Transcripts For CNBC Squawk Box 20170518

Selloff, were implied to open lower by 87 points. The s p implied to open lower 8. The nasdaq down 27 having the worst day since brexit last june. The dollar has been in a slump. Kind of unchanged right now. 97. 50. Not long ago we were up above 100 and talking about going higher. Big reversal. The yields have been falling. I guess roiled by the stuff happening in washington. The tenyear below 2. 2 . 2. 188. How about europe. The nikkei down 1. 3 . Hang seng down 0. 2 . Shanghai down half a percent to 3,090. Over to europe, i love how they react to the weak day we had and set us up for another day of weakness. The chicken egg tail waging dog thing. Theftse mib down. The ftse 100 down 1. 5 . The german dax down about 1 . Here are the big stories were watching today. Well, there are a lot of did they do that on purpose . Did they do that on purpose . On your show, do you need a teleprompter . We dont have any scripts on our show. What is this today . This is like a half box bell . This is like a weird hybrid we have closing bell, half time report. Its a fast forward. We have the morning, afternoon and the close all in one. Can you guys adjust to the squawk box i dont even know where i am now. Obviously not if you need a teleprompter. That may or may not be there. I thought they were trying to sabotage me with the prompter going out. Do either one of you guys get the knowing you, you probably have the twitch. Im with andrew. That might help if i turned off the prompter. No, no. Do either one of you guys get the, hey, youre a business network. Enough with the politics . Do you ever get that . We cover politics in the prism of business what are you talking about . How can you possibly no. Watching whats happening, how could you possibly utter a word about Business News without the washington back drop, right . I spend all my time on the road talking to institutional investors, its all anyone wants to talk about. Dont you think that creates opportunity . If everybody is obsessed with d. C. Politics, does that not mean people are selling off one thing or another. We constantly hear from people it has nothing to do with trump or washington. Its all about earnings. Then why does it go down 400 points if theres once. Volatility you had to put out a missing persons alert until yesterday. 1 moves were typical. A year or two ago, we had 100 point moves, 200 point moves interday every day. This is where we need you what this mueller thing means. It drags it out. But hes ready to step right in because he was the fbi guy any way. Maybe it doesnt drag it out as much as people thought. Does it hurt the legislative agenda . Can i answer now . I think its actually did. Puts a bottom in. Why is the market down another 80 points . I dont know. I think its very good for the economic agenda. I fell like i know the economic agenda because i know, joe, a lot of the people that are crafting it. I think its very good. And i think this takes the temperature down quite a bit it will drag it out. But it also is going to allow congress to focus more on actually getting things done. I also think, because theres not a lot of profiles in courage in congress, that its going to refocus the mind on getting a few things passed before 2018. You say, listen, i dont want to walk in empty handed. I know the mid termt elterm elee a long way away. You were talking yesterday to dan clifton saying there is a renewed focus among republicans on the hill to say we better get our act today. Thats partly because of dan. You guys put out the note last week where you said you will lose the midterms. I dont know if im buying that. We used to have a guy, we still have him on, specialist, we used to call him jack the ebola virus is good for the markets and his last name. Because it didnt matter. Ebola virus . Yeah, s ps will rally. How is this what if this turns out how is the special prosecutor good for the markets . The way things were going the last week, things were ready to spiral out of control. There was no focus on any legislation. People were trying to figure out where the bodies were buried. Here at least it takes i dont think its good saying wait a minute this is not cli Clinton Administration trwith bodies yeah. Bad joke. Bad joke, almost as bad as mccarthys. Yeah. Almost as bad as mccarthy. Where is this poor seth rich guy . What happened to him . We dont know. Dont go there . No. No . I dont know. I dont know anything about it. Now youre spinning it back to that . Its not hyperbole i think joes point is well taken. How is this possibly good for the market . You have a full bore special councdowcounsel doing his inves and who knows what turns up out of that. Thats true, except im talking more about time. And i think this will refocus the mind among the administration or at least among congress to actually stop engaging in these academic exercises about these baroque policies and focus on putting points up on the board. I dont want to i dont priebus and ryan, theyre starting to look like the smartest guys in class, dumbest guys on the bus. They keep coming up with arcane, complex tax policies. Lets actually, i would say, put some points up on the board and stuff that can be passed while the president has some power. Hopefully he will continue to have power. But thats the way im looking at it. Well talk more about that. You remember that the prosecutor going back to the clintons, that started with a land deal in arkansas and ended up with a blue dress on an intern. It went places that you had no idea where it was going to go. Does this go to manafort and anything hes done in the last 50 years . Go to flynn in turkey . What about this, wapner . Do they get all of comeys memos . Do they want them going back to the Clinton Foundation . To the email . Do they see everything hes ever written now . Do democrats want this . That Wishful Thinking on your part . Be careful what you wish for with a special prosecutor. Im sorry andrew is not here. Im talking as a market analyst. Speak for yourself. Speaking as a kidding. Kidding kidding cant i like you . The New York Times article two days ago, i read the thing. Im no legal expert. Im saying i was trying to think what is the big i dont see the there there. You hope to youre quoting Anonymous Sources who have not seen a memo who it is read to by somebody else, you dont know who it is, what their motivations are. It seems flimsy to me. Seems important to see those memos if they exist. Again, it doesnt obviate the need to see more about whats happening. But thats a high bar to publish that it seeps to me. But it was swiftly confirmed, remember. We need to see the memos, thats for sure. The Justice Department has appointed former fbi director Robert Mueller as special counsel to oversee the investigation into possible ties between president Trumps Campaign and russia. Eamonaft javers joins us from washington. Maybe you can help us address some of these questions. You guys have been hashing through the implications of this. Lets give you the statements we got last night. This news broke at 6 00 p. M. Last night. The white house had about a half hours notice that this was happening. Rod rosenstein, the Deputy Attorney general not giving the white house a lot of running room here. Ultimately the statement they put out from the president was rather measured. Heres what he said. The president saying as i have stated many times, a thorough investigation will confirm what we already know, there was no collusion between my campaign and any foreign entity. I look forward to this matter concluding quickly. Robert mueller said i accept this responsibility and will discharge it to the best of my ability. That from the former fbi director, who ran the bureau for 12 years and was asked to stay over by president obama early in president obamas term before director comey came in. So mueller a parent with bipartisan credentials who was an appointment met with praise by democrats and republicans yesterday in terms of their c e confidence in mueller themselves, even those republicans who said they didnt think a special counsel was necessary. There is a credibility factor here with mr. Mueller coming in. Now well see where this goes. The impact on the legislative agenda, this will be very distracting for white house staffers. Theyll have to get lawyers. This will take a long time. Now that you bring in a special counsel t will tashgs counsel, it will take time to get staff up, get mueller up to speed. This lengthens out the process here. I did talk to a Senior Administration official at the white house on tuesday who said their effort on tax reform was moving forward full steam ahead. The game plan is to meet with members up on capitol hill and iron out any potential controversies or conflicts before they get a bill ready. Doing it in the opposite way they did healthcare, which is cutting the deal politically and writing the bill. They think that theyve got some opportunity here to still get that done. Well see if thats possibility in a bitterly divided washington. Thats the question. Anyone want to add anything here . This goes back to what we were talking about. Eamon, the question i still have, about these comey memos. So, theres a special prosecutor who will take the helm of this whole russia investigation. Does that encompass ul of the me all of the memos . Does. So its up to Robert Mueller to find all of those memos, and spearhead his way ahead finding the memos is not going to be difficult. We are told the fbi secured directors comeys office and his documents and devices immediately after he was filed. So they should be in his filing system. Im sure theyll have access to him. The special counsel will have full authority to investigate anything to do with russian interference in the 2016 elections and anything that flows from that, including potential obstruction of justice by President Trump or anybody in his administration. So that opens up a pretty expansive investigation. But to joes question about how far can they go . They can ask comey for any memos that have do with russia or obstruction of justice or anything related to that if there are other topics, thats not under muellers purview. He would not be able do that. Part of the reason why they got rid of the independent counsel statute in washington years ago was that those independent counsels both in the irancontra effort and the clinton effort was seen as going too long, taking too much time, spending years and millions of dollars investigating going all over the place. This is a much more narrow effort now. So the independent i heard that last night, that it can be broad. Valer valerie plain, when was that . In the early 2000s. That was comey. That was a special counsel situation, not an independent couns counsel. So this effort is independent from the department of justice and independent from the fbi, but ultimately Rod Rosenstein does still maintain some authority over Robert Mueller here. I thought of one more question, then we have to go. I guess walmart i dont know, some retailer reporting earnings . Yeah. Just one more. They all stink any way. They do. Except for target. One other one. Do you believe what nbc reported that the white house did not know about this until after it was done . Dont they sign off on Justice Department stuff . I had