre talking about a system as big as the department of veteran affairs, which is the Largest Health system in the United States, its never one answer. And i think that for years, the v. A. Had been underfunded. And for years the v. A. Had put off decisions that needed to be made to modernize its systems to keep up with where health care has gone over the past decade or so. But now, i think that we are dealing with those issues, were making some of the decisions and i do not believe this is an issue primarily of funding. I believe that the v. A. Has, in general, Adequate Funding to be able to fix its problems. We now need some legislative changes. We need to make some Management Changes to adapt to the best practices in the industry. And were well on our way to making this a system that works again. I can remember, mr. Secretary, five years ago or so paul krugman and others when we talk about single payer or talk about, you know, alternatives to the Health Care System we have in the country, prior to obamacare, they would point as a model to the v. A. As look, it can be done. It can be done under budgeted, and providing great care and i think that maybe that was not the case. That everything finally came out that that wasnt necessarily the system that you would use to argue for single payer. Is that an accurate portrayal of what happened . Is it not something that works for the entire country, governmentrun systems . Well, ive spent my entire professional career in the private sector Running Health care institutions. And so im relatively new coming to government. So i came in with a very open mind on this. I will tell you that what v. A. Does for veterans would not be available in the private sector. And our veterans are coming back with very complex issues, after theyve served defending our country and i believe that the v. A. Is absolutely essential and necessary to be able to make sure that we are providing those services to veterans. The v. A. Is also not just a governmentrun organization. About a third of our care now for veterans is in the private sector. Working with private hospitals and doctors. So what were developing now is really an integrated system of care between what v. A. Can do, what the private sector can do, all for the benefit of our veterans. All right secretary shulkin, thank you. Good luck this morning. Thank you. Hopefully you make some progress on whats an important issue. And well see you again soon. Thank you. Thank you so much. Byebye. Okay. Breaking new just in from ford. It has announced a voluntary Separation Program which will impact 1400 salaried positions. Those workers expected to depart by the end of september. More on the story coming up in just a few moments although this does appear to confirm the reports out yesterday that they would be doing this. Also coming up the code at the heart of the wanna cry virus that spread around the global earlier this week was apparently stolen from the nsa. Well talk cybersecurity and web disruptions with the ceo of number 11 on the cnbc disruptor list crowd strike. Squawk box returns after this quick break. 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 . I count on my dell small for tech advice. With one phone call, i get products that suit my needs and i get back to business. But weve got the get tdigital tools to help. Now with xfinitys my account, you can figure things out easily, so you wont even have to call us. Change your wifi password to something you can actually remember, instantly. Add that premium channel, and watch the show everyones talking about, tonight. And the bill you need to pay . Do it in seconds. Because we should fit into your life, not the other way around. Go to xfinity. Com myaccount a lot more from jack welch when we return. And later congressman jim jordan will join us to discuss tax reform. Quick look at the futures as we go to break. They are improving a little. Down now just 82 points having been down triple digits about an hour ago. Market alert. Futures in the red as the white house denies details of a memo from exfbi head james comey. Tax overall. Third ranking senator john thune pitches his proposal for reform first on cnbc. Plus jack welch, straight from the gut. Stay on jobs. Stay on health care. Stay on tax reform. The business titan is our special guest 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. Youve learned nothing. Good morning. Welcome back to squawk box here on cnbc. Live from the Nasdaq Marketsite in times square im joe kernen along with wilfred frost and melissa lee. Becky and andrew are off today. The incomparable jack welch is our guest host. Executive chairman of the Jack Welch Management Institute, which is you got like how many students now . 1600. 1600. Wow. Yeah. And and an nps score of 84 this semester. Net promoter score which is student satisfaction. Its off the charts. Were growing 40 this year. Weve already learned one lesson for free. A severance dollar is the best dollar youll ever pay. Love them on the way out as you loved them on the way in. Im taking that you know you parade the m. I. T. Graduate around the room, look who i just hired. And six months later youre i dont want to talk to you and they let him go youre talking about me again, right . Why did you say that . I taught there for four years. I dont remember you. The futures up when you did say that i was thinking, if you were nicer to comey the way you did it do you think he wouldnt i dont know whether that would have made a difference though. You would have had to take him through. You never surprise somebody. Thats another rule. Never surprise its almost like saying youre buying someones silence, jack, almost sounds like what youre saying. No. Youre recognizing your mistake. You put them in the job. Okay. Comey