Transcripts For CNBC Squawk On The Street 20170306

Expected to roll out a revised exec tifr order on immigration today. Well talk more about the economic impact. First up, stocks are looking to extend weekly winning streaks. The s p and nasdaq each up to six. The dow posting four straight weeks of gains since the bull market began about eight years ago today it has generated more than 21 trillion in new stock market wealth. In fact, today is the anniversary of the dows crisis low, 6,400 and change, of course the s p and haines bottom come in a couple of days. There were a lot of people believe the asset class tarnished back then and havent come back. There are a lot of people who believe that a return on a tenyear bond is acceptable. And there are very few people say, i got to put all my retirement money in the stock market because its actually hurts you. Its not like the old days where people feel that its a completely investable concept. So today, again, j. P. Morgan comes out, gives a bunch of reasons to stick with the reflation theme. One of them is their argument that equities remain underowned and that the retail flows are just now starting. I think thats very true, but one of the reasons why they remain under owned is pick up either paper today and theres articles about Hedge Fund Managers who really hate the market. And theyre very well reasoned, very rigorous. They leave you thinking that the market is all one entity because thats about the notion that a lot of people brainwashed into thinking about single stock risk is really bad and you have to be in the s p 500. I totally get that. I like index funds, but there is a notion from these Hedge Fund Managers that this is the last day of this bull market. And theyve been saying it over and over. And i dont understand it because if i go and i look say at the banks, theyre at 14 times earnings, and i think that maybe you can actually make a judgment that earnings matter for the banks. But i recognize that the Hedge Fund Managers just hate this. They hate it. Well, eight years is a long time. Sometimes people just tend to look at how long typically these things last and say weve got to be in the last innings. Rates are finally poised to go higher. That has sometimes at least sometimes been a break. But your points a good one on multiples. You can come back and you can play both sides here. We did see an ipo last week in snap that did have a bit of bubbleiciousness to it. I know the market doesnt really know how to Value Companies that are just starting. Theres a very compelling note this morning from needham snap is which he equates to playing the lottery, sometimes lottery tickets also pay off. Its a thoughtful piece that doesnt matter today. Its at the 40 billion i feared it would be at, i emphasize fear because i think if you look at the piece its very good about daily average users slowing. Its very good about how its got a really take a lot of share from facebook and google. Its a very compelling negative piece that wont really matter right now because theres a lot of money that wants to be in it. Right. Jim, when we think about where we stood eight years ago and where we are now in terms of the market itself and the changes that have taken place, whether its quantitatively driven strategies. Right. Or the proliferation of etfs and index funds to Warren Buffetts letter referencing the fact that your performance would be better if you just did that as opposed to went with stock pickers. Right. I mean, how do you think thats influencing the market at this point . We sit here and we talk about individual companies because frankly theyre more interesting than talking about in my opinion the Broader Market, but a lot of people dont care. No, i think thats kind of the onwe of the notion of watching netflix and i like this show not thinking netflix is a great buy. These are viewed as unreachable by the average person. I think its opposite. Youve been convinced by very, very powerful marketers that you can never get facebook and youll never get alphabet. Never. Because it requires too much fire power, as if thats really whats at stake when you pick stocks. Its not. Its never been. Its recognition of trends, trends that you and your friends see or your kids see. Its the recognition that every kid has an apple at 15. But these are things theyve convinced us, marketers have convinced us that you must have that you either cant do it and you have to go average, or that you must have an algorithm that only can be produced by the finest schools in the world. I rebelled at it ever since i was at goldman. But what im saying is that it doesnt matter. The rebellion has failed. The rebellion has failed . The rebellion has failed. We do what we can because Companies Want to know about whats going on with other companies, individuals are fascinated by what happens with other countries. But i think that theyre so theyve been brainwashed into thinking that there is no way that they will ever get the things i think are available to them in their daily life. Couple things separate here. You mentioned i think youre referring to kad kellys piece in the times this morning. Yeah, that was a really negative piece. Being outright bearish. I love kate, but that piece was like, okay, im going to shoot myself before i buy another stock. Then theres bernstein today saying were putting on partial hedges from our global strategist because we have very little cushion to a macro selloff. But what happens if i mean, Deutsche Bank did this giant filing and thats great. They raised capital as did unicredit not that long ago. Im looking at a very big turn in latin america, asia away from china very strong. Im not going to say 6. 5 is bad. Major companies are giving you so much information on each Conference Call about how the rest of the world is good, but its not opaque. Its right there. But youre somehow not supposed to grab it and thats what i dont like. I look at the netflix note this morning and i see theyre talking about subscriber growth being better than expected, ubs, well, our world has changed. People watch netflix as a matter of course, but why is that not a stock . Why is that just a company we use . That is what id like to bring back. Id like to bring back the notion that if you like apple at 93, dont listen to the analyst that tell you best days are over while you buy your iphone 7. Dont do that. Really . You want to emphasize the peter lynch way of investing again . It was never wrong. Yeah, but it didnt always follow through either. Geez, really . Pe peter lynch is still the greatest oh, he was good. He was definitely good. So was the guy who followed him, too. Do you think its wrong to think you can nail these ideas, if you watch the shows and do the homework . S p index future index fund should be your bedrock. Im totally in belief of that but then have additional money play money. Okay. Is that it . I call it mad money, but lets use play money. All right. And you are like both feet are on the gas pedals. Your kids are born and take them to disney four years in a row and buy an index fund . How about buying a few shares of disney . Jim, i spend my day on the phone with guy who is are incredibly rigorous in terms of trying to unturn upturn every stone they possibly can in understanding various and they take 20 and thats what buffett said they end up underperforming all the time. But if you took back the 100 billion they take, buffett did not say that they were bad. He said that their fees made it so they were bad. He also to be fair was using fund to funds, which is fees on fees as his bogey. That business right. But its not needle in a haystack is what im saying. Now, snap comes along and i cant look, im saying, listen, my kids my daughter, my youngest loves snap so much. She says, dad, you got to get your picture with evan. This thing is just a rocket ship. So i listen to her. And retail is listening to it as well. To your point. Listening to emma. Yes, they are. You wouldnt call that rigorous though. No, thats not. And that buying on friday, that was them. That was retail saying we want in. Because they dont look at daily average users going from 10 million to 5 million in terms of growth. Okay. Theyre daily average users, checking all day and hearing and going on make their own shares. When you sat here a couple days ago made a great prediction it would hit as much as 40 billion also said a year from now it will probably be lower. I totally believe that. Is that a suckers bet right now . Not until theres more float. I mean, thats the mechanics of wall street make it so that it goes up. Mechanics of wall street are something you know if you worked with the syndicate, you beg for stock, youre a Hedge Fund Manager that im not calling for a complete upending of the notion that stocks are nonsensical. Im saying stocks play a role in peoples portfolios. Look, im not saying its the racetrack. Its like, hey, listen, you got to take certain amount of money go to the racetrack. Im saying its better than that. There are individuals who see trends who have intelligence, they can buy these stocks and sell them when they want and creating their own tax concerns, which is not bad, and they can do the work. They dont have to have a portfolio of 30 companies, 50 companies, 100 companies and constantly getting money in and constantly finding new stocks. They are sitting there saying this netflix is something. And i like that. We can talk about it. And we can help them find it. We can help them. Yeah. It feels good when so this weekend, this weekend these three huge boxes come and the post office asks me for help. What are they . Whats in them . Okay, the first is a huge box of keurig 8 00 coffee because i love that and supermarket doesnt stock it. The second is a gigantic box of, yes toilet paper. And the third is scott paper towel. If we were at home, wed go to costco, drive when youre where i live in an apartment building, this amazon comes and its great. Now, get this, its a stock and you could have bought it. By the way, you still can. Youll pay 149. 