trouble believing that they didnt have a heads up on this. Do you believe it . I do believe that the chronology that nbc reported is accurate, of course, which is that Rod Rosenstein did not tell the white house until after he signed the document. Really . And gave them about a half hours notice. But did they know that there was a possibility that that was going to happen and that he would sign the document . Maybe they didnt know the time the discussions of a special counsel has been out there for weeks. I know. This was a big this was a big three quarters of the republicans were saying no, no, no the white house was still saying that. I still think that before he did it, there would be some type of communication and the white house would sign off on it. We know Rod Rosenstein felt burned by the way that we know that they didnt no when he was going to sign it. I dont know for sure george bush thatsure do you think the Justice Department did anything without the Obama Administration eric holder did anything without letting the Obama Administration knowing . Or loretta did everything come back to the Obama Administration . No, we were talking about clinton before that. We only have is 100 day the of s administration. Thats too far back . I can see why you dont want to talk about it. Ill talk about anything. Theres no reason to its a sore spot. Obviously not. Do you think eric holder or Loretta Lynch why are we talking about that . Because im saying i doubt the Justice Department, which serves the administration, not completely, its independent, but i doubt whether they wouldnt know. Maybe if if youre launching an investigation twhee hait took the white ho while to come out with a statement after this news broke which would lead to you believe that all of the reporting on it was correct. I dont know. Normally you would think they would get they would know thats happening. Say fine, lets do it at this point. Joe, if youre launching an investigation into something that includes the possibility of obstruction of justice by the president of the United States, one of the things you will want to do is not have the president of the United States have any opportunity at all to interfere or waylay that. We know Rod Rosenstein felt burned last week by the administration is the guy who said we should fire comey. Ultimately there was some point of tension between Rod Rosenstein and this white house. Last night, if he made the moves in the order we reported, that would indicate he wanted to make sure the white house was out of the loop on this. That would mean mueller was approached, spoken to. All those things happen, and nobody heard anything about it . I dont know. I dont know. I may have been born at night, but i wasnt born last night. Robert mule seller is an old man. Theyre good at keeping secrets. When comey took over, he was talking about mueller. Remember the speech, he was saying how could i possibly step into these shoes . Here hes back taking over its bizarre. Not as fbi director, but going to get that investigation there will come a moment when Robert Mueller will sit down and interview james comey. Mueller and his investigators have to interview comey here. Comey, the successor to mueller he can ask for his tax returns if thats where this leads. Hell have subpoena power, full investigative authority. He can go wherever the facts lead. He can pull tax returns. Youll finally get him. You and andrew i dont care if we get him or not. You mean trumps . Yeah. I love whenever puts forward insane no. I just cant believe you dont want to talk about the Obama Administration. Youre nothing if not predictable. 100 days. Dont bring up obama. That was like ancient history. We are talking about this particular thing, but it goes back to that. There was some great stuff happening with the Justice Department. Some interesting things over the last eight years we didnt see nearly as interesting until now. Now well do this tease. Okay. Thank you. You have a prompter. I do. Unless you pull the plug on it. The big stock movers including biotech names after massive amount of cancer data was released ahead of a Major Research conference. Stay tuned, youre watching squawk box on cnbc. A sharp selloff yesterday. The dow looks like it will lose further momentum at the open. A trfew minutes ago, it was dow 80. Now down 67. Declines of 1. 5 over much of europe. Roughly the same across asia. The nasdaq had its worst day since brexit yesterday. In corporate news, a massive amount of cancer data has been released. Meg tirrell has some of the winners and losers. Last night at 5 00 p. M. , 5,000 data sets came out ahead of this conference, the American Society of clinical oncology meeting which happens in chicago june 2nd through the 6th. We got a look at initial data sets. The main theme at the conference has been immunotherapy. The new drugs that unleash the immune system, unveil cancer to the immune system so it can go after it. Bristolmyers and merck had big updates on their drugs. However theyre not really moving that much this morning or in the after hours last night. As we may get more updates at the meeting. They were testing two drugs in come flags wibination with a dr insight, a next generation way of using immunotherapy. Trying to test these combinations in different cancers and see if we can get better Response Rates and see if more patients willbinations of. What wave are we in, in Broad Strokes what do you think this conference will signify . Its all been sort of a progression. Over the last few years, weve been introduced to immunotherapy. Companies are trying to figure out how to put the drugs together to get more people to respond to them, so have more people fight their cancer better. Theyre figuring that out now. We had merck on last week, saying they have 500 clinical tries now in massive studies. They got approved for something else. Nonsmall cell lung cancer. Exciting, but mid stage innings probably. Meg, thanks. We will get back to the broader markets with hans olson. Well get back to this. I found something here, apparently sessions didnt know either. He didnt tell sessions or the white house. So now you might be right. Now i think theres a target on poor rosenstein. I think if you look at the progression of events the past couple of weeks you cant go after him. Why do you think theres a target on him . I dont think the white house is happy that he did that. Maybe it is sort of i dont think rosenstein was happy that he was any way. This delays all this stuff . As the guy in the first place. He did write a great memo to the rational for firing comey. The journal again and again saying here, here, these are good reasons. Does this help with the legislative agenda . Does it delay it or help it . It certainly puts it into a dance. Markets have run you dont think congress will keep plugging away at this . All the oxygen is getting sucked out of the room. What else do they do . They cant sit there wringing their hands. Joe, theyre so very good at that. These guys are not the on the vanguard of change. Big government has a lot of inertia. The reality is that markets have moved since the election, really based on what was to come. A quantum of change, of reform, of tax reform, healthcare reform, legislative Regulatory Reform if that doesnt happen, and the implications that that has for earnings that will push things forward. And when youre trading at 21, 22 times trailing, your mar kin of samargin of safety evaporates. You totally disagree, right . I wouldnt say i totally disagree. Parts of the agenda, that can largely happen without congress. Personnel is policy in those areas. So, when you get to the budget, and when it gets to tax reform or tax cuts, i completely agree with hans, thats a bridge that might be a bridge too far given the political those are the big cajones of policy that the market would like to see happen. If you look at the two best performers between election day and the end of the year, in the aftermath of president elect trumps victory it was financials and energy. Those were the biggest beneficiaries. They started to decline. They were hit very hard yesterday. I wonder if maybe too much was being put in the first place on the agenda itself. Absolutely. Would be a sherry on top of the sundae if you could get the policies through. Maybe the markets moved on earnings expectations than anything else. A whole contingent of guys come on saying it had nothing to did with trump, the stars were alined for better earnings. I think it had a lot deregulation helped, too. Had a lot to do with trumpment. But people come on and say that, its earnings. In other words, the market maybe the market doesnt need the ajgenda to happen so fast. Earnings and the economy have gotten much better. Thats the tragedy about this. First quarter earnings were incredible. They were great. It confirms the earnings recession over the last year, two years. Its sad its getting lost in this the noise cacophony . Cacophony, thank you. Its still early. Of all of these the different scandals. Can i throw something out there quickly . Brazils market is down sharply. A renewed political crisis. Declines of 15 . I know were very, very focused on the situation here. A lot of people have been investing overseas to get away from it. They say they want to be in europe. What do you say when you see a market like that down so big here . Thats more specific to that market. Em as a whole thats one of the best performing sectors this year. For us, we have stayed away from it because we thought that the trend for the dollar would be higher as Interest Rates continue the path of normalization. So you were lucky you were you did the right thing for the wrong reasons . If the dollar has weakened . Thats right. Thats right. We did the right thing for the wrong reasons. Thats right. All right. Jason sticking around. Hans, thank you very much. Thank you. Coming up, so much so many nuances. The top stories plus financial stocks hit hard in yesterdays selloff. Sector coming up next. Heres a look at yesterdays winners and losers. Predictable. 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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. Containing this information. Read it carefully. 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. The Financial Sector just one area of the market that got hit hard during yesterdays slide. Don chu has that part of the story. We need a yield curve, now its flattening. You saw the spdr, they were pacing the declines yesterday, they pulled back about 12 , 13 since highs in early march. As we talk about financials, its not the only place getting attention. We talked about technology and weaker points there. Look at some of these. We looked at some of the longterm trading prices, in this case the average trading price over 200 days. About 50 stocks in the s p 500 are 10 or more below that longer term average trading price. Not good, but to balance things out, there are about 120 stocks so many more, trading at least 10 or more above the same average trend price. The lagging stocks, depending on how you want to look at this, either the ones that could be perhaps doing really badly or continue do do badly, are some of the themes we talked about, Industrial Companies like fluor, neufeld energy. Down 17 . Macys and under armour, more than 13 pors below the averag trading price. Maybe they revert back. The bigger ones to watch are the ones buoying up the market. Amazon up 16 over that trading price. Mcdonalds, 20 above. And apple and nvidia. So either those stocks that have shown strength pulled back a bit or continue to prop up the markets. If this slide continues, the idea is that we could see some of these stocks be indicators for what sentiment will be like. All i know is under 2. 