is different, though, because he was appointed during a previous administration. So its a little you didnt love him on the way in at all. Yeah, but you have to deal with what you dont like about him all the time. He kind of loved him when he first met him, when he became president and said you can stay. Thats true. You cant impulsively fire anybody. Do you think youve ever seen a happy whistleblower . Did you learn this happy whistleblower arrives . I like the new jack welch here. You dont ever remember just simarily dismissing people . Do you remember a name that people used to call you long ago where the building buildings were left standing and there were no people anywhere. That was the media. I know it was. That wasnt the people. The people you learned this over time that this no i always did it. Thats why we never had problems. Right. Nobody ever, when i retired, i said, you find nobody who we surprised when they left. And my friends. My friends who didnt get jobs are with me now. We didnt look at the futures. That is a story today. Triple digit losses for awhile in the futures but i think theyve pared those. Last we saw the dow was down, oh, its down 85 right now. And, some would tie this and the weaker dollar to whats happening in washington. And the, you know yeah. Some angst. Dollar down again as well we should point out because it was down 0. 7 yesterday and down 4 now yeartodate and its down another 0. 7 against the yen this morning. Shares of target are surging in the premarket. The earnings and revenues topping forecasts. Same store sales fell 1. 3 but that was only a third of the decline that had been expected. Shares are up some 7 bucking the retail trend there. Antiausterity protests turned violent in athens. A group of protesters threw gasoline bombs and flyered flares at riot police. Workers across the country walked off their jobs as lawmakers were set to approve another batch of reforms that could impose more hardship on greek workers. Ford has announced a voluntary Separation Program. It will affect 1,400 salaried positions. The automaker will use early retirement and special separation packages. The workers are expected to depart by the end of september. Ford shares down 0. 2 in the premarket today. One of the effects of your beloved European Union on the southern european as germany flourishes the poor people in greece are asked so who gives asked to give even more. Who am i a representative of today . Im representing the brussels side of the argument this time around . The technocrats the unelected bureaucrats in brussels, yeah. The socialists just like every day. Now to politics. Fired fbi director james comey wrote an internal memo, saying that President Trump asked him to drop an investigation into former National Security adviser Michael Flynn. This is according to reports and sources tell nbc news the memo is part of a paper trail that comey built to document what he believed to be trumps efforts to derail the fbis investigation into his campaign alleged ties to russia. Lets bring in congressman jim jordan, a Founding Member of the Freedom Caucus. Where to begin, congressman. What should we assume we know . At this point, the language that comey reportedly condemn plainiously wrote down, can you see clear, or i hope you can see clear to let this go in right. Do you believe that much right there . Well, i think we should get the facts. A lot of Anonymous Sources, a lot of reporting. One side says one thing, the white house says Something Else. Lets get the facts. Lets let the intel committees do their investigation, and you probably saw last night with chamber and chaffetz of the Oversight Committee said if he has to subpoena the memos, tapes, anything related to this. Lets get that information. I completely support that. Then we can proceed and get the full all the facts, and go from there. I guess you dont have any more insight into whether there are tapes or not. No. Nobody knows. Does it then become a he said, he said situation . And lets say its proven or lets say that you believe that President Trump said in his words, and youve been around him, you know, he could maybe theyre denying it was said. Lets say you know what, mike flynn, hes gone, he resigned, i hope at some point you could just see to drop this. Does that rise to the level of obstruction of justice in your view . Again i dont have all the facts. Doesnt sound like it to me but ill let the legal experts determine that. I want to see the information. I want to see the evidence. I want to see the memos. You know, mike flynn served our country well as a general. Maybe that was the context of those that conversation, if it took place. The white house is saying it didnt occur that way. Lets get the facts and more on from there. No ones ever accused me of going easy on my own party. Ill follow the trail, the truth, the facts but lets get those first before we start jumping to conclusions and having hypotheticals. Congressman im glad youre here today. And senator thune is coming on. But, just watching the coverage last night, most of the cable channels were saying, they have plenty of democrats ready to weigh in, and i was watching Chuck Schumer, i mean, no republicans were appearing last night. Do you get the sense that this is a bridge too far for some guys that are up in two well youre up in two years. But for some of the senators that are up in two years . Is this a bridge too far . They ready to throw in the towel yet, do you know . I get the sense of that. We should get the information. We should get the facts. Lets proceed in a methodical manner here. Lets get all the information. Lets not just rely on Anonymous Sources and whats reported and what some people may speculate took place. Lets get the information. And follow that wherever it takes us. If at some point there is a need, and a select committee is warranted, im open to that, as well. But lets follow the facts first. Lets not just reach conclusions before we have all the information. Congressman, senator mccain has already called trumps troubles of watergate size and scandal. Sounds like youre willing to withhold judgment. Are you disappointed about the reaction from some within your own party . Because it makes it look like the party has fissures right now. I think what we should be focused on is the things the American People elected us to do. I think we make this job way too complicat complicated. Our job is to do what they elected us to do. That is getting this Health Care Bill done. That includes doing the tax reform, creating a tax code conducive to Economic Growth so we can get out of this 1. 