88 a share. Yes, you can. As a matter of fact, i have the quote on my apple watch. Look at that apple. Market value above 400 billion. Stock of which is up 13 plus this year. It wasnt that hard to find. Youre on it all day. Was it that hard to find . Or were you worried about Deutsche Bank . Its like dorsey, looking all over the world but it was in my own backyard or in my own front pocket. The fact is prosser may have kept you out, fed guy, you know . Fischer. Thats a good diskugcussion start the morning. Much of the spotlight remains on those wiretapping allegations, our eamon javers in washington with more on that. Hey, eamon. Good morning, carl. So heres the tweet that roiled all of washington over the weekend. President trump waking up very early at maralago and tweeting out the following. He said, terrible, just found out that obama had my wires tapped in trump tower just before the victory. Nothing found. This is mccarthyism. Now, the white house doubled down on that a day later with a statement from press secretary sean spicer, but note what this statement asks for, carl. Theyre asking for an investigation into whether or not the thing that the president tweeted was actually true. Spicer saying president donald j. Trump is requesting that as part of their investigation into russian activity the congressional intelligence committees exercise their Oversight Authority to determine whether executive branch investigative powers were abused in 2016. Neither the white house nor the president will comment further until such oversight is conducted. Meanwhile, former president obama objecting to this issuing a statement through a spokesman. The statement is a Cardinal Rule of the Obama Administration was that no white house official ever interfered with any independent investigation led by the department of justice. As part of that practice, neither president obama nor any white house official ever ordered surveillance on any u. S. Citizen. Any suggestion otherwise is simply false. Now, heres the big question. This is a big week for the Trump Administration in terms of their political and legislative agenda. A couple of big items on the agenda for today and later in the week. Well see whether all of this overshadows that. But were expecting the white house will announce its revised immigration executive order unveiled today at the department of justice. And then weve got republican lawmakers expected to introduce an obamacare replacement bill later this week, carl. So a lot at stake here for the Trump White House as they pivot from the weekend back into the workweek here in washington, d. C. Yep. Were told this morning, eamon, the spicer hearing will not be briefing will not be on camera. Well see what we find out. Thats right. Eamon javers in washington. Jim, your thoughts on how this plays into the market . This delays things once again. I like it delayed. I want it pushed out. In the interim we have better earnings. I know washington should control but im stuck with the four walls of the Earnings Report and they are damn good. So what some would consider chaos its so easy to talk about. I actually spent the weekend reading quarterly reports. And theyre not as much fun as reading his tweets. They take a lot longer. Theyre really boring. I wish i had more time in my life. But thats the way it is. When we come back, former Obama Administration Economic Advisor Austan Goolsbee. Look at deutsche capital raise, look at the futures theyre obviously down. More squawk on the street from post nine at the nyse when we return. Deutsche bank falling after announcing an 8. 5 billion capital raise, its fourth hike since 2010. The german bank also reorganizing its major businesses promoting two executives as deputy ceos. Heres what john cryan told us about. We were listening to feedback from the market where there were still concerns which were to some extent shared by our clients and our counterparts that we still didnt have enough capital. All right. So going to merge some Business Units here. People are trying to calculate earnings dilution over the next couple years. I loved that interview. I got up early and watched that interview and ive not been a big fan of cryan because he didnt do a fund raise but did talk about animal spirits got up. I think its a great chit in the turn of europe and germany, regardless of whether you like the management, it is a gift to be in this deal. Theyve cleared up all the Justice Department issues. They are a great way to play what i regard as the very improving quickly situation in europe. Weve always wondered though, and i mean its been an ongoing topic of conversation since the financial crisis, how big are the holes, how large is Deutsche Bank. Of course its Balance Sheet versus market size was always absurd. Hideous. Tiny market cap, enormous Balance Sheet but even versus the German Economy that Balance Sheet is. A fabulous call. I think in the end this whole continent since 2011 raised rates twice into recession this things coming out of it. Right. And its going to come out of it because of politics, the need to stop nationalism, because of the need to be able to keep this union together and germany has to play. And Deutsche Bank is the way you play germany having to play. As they typically do in europe, its a rights offering, 687. 5 million new shares raising about 8 billion euros worth of proceeds. They say its going to take their pro forma capital rate ratio to 14. 1 leveraged to about 4. 1 . Which should be viewed positively. Yes. Allay concerns, but of course stock down because of delusion. J. P. Morgan what i regard as a fortress Balance Sheet. We can make fun of it all we want. We can because they put it in every single press release. A great Balance Sheet skb if the fed raises rates, bingo. Im working on Halftime Report with judge wapner on bank of america. Well talk about what yellen said on friday, kashkari does speak later. Were back in a busy moment. Uh, yeah. Its over, larry. What is . The whole wheelie thing. What do you mean . I just got this baby to get around the plant floor. Right, but now Ge Technology monitors every machine. Yeah, it brings massive amounts of information right to you. So you dont need that. Well, it makes me look young and uh. With it. Time to move on. Oh ill move on. Right into the future. Backwards. Youre going backwards. The futures all around us not just on your little tablet, my friend. We are counting down to the first trading session of the week here at the new york stock exchange. Time for our first mad dash of the week. And you want to get to a big company starts with a. Yes, its apple. And its citi. And jim does a lot of good work and hes talking about why you can justify paying a higher multiple for apple. Now, he does use the term that i rebel against because i always feel like i hear about the kohls super cycle, that was the top, fracking san super cycle, that was the top. We got the product supercycle about the 8 and i dont want that to be the theme because i know when the 8 comes out then therefore it will drop from some level. But when you buy it right here, it has historically worked but then goes down. I caution people own apple the stock because you like the Service Stream and because you like the ecosystem, but does have a good Conference Call this morning. And he talks about india. India is now the worlds second largest Smartphone Market and they only have 2 remember, tim cook spent a lot of time there. But dont get caught up look, ive liked apple for a long time but i dont like supercycle talk because supercycle means to me too much exuberance. Right. What about macrofactors such as trade, such as a border adjusted tax . You know, hes not making that part of the story, which kind of fits into my thesis of please do not necessarily make it so washington controls wall street. I totally with a lot of notes of what could happen with tax reform. Im saying as we wait for that were going to miss good opportunities. Thats all. Well, speaking of opportunities, were going to take a look at a lot of stocks moving this morning when the opening bell gets us started a few moments from now. Stay with us. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at Td Ameritrade. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in 90 seconds on this monday. A lot headed our way over the next five sessions. Of course the anniversary of the crisis low, jobs number on friday, perhaps an immigration order today. Maybe even a draft of the aca repeal bill. Right. That would be kind of showing that theres not a total log jam. A lot of the by the way, a lot of the Health Maintenance companies, the traditional insurers, have been among the strongest stocks in this period. You go and look at them by the way the hospital changes, hca, these were supposed to be necessarily not winners. I thought it interesting that hca has been such a winner. Yeah. Hospital chain. Well, they were beneficiaries of the aca as you say. Beneficiaries either way, i mean thats what the stock is saying. I find that hard. You know, we have no idea what were going to get here. No, we dont. Well see whether anything even surfaces. The hmos when those deals fell apart, why did that go up . Well, they were all discounting the fact there was nobody who thought they were ever going to be able to get together. Right. Then you start again with the idea of consolidation to a certain extent in a new administration, possibility of new combinations. You follow this so well. Thank you. Lets get the opening bell here, s p at the bottom of your screen. At the big board natixis celebrating its first etf listing. Over at the nasdaq taaleri, a Financial Group based in finland doing the honors. Mentioned europe in the context of db al, also got to mention europe in the context of gm. I was very surprised that they actually got money for that. I am not being facetious. A lot of people say, jim, why arent you saying you should buy gm the stock . Look at the mess in europe. If you take off the mess in europe youre left with the issue of Driverless Cars and technologies because General Motors is so much better without this. So you say why is the stock down . Well, i mean, the stock ran up three points, but it is important to recognize its very difficult to close a plant in europe. When you get off the desk with executives, they a, listen, too many plants in europe but not much we can do about it. So this is a good thing for gm if