2 for that tenyear yield. I know the cpi wasnt great. But its amazing. The election, the tenyear yield was 1. 8 . It went up to 2. 62 , now fallen back again. You wonder trendwise what that will lead to. Coming up a live report from washington ahead of a key hearing on tax reform today. And were waiting for numbers from walmart. At 7 15 eastern, commerce secretary wilbur ross will join us to talk trade and how the u. S. Could eliminate deficits. Later the man on the front lines of tax reform, kevin brady will join us. Thats live at 00 easte 8 00 ea. Youre watching squawk box on cnbc. Welcome back to squawk box. The house weighs and Means Committee holding its first hearing on tax reform this morning. Kayla tausche joining us from a capitol hill that could probably use the distraction. Theyre glad to hold this hearing. The Republican Leadership trying to stay focused on the agenda at hand to prove they can keep the policy promises that many ran on last year. Today Business Leaders will testify about tax reform. Among the five witnesses, the cfo of at t, two proponents of the bosrder adjustment tax and steven rattner. Yesterday Steve Mnuchin met with caucuses up on capitol hill. Some convened in speaker ryans office. People familiar with the meeting wouldnt say what was discussed, only that the neati imeeting us productive. But these hearings will be instructive on how views on tax reform may change. Chairman brady is holding a hearing on border adjustment specifically next week. Lobbyists say he has been floating a four to fiveyear phase in for that to see people feel about that even as the senate side knocks it were been talking about the republican agenda the economic agenda and how that moves forward despite the frenzy of the administration. Lawmakers on capitol hill feel a stronger need to actually get legislation passed. To show they are immune from the current frenzy and that they can operate in a silo despite whats going on at white house. From what youre hearing, is that true . In a way, just having to deal with the reaction to whats happened with the president , doesnt that divide the party . Are they able to come to common messaging . They have members from the moderates to more conservatives whose constituents feel differently about what has happened. Theres no real formal way to take the temperature of congress broadly. You can just talk to people walking down the halls, deciding to hold meetings or put out statements. But it is true that they are trying to hold these hearings, theyre trying to have closed door meetings to show theyre still talking about things important to the market and important to business and important to the american people. Whether theyll have time to get anything done or whether theyll have the support from the white house principles that they need is still unclear. I know you and i have talked about the legislative calendar before its just about 50 days between now and the end of the year. Thats not many days to actually draft and vote on any of these major issues. One thing theyll always do, kayla, if they think something is in their selfinterest, thats what theyll do. They could find a way, these guys that are in shaky areas in terms of trump, they could find a way of trying to do the legislation and still they theyll distance themselves from trump. Theyll cut and run the minute they get heat. That doesnt mean they wont try to do tax reform. I think you can do both. Whatever it is that will get them reelected is what theyll end up doing in the end. Thats true. But i think the Republican Party in both chambers is doing soul searching, now they have a situation where they have a republican president in office that would sign any legislation they put on his desk, yet the snad senate is proving to be a much more moderate force than the house expected. And Mitch Mcconnell coming out this week knocking down the border adjustment tax and not firm about Financial Regulation getting reformed. Its unclear whether this soul searching process will result in any Common Ground between the two chambers. All right. Kayla, thank you. You must be in washington. I see that building. The dome. That gives it away . Yeah. The capital or liesman in the background. The dome. Coming up, facebook fined by the European Union this morning. Well tell you why next. First a look at european trading at this hour. Stay tuned, youre watching squawk box. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. 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Regulators say when facebook informed them of the deal they said they couldnt match User Accounts on both platforms, but the Company Launched a Service Last Year that does exactly that. Today is facebooks fifth anniversary in terms of the ipo. They have transformed dramatically since then, not just in size. For the first time Julia Boorstin is here. First time on the new set. Love it. With a look at how dealmaking has shaken up the company. Facebook has three big acquisitions, instagram, whatsapp and oculus that has transformed them. They paid 1 billion for instagram five years ago. Instagram is a valuable place to copy and compete with snapchats most popular features, such as story. There are 8 million instagram business profiles. Facebook bought whatsapp for 19 billion in 2014. It now has 1. 2 billion users. But it is not a moneymaker. Though the company is starting to experiment with the likes of Customer Service on the platform. Oculus which facebook bought for 2 billion in 2014 is the furthest from boosting facebo facebooks bottom line. Facebook is working on various social applications for the vr appeal. Joining us is victor anthony. Good morning to you. Good morning. Before we circle back to how the company has changed. Look, from when you read about it, it sounds like eu said you told us you were going to acquire whatsapp and not do the very thing you you told us yu were going to purchase whatsapp and didnt. So will you pay a fine . I think well pay a fine, 32 billion on the balance sheet. Do you think anyone lels shake them down on the same thing it. I dont think so. If they put this behind them, do you expect them to leverage whatsapp even more . I think so. Zuckerberg has said hell wait for these apps to reach a billion users before they start monetizing. S that a path to go in the future. You have to give them credit i love it better to be the best copier than the best innovator. Look what theyve done with snapchat, theyve said youve done amazing things, were definitely going to do it, too. They definitely copied snapchats most favorite features. There are already lenses on the facebook platform and facebook has copied stories and instagram and messenger and its working. Theyre able to use those platforms its only five years down from its ipo. You were reminding us back in the day when they were public and shares were falling and zuckerberg should step down. I remember getting calls like that from investors, whether zuckerberg should shut down. Ive been bullish since dione. Ill be buying the stock. Is there any risk to the story at all and what would it be . I think competition is still a risk. Snaphas been one of the biggest competitor lately. And also you see all of the fake news problem that theyve had, the live video issues theyve had with people committing suicide on live videos and i think these are issues they probably need to fix just yesterday they refunded money because, oh, our ad revenue was wrong again. And there was concern over the transparency of those metrics. The one this week was the first one they had to refund advertisers. The amount they had to refund was 10 on average but it does still indicate that facebook has to work on better transparency, more Third Party Monitoring of those issues. Are you getting any calls now for Mark Zuckerberg to step down . Not at all. Hes earned. s respect. How about Sheryl Sandberg . How important is the role that she plays . I would agree. Shes been a pivotal part of that Management Team and pivotal to Mark Zuckerbergs success offer the past five years. Do you think facebook is the most widely owned name now . A company five years ago people were laughing at. Now its up there. It certainly is. I would ask, too, one of the thanksgiving that concerns me just from a more macro point of view of what the risk to big tech is now. You have the situation i would say during president obamas years, financials on energy were kind of seen as evil might be a strong word but almost a dirty word. And tech was seen seen as virtuous. Now in the new administration you im sorry that hes pulling back hes doing it to make it develop want when you have companies that have this size and market caps purchasing 7,600 l, 800 billion, it brings up private trustee issues or ant oo trust issues, but they theyre. When President Trump came into office, there were people who were worried was he going to pick a fight with bezos, is tech not going to do all that well and it been the leader in the best perform willing sector there is. Also bezos owns the Washington Post so stocks traded down initially after the election because of that concern and theyve since bounced back and i think Trump Realizes these companies are the job creators hes looking for. Thanks, victor. Good to see you. Tech was okay. What did you say was bad . Energy . And financials. Hold on. Insurance, Pharmaceutical Company im just trying to to was there any private sector that was not fillified sat some point . Coming up tech was okay. I think that was it, wasnt it . Wasnt that the on noble maybe sta bucks because of howie. Quarterly results from walmart, the numbers andin al sis straight head. I was going to give you an Anderson Cooper eye roll. You cant do it as good as he does. And commerce secretary wilbur ross will join us live. With this level of intelligence. Its a supercomputer. With this grade of protection. Its a fortress. And with this standard of luxury. Its an oasis. The 2017 eclass. Its everything you need it to be. And more. Lease the e300 for 569 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . A used car, the dow and s p suffering their worst day since september. Returns what is next for markets and investors . We have special roundtabl coming up. And could distractions in washington hinder other trade deals . Hell join us to answer and call as the second hour of squawk box begins right now. Announcer 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 Market site. Im kelly evans. Theres the Dow Jones Industrial average, now were back down 81 points implied for the open here, the s p down 7, nasdaq down 1. Take a look at the dollar. Some big weakness will recently. Were back down to the 97 1 lev now. And weakness across much of the roast of the globe, yesterday also setting us up for this today, and it looks like walmarts numbers are out. The Quarterly Results are just hitting the wires as we speak. Courtney has those details. Good morning, courtney. Walmart turning in mixed results, 117. 