5 Economic Growth weve had the last five years. Lets actually get to 3 , 4 growth, creating the right kind of tax code will help that. Lets get focused on those issues the American People elected us to do. We do that i think well be fine. And lets get to the facts on this other situation regarding former fbi director comey. Projected is 3 to 4 growth et cetera. Im story im looking the wrong way. To get to the 3 to 4 growth he needs to have a unified Republican Party. Right. Youre going to have to not each get 100 of what you want. And the problem were facing with the Republican Party is you each have your little taxes. The tuesday group, the involved with meadows, et cetera. You dont get a unified party. The democrats come at this thing as one. Yeah. Jack, i think we were unified on election day and the House Freedom caucus stands for the very things that people elected us did the people elect us to repeal obamacare . Yeah, thats what the Freedom Caucus was fighting for. Did they elect us to reform the tax code . Yeah, thats what the Freedom Caucus will be fighting for. They didnt elect us to put a whole new tax on the American People like this border adjustment tax some are talking about. The Freedom Caucus is doing exactly what we were elected to do. We will continue to do that. People are united around that message. Lets make sure people in congress in our party and our Conference Get united around that as well. I think were doing exactly what the American People elect us to do and that should be what unifies us because thats what they said on election day. Well i loved you when you were in the minority and i loved you in the hearings. You were my favorite congressman. Well i appreciate that. I wish you would now coalesce around the issue of supporting the president and driving his agenda. Because we if we dont get his agenda done, we wont get to 3 or 4 growth and you guys will be in the minority before you know it. I couldnt agree more, jack. And the tax principles, tax reform principles, that the white house rolled out a couple weeks ago we support those. We want to unite around those and get those done. Lets create a tax code that lets families keep more of their money and one thats conducive to Economic Growth so we get the growth rate we need. Were all for doing that. Lets let this other thing, we can do both of those things at the same time i believe. Congressman, what is your eta for that sort of tax deal . I mean clearly the unity is not as high as it could be. Is it realistic that it arrives this year . I hope sooner rather than later. I would love to get it done before the august recess. Thats probably pushing it. But lets make sure we get it done this calendar year. I think politically speaking that makes a lot of sense and obviously, as we talked about economically if were going to get the kind of growth rate we need the sooner the better. Congressman you were right there in a lot of jack mentioned in a lot of the hearings. Just to tie up a couple of loose ends, did it become known, is it factual that the Justice Department or certain parts of the Justice Department told the fbi to stand down on the Hillary Clinton Foundation Investigation . Is that different than this . Do you know . Well i dont know that that specifically happened. I do know we saw things in that investigation weve never witnessed before. Have you ever seen the subject of the investigations husband get to meet with the attorney general three days before the fbi interviews the subject of the investigation . Have you ever seen that happen . So we know i actually saw the immunity agreement cheryl mills and Heather Samuelson got. Unprecedented. In terms of investigation. And the other thing if trim had said to comey im ordering you to end this probe of mike flynn i think comey would have had to resign or something at that point because that would have been truly obstruction at that point. He didnt do anything. He said all right. He took some notes. He was there for another two or three months. We find out about it now. If in his view it rose to obstruction why didnt he view he had been totally compromised at that point . Great point. Im confident that the president wouldnt Say Something like that and that he didnt Say Something like that. I dont think he did either. Just shows that comey obviously didnt think that this was im just going to add one final question. Jack earlier gave the president a dminus for communication. Whats your take on that . I never give grades. Lets do what the American People elected us to do. Lets stay focused on that. Thats why youre a better politician than i am. Good to be with you. Dockman thanks for coming on this morning. You bet. And as jack said youre i dont know, the guys that are up, the senators that are up in two years, they need to they cant hide. You know what i mean . They got to come out sometime. Anyway, and Say Something. Quick programming note, were going to talk about more about tax reform tomorrow on squawk box. House ways and Means Committee representative kevin brady will be our special guest at 8 00 a. M. Eastern time. Weve still got a lot ahead on squawk box up next cybersecurity disruption. Crowd strike taking the number 11 spot on cnbcs 2017 disruptor list. The ceo will join us. And later senator john thune out with a new oped on cnbc. Com. He will be here with his pitch for tax reform at 8 30. Plus, the welch way. We get you back to our guest host jack welch. Weve got much more on the economy, markets, and of course President Trump. Stay tuned youre watching squawk box. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back. To squawk box. Disney was downgraded to neutral now from outperform. This after macquarie, as well as continuing subscriber declines at espn. And cnbc has learned that amazon is breaking in to the pharmaceutical space, or attempting to. Company hired a general manager to lead a new team and formulate a strategy and is in deep talks with industry experts. Amazon recently started selling medical supplies and equipment in the u. S. In april reports said the Company Expanded its prime now Delivery Service in japan to include the sales of drugs to patients. With the approval from a pharmacist. Crowd strike has been disrupting the cybersecurity space since its inception in 2011. It is number 11 on your disruptor 50 list. The company was called in to investigate the dnc breaches of the 2016 election and continues to be involved in analyzing International Cybersecurity threats. Joining us now, crowd strike cofounder and ceo george kurtz. George, good morning to you. Thanks very much for joining us. I mean of course a week where this is front and center in the discussion point once again. I wanted to start by asking whether, particularly when it comes to the consumer, should protection against Cyber Attacks be a public good . Should it be something that the state provides for all people . Well, its a great question and i think thats one of the areas where a lot of u. S. Citizens and maybe folks around the world are a little bit confused. And in Different Countries the protection is different. For example, in the u. S. , there is no mandate that the government protects the dotcom domain, if you will, and all the companies that are associated with it. Their mandate in their charter is to really focus on the government protecting the government. So i think its a broad issue. And i think what consumers need to do is to make sure they have the right protection in and can be able to protect themselves and have the write Security Software to prevent those advanced threats. Should there be more severe punishment for the wrong doers in this space, as well . Well, its very hard to actually apprehend a lot of these cyber criminals, nationstate actors, just because of the geographic boundaries and challenges. So, again, i kind of think its one of those areas where you got to protect yourselves, and where you can bring people to justice, certainly the governments are involved in trying to do that. And george, obviously crowd strike number 11 on the disruptor 50 list, cnbc disruptor 50 list, the fact that you are a very much cloud focused company, do you think that plays to your strengths, both today and for the future . Well, absolutely. If you look at the existing legacy players they all look like seabold. We know what happened, they got sold for 5. 5 billion and after having a 45 market share. You look at sales force, theyre 55 billion market cap because they have the cloud architecture. Its difficult for the legacy antivirus players to make that architectural change and we believe the cloud is the futured powered by Artificial Intelligence which is really what were driving. George you recently closed 100 million in definancing in the latest round, valuation over 1 billion. There are a lot of companies out there, with the likes of cisco looking to expand in the security space. What are your plans . Well, we get this question all the time. Our plans are to drive customer growth, geographic expansion and make sure we have happy, smiling, protected customers and then we have option allties. We look to the future, understand what the Public Markets might mean for a company like crowdstrike. Weve got tremendous annual recurring Revenue Growth over 300 compounded year over year and its been just a great run so far. And i think when you look at some of these latest attacks like wanna cry, it highlights the need for advanced technology that can actually stop these threats, using something that goes way beyond traditional signatures, which is what we do from an Artificial Intelligence standpoint. Optionality means youre entertaining all exits . So to speak . Optionality means, yeah, opti optionality means were focused on the customer and in the future what our plans are, well look to our board and investors and decide whats best for our company. Given our profile we certainly believe we could be a Public Company in the future. George kurtz of crowdstrike. Coming up, a memorial spacecraft. One Company Wants to send your loved ones ashes into orbit. And elon musk is getting in on that mission. That story is next. Space space. As opposed to what space. Going forward. Oh, i see. Later senator john thune out with a new proposal for tax reform. He makes his pitch first on cnbc. Well be right back. Space one Company Wants to bring a death from underground, to the celestial with the help of elon musk, they plan to send ashes into orbit on a spacex rocket. Each customer who signs up will receive a kit with a custom ash capsule. And you collect the cremated remains of one of their loved ones, and then the memorial spacecraft will orbit the earth for about two years. So far, believe it