they can get it through. But its not immediately reflective because there are other challenges to the auto companies. Particularly Driverless Cars, which you have got me thinking is something thats going to be with us maybe in two years. Oh, yeah. Yeah, i mean, again, i ask a lot of people and you get a lot of different answers in terms of a timeline, but people talk about Different Things because when it comes to Autonomous Vehicles in a city, its different than whether or not youre going to have them driving on certain parts of the highway versus, you know, there are all sorts of different uses. Right. That could be phased in over time. But thats what all these Auto Executives are thinking about. Oh, yeah, they should. Front and center for them. Theres a department of Motor Vehicle site in california that talks about disengagement. How many times per mile have the drivers had to take back control. And the wamo numbers each month are just better and better in terms of no need to disengage. And wamo is going to be a license youll be able to buy it with software. Right. The key of course is data. In other words, the more miles driven, the more things that that a. I. Has seen and therefore knows how to react to. Machine learning. Right. You eventually will get to a grid at some point where many years down the road where 5g is ubiquitous and many other things to your point, Autonomous Vehicle grid is run from the cloud via chips in every car that are run off of a Wireless Network 5g being what that would be with the fifth generation. That will be quite a thing. But thats a ways away. Theres no doubt in my mind if cars i was watching one of these History Channel things about henry ford making cars. Theres no doubt in my mind if you were to make a car today from scratch you would not have a human behind the wheel because the human is too fallible. But the problem with the driverless car is the moment you get a fatality, one fatality. We saw that in tesla, even not a fully driverless car but sort of software. And barrons over the weekend puts a robot on their cover, calls it the new american worker. Thats going to keep things interesting. Well, you know i was thinking about this whole notion the pushback of if you dont have we dont really need auto plants in our country. Think about what they do to keep an auto plant in europe and how they regard an auto plant to be so important to the town. Well, why is it important to the town in europe and not to us . Right. But the Counter Point that has been coming up a lot in all the discussion about adding jobs or bringing jobs back to this country is what are they going to be when youve got automation in full flower and the fact is robots are going to take over. Now, then the argument is and weve heard it well people have to make the robots. Right. So that will become a Huge Industry potentially. Look. I know that fossil fuels got to keep up the robots. Do you have a robot that does the repair on the robot . I think you can. I think they can repair themselves. Theres selfrepairing robots . Look, i think the robots are ahead of where we think they are. You do . Yes. Who have you talked to lately, cars are ahead and robots . I speak to the people at google and i think that the machine and also another company this week last week that said that the machines are learning a little faster than we thought. Which when i heard that phrase was a little disconcerting. Yes. You know a game called go where machine just trashed the greatest go player ever. Yes. Machine learned as it went on. And the machines can, yes, they can go ahead of where the thought because they are constantly judging that was brute force still computing power, a lot of that. Right. What youre still looking for as in a. I. Is you see a tail of a cat, you know its a cat. Machine cant do that yet. Or reading intent into language, not just the language. Right. Let me pull you guys back. Sorry, i know, we keep going on. Dows down 72. Weve lost 21k, breadth is weak hear, jim. What do you think is going on . Look, i think people weve had a big run, obviously. I think that the confusion, im using a nonloaded word about what trump is tweeting and the Justice Department, those things make people feel like wait a second things are less stable than we think and europes not so good today. Carry over europe. We have the fed, i think people are starting to think, wait a second, we dont really like a rate hike. And were going to get one. So theres a lot of remorse. The papers are filled with the notion that youre a complete moron if you buy a stock. So you get a bit of a pullback. We had that nice run. You know, friday wasnt even that bad. Yep. So i think theres a lot of remorse. It just cant be as good as people think. So you would ride through it . Yes, i would ride through it. I remember when bank of america was at 23 and everyone was downgrading. I said are you so good that you can get back in at 21 . I feel the same way about bank of america at this price. Are you so good you can get back in at 23 . I say, yes. Look, there are big gains and people want to take something off the table, im never going to fight that. Nobody ever taken a profit, but i just find that the articles leave me cold. Its the same arguments over and over again. Its like, wow, this is really bad. I remember when there was a piece about seth carmen, hes really good, he didnt like it. Google Jeffrey Gundlach and stock market and youre going to see a guy who hated it, but hey, theres no crime to hating it. There isnt. Ive always maintained gundlach was better served sticking to his area of expertise, which is the bond market. I was watching the nfl combine this weekend and i dont see these guys opining on spring training. They kind of stay with football. Yes. I really like the way the white sox look, thats terrific. Im going to switch to a baseball channel. But a guy does a 4. 5 and mike mayok puts in context, im all for it. Wasnt it a 4. 2 . No, they were doing the defense guys. Oh, i thought you were talking about the guy who set the record but was wearing the nikes instead of the adidas. Im talking guys who are 300 pounds i had my wife come over look at this 63, 300 pounds vertical leap is unbelievable. They all look like clowney. You mentioned netflix earlier, more on this upgrade out of ubs to buy. They mention exone, less overseason i thought that was interesting. Please, you worry way too much about about content cost. Its very interesting because theyre saying, listen, we think 4. 1 million overseas, the consensus is 3. 7. Using discounted outflow basis out 15 years, but i do think this was a piece that is uniquely about how what you discovered with netflix here theyre discovering over there. And the programming just is just unbelievable. The hits. The percentage of hits of the program. Its really rather amazing. Because its like the home run derby. Theyre just swinging every five seconds, right . How do you know what a hit really is . If you reup. A hit is something that you do on iteration and then do again, which is not that often on network, but on netflix its like, okay, when is luke cage start again . Im ready for luke cage. Im ready for the next black mirror by the way do not watch alone it will really play with your head. It is truly disturbing. My daughter said, listen, dad, dont watch it alone. Its going to be really i was, geez, its hard for me to grasp this. You should watch black mirror. I dont know what to watch anymore. What are you reading right now . A lot of Different Things. I mean that hill billyology. You did not like the book . No, overrated. Its not about a smart relative changing your world. Its a little bigger than that, about government and big business getting together to help you. Not a smart relative is going to change the world. Im with you on that one. Thank you. Really . Uhhuh. Okay. You ever read downfall . No. The first half is better than the second half. Thank you. Then i read downfall about my fathers division that would have been wiped out in the invasion of japan. I like it. Youre reading not to mention quarterly reports and all that, and you manage to watch netflix shows. I lead a full life. Its because you dont sleep. For those of us who do, it cuts out a lot. Thats very true. Anyway, i know thats i always like to know what people are reading. Yeah. Always. My latest rejs is the bridge about the building of the brooklyn bridge. David mccullough is so good. Okay, now, they did a little there was a Little Bridge in pennsylvania in new jersey is the model, right . Yes. Same designer. Okay. Fantastic. I love that. Lets get to morgan brennan, dows down 72. Hey, morgan. Hey, carl, thats right. U. S. Stocks are lower today. All s p sectors are in the red. Thats following a down session in europe, French Election jitters there, Deutsche Bank raising more capital all weighing. Mixed performance in asia where markets largely shrugged off missile launches by north korea even though three did land in japans cleexclusive economic z. More hawkish fed speak including chair yellen last week f you take a look at the Thompson Reuters fed funds futures now indicating 83 odds of a hike this month. All eyes on fridays jobs report. This is considered the final hurdle to that hike actually happening. Meantime, china setting its 2017 Economic Growth target at 6. 5 . Thats down modestly from last year, but still represents a 25year low. So that is sending copper lower today. With it freept mcmoran, also adding pressure to crude which coupled with opec comments over the weekend that it hasnt committed to extending its output deal is weighing on energy stocks. Names like transocean, halliburton, murphy oil, energys the worst performing sector so far this year. Its going to stay in focus this week as top Energy Leaders speak in houston, which cnbc is covering. Meantime, few big movers for you, snap, thats snapping higher again today. After its up about 3. 