Transcripts For CNBC Squawk On The Street 20170321

Get ready for more fed speak at home. Our road map begins with the president. No pullback despite the near daily drama in washington. New this morning, Electronics Ban targ it eieting flighting from muslim majority count countries. The president takes a visit to capitol hill, selling the Gop Health Care bill ahead of the vote on thursday. Stocks continue to show resiliency. The nasdaq taking aim at another interday high after four Straight Days of gain. The dow and s p up. S p is up 11 since the election. But the nasdaq put together three gains of less than a point. Yes. Which hasnt happened three times in a row since the 90 s. Closes at 5900 or 5901. I mean, it obviously tells you, maybe not that much going on, but also a coiling effect potentially. Youre seeing the volatility indexes and Everything Else looking like, you know, sort of the movement has been this offsetting action. At some point, no broad selling pressure. Really, something is working to keep it supported. It is amazing, that stocks are holding recent highs. Especially on a day we were monitoring the hearing on capitol hill. The head of the nsa and the fbi confirmed that there is no evidence pointing to the president s wiretap claims and confirmed there is an investigation into Russian Election hacking and trump ties. Two things you might think would undermine the credibility or at least Political Capital of this president to get things done. But the market took it all in stride, as it continues to do. Maybe it is because republicans were sticking to the talking points on the white house. Who knows what it is. Clearly, i think this Health Care Vote is going to be a key test of the trump agenda. What he can continue to get done with his party in the senate and the house. Taking stock of the president s appearance in louisville, in which he seems to talk about Health Care Like the vegetables you have to eat before you get to the good stuff. Things hed rather be spending his time on, like tax reform. We know what the market wants. Yes. A new manager survey is out today. Only 10 expect tax reform before the summer recess. Are expectations aligned with the calendar . I think the markets expectations are aligned with what perhaps is likeliest to happen. Just this probability waited thing. Probably because the market can grab hold of other things. Earnings rebound based on projections. Emerging markets up 1 plus yesterday as the dollar backs off. There is this general story of enough else is going to way that we dont have to fully pin everything on what might come out of washington. You are seeing signs of the trump rally that worked so well after the election starting to fade. We talked about small caps underperforming. The yields havent climbed. Theyve gone the other way. The dollar is a key point for the trade. Sitting at a six week low against other major currencies. The banks are down for the month of march. I mean, these were all the initial, gut reaction movers on the back of the trump rally. Thats fading. Instead, mike, youre getting this rotation into more defensive names, real estate, consumer staples. Actually big cap growth, all weather growth. The s p tech index is up 2 month to date since the overall s p topped march 1st. Itll be a lot about health care today. The president is making his way to capitol hill in the next few moments, looking to shore up support for the house Gop Health Care bill. Kayla is going to watch this for us all morning long in washington. Good morning. Morning, carl. Call it the art of the health care deal. The president heading to capitol hill for a meeting with the House Republican conference set to take place in a few minutes. This is after his trip to kentucky you were talking about last night to stump for the bill, put forth by House Republicans, led by House Speaker paul ryan. Last night, House Republicans did put forth some changes on the initial draft of the American Health care act. Here are some of the more substantive changes. You had an amendment with technical changes for the bill to comply with senate rules. Then to win over some members of the republican conference, here are the changes. Itll pave the way for senate to add benefits for older americans. Also older and disables, that is a move to bring Senate Republicans into the fold. Before they get to the senate, they have to win over the House Freedom caucus. Though they havent had a united front, there have been several vocally opposed members of the group to this bill. To win some of the members over, changes will be made to accelerate the repeal of the tax increases. Those will happen this year on some of the Obamacare Tax repeals instead of happening in 2018. Basically, trying to say that obamacare will end sooner than previously expected. Also expected to curb further Medicaid Expansion beyond what i mentioned in order to win over the more conservative members. The house vote is set for thursday. The calendar doesnt leave much wiggle room or room for error. The president last night even said that this will be a continued and potentially protracted negotiation. Listen. Thursday is our chance to end obamacare and the obamacare catastrophe. And begin delivering the reforms our people deserve. So thursday, of course, the date that is circled on the calendar for this to go to a full house floor vote, that being said, the president said that he has been working with Senate Majority leader mitch mcconnell. Also with House Speaker paul ryan. He said, like with everything, sarah, this will be a negotiation. Itll be a back and forth. Not everybody is going to get what they want, but we have to do health care before we can move on to the other stuff they want to do. Are they going to get the votes . What are you hearing . Well, sarah, they need 216. The fact that the Freedom Caucus