or not, 100 people have paid 2500 apiece for a reservation to have their ashes orbiting the earth. How do you even prove that its actually orbited the earth . Thats a good question. Versus collecting capsules and putting them in the basement . True. I mean when you young you think youre immortal. I dont really care what happens that much to me or my ash ash ashes. Anyway, once youre gone my souls going to be somewhere else, hopefully. Coming up, senator john thune says the current tax code strangles Business Growth and job creation in a new oped on cnbc. Com jack is going to love some of these ideas for Small Business. And i want you to Pay Attention and talk to senator thune about this because you have great input, jack. The third highest ranking republican in the senate will be here with details about a new tax proposal. Youre watching squawk box on cnbc. The babys room wont build itself. And her paw wont heal on its own. Were all working forward to something. Synchrony financial can help your customers make it happen sooner. So she can plug into her dreams. And theyll have a new addition for their new addition. Whatever youre working forward to, even if its chasing squirrels, Synchrony Financial can help you get there. Thereit comes to technology, about my Small Business so when even if its chasing squirrels, i need someone that understands my unique needs. My dell Small Business advisor has gotten to know our business so well that is feels like hes a part of our team with one phone call, he sets me up with tailored products and seices. And when my advisor is focused on my tech, i can focus on my Small Business. A sunny good morning and warm welcome to squawk box here on cnbc. Live from the Nasdaq Marketsite in times square. Among the stocks on the move ahead of the wall street open, the apparel retailer reported profit of 13 cents per share. While revenue also short of forecast shares down about 1. 8 . Restaurant chain jack in the box is jumping in the premarket trade after saying its considering a spinoff of its qdoba Mexican Restaurant chain up about 9. 6 . Also rising this morning, shares of Consumer Products maker colgatepalmolive. The New York Post reports ceo ian cook told investors hed be willing to sell the company for 100 per share. Seen a 4 jump to 74. 3. Ralph lauren has named patrice luvet as its new chief executive officer. Recently the head of Procter Gambles Global Beauty division. Hell take over on july 17th. Shares up in premarket. A tax proposal today aimed at benefiting small and midsized businesses. Joining us now senator john thune of south dakota, chairman of the Senate Commerce committee and member of the finance committee. Thanks for joining us this morning. At some point well talk about the news of the day. Lets start with some of the proposals that youre putting forth to try to loosen some of the shackles, i guess, or at least help out Small Businesses. What does it entail . Right, joe, thank you. First off, we think that small and medium sized businesses are very interested in speeding up Cost Recovery, getting them to get capital deployed to invest more, and to create jobs. And so our bill basically gives them ways in which they can recover those costs more quickly, expansion of section 179 expensing, making permanent the 50 bonus depreciation allowing startup to deduct their cost at a higher level and expanding a number of businesses eligible for cash accounting. Those are some things that we do in our proposal. We think it will serve as a sort of a marker out there. And we expect that the finance committee will enter into the discussion about how to create a broadbased tax reform bill here in the near future. And we wanted to get that discussion going. So basically, youre talking about some things that are important for Small Businesses that you want to put on the radar for the house, or whatever committee is going to write the tax reform bill . You want to have these things in front of the people that are doing it as suggestions for what should end up in the final bill . Yeah, thats right. And we think that the finance committee in the senate, weighs and Means Committee in the house and the house has a blue print out there, the administration has put forward a set of principles. The senate hasnt been heard from much yet but were starting to engage in that process and working closely with chairman hatch and the Senate Finance committee. Our colleagues there to try and put together, you know, the outline of a bill that we think we could move to the senate. And obviously were going to be focused on the issues that we think will create greater growth in the economy, create better paying jobs and higher wages. These needs to be about growth and the two things we think achieve the highest growth is the reduction in rates and faster Cost Recovery and especially for small and medium sized businesses which create a lot of jobs in this country. Youve got on the plate of the senate the obviously repeal and replace. And does that i mean do you foresee that being first before you do any of this other stuff . And where does that stand right now . I know you might not be specifically involved with that. But is the work going on right now with the senate . That you know of . Actually, im very involved with that conversation, as well. And weve got a group thats meeting on a regular basis and every republican senator, all 52 senators are having input into what that Health Senate health bill might look like. Obviously were going to look at what the house has done. But the senate is taking a slightly different tack in terms of how we construct this thing. But we believe that the current, you know obamacare is failing. Status quo is unsustainable. And that we need to move in a different direction that