5 . Thats after the social media companys strong debut last week. Despite those valuation concerns, which i know you guys have hit on in recent days. Lastly, tyson foods down more than 3 after a chicken farm in Tennessee Associated with the poultry producer was hit by bird flu. Tyson does not expect this to disrupt its chicken production, but we saw in 2015 what bird flu can do to the poultry stocks earnings. If this were to spread to other farms, this could be considered an issue. But again, stocks are down. The dow is down about 71 points right now. Guys, back over to you. Morgan, thank you very much for that. Were getting news that at 11 30 a. M. This morning the secretary of Homeland Security, kelly, secretary of state tillerson and a. G. Sessions will make some remarks 11 30 a. M. On issues related to visas and travel. I think we can sort of read into what that will involve. There was a piece today saying wheres stilltillerson. I find these articles, well, tillersons at work and people i dont know. Rex tillerson, i dont want to conflate too much between his excellent work at exxon and what he might be doing, but i just find is Rex Tillerson going to be out there every minute . That was never his style. I dont think its going to be. No, those whove covered state wonder why theres been no briefing. Yes. Standard briefing. I think theyre trying to change the way the government works. Look, i like the standard briefing. I wish tillerson were out there, but different style of government. Its not my style. Not what i want. But its different style. I think tillerson is pretty knowledgeable man. Speaking of government, lets move onto governance which is this interesting fight between csx and mantle ridge. You may remember in february we got this extraordinary letter from csx saying that we will bring to a special meeting this question is to whether we should bring on Hunter Harrison and pay him a pay package that could be as much as 700 million additional beyond simply what we wanted what we would pay him to be the ceo of this company. And theyve been talking and negotiating with mantle ridge, of course run by paul hilal. This is where things stand right now, on friday reuters reported they were getting closer. That is the case. They are getting closer to a deal. What would it look like . A potential deal between these two companies in terms of resolving his ask for board seats and mr. Harrison taking his place as ceo and the pay package, well, you just saw it. Lets bring it up again. Five new board seats, of course mr. Hilal would have one, ceo Hunter Harrison would have another and bring on three independent directors. Here is the key. They want harrison to be paid 84 million. Of course that was fund his obligation to reimburse mantle ridge for compensation and benefits he chose to forego at canadian pacific, which he left. And additional perhaps as much as 23 million in what they call a tax indemnity. Whats going to happen . Well, at this point the deal that is under discussion involves not just those five board seats but putting his pay package to a vote of shareholders at now would likely be the companys annual meeting given where we are on the calendar, they held their annual meeting last year in may. You could see an annual meeting in that sort of timeframe. And it would be there, again, something that i cannot really recall having seen where shareholders will have the opportunity to vote on whether mr. Harrison should be paid as much as 107 million that we were talking about. If he is not or shareholders turn it down, the expectation is that mr. Harrison will resign. So where do we stand . Well, again, no deal twor, two talking, mr. Harrison would appear close to taking the job as ceo and then also have an annual meeting at which his pay package would be voted on and at which he would say to those shareholders if you do not vote in favor of that potential pay package, im leaving. I dont know where that leaves everybody. And things can change. There had been some offers, is my understanding, from the csx side to say, hey, why dont we split the difference. Well pay 50 million of it and mantle ridge, you can pay the rest of it. But apparently that did not gain a lot of momentum. So that is where they stand right now in terms of this. But, jim, i mention it in part because its just fascinating to see the potential here for mr. Harrison taking over the age of 72 from mike ward whos of course stepping down, but even more importantly then perhaps saying to shareholders im out of here if you dont agree to my pay package. And shareholders having the opportunity to actually do that at the annual meeting where it will be put up to a vote. I find this whole thing astounding, okay. Mike ward works his way up from baltimore, all the way through the railroads, years and years and years, very much liked by wall street, people thought he was doing a good job keeping up with Union Pacific and Norfolk Southern and then hes out and suddenly people talking about Credit Suisse and a 54 stock. Where were they when it was a 64 stock . Now its a 54 stock whats he going to turn it into . Whats he going to turn this railroad into . Is it also going to have a division that works with bristolmyers to get opdivo back against keytruda . Its a railroad. Its a railroad. Its major cargo is coal. Right now i know when i was looking at the joy global their last one, quarterly, that coal service was up. Their Service Business was up. But in the end its coal. Its chemical. Its ag. Its aggregate. Not autos. Its a business controlled by both its cargo and by its, you know, well, i would say how much they get off of each one. I dont want to get too specific about the metric, but i just think in the end theres only so much you can do. And you cant buy Norfolk Southern because i dont think the government would ever let you do that. They tried that at c. P. When mr. Harrison was running that. Lets get to the bond pits now kmek in with Rick Santelli at the cme group in chicago. Hi, david. Of course everybodys looking forward to hearing what mario draghi and company has to say later on in the week. We know that our market is fully prepared for a raise, the third one. And indeed it should give us a little extra horsepower all things considered. But it certainly seems though the stories of the day, the cloak and dagger politics of the day seems to have diverted some investors attention. So this could be a critical day. Oneweek of tens, you know, it backed away from that 2. 5 level, but were hugging pretty close. You can see on the november 1st chart before it all began how tight of a range it actually is. But still we havent really seen much outside the 2. 30 to 2. 60 as we hug it. If you look at a oneweek of bunds, a little bit sloppier ride. And obviously the rates are much lower. But all in all if you look at bunds and you look at the separation of 215 basis points between our tens and bunds, the fact is it seems to have come to an equal librium, which makes sense, especially if you look at the landscape of all markets today. Oneweek of the dollar index heres one thats kept you right with regard to your positions, if everythings going to keep doing what it started to do two or three weeks ago with regard to equities and rates, the dollar index would be higher. Backed away again from unchanged on the year. As you see that rate 102. 20, were about 0. 75 below again. Talk to you in a bit. Thank you, Rick Santelli. When we come back, assessing snaps runup and get an ipo watchers take on the road ahead. Market off the initial lows down 48, but breadth is pretty weak in all ten sectors down at the open. Back after a break. During the lexus command performance sales event, experience our most thrilling models ever. Including the exhilarating is, gs and rc coupe. Experience amazing. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. S p down about ten points. Dow 50, but as you can see big majority of the stocks are in the red. Were going to discuss this and more with jim when we get stop trading after a break. 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And the dirtiest kind of employment you can have is smelting of aluminum. So when you see this stock go up, thats because of belief that the Chinese Government is favoring a policy that has fewer people dying from lung cancer. And thats the main reason why alcoa can go up here. Thats a long term trend. Whats on mad tonight . One of my favorite stocks is Dominos Pizza and its really been remarkable. No excuses. Way up story. And then mr. Muehlhaeuser, that is the old food service. I went by the bar last night, we dont use any of their stuff, these of course are big institutional, but they make garland which to me is the finest stove in the world. New guy. New guest. Jim, good show tonight. Thank you. Good monday under our belts too. Mad money 6 00 p. M. Eastern time. When we come back, well talk trump and the economy with Austan Goolsbee, chief white house Economic Advisor under obama. Dows down 45. Hi, this cindy at reverse Mortgage Funding, how can i help you . 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So if youre 62 years or older, contact reverse Mortgage Funding today to receive a free information kit about reverse mortgages and the flexible payment feature. Just call the number on your screen or go online and visit flexreverse. Com isnt it time to take control of your finances . Call now or go online at flexreverse. Com and request your free reverse mortgage information kit today. Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. Good monday morning. Welcome back to squawk on the street. Aisle Carl Quintanilla with mike santoli, david faber at the new york stock exchange. Dow down 45 points, s p down about ten, awaiting details on the new immigration order from the white house. Expect some details around 11 30. And our roadmap this morning starts with the president s top trade advisors speaking out. What he is saying in terms of actions that will boost growth in the u. S. Busy week in washington, perhaps new details on the immigration order and the gop expected to roll out a new Health Care Plan. Weve got the latest. Plus shares of Deutsche Bank tumbling after the german bank announced an 8. 5 billion capital raise. Let get to factory orders from Rick Santelli, rick. Yes, factory orders for january up 1. 2 . Sequentially thats down 0. 10 from unrevised 1. 3. If we look at whats going on with regard to durable goods, durable goods from january was up a little better than expected, up 2 . Now, if we look at the past numbers unrevised 1. 