54 billion, which is shy of expectations. But the u. S. Comparable sales are the standout again. Walmart posting a gain of 1. 4 . This marks the 11th straight squaur of positive comp s. Walmarts e come val prm. Now, i spoke with walmarts cfo on the phone. He said the quarter was solid, we had good momentum across the category and and across stores. Remember food is more than half of what walmart sells and i ask him how he was marketing tral fr from, he said these acquisitions give us a different way to reach the customer. He said while walmart isnt ready to speak about the on instore discount, he said it having a very good response. Up 1. 4. What was it supposed to be . So it not above. Its not below or quoter couldnt perfect. Stocks still down, though. The revenue will miss. It could run out of lettuce in a store. And for the next quarter, the guidance 108102, analysts were looking for 107. Are you a millennial . I am technically the oldest millennial. So youre familiar with the term math, this is a math thing. But youre hip to the language. Am i . No, i just learned tbh is to be honest. Im surprised. Rotplmm oo the aol aim page. Are you on twit are again . No. What about facebook . No. By the way, facebook, it just a personal thing. Squawk box is on facebook, closing bell is on facebook. Theres a kelly evans page. If you get on twitter again, lmk, let me know. She comfort probabl alibaba autorused a 6 billion shares repurchase program. Baba is down like 7 . Ill have to dig through this little more, especially had j. A so busy morning for Economic Data as well. At 10 we have the index of leading economic indicators. The u. S. Airlines are expecting a Record Number of pass injuries this summer. Airline for america estimates 2. 1 million will fly between june 1st and august 31st. Joining us now is karp. Thats unbelievable. What was i doing . Magic. You got it, scott that is unbelievable. This is like david copperfield. Hi, joe. Nice to see you. He just popped. Also our guest hosts continue along with us. Were finished. We have no more time. After all the intros. My man, again under 220 today. This has been your thing for years. I think you thought the fed was going to be even more dovish than they thrill have been, they finally did do a couple of raise its but it seems like its come being back into your thesis again. I called it in 015, she proved it in 2015, 2016, theres been one increase in 2017 and i think thats it. So there is no add back of the feds balance sheet, no increase in Interest Rates for quite some time to come. This is a abovish fed. They pushed Interest Rates too low too much. You have a choice. You either increase Interest Rates substantially like john taylor at Stanford University by 1. 5 very quickly and take the lumps in the market and the economy km and i think they have chosen the thor, which is why i expect the situation is not going to change any time soon. Retail sales are very weak. I dont see even setting aside the political tur royal in washington it seems like you cant do by saying what youre saying, youre implying thats in the going to happen, it not going to work. Is the par it is pags. Is lower than before the recession. People working multiple specific has increased 7 over the last year. S. Are frngs what has happened is the fed has boosted the equity market, nothing else. Karen, you dont buy that . Well, i appreciate what hes saying but theres parts i disagree with. Were adding 00 mrs. And think people it could be slightly ahead of 3 and people star pointing more money. Jo, we see those as positive signs, notwithstanding the fact that you havent yet seen inflation and we still have this quarter should be prm this could be about 3 . High are then 3 pr prp would have been a good idea yesterday. Since 2004, june returns have been about negative 11. 5 . It simple math. On may 1st we put out a piece out called dancing around the may poland. The fact 2012. We thought that tail wind was going to follow and we thought the trump bump was going to fade and all of thos things apparent le has started to happen. Funny the way fund als always seem to justify technical calls lick that. There is a chance, though, that you have both sides that are kreb, which is my own opinion from a firm point of view is that the most le be fsk and i am also under the view, personally i think the deregulatory program and the fiscal agenda will be very stimulus. So you could have a situation where the speculationagely and i know this seems crazy given whats happened politically, but i have feeling the fed is not going to get religion any time soon. I very much agree with that but youre also going to have a stronger economy going into 2018. I agree with you, jason, but to have tax cuts passed by congress, you need to have a presidency, white house focused on in other if it happened, i change my mind. Im more optimistic about 2018. We hope you changed your mind puns happened flchlt what really concerns me is the tw to p this morning we are at 96 basis point and thats telling you a whole big story on the strength of the economy. Thereslags, we is f. Weve been calling for a smaller yield kir of well, you guys see hip ham permanent and dan roth and susie wells will for that big reveal. Youre watching squawk box on cnbc. [vo] when it comes to investing, 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. Drama in d. C. And today it is driving the market down. I think theres so much fear out there and that politics now create another brick in the wall of worry. This impeachment proceeding to blow the market away. I think that this is going to get far worse before it the shows about to start how do i look . Like a bald penguin. [ laughing ] show me the Billboard Music awards. Show me top artist. Show me the top hot 100 artist. They give awards for being hot and 100 years old . Well take 2 [ laughing ] xfinity x1 gives you exclusive access to the best of the Billboard Music awards just by using your voice. The Billboard Music awards. Sunday, may 21st eight seven central only on abc. Department holding the hearing today aiming to find ways to reduce the nations trade deficit. Joining us, commerce secretary wilbur ross. It great to see you, mr. Secretary. Im getting used to that, mr. Secretary. Weve known each other a long time and now that is who you are. So thank you, appreciate it. So 750 billion trade deficit is what were trying to deal with. Theyre going to talk about it all day long. Will you touch on, wilbur, the notion that when youre a wealthy country like the United States and a consuming country like chan theres going to be a trade deficit. Youre going to import more things than you export. Is there a way to do that where we dont become a time consuming country . There as a whole lot questions. First of all, this hearing is for the public to express their views. We had sm for people to give their different views. Some probably will be taking the fact that you are, that trade deficits may or may not be bad. Others will come with very season sprnls you could get a weaker dollar. Think of larry kudlow. Thats like heresy to think about weakening the dollar to export more and then youre thinking about if we do tariffs or any type of protectionism that it comes back to haunt us because its reciprocated by other places as well. These are all things that need to be explained in a way that makes it more palatable. Sure. You mentioned the concept of reciprocity, and that frankly is one of the things thats missing from trade regimes. Were not in a reciprocal mode at all right now. Take orders. We only have a 2 1 2 tariff on autos. The eu has a 10 tariffs on autos. How do we get them to drop their 10 tariffs to get rid of our 2. 5 . We go we dont have much to try to agree gree prchl instead of worrying about reciprocity for certainly we do now, maybe we need to the status quo already is not balanced properly. And im not surprised because when youre the biggest and wealthiest kid on the block, i guess, our going it almost like our largess being can be taken of from time to time. I think for u. S. Policy o try to help the other countries recover from the ravages of the war. That was aom and yet were stuck with a lot of the decisions that were made back then. So we have the odd position what china be with hom we regime whereas we get criticized for nothing, free trade, whenever we do anything to try to defend ourselves and we actually have about the lowest both tariff and nontariff trade barriers of any big country. It is Pretty Amazing because it every single rich countries, poor countries. The eu, you could make a case theyre consuming area of the world and in 2016, 146 billion there, canada, johnson, union, 613. Theres not a single sur palace across all these different areas. Naerks it. Well, it does but the way were going to go away about and that was the approach in the deals we did with china and the deals we put together in the first 40 days of the hundredday plan. It very specific said what, that are are. Secretary ross, i was wondering if you could talk a little bit about i think about its about 15 of our trade deficit is just fossil fuels. Thaerd. To the extent to which we seem to have a lot of this stuff and there as aas far as energy and the tritt as well . And expand our relative activity if. In the prices there have been very depressed, but many of the countries with whom we have oaf all trif. And know opinion, so theres a way we can fill products that they actually need, a lot of which theyre buying some absorbing prn sfrrnl, our deficits equal the cumulative trade process of all the other countries in the world. Mr. Secretary, im hoping youll comment on the news of last evening and the naming of a special counsel to represent russia. Were you in favor of bob mueller being named as special counsel in this situation in. Well, i think we have to get on with it, get this over. Its a side show. In the midst of this side show, the president is running the country, getting ready to do an amazing trip to saudi arabia, to rome, to israel. This is an Incredible Movement on his part thats going to demonstrate once and for all that were not retreating into isolationism. This is a very, very important trip. And thats whats really on everybodys mind right now in the administration. This session is a side show and it the distraction in trying to run the country in a proper way. Im glad you went there because myneck will about the investigation and other stories could potentially mean for the president s agenda and trying to run the country like you say he is. Do you feel some of the most important policies could in andi dont think but this is all rumor and gets it to a head and then maybe the media can go on to certainly else. Well, weve got our trade rep now. Yes, indeed ands that a great little segment of activity, thats the much more rof purchase did from thats what we need to get gong the important businesses, which is resolving, the updating and the improvement of nafta from its present condition. So will that happen near term now, that youll send a letter to congress notifying congress of the intention to renegotiate nafta . Is that imminent . I think its imminent and i certainly hope so because weve been waiting for a vong long time for. It could happen anyway time now, they loved him over there. Up know how israel fills about trump. Israel sp, they didnt have any problem with that huge media story that we had. And then, i dont know, mean and he might like it also given whats happening on the home turf, secretary. I dont think you should give any implication that hes hiding overseas. No, no, he may actually get away from this for a couple of days into a place where you dont have the same type of i dont know, do they have trump derangement syndrome in other countries yes. In some places anyway. I think the trip will be an important event, a very historic event, it involves three religions, it involves some affirmations of relationships that have been developing very well within the middle east and that after north korea is the other big problem that he needs to solve in international affairs. And i believe this trip will go a long ways toward accomplishing that. So someone is writing in, wilbur, i heard we had a surplus with canada, too. Not anymore, its 12 billion in 2016. Is there a Different Number that well, in goods we do not have a surplus with canada. Part of the reason being that we import a lot of hydrocarbons from them. Right. Okay. So theres a lot of these things there is some nuance. Mr. Secretary, thanks for your time this morning. Always great to you have on. Thank you. Good morning to you. Commerce secretary wilbur ross. Coming up, linkedin releasing their most sought over numbers. Well be right back. Time now for todays aflac trivia question. What was walmarts top selling item in 2015 . The answer when cnbc squawk box continues. 