creates more choices, more competition, allows Market Forces to drive prices down in the Health Care Market out there. And thats what our bill is going to be focused on. But to your point, i think we have to get through that discussion first. We need to do something on Health Care Reform before we pivot to tax reform, because Health Care Reform creates a much better, more favorable baseline to do tax reform later on in this year. So i think they have to sort of move sequentially but were multitasking right now and working on both of these important subjects. Senator, as i said, we really appreciate you being here today. I was, you know, twitter. Not sure about twitner general. Just looking at twitter. Cbs news tweeted out we reached out to 20 republican senators and representatives, as well as the white house today, to appear today, and all declined. So, charlie rose and his friends at cbs this morning is that you guys are reticent, or afraid, or hiding, or not wanting to comment on the latest comey allegations from yesterday. But here you are, so well give you a chance to okay. What were your thoughts yesterday when, again, Something Else comes out after 5 00 p. M. That just shakes the whole political world . What were your thoughts and give us some comments . Sure, joe. Well, look, nobody likes what were hearing in terms of the reporting thats coming out in the last few days. Obviously we want to make sure we get this train back on the track. The president is the person best positioned to do that. He needs to keep his focus on the things that the American People elected him to do. And thats to grow the economy, create jobs, raise wages in this country, and there are lots of issues that we can work on together to make that happen. And so these things end up being a side show. They end up being a distraction. Obviously we want to get to the bottom of it. Figure out what the facts are here, and there will be efforts made both in the house and the senate, various committees that will be at work endeavoring to do that. But in the meantime, weve got to multitask. Weve got to work with the American People. And i hope the president can get his game face on, and go to work on some of these issues, and try and get away from the twitter activity and all the things that seem to get us distracted from the task at hand. Did you see senator schumer yesterday . Did you catch that sound bite by any chance . Does that i mean is this going to be a reasonable, calm, discussion of whats happening . Or, you know, is history watching as the very foundations of our democracy are shaken, and you know, i dont know how we come out of it . Can you have a reasonable discussion in the senate at this point . We can. Weve got members on both sides committed to getting things done. I chair the commerce, science and transportation committee. Were marking up a series of bills tomorrow that well report to the floor and hopefully get some action on there. So theres a lot of other things that are going on. And its too early i think at this point to determine whats ultimately going to happen with some of these allegations that are being made. There will be a time for that. And a fuller discussion. But in the meantime weve got work to do. Because theres not a lot of wiggle room with 51 include Vice President pence not a lot of wiggle room. Some of these guys are up in two years. Do you see in your Walking Around there, do you see some wavering, do you see some guys ready to, to cut bait and run . Well i wouldnt say that, joe. But i think there are members who are concerned. Obviously, you know, the reporting that weve seen the last few days we want to know, actually, what happened. Okay. You know, this more recent thing last night about the memo, everybody of course wants to see that. Get questions answered by the white house, and the administration. But right now i would say that most of our members realize that we have an important job to do in the senate, and we want to get on with it. And we hope that the president will join us and you know the sooner he can focus on some of these important issues that the american elected him to work on, the better its going to be for him, and for us, and for the American People. Thank you, senator. That was not so hard. You know what, i dont know if id go on a Network Morning show either, though. Maybe you know, that might be might not get the imsame interview. Anyway, appreciate your time and thanks for coming on. Glad to be with you. You should go on a network. You can read why would i . To face the nation . You can read more about the president s tax proposal. His oped is published on cnbc. Com. Taking stock of the trump economy. Youre watching squawk box on cnbc. Is is a story about mail and packages. And its also a story about people. People who rely on us every day to deliver their dreams. Theyre handing us more than mail. Theyre handing us their business. And while we make more ecommerce deliveries to homes than anyone else in the country we never forget. That your business is our business. The United States postal service. Priority you 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 to squawk box. Our guest host this morning, jack welch, executive chairman of the Jack Welch Management Institute at strayer university. Jack, we just heard an interview with senator thune and he said that some of his colleagues are concerned, and the way i read that from a Market Participant standpoint is, that means that there is not republican unity, necessarily, and that might be even harder for the agenda to get accomplished. Well, that is an issue. That is a clear issue. Can we get this agenda accomplished . The First Quarter, were seeing the confidence, the underpinnings of a Great Potential economy here. People are expecting the agenda to be delivered. And whether or not they can get that, i said that to jim jordan. I mean, they cant get everything each one of them wants. Theyve got to come together or else theyll be a Minority Party again. And theyve got to make that alternative decision, can we come together around this . Look the economy is poised to get to 3 , to 3. 