8, you have to go all the way back to october to find a higher number in the form of up 5 . Now, when we look at extransportation, we lose all that growth. Were only expecting up 0. 1, we ended up with a goose egg. Capital goods orders nondefense exaircraft down 1. 1 following unrevised down 0. 1. Capital investment by business something to keep strict attention on. And weve had now two minus months in a row. You have to go back to december to see up 1. 1. And even that is a little bit underwhelming. So that may be the weakness. If we look at shipments versus orders that was down 0. 4. Carl, back to you. Rick, thank you very much. Rick santelli. As we said a busy day in our nations capital. We await the new immigration order from the president with an event now scheduled for later this morning. Our eamon javers is at the white house with more. Eamon. Yeah, good morning, carl. The white house took its first crack at this immigration executive order back on january 27th, that though has been tied up in the courts. The white house has said that it believes that its first immigration executive order was legal, proper and effectively executed, however they are pushing forward with this second revised draft. We expect that its going to limit the number of countries impacted down from seven to six taking the country of iraq off the list. We also expect more details at 11 30 from the administration so well be able to bring you a full menu of what exactly the white house is doing at that time. And then, carl, were also expecting this week at some point to hear from republicans on capitol hill about their agenda for obamacare and some very tough decisions that have to be made there in terms of the path forward to repeal and replace obamacare. All of that in the mix this morning as the white house is dealing with the fallout from the president s tweets over the weekend accusing former president obama of wiretapping him at trump tower. Intelligence officials have said theres simply no truth to that. Well wait and see how the white house handles that one today as well. Thats got washington roiled this morning, carl. All right. Eamon javers in washington. Eamon, well be talking to you later in the morning. Thanks. You bet. Meantime, stocks sliding this morning. All eight sectors are lower, but the market is of course coming off six weeks of gains. Key question now, will investors continue to buy at these somewhat high valuations . Joining us here to talk about that at post nine, Deutsche Banks chief u. S. Economist and brian belski of bmo capital markets. Good to see you here. Joe, you know, we heard in the last several days feds not waiting. Feds maybe going to get on with things in terms of lifting Interest Rates. Everyone now expects that for march. On the other hand on the fiscal side i dont know if were now going to assess that maybe these policy help is going to be a little bit longer in coming. How do those things fit together . Maybe it will be a test for how much policys already baked into this market . The fed certainly made a concerted effort, michael, to announce they wanted to go in march. I havent seen anything like that in a while. And sort of came out of left field because look at the futures market the friday before only around 20 , now its over 80, so theyre going. The only thing that makes sense to me is theyre anticipating some fiscal stimulus chrks is built into my forecast but ive been very bullish on growth. I remain of the view that fiscal stimulus is coming and sooner than what many investors believe. In my mind the equity market pretty much has it right. So, brian, your base case is for a pretty good earnings rebound. Does it involve anything on the policy side . I mean, what are you actually seeing that allows you to think that s p 500 earnings can actually be revised up from here . Well, michael, remember last year was a tough year for earnings in the Industrial Base in those areas that really focus on International Growth like industrials. Now weve segued growth in some of these areas from an internationally biased Growth Strategy to more domestically biased Growth Strategy, especially some of those Industrial Companies that are going to benefit from the infrastructure bill, from some of these tax bills. And so we do think that theres still upside to the earnings. Now, earnings in general have not gone up so far in the first couple months of the year, like many people thought. So i think its probably were due for a pause. This is a chicken little market, right . Everyones calling for a Market Correction every day. The market down 30, 40 basis points, today the day, today, today, markets go down for fundamental reasons, if earnings dont come through thats most likely when the market will see a deeper correction. A lot of people say infrastructure bill there is no infrastructure bill. I think this. Stocks have gone up in anticipation of a tax cut and infrastructure and Affordable Care act. We think the longer term sec cue lar positive, carl, is less regulation across the board. Were already feeling that in several different sectors. When youre talking infrastructure, what industrial stocks, right . But across the board less regulation effects almost every company. Thats why stocks are up in our view. And thats already happened. Thats already happened. So i want to add if you get my 3 to 4 gdp forecast, 5 to 6 nominal type of growth, youre going to get the earnings that brians talking about. Now, you havent seen it yet in the macro data, the hard data, but youve seen it in all the sentiment numbers. The purchasing manager, the forward looking expectations part of those reports, consumer expectations, business confidence. And whats interesting is youve gotten this jump post election but you had very little retracement in these series, which tells me theres Something Real behind the movement. So you think 3 , not a im very bullish, david. I was one of the most negative people on growth for 15 and 16 and then i changed because to brians point i saw a much more pro Growth Business policy tilt coming through. And expectations can become selffull fiing and selfsustaining. 3 growth we havent had since 05, but relative to the cycle weve been in it will feel very good. Were transitioning, david, from a macro investor to a fundamental investor. When that happens it takes time to start looking at things like cash flow and Balance Sheet strength and Earnings Growth and sales growth because weve been so focused on whats happening on the macro stage, thats why the markets been lagging this and we think theres an opportunity for this market to go a lot higher. Isnt there an issue of pacing . If we get to 3 at some point, if earnings do in fact start to reflect some of that better Global Economic numbers, first quart quarter were now looking at under 2 gdp, at least thats what the tracking numbers are saying. So are we kind of slipping in terms of the schedule when all this stuff is supposed to kick in . Im going to tell you no, michael. I was at 2 growth for a while. Probably still the right number. But theres been this seasonal bias we found that the government hasnt corrected. Its really again more anticipatory and i would argue that the forward looking components of that soft data i mentioned all are turning up. So i think the pacing is there for growth to improve. And the fed certainly raising rates at least gradually helps. Give us some Interest Income to savers who need the money. Brian, ceo confidence certainly plays an important role. Yeah. I think you both are hitting on it in a certain way. Regardless of what we see out of washington you feel as though theyve been emboldened to conceivably feel better about things and therefore theyll be improvement even if we dont see the legislation on tax reform some had hoped many hoped for. 100 . Because the ceos are the ones impacted the most in terms of managing their business and seeing less regulatory pressure across the board. Remember, we are a market of stocks with majority underperforming this year you want to focus on those companies on a fundamental basis recovering faster than others. Thats why were in a stock pickers market. When you go into a weekend and get tweets like we got, that news flow coming into the week, is that all noise from an investing standpoint . Showdowns between the executive branch and the Intelligence Community . Listen, we know that politics are politics. Id give you three words, blah, blah, blah. Im going to make a bold statement. I believe the correction has nothing and will have nothing to do with trump. This is going to be fundamental led, a surprise oh, gdp number in china is not as strong. Something were not accounting for. We examine this president more than any other president. We are incensed with it. Stop doing that and start investing and i think the market can do its thing. The market is treating, carl, with noise when is the last time we had a 1 down day in the s p . Its been 100 days. The market is telling you this is noise. It will remain noise no, my issue is if you get my forecast im guessing bringan h a higher target, does the bond market move in anticipation you have to counter vail that with whos running the fed, these people running will they be more easy money people . Does the yield curve steepen . Do real rates then rise . How does that impact stocks . But that to me is a late 17, early 18 story. Its not right now. All right, joe, brian, thanks a lot. Appreciate it. When we come back this morning, the president s top trade advisor, Peter Navarro speaking out, what he says will boost growth in the u. S. Liesman probably talks to him a bit about the trade deficit as well. Ridiculously valued, thats barrons on snap. Were going to discuss that story over the weekend. A lot more squawk on the street continues in a moment. President trumps trade advisor, Peter Navarro, is speaking at the naib policy conference this morning. Our Steve Liesman is there and has the latest for us. Steve. Yeah, david, a strong and pretty dark view of trade coming from Peter Navarro, president trumps top Economic Advisor when it comes to trade. He said reducing the trade deficit will boost growth and that reducing the trade deficit is essential for National Security reasons. If the current