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 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 tired of paying hundreds more a year in taxes and fees for your unlimited plan . Only tmobile gives you unlimited data with taxes and fees included. Thatll save you hundreds. Get two lines for a hundred dollars. Thats right. Two lines of unlimited data. A hundred bucks. 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Do it in seconds. Because we should fit into your life, not the other way around. Go to xfinity. Com myaccount good morning. Welcome back to squawk box here on cnbc, live from the Nasdaq Market site in times square. Were watching shares of cisco. They Beat Estimates by 2 cents and announced 1,100 job cuts. Ceo Chuck Robbins will be on at 9 00 to discuss that. And the International Trade commission will hear testimony from boeing and bombardier customer delta. General motors will stop selling vehicles in india and is putting its operations in south africa for sale. Gm wants to focus on fewer, more profitable markets. It will take 500 billion charge against earnings as a result of that. Joe. This is complicated for me. Linked in out, linkedin out, link linkedin out linkedin is out with its list of Top Companies. You do Something Like linkedin and get all these people corresponding with employers and each other and big data comes out of it and you can really i mean, some of these conclusions you can draw are really valuable. For this, this is a list of the company where we know people want to work. It looks like a list of fang its like facebook, amazon, alphabet tesla. Tesla. And some media companies, comcast is on it for the first time. First time. Thank god. Nice part about the list is it looks at billions of actions of users, whereas other lists that might just be based on surveys, we actually see are they looking up jobs, looking up jobs and are they looking up employees and were they staying at the job once they actually get it. Were trying to figure out where people are telling us they want to work. Can you figure out where people dont want to work . We can see what companies are on the list and off the list. For instance this year you saw a big drop in twitter but see jpmorgan got on the list for the first time. There are a number of companies that are doing really welcome paired to their competitors and its because they are investing in talent, theyre out there, theyre big brand names. Within of the things sous susi looked at is the brand is it all about sizzle . What makes it the most Popular Companies and most popular stocks . Theyre very relevant, theyre brands we use every day, amazon, google. Theyre sort of audacious these companies, creating new categories. Its not where people like to work, its where they yearn to work. Google has about 1 million job seekers, and it has been 957 jobs open per year. They yearn because this have this aura but once you get there, are they the best pleas to wo place to work . If theyre a great engineer, you get all these lifestyle benefits and paternity leave and fabulous food in the cafeteria. To get the jobs are incredibly hard but some of them have fantastic culture and generally it is how is the experience once you get there. Im surprised about uber being on the list because the controversy was all about the work environment. Uber surprised us. Its a brand name. People want to get into a company that changing the way we live and is creating new categories and is up ending the status quo and that washed away the negative publicity. Some companies with negative publicity did get off the list. For example, Goldman Sachs got quite political on the list and its off. Now some of the goldman people are some of the most important people in the white house. People are working so many jobs. No one gets a job and says im going to stay here for life. The average tenure at google was two and a half years. People want to take on hard problems. The average tenure at google is 17 months. You want to fix something, you say i launchedndia and i did this. People are collecting experiences. They want to solve hard problems. Google is offering that. Do you have any demographics, what ages people are that want to work at some of these places . It sounds like it skews young. We looked at the actions of 133 million usieers in the u. S. We didnt break it down by age. A question about mobility. Do you see that its weve heard that mobility is down big in the country. Are these people largely moving from a Silicon Valley firm to another one or is this bringing people across the country . Im just curious if anything like that is revealed. Theres a couple things. One is the Top Companies tend to attract other people from the Top Companies. You get into this grouping and you stay interest. Youre now in the ivies and you want to stick around to the different ivies. And people are consistently moving to cities where these companies are. Talent is following or talent. And the message is is that this is what people look for, they want excitement, they want a brand name. It is an important takeaway for companies that are trying to hire top talent no matter what industry theyre in about how you might frame up your Value Proposition to potential employees. Dan and suzy, thank you. Your husband was on yesterday. Really . People want him to go to washington to fix things. I heard that. Chief of staff. He was amazing. Hes looking for a new career so maybe that will happen. Okay, you behind him on this . Yeah, were going to washington. I dont think so. Its a tough town. Anyway, thank you. Coming up, a look at the coal market, talk of deregulation and where it makes sense. Squawk box will be right back. Or plan for tomorrow . At kpmg, we believe success requires both. With our broad range of services and industry expertise, kpmg can help you anticipate tomorrow and deliver today. Kpmg. Welcome back to squawk box. Commerce secretary weilbur joind us to talk trade and Kayla Tausche has more. Kayla. You asked when this letter to be delivered to congress to renegotiate nafta. He said it would be imminent. I have learned from three sources familiar with the matter that letter will be delivered today to the house ways and means and the Senate Finance committee. What that letter does is it basically opens a 90day window for u. S. Officials to discuss what their negotiating position will be, that 90day window if the letter is delivered today as sources are telling us, that would expire around midaugust. That is when talks and canada and mexico over nafta would begin. Reuters reported comments from the mexican economy minister is that it would be a trilateral deal. That letter to begin the clock on renegotiating nafta is expected to come today. Good stuff, kayla. Thank you very much. U. S. Energy and independence has been a top priority for the Trump Administration as well. For more on domestic renewable options, lets bring in daniel. Renewable energy seems like it would be one, the Trump Administration has been a little bit less clear. How does it feel from where you sit . Well, for certainly years, more than a decade, its been a bipartisan supported area. In particular what we do, so were a premiere bio diesel company, thats a growing diesel that volkswagen runs on, that kind of diesel in europe a lot of consumer diesel but here in america, its industry grown. We have great environmental benefits and we really find arms across the aisle helping. People love the idea of course. But if now youre seeing much more sympathy and support for kind of the fossil fuel industry, does that just make it harder to say were not going to have a bunch of money thrown at us or incentives not at all. To me its really obvious and when i spoke to folks it becomes that way. First of all, we sell to and through a highly fungible, directly distributed fuel. We love our customers, theyre the energy industry, we sell to fuel companies and were in a market where everything we make easily is consumed. And at the same time, i met with scott pruitt last week on wednesday, hes the administrator of the epa, and a comment he made which i agree with are jobs and energy are not in conflict with environment. They can go directly together very well. So we do that, we create fuel that has wonderful how much is your fuel relative to our fuel it sells at the rack whole sale price never sales more than deesel. But at the same time when you use our fuel, you make it easier to have a less polluting, highperforming blend of biofuel. Why isnt everybody in biodiesel . We actually bring raw material from across the world together. Its used every day almost of where and our fuel throughout the year almost everywhere. So when you go and meet with the epa, what are you looking for . Whats important for and were a company that is a political because we dont need to tack sides. People like what we do. So when we talk to them, the first thing is we need a predictable future. I think its good policy because it marks. Is that the thing carl icahn assassinates. Well, i dont know what mr. Icahn hates. Hes been vocal about a few things. Is that the reason we have ethanol in the gasoline . The reason ethanol is in the gasoline, which is not our product, is to have okctane to have ntbe. Its the run cleaner. Youve lost me. Sounds like thats something this administration also supports. Daniel oh joining us. Thank you very much. Are you sick . Youre okay, right . Im okay. Im all right. Coming up, some final thoughts from today final thoughts. Today final. Its scary. You dont know the time or the hour. Final thoughts from jason. You look fine. And house ways and means chair kevin brady is our guest on squawk box. The power of a low volatility investing ap. The power of smart b power your