has not, as a block, decided it will vote against this, some are taking that as a more positive sign. Basically allowing individual members of the group to take a more moderate stance on this. We will see. It does appear that especially with the president siding with this bill, despite some of the opposition in the house and the senate, that republicans will at some point, hopefully for the administration, get on board with this. We will see. Kayla, thank you, for setting up the Health Care Story for us today. Meantime, larger Electronic Devices will be banned on certain inbound u. S. Flights. That directive coming from the department of Homeland Security this morning. Phil lebeau is on the phone with more on how all of this is going to work. Phil . Sarah, let me run down exactly how this travel restriction will work. Youre talking about flight s directly to the United States from ten airports, predominantly in the middle east. A couple others in africa. What were talking about are flights on airlines like emirates, qatar, which are Prominent Airlines for those particularly business travelers who are going to the middle east. The department of Homeland Security has determined what it says through continual threat evaluation, that the best approach in terms of limiting the threat to these flights, is to say, you have to now check your laptops, ereaders, tablets, ipads. You can no longer carry those on planes. Theyll have to be checked on those flights from those airports into the United States. This is called a temporary restriction, though there is no indication of when they will lift this and allow people to once again bring on electronics. We should also point out that for the flights that are impacted here, which are about 50 a day, there are no u. S. Carriers that are impacted by the restrictions because the u. S. Carriers do not fly directly from these airports in the middle east to the United States. So for those people who are flying from those countries into the u. S. , theyre going to have to change their approach in terms of how theyre going to pass the 11, 12 hours it takes to go from a place like dubai into new york city. Phil, you mentioned some of the carriers. Who is most exposed . Is it the Gulf Airlines like emirates . Correct. Youre the ones who have the most flights, emirates, qatar. There are a total of Nine Airlines overall that have direct flights from these airports in the middle east. But the ones that are most popular, most prominent here in the United States are emirates, eddie hod, qatar. Well talk more about the Electronics Ban potential impact here. Lets bring in the former u. S. Ambassador to iraq and turkey. And former Deputy National security adviser. Also with us is james, aei fellow and cnbc contributor. Welcome, gentleman. Brem bremmer, who has been critical of the administration, says a laptop ban continues fine tra diction of u. S. Responding to terrorism by disrupting commerce. Whats your take . My take is having experienced a lot of terror coming out of the middle east and in the middle east, that you have to give the administration cut them a little bit of slack on Something Like this. They would not have done this for no reason. They would have not done this for the, quote, muslim ban or anything. And there are real problems with electronics. I think we need to stand back a little bit and remember, not taking actions like this before 9 11, well, produced 9 11. So maybe the question we should be asking, jimmy, is does the administration need to be a little more forthcoming on the threat or the description as to why theyre doing this and why specifically it affects the gulf carriers only coming from certain countries . This is exactly the reason why it is important that people have confidence in our intelligence services. It hurts the Public Confidence if you have people in the administration, like the president , constantly saying theyre doing a bad job or theres fake news or theyre not investigating this or investigating that. People need to have confidence. When a decision is made that is disruptive like this, that it is more a good reason. If theyre got toinot going to forthcoming with some sense of the actual intelligence, saying listen, you have to trust us, there has to be the relationship between the public and the president. Indeed, we trust these decisions and dont question them. Ambassador, would it be your guess or judgment that this decision by this administration is a result of Fresh Information or just a new administration interpreting the same intelligence and potential threats that the Prior Administration might have been looking at . I suspect the latter. I agree with my colleague. This administration has done everything under the sun to erode confidence in what it says and to erode trust in our own intelligence services. That notwithstanding, there are real bad guys out there, and there are real necessities to act against them. Probably this is a reassessment of something that was apparent during the Obama Administration, but for one or another reason, they decided not to take this action. My feeling is when youre talking about people on airplanes, you want to be very careful. And it is an ill wind that doesnt blow some good here. I guess if youre selling the sysco systems, those are good because now itll be a huge hassle but also physical books. Someone will benefit. Jimmy, you talk about credibility of various agencies. Homeland security has been fairly immune from president ial criticism. Is he carving out parts of the executive or administrative branch, that some areas arent affected by that . Well see. I dont think anyone believes theyre immune from a very sharp president ial tweet. Of course, the head of Homeland Security is a general. The president likes generals. Maybe it gives him a heat shield when doing some of these