distorted market patterns continue, and to paraphrase, in the long run we are all likely to be owned by foreigners. Hes concerned that foreigners are buying up the u. S. Food supply chain as well as accumulating assets when they run trade deficits for the United States accumulating assets with which to buy key technologies in Silicon Valley. He said the Trump Administrations plans to increase rules of origin provision and help create a Better Business climate for trade in the United States and needs to promote fair, free and reciprocal trade. The broader goal of a free trade policy based on fairness and reciprocity is not to raise either tariffs or nontariff barriers. Rather it is simply to encourage our trading partners to lower theirs. Now, a lot of folks at the National Association for business economics where navarro spoke this morning dont necessarily agree with the for the trade deficit. They see as part of u. S. Global trading system that americans getting cheap goods as a result of that. And dont necessarily see the dire consequences. But well see what kind of actual policies come out. David, he declined to say whether or not the administration would label china a currency manipulator. Saying thats up to the Treasury Department and that report is coming out in april. David. What about the idea that you raised i guess he did of our food supply being owned by foreigners or i guess hes referring perhaps to purchases by we had the chinese buy something, but not a lot. And or our Technology Companies were preeminent but the idea the supply chain could fall into foreign hands. Did he give anymore concrete examples of what hes talking about . He didnt. He talked about some individual countries and their trade deficits as being among those who the administration would like to address. But i think he is talking about some of those deals you spoke about, david, some of the ones youve obviously covered so well where what happens of course people understand the economics of this when china accumulates a large trade surplus with the United States, they have dollars and they have treasuries which gives them a lot of money to buy assets in the United States. So theyve come in and buy things and Peter Navarro takes a very dark view of this. Said the u. S. Food supply chain over time could fall into foreign hands, is concerned about them buying up properties and technologies in Silicon Valley as well as some of the defense issues saying theres only one company in the United States that can fix or repair u. S. Naval propellers. So thats the kind of thing. Now, some economists here would point out we have a committee in this country designed to look at those foreign purchases for National Security reasons and that trade policy shouldnt necessarily be oriented to that but by deal by deal is how we should handle this. Youre referring to the sifious review. Covered by Smithfield Foods a few years back, steve, big pork producer. Right. I think they pay them dont they, david . Though i think the pigs remain in the country though, right . Its not like they took all the hogs over there and shipping them back to us, right . No, i dont think so. Its a very dark view. I mean, this is not the view of most economists in this room. Most of them in a survey that was out this morning said we should be increasing free trade, not putting barriers and tariffs on. By the way, also they said we should increase immigration. Only 5 said we should spend anymore money to deport Illegal Immigrants in this country. All right. Steve, thank you for reporting. From nabe. Steve liesman. Sure. Meanwhile, shares of Deutsche Bank falling after announcing that 8. 5 billion capital raise. John cryan telling cnbc it was the right time to go to market. We were listening to some feedback from the market where there were still concerns which were to some extent shared by our clients and counterparts that we still didnt have enough capital. Deutsche also announcing changes to the executive team, naming two codeputy ceos to work side alongside cryan. The bank will undergo restructuring moves in an effort to turn its business around. Talked to jim earlier this morning about perhaps marking a turn in europe as he said. Yeah, at least representing part of that turn. I mean, the stock is up, what, 70 or Something Like that from last september. And back then there was talk of a much bigger potential need for a capital raise. So, yes, pulling back today off levels that really had been much higher than theyd been. So i guess you can kind of play it both ways but seems like its, you know, kind of part of a solution. You know, maybe recognition of past problems, right . Yep, taking the delusion chr dilution which is why the stock is down this morning largely, i think. Of course go back eight years at the bottom for the dow remember the stress test for our banks and i think the introduction of levels in terms of assets and where things stood that the market believed really instilled confidence. And when they started to raise capital that was one of the turning points for yeah, europeans never really got there. Very much a belated process over there. When we come back, snap has been soaring since its ipo. Its been around the flat line today, pulling back actually. Barrons calling its share price ridiculously valued. Well discuss with jgb managing partner hans tong. Broadly we are pulling back, nasdaq somewhat underperforming down more than half a percent. More squawk on the street. Stay with us. Ridiculously valued, barrons mincing no words in assessing the valuation of snap, which made its market debut last week. Stocks up more than 50 since the ipo, but down 5 this morning. Its first loss since going public. Joining us this morning to talk about it hans, managing partner at jgb capital. Good morning. Were in this crazy period after the ipo or retails trying to get their hands on it, a bit of a silly season. How long does that take to break . Its hard to say how long it will take. Right now given where the valuation is on an equity value per daily active user basis facebooks trading about 325 per daily active user. And snapchat at the closing of fridays price already at 222. So its already at 70 of the sort of monetization capability of facebook is what the markets expecting. And given where facebook and the gap between the two today take snap quite a bit of time to catch up. Yeah, so given all that, weve seen targets at 10, weve got a call today saying 19 to 23, have you done any work at what reasonable value is . For us were looking at whats revenue per daily active user for snap at the end of last year roughly around 2. 50 per user and facebook is roughly 22. So what is the right value for snap is, you know, onetenth of facebook, which will make it around 40 billion, or it is could be lower just because taking more time to realize that valuation. Yeah, hans, it seems like part of that analysis deciding exactly how much revenue per user snap can eventually generate, it somewhat comes down to, well, has snap not even fully attempted monetize or where are they on the path, whats your take on that . Have they been basically intentionally holding back and now can accelerate that process . Well, im a dedicated Consumer Internet user, so we track a lot of companies in the Consumer Internet space selling as to agencies and the brands. From what we have seen, snapchat is making a concerted effort to beef up their advertising team, advertising approach, selling more abundant deals to advertisers, but judging where instagram and facebook are right now, snap has a ways to go to get to that same level of sophistication. Needham this morning, hans, looks at total addressable market. Theyre argument is its a fraction of facebooks. I wonder what you read into that. Are we accepting some sort of unwritten rule they can only appeal to millennials . Where do you think that narrative comes from . There are two ways of looking at it. One is snap can appeal to millennials. Thats where most of the users are. And most half of them are based in the u. S. But the growth is coming from millennial users outside of the u. S. , which is already probably growing at a faster rate than millennial users in the u. S. We do see as investors in u. S. And china we do see a lot of commonality among millennials on a worldwide basis. Snap assuming growth internationally will happen even if it doesnt diversify among millennials. As part of the attraction is that the parents are not on it, parents dont get it so theres more privacy and freedom for millennial users to express themselves on snap. Right. That plays into something we also hear, cramer said theres something ethereal to the appeal of snap. And then we also talked to some influencers the last couple of days who argue even though i have a smaller following on snap, its more valuable than my larger following on insta. Is that where youre sort of headed with that . Well, i think insta and snap are very interesting, used differently. Expressing themselves but not in the sharing secret with friends kind of way. More showing the best side of themselves. On snap its more of a, you know, joke amongst friends kind of approach. So both usage are real and legitimate, just very different and we think both will have interesting growth ahead. If facebook would ever break out on a stand alone basis, the valuation will also be very high. One last thing, gvv is not in it, are you . Were not an investor in snap but invest in other companies that target millennial users. We like that segment quite a bit. Hans, good to get your take on this and a lot of other things. Thanks so much. Hans tung joining us today from gvv. When we come back, former chairman of the council of Economic Advisors under obama Austan Goolsbee, hell be with us. Well get his take on the president s trade plans, that is the current president s. And as well yellens next move. Squawk on the street will be back right after this. The future of business in new york state is already in motion. Companies across the state are growing the economy, with the help of the lowest taxes in decades, a talented workforce, and worldclass innovations. Like in plattsburgh, where the most advanced transportation is already en route. And in corning, where the future is