clies portfolio with powershar. Before investing, consider the Funds Investment oectives, risks, chaes and expenses. Call 800983090 for e prospectus containing thiinformation. Read icarefull distbuted by invesco distributors inc. Welcome back. Time for jason treners final thoughts. I guess my final thoughts are generally around this idea that i truly believe that whats happened in washington presents an opportunity, especially after yesterdays selloff. I do think its going to take the temperature down and i think that theres going to be a renewed focus, especially among republicans on the hill to get things done while they can. The independent counsel, its hard to see that as good news but to the extent to which it might allow people to focus more on policy, its good news. The dow is off 27 poin37 poi the open. Even though we were down 370 points yesterday, its hardly a blip after the runups weve seen. The sectors thats a trigger is the financials. I view yesterday as a gift. Does that imply Interest Rates are going to move back up . I think theres certain parts of the administrations economic agenda that will happen regardless of congress, thats energy deregulation, financial deregulation. Those are important, too. They may be slower moving than the stimulative impacts of the tax cut but theyre still important. Really want people to buy financials when the 10 year is at 218 . I do. I think thats the time to buy them. To me. I have a feeling a year from now it will be 318 based on my forecast of Economic Growth. And i think that short rates, i somewhat disagree with one of the guests that came on before, i think the fed is going to use this opportunity to slowly normalize rates. But for those of my friend that are inconsolable that donald trump is president , you have to be rooting for him because we can get back to a more normal kmk psy economic cycle. President trump did tweet with all the illegal acts in the Clinton Campaign and the ballpark administratiObama Administration, there was never an independent counsel appointed. This is the single greatest witch hunt in history. Thats your point that theyre unhappy with the special prosecute. Be careful. Now im worried. Look around, nobody dropping a bucket above you. Imagine if we all knew we were going to get a final thought, the luxury in that . I dont think mine would be very profound. Mine would be profane. Good seeing you. Coming up, a check on walmarts stock. Then were going to talk tax reform with how ways and means chairman kevin brady. At cognizant, were helping todayleading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading Companies Lead with dital. Deartheres 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 se it free. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realation 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. The trump effect, markets in red as a special prosecutor set to investigate possible ties between the president s campaign and russia. Tax code overhaul. Chief gop tax writer kevin brady pitches his plan and talks about the impact of reform on the economy. Applause dna and fragrances. How one company is growing products in the lab. The final hour of squawk box right now. Announcer live from the most powerful city in the world, this is squawk box. Well, thanks for sharing that with the whole did that go out i have problems, i got my eye running. I have no cough switch on this new set, which was i dont know who thought that up but thats the most important thing in tv is a cough switch. The red button. The red button. Not just for coughs but for cursing and those things. Stocks are coming off their worst day of the year. Futures have improved greatly from down 80 or 90, now down just 27, s p down less than a point and nasdaq indicated down about 6. Walmart out with earnings. Revenue came in slightly below forecast. We have the sick ward over here. I coughed up a lung just coughed up a lung right into the cough switch. Walmart, the shares are up about the same amount. Well talk an analyst in a few minutes. Brazils president denies bribery al gallegations. In his statement he said he never tried silence his opponent. Robert mueller has been chosen to head investigation in tru trumps administration. Theres no there there. I hope they can get it done and then the media can go on to something else. Trump tweeting saying with all of the illegal acts that took place in the Clinton Campaign and Obama Administration, there was never a special counsel appointed. In a second tweet he writes, quote, this is the single greatest witch hunt of a politician in american history. And Kayla Tausche reports that the nafta letter will be sent to Congress Today and it start the 90day clock to renegotiate. Secretary ross told us it would be imminent. And the house ways and Means Committee is holding its tax reform meeting, kevin brady. Good to see you. This is a big day on tax reform, first congressional major this year on tax reform. And youve seen the scuttlebutt, the scuttlebutt is really is anything happening with the backdrop of the developments of this week, is anything happening in obamacare replace men and ment and repeal would say what to that . On tax reform, i would say yes. Heres whats going on. The key tax negotiators from the white house, the house senate, are continuing to Work Together toward trying to get to one single unified tax reform plan. In fact, we met again yesterday, our tax teams are meeting almost daily on this. And so, look, were just laser focused on what is the top priority, which is how do we grow jobs, wages in americas economy . Does it matter, mr. Chairman, whether the senate gets its act to the on their version of obamacare replacement and repeal . It would be a lot easier do you know what are you hearing is happening behind the scenes over there . Yes, it does matter. For a number of reasons. You want plenty of time to be able to restore the free market and restore more state and local control of health care. Yes, time matters. From my standpoint, we want a trillion dollars of those tax hikes out of the u. S. Economy. It really does drag us down. Plus really creates momentum for where were going on tax reform. So look, the senates doing its job, were hopeful theyll continue to make improvements, well get this done. In the meantime we are meeting daily on the issue of tax reform. In the past weve had guys like, i dont know, langon, people that are great Business People talk positively about the border adjustment tax. Then we have senators on and i dont think ive found a single one that you mention it to them and they turn white as a ghost, you know, i dont know whether its because theyre from arkansas. Purdue used to be a dollar general. It looked so d. O. A. In the senate, how do you keep promoting it when it just looks hopeless. Is it hopeless . No, its not. Look, no one can defend the status quo. We have tax break reform product, over u. S. Products here and around the world. We want to go straight at our competitors, equal taxation here and abroad as well. One, its incredibly pro growth and competitive but its a big change. I think the burden is on us to Bring Solutions to the table on border adjustment. Thats exactly what were doing with the white house and the senate. At the end of the day, were going to ask senators in the country to look at the whole pack and to see what it does, not just to go jobs and paychecks but how it vaults us into the top three best places on the planet for that next new job or investment. Be patient, let us work, were listening real hard to the same people our senators are listening to. Im convinced we can get it right. If you did get it right and then you also got thinking that this can happen, i its a fantasy. But if you had obamacare repealed and is it still a goal . Were at lowest rates for businesses and modern rates lowest in history. We always look to take that rate as low as we can so we can stay competitive as long as we can. But theres an equally growing issue. That means tax reform should be bold. It should be permanent. Businesses, if we want businesses to bring beg parts of supply chain back to the United States, there has to be certainty going forward. Thats from the house perspective and design tax reform to balance within the budget, counting on Economic Growth because that will give us the greatest impact. Mr. Chairman, its scott wapner. Its good to speak could you this morning. The Senate Leader mcconnell is at odd with the white house. How do you bridge that divide within your party . I dont know if its at odds with the president who has said im good with losing revenue ins early years, a Strong Economy will bring it back in time. You can design to break even in the budget over the first ten years. Not only is that good fiscal sense, it allows us to make it permanent in the senate, again which i think is so much more progrowth than temporary tax cuts, which will give you a boost and then settlings back down from the week before. This does seem to suggest, though, that there is a debate, whether its semantics or odds or whatever about deficits . There is, there isabout im theeg over the ten years that has been the approach weve taken now for a decade. And that lays the groundwork for the budget process called reconciliation that allows us to do sex im still very optimistic that we can finish this this year. Lets get down and dirty in the trenches for the washington scuttlebutt while we have you here. There have been things written in recent days that house guys, every two years they got to worry. They got one foot out the door with this trump character. Theyre not sure, do we stick with him, not stick with him. Ive seen so many articles, many times theyre talking to an anonymous house member or just the guy from michigan or whatever, on a scale of one to ten that people are going to bolt, where do they rate on fake news . On a scale of one to ten, do you hear people nervous and ready to jump ship . No, no. I dont put much stake in those. Those are just sort of fight promotion type articles, i think. Look, hour members want to deliver on repealing and replacing blauk. Theyre exsouted about and thats what theyre focused on. And repealing the regs lagss that have just dragged our economy down. You would think that things have come to a complete standstill. No. Oh, gosh. Members are working, moving bills. I cant tell you how many discussions a day i have with House Republicans and with democrats as well who want o weigh in and gauge and get tax reform done. Im sorry, go ahead. No. I was going to say is there the risk that appointment of a special counsel for an investigation that is going to go deeper and last longer harms the effort that youre trying to put flew . I dont know i think general mueller is a reassuring choice to go in that direction. It allows more members to stay focused on their jobs and the big priorities. I at the end of the day will make the facts, will, certainly with secretary mnuchin and senator cohen gives us again every day the opportunity to continue to move toward a unified plan. Quickly on that point, is this is all about how pro growth and competitive we can be. Is your product or service consumed in the u. S. . If so, it will be taxed equally at a low rate of 20 . That is a big change but its dramatically more that be youre like the north star. Youre constant. Youre a constant for box bach. And youre pretty good at this, too. I mean new york we need you where you are. You want him to be the chairman . No. Im just saying we need him in a lot of different hats. Go back to coughing. Go back to coughing. Thank well hear more from analysts when we come back on squawk box. Stay with us. I count on my dell Small Business advisor for tech advice. With one phone call, i get products that suit my needs and i get back to business. Were back. Walmart reporting a mixed first quarter, beating estimates by 4 cents with quarterly profits a dollar a share. Joining us is karen short, covering food and staples retailing. Nice to see you this morning. We were talking about the stock in the break. It was down, now its up. Why the reversal . I think there was an expectation on the camp into the quarter that was a little higher than what they actually reported in the u. S. My estimate was high ones, maybe into the two range. At the end of the day when you look through the numbers and look at guidance, this is a Company Generating traffic not only in bricks and mortar but in ecommer ecommerce, and you just dont see that anywhere but guidance is definitely stronger than what people expected. I think the tax refunds shifted into the second quarter. U. S. Comps are up 1. 