5 in the next 18 months. If you do it. If we just get these agenda items put through. So youre talking about being in these meetings with all these ceos. Theyre pumped. Theyre really excited about what can happen with the u. S. Economy. Right. If youre a ceo and youre making plans for growth, making plans to spend money, whatever youre going to do, hire, are those plans on hold now . I mean, what do you how do you i dont think on hold yet. But continue to just stir and be a huge turmoil is not constructive for that agenda. But ill tell you, if i take a month ago or a week ago, two weeks ago, i would be all bullish. All bullish. And the democrats are tearing the fabric of this economy apart. With this threat. This constant theres never been a battering like this of an administration. Never. The republicans, the democrats, and the press have joined to get this guy. I want to get cnbc. Com to write a story with that as your headlines. That the democrats are tearing the fabric of this economy apart and well see if we can offset some of the other stories that we can see. That was pretty significant what you just said. I think its true. Trump derangement syndrome is a is a real thing. Well, people arent acting the way theyve acted for years. Ive nover Chuck Schumer for many years. Hes never acted like this. Right. Hes never done this emotional stuff. Right. Hes a reasonable he was always a reasonable guy. Hes got a base to satisfy now. Pulling him one way. And bernie sanders, who couldnt get out of his own way is pulling him that way. Jack in terms of the way you said you want to see President Trump improve, the most clear youve been is on communications. No, i want him to put a Team Together that really is supportive in the white house. Hes got a great team in all the buildings around the white house. In the white house hes got to get clear focus on his team, a loyal team, to execute the mission. The other area throughout the show which ive heard you say a couple times, im not sure if its a criticism or an observation of the president but you said that hes thin skinned. Is that in its own right a problem for the president of the United States . Yes. Does he have to change that . Or is it something that the president has to live with . Can he change it . Hes got to change it. He cant react to everything they put he puts a dollar out there and he grabs it. And he puts a dollar out there and he grabs it. And he cant do that. And spicer doesnt have to be angry at every press conference. I saw huckabee sanders, with a refreshing discussion of a smiling, reasonable person. Now they beat the hell out of her if you face that press corps, the White House Press corps every day you think you could stay calm . It would be tough. It would be tough. But thats his jobs. I know. Thats his job. These two things, improving the quality of certain members of the team and the communications roles, the thin skinned issues, are those easy fixes . Or is the work really cut out now for this administration to get back on to the positive track that you said you would have talked about if this was a month ago . Its a hard job. Its a management job. Its a real i think his ideas are great. I think his Foreign Policy is great. Were leading not following. Weve got better standing in the world. With israelis and a lot of people. Were just looking better as a country. This trip hes going to have, i hope it isnt marred by this he doesnt look as strong with democrats screaming at them every minute as he goes on a foreign trip. You mentioned your change in bullishness over the past month. Yet the markets have continued to hit new highs no, i havent changed bullishness. Youre still bullish. But its i wish to a degree. I wish the democrats werent tearing the possibility apart. I wish the resistance could realize they have an obligation to the country to get growth, jobs, higher wages, are good for everybody. And i want more people employed in better jobs with higher pay. He does. He believes that. Every meeting were at he talks about it. He has got to keep on that track. Now, as they pick away at it right. But even as they pick away, and theyve increasingly been picking away. The markets are continuing to march to new highs are you sort of surprised at the market ambivalence . No the market is benefiting from a global synchronous if you will. Europe is doing well relatively speaking. 1. 7, 1. 8. Japan is doing well. China has recovered nicely. So the global role looks good. If we could get this thing through we would have the world by the tail. We would have the economy humming and jobs would be pouring out. Now the result of that would be the democrats wouldnt be in power in 2018 and 20. Which theyre fighting against desperately. So the u. S. Equity markets not overvalued at the moment . I dont think so. Now, two months down the road, as the thing is shredding, theres more trouble. All right. Jack, will be here for another twelve minutes or so. When we return well find out what is jim cramer fired up this morning. Well join us from the New York Stock Exchange coming up. Quick check on currencies. The dollar soft once again to the tune of now about 0. 9 against the yen. The euro well above 1. 11. So a lot of dollar weakness once again. Futures down as well. Almost triple digits on the dow. Back in a couple minutes. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. Predictable. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. Well, there lets get down to the New York Stock Exchange. Jim cramer joins us now. I keep reading your tweets, jim, that, you know, nothings happened yet and if it does happen with washington, heres some stocks that where its not going to matter. Im not convinced its happening yet, although we saw triple digit for a while. These 0. 2 moves, wasnt that long ago we were getting 100 point and 200 point moves three times a week. Its been very, very quiet lately. What i have been waiting for my friend jack welch to say how well the ceos are doing in this environment, that the dollar is getting weaker, it will be a wind at their back and we have to braise some of praise some of guys who have done incredibly well. And jack you know, theres a quality of a level of ceo that we have not seen in a long time. These guys are really navigating some incredibly difficult waters and coming out on top in the world. I agree, jim, totally. And in the First Quarter we saw an industrial it in industrial businesses, so some earnings we havent seen in a long time. Im not talking hightech, but im talking the grungy industrial businesses, growing double digit earnings and the s p was way up 15, 16 in earnings. So i mean right. I mean, what were seeing is that places to go on weakness, yes, i dont like turmoil in washington or whatever. But the companies themselves, jack, have really come on strong in europe, in asia. You know, the 3ms of the world. United technologies, guys we really like. Its amazing to see how well theyre doing in this environment. Theres one story i like to tell. I was at a private equity my private Equity Company that i work for. For three days. Reviewing nine businesses for three hours each. The people were pumped out of their mind, the ceos have never been more optimistic. Then i went to dinner that night with some media people in new york. I walked in to the restaurant and they said to me the first words, whats the over and under on trump . I said what are you talking about . They said, the number of months hes going to be in the job. I said, get the hell out of here, i just have been with people that are creating jobs. Giving people raises. Growing the economy. We havent felt this way in eight years. Thank you. Putting food on the table. And that is what you and i know matters and lets not lose sight. Thats what we do in this country. God bless you, jim. Just i want to let this you know, we have to go, but i want to keep going. Been a while. You dont see that you dont see this in too many places. Jim, thank you. See you in a couple of minutes. When we return, some parting shots from our guest, literally, jack welch. Stay tuned. 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. Start trading today at etrade. Com im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Remember here at ally, nothing stops us from doing right by our customers. Whos with me . Were like a sports team here at ally. If a sports team had over 7. Im in. 7,000 players. Our plays are a little unorthodox. But to beat the big boys, you need smarter ways to save people money. We know what you want from a Financial Company and well stop at. Nothing to make sure you get it. One, two. And we mean nothing. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Our guest host this morning has been jack welch. If i had to summarize what you say, its keep your eye on the ball, that we have a chance here to have more jobs, better jobs. More prosperity. And to really accomplish some things if you keep your eye on the ball and not distracted. Focus on your successes. Talk about year success. Gorsuch. The spending on the military. The border. Focus on if the stuff you have done successfully against all of this. And stay on jobs, jobs, jobs. People elected you to do this and bring the Republican Party in constantly. Make them one. We cant have mccain saying this and john thune said it beautifully today. Focus on this stuff. Thats what weve got to do. Weve got to get this agenda through for the sake of the country. Weve got to get his agenda. We were going one way and now we can get real growth. Markets gotten significantly worse. Yeah. 132 points. But we havent had a triple digit move one at least down in quite a while. Yeah. The dollar is a lot weaker. Do you agree with what jim cramer is saying, that it will help the businesses or it will drag the market lower . I dont know about, but it helps exporters for sure, big time. Exporting to a stronger europe and a stronger asia is good news. The triple digit decline today concerns you at all that its one day. Its one do you think the markets are undervalued right now, right . We can go higher. I think the markets are right. Fairly valued right now. The repeal and replace is a slippery slope that needs to be managed correctly. No matter what i dont think its going to be its a loser. Its a loser. You have to do something though, right . Im not hung up on repeal. I dont know if you need to take the name off of it. You can take the name off of it, leave the name on it and work around it. Youre talking for political reasons because youre taking entitlement away. Youre going to get killed. And they knew that eight years ago. Once it was done, they knew it was done. It was never going away. Now fix whats wrong with it. Because theres a lot of things wrong with it. I know. All right, jack welch. Thanks. Thank you. Youre both here tomorrow. Im not. Im out. All right. Make sure you join us tomorrow. Squawk on the street is next. Good wednesday morning. Welcome to squawk on the street im Carl Quintanilla with jim cramer and david faber at the New York Stock Exchange. The markets appear to respond finally to the turbulence in washington. The dollars down, futures down, golds up to the two week high as we await