materializing. Let us help grow your companys tomorrow today at esd. Ny. Gov my name is danita seaton. Im a Gas Service Representative for pg e here in oakland. When i work in oakland, i feel like im home, because i grew up here in oakland, my family still lives here. Every time i go to the customers house, i treat them like theyre my family. If they smell gas, or they dont have hot water, im there to ensure that by the time that i leave, they feel safe and they can go back to their day to day life. To learn more about gas safety in your home, visit pge. Com safety together, were building a better california. Good morning everybody. Im sue herera. Here is your cnbc news update at this hour. The Supreme Court sidestepping a ruling on transgender rights by sending a case involving bathroom access at a Virginia High School back to a lower court. This follows president trumps rolling back protections for transgender students. More than 50,000 North Koreans rallied after the north korean government launched four more missiles early monday morning. North korea has not officially acknowledged the launches, which were detected by south korea, japan and the u. S. And has been universally condemned as provocative. Israeli police say a palestinian militant has been killed in a shootout in the west bank. The man headed a Group Planning attacks against israeli targets. And when Israeli Forces tried to arrest him, he opened fire. A study by bankrate. Com finds just 6 of American Adults who expect to receive a tax refund will plan on splurging on a vacation or a shopping spree. A full 34 will save or invest it. Another 29 will spend it on necessities such as food and utility bills. Thats the news update this hour. I will send it back downtown to you, carl. All right, sue, thank you very much. Sue herera. As you probably know by now the fed set to raise rate ths month as it seeks to keep pace with the recent tide of Economic Optimism and trump rally thats followed. But just what impact will arise in rates and trump policy have on the overall economy . Joining us this morning former chairman of the council of Economic Advisors Austan Goolsbee, now professor of economics at chicagos booth school and with us always james pethokoukis, good to see you both. Good to see you again. We talk about the stock rally all the time. Now people are looking at ism prices paid, austan, to what degree will inflation be the story of this year . You know, i think youre seeing expectations of inflation are rising. Thats one of the big motivators of the fed. Theyre saying, wow, were getting close to our 2 target finally. I hope that inflation will not be the story because inflations got a bit of a sunburn aspect of, you know, once theres significant inflation here, its too late for the fed to act. Its going to be just a painful recovery. And that said i continue to think the economy for the last 18 months youve seen a pretty strong job market, youve sign inflation coming back to the target, the fed itching to get rates higher. But as those rates go higher and all the other countries of the world are loosening their monetary policy, i think youre going to see continued strength of the dollar and a couple of things that put the brakes a little bit on the growth. So i dont think that theres going to be that much inflation. Huh. Jim, you go along with that . Listen, i hope we dont get, you know, a surge of inflation, but we do see a bit of a reflation trade. I think what were actually seeing here is sort of at least for now the end of the sort of hard secular stagnation case. It was only a year ago when we were still in the full throes as we couldnt grow, inflation was dead, Interest Rates were going nowhere. Now i think that case is really weakened. Now, i still think might be kind of a soft sec cular stagnation case, but i think the sort of demand version of that which is theres no business demand, no investment demand, Interest Rates are low forever, i think that has weakened and i think thats being reflected in stock prices. Austan, does hoping that inflation doesnt become the story of 2017 also imply hoping that we dont throw a lot of fiscal stimulus at an economy thats already, you know, rolling at a pretty good pace . Yeah, probably. You know, theres there are two fundamental things going on that you got to ask yourself. One is do you think were approaching full employment or not. You know, the president seems to be espousing a view that although we added 15 million jobs in the last seven years, the Unemployment Rate is low, the u6 rate is low, all of those things are coming back down to completely normal levels. He has a view in his mind, i think, that the Labor Force Participation rate is going to go back to Something Like what it was when the country was much younger. So if you think that, then you, i guess, would be for some big stimulus. But i think if you view like the fed does that were kind of approaching the full employment spot, then a whole bunch of stimulus would most likely be inflationary. I think theres a case for fiscal policy at this point to boost long term growth and our growth potential. I think the case that we need fiscal stimulus to boost demand right now is much weaker. Also mentioned Labor Force Participation rate, i dont think running the economy is what we need right now, but there are longer term policies to help boost labor force. I think we can do better, but what i hear from the Trump Administration is the idea that its still, i dont know, 2010 and we need a lot of stimulus to boost demand. I think the case for that has really dissipated. Thats what i think too. Shorter term, guys, we do have a jobs number coming our way on friday. Some viewers are curious how bad would it have to be, austan, to get the fed to get probability on march back to what we saw last week, week before . Oh, thats a great question. I think it would have to be pretty darn bad for them to get off of the path that theyre on. So like a number like what . Pretty bad. You know, i bet if it was 40,000 that there would be at least a number of people say, well, lets wait a month or something to see if this was a blip. Listen, im going to give him the price is right thing, im going to say 39,000. 39. Undercut him. I dont know, it wouldnt matter whether the Labor Force Participation rate went up. I mean, obviously were talking in multiple levels of hypothetical here, but it seems as if were in this blackout period so maybe if the market is at 100 and you do get a number weak enough, i guess maybe its just an occasion for some second guessing by investors, huh, austan . Yeah, thats what i think. I think youd get some second guessing. I still dont think it would change the fed. I mean, i said 40,000, but even if it was zero i think youd still have a lot of the people at the fed saying, no, this has to be a blip. We have a long trend. It might be more interesting to keep an eye on the pricing and inflation. If you started getting some data that said deflation or were going the wrong way, were not getting near the 2 , then i think it might change their mind. Right. Drop off in wage growth, that sort of thing. Yes. Austan, i continue to be interested though this debate about whether we can get to above 3 gdp growth, we had joe lavorna on early saying he believes it. Deregulation hes citing one reason, obviously increased confidence in the business community. It will become important conceivably if we get dynamic scoring on any of these important bills and they go under reconciliation as to whether you really think you can get over 3 . Do you agree, austan . Do you think this deregulatory environment is going to lead to that kind of growth . Well, look, lets split two Different Things. One is in the next one year, or two years, could you get to 3 . Maybe, but this direction that the Trump Administration is headed is to have the political people instruct the council of Economic Advisors to put 3. 2 growth for the next ten years. No. That will not happen. You got to remember the population growth in the u. S. , which is part of the growth rate, is dramatically lower than it was in the 1980s, lets say. So saying, hey, lets just go back to the growth rate of the 80s is to ignore the fact that the baby boomers are retiring and is just confused. Jim sorry, go ahead. Listen, i think the economy can grow 3 , maybe a bit more over the long term, but i dont think its dependent on i think it may be partial dependent on this but doesnt necessarily matter if the Corporate Tax rate is 20 or 25 or 28 , were talking a portfolio policy change to accomplish that. Theres no magic bullet. What i hear from washington is we just need to massively deregulate, massively cut taxes and it will happen. I think that kind of stuff will help, but theres more to it than that. Yes, its not a magic bullet. And so far its been more like pointing the bullet and shooting yourself in the foot over and over. Austan, one last point were going to ostensibly get new details on the immigration order in about an hour as secretary kelly, a. G. , tillerson speak, already were talking about merit based green cards and how that would effect tech . This is absolutely one of the bullets im saying. Theres no magic bullet for growth, but we can all agree that shooting a bullet in your own foot has a negative impact. If you go try to restrict the growth of immigration into the United States, you have to deal with the demographic reality that of native born u. S. The native born u. S. Population demographics look exactly like western europe and japan. We will have a shrinking population and a severe limit to growth if we start restricting immigration. And if we start restricting high skill immigration, it goes exactly the opposite of what donald trump seemed to be suggesting in his speech to congress. So i just dont know what theyre doing. Jim, last word there. If people wanted to do great things with their lives, we want them to think theres no better place to do it than the United States of america. Yes. Jimmy, austan, thank you guys. Good to see you both. You bet. Austan goolsbee, james pethokoukis. Well, the gop is expected to roll out a new Health Care Plan perhaps as soon as this week. Kayla tausche is in washington and has some details for