4 you think thats pretty good ecommerce grew 63 . The question of that is how much is third party versus walmart. They tried to suggest that its not all jet. Obviously, but they are doing more on the thirdparty front and theyve given you the number of skus, 85 million i think theyre up to online. So ecommerce is working. I think the point is you got the ecommerce growth thats not coming at the expense of the bricks and mortar traffic. You need both forms to survive. What about the spend . Amazon is trying to each everybodys lunch, whether youre selling apparel or everything like walmart. The company cfo told our court any reagan they were disciplined on capital allocation. How would you describe the risk moving forward on profits . Obviously they made the jet acquisition and that pushed back earnings by a year and thats priced into the stock. Now theres all these headlines on these small acquisitions. Theyre small. I dont dismiss them but theyre basically buying images to put on a web site so it saves them hours and hours and hours of labor to take the images themselves for shoe box or something. But the discipline is coming on the bricks and mortar side, where theyre not growing anymore or very little and thats producing cannibalization, its about roic holistically, not just excluding ecommerce. I got to run. Do you like the stock here . Yes, i do. Whats the target . To be revised after todays call but right now its 28 and walmart is our top pick. Sounds like youre going to raise the price target. Well see what they say at 9 15 when we have an analyst call but they certainly didnt disappoint me today. Good to hear from you. Thanks. Americans may have complaints about airlines but its not expected to keep them from traveling. Phil lebeau has the report. Hi, phil. When they put this forecast, they say, wow, this many people are going to be flying . Between june and september, a Record Number of people are expected to take to the sky. In total, 234 Million People are expected to fly. That is an alltime high, come out to a little more than 2. 5 million passengers a day. Thats up 2 from last wreyear. Theyre adding 123,000 seats per day across all networks. Lower fares and a good economy are driving sales. 263 for average domestic ticket according to hopper as they track the affairs. Whats interesting to know is despite all of the controversy that weve seen with airlines over the last month and a half, it has not slowed down these stocks at all. Why . Because so many people are expected to fly and the market is strong in terms of revenue, guys, this could be a big summer for the airlines. Back to you. All right, phil. But is big summer a good thing or a bad thing the way that the spring has kicked off . You know what i mean, phil . And i dont know, as a flyer is it going to be worse because all the passengers feel like yes, yes, it will be worse. It will be more crowded, the planes are packed. Youre going to have to deal with that frustration thats out there. The days of having an empty set next to you, theyre gone. You could be in an suv with your kids for 14 hours passing trucks, every time going please dont come over, please dont come over, no try that. Versus being in a tube. For an hour and a half. Youll be okay. Try that as a way to travel. President taking off from morristown. Thats good. Were facing 20 billion security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. 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 . President trump rolling back regulations he says will save the coal industry but some analysts say not so fast, theres no way coal is coming back. Jackie deangelis traveled to coal country to get some answers. Wow. Thats right. The miners told me they had no choice but to vote for donald trump and they think that hes going to deliver. Still, the analysts will tell you coal is dead in the water anyway. Thats because of demand, destruction, domestically and international an internationally and because of the switchover to natural gas. They say rolling back regulation levels the Playing Field to make coal a real competitor again, that coalproduced energy is cheaper than nat gas and alternative and it will fuel a manufacturing boom giving it room to grow. When you look at the time period before 2008, we were over 50 of the electricity. After the last eight years and the regulations that have been put in place, were now down closer to 30 . So if we had the regulations removed, we believe we can come back and continue to compete with natural gas. Reporter now, some of the footage that you saw, were down in the mine more than 400 feet underground yesterday. When the coal comes above ground, you can see it behind me here, it stacked and then it comes down the conveyor, it loaded on barges and it gets shipped out from the ohio river. If President Trump can deliver on his promises to bring the manufacturing jobs back here to the United States, these miners say youre going to see a lot more coal fueling the future. 90 of people dont. Thank you, jackie. Jobless claims about to hit the tape. Well bring you the numbers when we come back. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. I am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound 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. Welcome back to squawk box. Were going to have some breaking news of course initial and continuing claims, our made read on philly. As i look on the board, i see close to triple digit losses on dow futures, down almost 10 minutes to s ps but today feels a lot different than yesterday. Heres today the point, 232,000, if you bench mamark that to 236 unrevised from last week, its a drop of 4,000, a whisker on continuing claims, from a 1. 29 million on continuing claims and philly fed, there we go, 38. 8. That is more than twice what we were expecting. Not a bad number. Sequentially it comes from 22. And unlike many other numbers that have eased back a bit, that has it. Although the feel good indices, its not going to give us numbers in a quick time frame. I would benchmark on one very easy notion, whatever reason you think the market Health Insurance moved up from november, does yesterday challenge it . I think yesterday is one of the first days you can pin politics on what the market did. When they start digging and get somebody neutral, will they actually find anything . If you believe the answer is no, this is the greatest buy in years for many markets. Joe, back to you. I hear you but how do you know, rick . How do you know . Oh, come on. How do you know, joe . I think you know the answer to that. It just a at least the other investigations there was a crime first. Wat watergate there was a breakin. With clinton it was dresses. It was a stellar move. Well see. Can i ask about brazil, it involves currency and maybe small beans but a lot of people are in the emerging market and now they have a huge political issue to deal with and maybe they cant survive it. Im not the type of person to monitor markets to recommend emerging markets. Be careful. Emerging markets are emerging for a reason. Developed economies may have their issues, but id certainly rather be on the ones in a raft than the ones underwater. I looked at it in a different way. I thought if they went down yesterday because of the possibility the legislation gets pushed back or becomes less likely, i figured youd have to assume some of the upward move was because of the anticipation of some of that legislation. You cant have both. People that said it was just because of earnings and just because of things that were already good that were happening, thats why it went up but then theyre quick to say now its down because of washington, its just weird. You cant have it both ways. You cant have it both ways. I will stick to my assumption. Hillary didnt win, the market goes up. The people that backed her, if they become more powerful by dragging this out, it just like shes there given and the market is going to do what it would have done if she had won. Im not saying trumps a great guy but his policies are great policies. His policies, rick, have nothing to do with the investigation into any activity that took place between his campaign and russia. It has nothing to do with anything that Michael Flynn did or didnt do, whether the president shared the information that he did, whether whether he asked comey to do anything regarding the flynn investigation. I dont know where you get half this stuff from. Wait a minute, wait a minute, i agree with you, youre exactly right, youre exactry right. And all the things up said are true because most of the media, look at the tapes, look at the tapes of every channel, read the newspapers for newspapers you may write for. Look at how they treated the win. They didnt treat it as a win. His policies are policies that make sense. Its personal and policies. The last president had a great personality and in my opinion really crummy policies. Now you have the opposite. I agree with you, totally agree with you. And it isnt whether his policies get enacted. Its that the old policies dont come back. Thats why the market broke i agree with your synopsis about why the market i dont know who im talking to by the way. I dont have a monitor. Is that andrew . No, its wapner. Might as well be. Anyone puts no, no, i just couldnt tell who you were. I agree with you that the market likes the policy and thats the reason that its gotten to where its gotten in part. Thats still not what im saying and i dont agree with that. Im saying the market didnt like the last set of policies. Thats what im saying. The market still went up under the last set of policies that they apparently hated. Did they really . I think they went up because the Federal Reserve was financing 55 of the debt that all the last policies put forth that nobody noticed because the fed covered it with a blanket. The blankets off. Read todays oped in the journal. That kind of explains it. All i care about is the way we frame whats happening in washington. Maybe you. Not me. I dont claim anything. I think it pretty easy to see what the markets like or dont like. Its the people that put it in a stew and this is backup for you. Unlike you, i dont let the entire world know where i stand politically. I like just having a debate over why things are doing what theyre doing. Can you come back in like a decade . Anyway you came down from d. C. You must have been on a plane because we saw you earlier in d. C. On a shot. Did you really . No, that was the dome. As you know, im trying to hide my baldness from viewers and your pointing it out is really working against my efforts here. I had an intro for you. You did . Did you look at drudge yet . Dont do that now. I want to talk about all the things you were talking about. Theres data that suggests that all the chaos in washington could have a negative impact if these things persist. Professor davis shows that six months since the election of donald trump has been among the most uncertain of the past 30 years. You have to look to the fiscal cliff of 2011 and the financial crisis of 09 to beat it. This is only through april so it doesnt include the rather momentous events of may. It uses newspaper articles and measures the number of federal tax provisions about to expire and how far apart economic forecasts are. Look at the last 12 months. The index shot up from brexit but it didnt stay up there. It surged with the election of President Trump but it never declined back to the average level, its remained up there. And his explanation in uncertainty matters. He said it can retard and it shows if theyre going to make big changes to the tax regime, do it quickly. Longer term it makes sense to do it in a more bipartisan way so you dont have the effect of coming in as obama did and Pass Health Care in asongle party way and come back and it reversed, six years later or however hard it was. Himself point is is that there is an effect of all this, its mess measurable and it should be something that washington should move to minimize. The u word i got a problem with, the uncertainty. What do you mean . Its always futures uncertain. What this does is it takes your comment and puts data around it. Even worse the future is uncertain, kelly, but are there things that humans can do to minimize that uncertainty . And professor davis suggests yes, there are. If you telegraph your thats better than its been in years. You think so . Kelly, its din from the idea of if youre constantly juggling, theres always going to be balls in the air. If you stop juggling, there will be fewer balls in the air. The effect is uncertainty, the idea that youre in the middle of mixing everything up and doing so for an extended period of time, his point is that has a downward affect on investment and on louie, we have you on to give us an individual idea that do you care about what happened in washington, what happened yesterday . You have stocks that you like that are going to do well no matter what happens kprp the market was getting increasingly narrow so it did get overbought. The events in washington are just an excuse to overcorrect. I think well watch the volume today, we get a bounce and probably have to retest some lows and then well rally on to memorial day weekend. So we talked a lot about your ideas in the past. What do you bring us today . Well, some of the stocks were doing goo so im going to use this dip as a buying opportunity for my strongest stocks. I like to buy very strong stocks on dips and it parg do you think rates will bounce back, too . Independent a grow mabb. I do have a few regional banks in a the truth of the matter is the major banks dont fit our earnings models and theyre just not strong enough. When we had that financial rally after the election, some of the etfs were going to premiums, their net asset value. There was a lot of frort in what we call a lot of the trump stocks. Im buy trump stocks that make money, like a masstech, a firm out of miami. So this doesnt effect me to and what are your earnings in sales . Are you guiding higher . Just said the best marines in five yoos pshlg. All right. Scott, i think it you. Oh, thank you. Up next, biology by design. One of cnbcs top disruptors wants to innovate how flavors and fragrances are engineered. Were going to talk to the ceo right after the break. 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. 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 the power of innovative thinking. The power of 100 of the worlds Top Companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Breaking news confirmed finally, saw this but wanted to wait a while. Roger ailes has died. Lets get to julia. He was former chairman and ceo of fox news as well as the Fox Television Stations Group from which he resigned last july, july 2016 following allegations of Sexual Harassment, a number of Sexual Harassment lawsuits over at fox. His wife Elizabeth Ailes posting a statement which is now on drudge report saying a career that stretched more than five decades, his work in entertainment and politician and in news affected the lives of ma many. Now back to you. You never now nowadays with fake news and the like, roger was around cnbc do you know him . Know him well. He was one of the most talented it. Tv producers that ive ever run across. He never needed a focus group to say whos going to succeed, whos going to be a great talent . I was shocked by a lot of the subsequent stuff. I never was a witness to any of the things that finally came out in recent years. But he was a very talented man and a man that you knew where he stood on things as well. He didnt pull too many punches. Sympathy and heartfelt sympathy to beth ailes, who also ran cnbc for a while, more than 15 years ago. Its sad, sad for everyone involved. Shocking. I wasnt aware he was sick or anything. All right. Well take a break and then well be back with more squawk box. [vo] when it comes to investing, 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. 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, cnbc, were rolling out the disrupter 50 list this year. Number seven is using robots to disrupt the biotech space and ginkgo bio works is one of the biggest writers of biotech in the world. The ceo is here. Do you have anything that can warm me up in a drink maybe . Little cold in here. A pill i can take. What are you guys working on . So ginkgo our Core Technology is designing and writing dna so were the largest writer of dna in the world. So youre trying to play god. Well, were trying to work bring nature into more of our products. Is it human dna were talking about . So dna is dna. This is something i find people dont realize but if you look at how biology evolved, you share 20 of your genome with bacteria. Theres a lot of reuse across biology so when we write dna we can draw in the entire code base of all the organisms that have evolved. Its all dna. Youre not going base pair by base pair, youre taking dna that does certain things and i mean, youre taking introns yes. Force it to have a resident bio engineer. Yeah. Thats what youre doing. Youre not going base pair by base pair like writing a computer code. Yeah, we are. In the last three or four years you can write base by base. So in 2017, ginkgo how do you have any idea what youll do, what protein results from that and what you want to do with it . So you do draw you basically learn from whats going on out in nature. We look at the genome of, you know, in our case like a rose plant, for example, to find the genes that would encode the fragrance. We learn from that and then we write that dna. So in 2017 well write 600 million letters of dna. Who are your clients . What do they want . So we started to move into new markets so we have electronics, the first biotech, were working in agriculture. In pharmaceuticals. So we have a program with darpa, which helped to invent the internet and were engineering the microbes that live in your gut and were fending off certain diseases. In the future wed have living medicines that you could take and use for a variety of different combat a variety of different diseases. I understand why youre number seven and not much else about it. Jason, thank you so much for joining us and best of luck. Well be keeping tabs on you. Later on cnbc dont miss the ceo of progeny, number 13 on our list. The new york stock exchange, jim cramer joins us now. You didnt work for roger, i dont think. No, i did. Oh, you did . Were you here no, i worked for him at fox. At fox. I set up a show called he predated you at cnbc when he was ceo for four or five years although you were probably guest hosting on squawk box at that time. Is faber in yet, is he around . Yeah, davids here. Hes getting warmed up for a big show. We have cisco on which is going to be important. I mean, i think that when i look at cisco, is that the real truth or is that the unemployment number we saw . 1988 the lowest since 1988 isnt that the truth . So were struggling with what the truth is here, joe. The jobs have been the best they have ever been in most peoples lifetime. And most people were in this business werent in in 1988. So its kind of a mixed picture, you know . So okay. So well talk about stocks and markets them. Do you expect more follow through from yesterday or i think there will be people who will be taking advantage of the fact that its up. Who want to escape so to speak because they were way too involved with what washington is doing and not enough of what the companies are doing. So i think that they if they want to use it for escape, fine. Dont necessarily buy this opening because yesterday obviously better prices. Maybe it comes down, but look, i think that the most businesses are good. The reason i mentioned cisco is because thats the beginning you know, that was a company which basically said things arent so good coming ahead. And if thats the case, then we have to be more tempered when it comes to tech. We have to find out whats going on because that was a disturbing forecast that Chuck Robbins gave us. We have to run. Squawk box will be right back. G by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . She cant become a guitar legend just by playing air guitar. 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. Get a final check on the markets today. The futures are now down 58 points or so. Kind of in the middle of the range we saw. Down about 90, then down 30. We had some economic numbers come out. The s p has gone down 5. 25. And the nasdaq down 8. At the very top of the show i said god knows whatll happen today because theres so many things happening and roger ailes passing at the age of 77. You know, he was at cnbc a long time and he changed the face of news and cable news for certain. Cable news and tv. We already said we send our condolences out to his wife beth and his son zach. A shocking show today. Thanks for being here, kelly. Make sure you join us tomorrow. Squawk on the street is next. Good morning. Welcome to squawk on the street. Im david faber along with jim cramer. Live from the new york stock exchange. Carl quintanilla is on assignment today. Lets give you a look at futures this morning. You heard joe mention it, we are looking down as you see on the s p. The dow and the nasdaq. European markets in the red at this hour. At least they were the last time i checked yes, the same. A little over 1 in france and