us. Kayla. Well, david, time is of the essence for House Republicans to unveil that draft. If they want to stick to a selfimposed deadline of having it on the president s desk by easter. Several meetings to that end took place over the weekend to work out some of these issues to try to finalize some of the language. On friday budget director mik mulvaney led a large staff meeting at the white house. On saturday there was a followup call with the director with speaker ryan, with energy and commerce chairman walden and hhs secretary tom price as well as domestic policy advisor from the white house. And a senior gop aide says the plan is in what he calls a very good place with the goal of releasing a comprehensive bill early this week still on track. But its not one that is expected to deal with medicaid separately. The goal is still to have a comprehensive bill, but it remains unclear whether house leadership has been able to quiet the opposition from tea Party Lawmakers over the cost of the proposed tax credits in the existing plan. Yesterday on face the nation secretary price said the cost of the plans for consumers and companies should go down because this time around they wont be one size fits all. Now, that had been one reason that insurance companies, humana just the latest in the last few weeks have been announcing they would be withdrawing from the existing exchanges. But a lingering question for the industry, which may still not be answered this week is when a law would actually be implemented. Because the 2018 exchanges are already getting set, meaning it would be about two years before the end product for consumers would change. But of course well see what is actually in the draft that is expected to hit earlier early this week. The president is having dinner tonight with hhs secretary tom price and the budget director, so we will see, carl, what substantive details we get either today or possibly tomorrow. Yeah. People starting to toss around terms like repeal plus and the like, kayla. Well see what happens this week. Thank you, kayla tausche. As we go to break, take a look at shares of gm. Company announcing it is selling its european car business to peugeot for 2. 3 billion. Stock is down about 83 now. S p down about 14. Back in a minute. Hey gary, whatd you got here . This bad boy is a mobile trading desk so that i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices, right . Oh, so my custom studies will go with me . Anywhere you want to go the markets hot sync your platform on any device with thinkorswim. Only at Td Ameritrade duexperience our mostand perforelevated suvs ever. Including the lx, gx, rx and nx. Experience amazing. And her new mobile wedding business. Tte at first, getting paid was tough. Until she got quickbooks. Now she sends invoices, sees when theyve been viewed andtadahpaid twice as fast for free. Visit quickbooksdotcom. Where can investors find the best opportunities right now . Our traders weigh in at tradingnation. Cnbc. Com. More squawk on the street coming up. Welcome back. Lets send it right out to Rick Santelli in chicago for the san tell li exchange. Rick. Thanks, mike. Like to welcome my first guest of the week, andy brenner, thanks for taking the time, andy. Rick, always a pleasure to see you, buddy. Ill never get off the topic. Last year the cubs won the world series. All right. Were in first place a good chunk of the season, kind of the way the u. S. Is in first place regarding the economies of the globe. And if we had lost a game or even a series late in the season, that wouldnt have really affected anything. So why is it that you and many others think that after almost a lost decade rates are too low on the short end, that the fed will raise rates except for if the jobs numbers bad. Are we still that close . Think what that says, how microviewpointed is that . Will this one number still potentially change the course of what ought to have been done already . Well, first of all, rick, i think the fed should have been raising all through last year. Its just with all the political stuff going on right now with the French Election coming up, the dutch election, as well as the timeline of the trump tax plan just getting pushed out further and further, i wasnt so sure the fed should actually go this time. But if you look at it, they really do have a window. You know, the french stuff is a little bit off the front page for the moment. And the economy is doing well. The fed and all the speeches we saw yesterday the last week was the recurring theme of equity markets are doing well, asset prices are doing well and global economies are doing okay. But isnt there also the issue isnt there also the issue, andy, that our central bank showing some confidence in the economy can go a long way considering that the fairy dust they could never artificial create through programs like qe is happening organically . Absolutely, rick. And we think its going to happen even further. But im just a little worried that the equity market might be just a little bit ahead of itself at the moment. And i think that might curtail the fed. Look, we think hey, andy, let me interrupt you there. Let me interrupt you there because times getting low. Theres another area i want to cover. Andy, do you like to get together with your relatives around the holidays . Absolutely. All right. Can you imagine if all your relatives all were wiretapped every conversation they had all year, do you think your christmas dinner would be more fun or less fun . If they all knew what each other said . I think it would be less fun, rick. I think thats a trick question. But go ahead. Where are we going on this . Yeah, it is a trick question. You know what, i look at the landscape and i see all the things that need work done. And all i see on the front page of the papers saw the cloak and dagger, i dont know, if everybody in government has their conversations listened to by somebody even for proper reasons, then when you get congressmen saying, hey, did you do this on this day . I cant remember what guest i had a year ago. Why doesnt Austan Goolsbee says its too late for growth, demographic time bomb, baby boomers. So what over 95 Million People that dont have jobs that are ablebodied we just wash that away . If austans logic is correct, then why doesnt the party he favors start tackling entitlements and all the issues the demographic time bombs playing with . You cant have it both ways, can you . Finish us off, andy. No, i think Austan Goolsbee is 100 wrong. I think theres massive underemployment in this country. And i think trumps backing up of the regulations, improving the tax plan is going to bring a lot more people into the marketplace. And were looking forward to three plus, possibly 4 gdp growth. I think he can do it. All right. Andy, listen, thank you for taking the time. Its a dicey time to be in the markets watching all the craziness going on in the political world. Maybe they ought to just get some of these policies taken care of and let the state take a rest. Andy, thank you. David, back to you. Thanks, rick. Thank you, mr. Over to john who has a look at whats coming up. Snap stock is off some 6 so far this morning. Well check in about what that ipo means. And were going to check in on what snaps ipo means for the Broader Market and we are expecting an immigration update from the administration coming up during the hour. All that coming up on squawk all all alley. Ivanka trump making a move for a child tax care credit. Youre going to have to complex what this means. Shes been talking to female ceos while she builds support for child care and paid family leave. Her company is familiar to anyone who has young kids. Its an Online Platform that connects parents and babysitters. I asked her how the dinner went. I think businesses have a huge responsibility when it comes to supporting paid leave with the government supportive making it mandatory and child care tax credits, supporting these things to make care more available. The plan would allow families to deduct the cost of child care from their income and provides a refundable tax credit for low income households and expanded tax free savings accounts for child care. There is some pushback however on this idea. The Tax Policy Center found the benefits would go to households making six figures. Families making less than 40,000 a year would get less than a 20 bump in their after tax income. Shes worried about that issue as well. We believe instead that it should be focused around a refundable credit instead of a deduction. She does support the call for paid family leave and she said that the government should find ways to encourage more companies to offer child care benefits. She told me she hopes the dinner was just the beginning of a deeper discussion going forward. Back to you guys. Thanks very much. As we head to a quick break, lets look at shares of snap. Down 7 . 24. 48 is where the stock closed at the end of the first day of training, but it has some fall through on friday mostly away, but not quite. Well have more ahead. Stay with us. It because so many go after it the same way . Chasing after short term returns. 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It is one of the worst performing sectors in todays trade. Down about. 5 . Immigration has been a hot topic with the government late friday announcing the temporary suspension of Premium Processing of h1b which are used by Companies Like apple and google to use talent there overseas like countries like india. This is a temporary that goes into effect april 3rd and could last up to six months. In half an hour the Trump Administration is laying out the details of its new revised immigration executive order. Secretary of Homeland Security john kelly will deliver remarks along with Rex Tillerson and attorney general jeff sessions. Well send it back to the gang. Well get to that in a few minutes. It is 8 00 a. M. At uber headquarters out west and 11 00 a. M. On wall street and squawk alley is live. Good morning. Welcome to squawk alley on a busy monday morning. Well get new details on the president s latest executive order on immigration. We are at the white house with details as we get them. Reporter limited details for now. Well have the full details at