things. Ambassador, why arent European Airlines connected by this . Cant you connect in various european cities from these places of origin . Im trying to give them the benefit of the doubt but trying to understand what exactly the motive is here. That is one of the unexplained questions. I had that, as well. It gets to the point made a minute ago, that the Administration Needs to be more forthcoming on this. Sometimes, they err on the side of not giving potential information to terrorists but sometimes it disturbs tens of thousands of travelers. I think the controls in european airports, particularly if youre flying to the United States, are extremely thorough. That may be the reason why they have made a distinction between the two. Again, we need to know more about this. Final question, jimmy. On the front pages today, you have fbi director comey, whether it is confirmation of the Russian Investigation or that there is no evidence on wiretapping. As it relates to the president s ambitious agenda with the republicans, does that change at all as a result of this sort of cloud thats hanging over the administration . Look, i mean, the president is already about 37 Approval Rating. You know, you want to use that Political Capital. Having the fbi, you know, investigating your campaign drains you that Political Capital. I think the good news is if you look at past times, whether its the clinton impeachment or irancontra, the mark itets and economy does fine. If the Approval Rating is dropping for the president , it doesnt mean the economy will collapse. This time, investors have been focused on the tax reform and Regulatory Reform and boosting the economy. I mean, i think there are risks there, at least headline risk. Well see what the market does. Thank you so much for joining us this morning. Ambassador James Jeffrey and james. When we come back, Market Action a day after the late day trading glitch hit hundreds of atfs. Also, the future for retail as kohls looks to rebound from a tough holiday quarter. Well have an exclusive with the ceo. Take another look at the premarket, looking for continued gains on this important week. Back in a moment. The greatest population shift in Human History is happening before our eyes. Sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. 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. We take you to capitol hill this morning. The president arriving to address the house gop party conference, as he looks to drum up support for the Gop Health Care bill. This is estimated to be his fourth visit to the hill in just about 60 days in office. Hes been extraordinarily active on the legislative process. We all know why. Later on tonight, hes going to attend a fundraising dinner for the nrcc. Havent seen any tweets from the House Freedom caucus, although mark meadows, who has been an important name in the last 24 hours, was just asked what he thought about the changes. He said, what changes . So it does appear like the whip has more work to do. Were waiting for commentary. Clearly, this is going to be a key test for the president in congress, for his agenda when it comes to health care. It is a short time window that they have from these changes to the actual vote on thursday. As kayla mentioned, i dont know if they can get a new cbo score that looks at the number i think cbo is expected to revise their score in light of some of the tweaks before the thursday vote. Thats my understanding. Right. And the complication, of course, is youre trying to appeal to two opposing wings. To change it in different ways for different people with different concerns, its not just about swinging it in one direction. When we return, apple announcing new products this morning with shares at a record high. And in the middle of a bull market run. Best performing dow stock of 2017 so far. What is ahead for this stock. Is it too late . Taking another look at u. S. Futures at this hour. Dow futures are up 48 points following in europes footsteps. S p futures up seven. More squawk on the street straight ahead. You cant predict the market. But through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Apple is on a record run posting alltime highs, including a fresh intraday high yesterday, as the company teased some new products this morning on the apple store home page, before announcing a new 329 version of the ipad, as well as some red special additions of its iphone 7 and 7 plus. Joining us this morning, ubs managing director joins us to talk about the run its been on. Good to see you this morning. Good to see you. What explain it is run, really since the beginning of the year . Well, obviously, the market is up. Tech has been on fire. Specific to apple, i think the december quarter was pretty solid. The guidance wasnt as poor as people expected. Supply chain is starting to think about ramping up for the new iphone 8. I think Consumer Confidence is increasing that were going to see a strong iphone 8 cycle. Of course, you have warren buffet buying in, suggesting there are more motes around apple than investors have given it credit for. Steve, i wonder if that allows apple to escape this kind of treadmill of having to reprove it every cycle. Go back to 4 1 2 years ago, apple peaked after the iphone 5. Stocks underperformed in the s p since that point. It took time for the earnings to grow back into the stock. Do you think apple, at this point, can get away from that idea, that investors run hot and cold on it . Yeah, thats a critical question. I think you want to get away from this cycle weve had. I think most of us expect a pretty strong cycle in fiscal 17 or 18 with the iphone 8. Were looking for 12 growth. Increasingly, were thinking you could have a twoyear cycle here. Particularly depending upon supply. Investors want to see more consistency. The company has been emphasizing services but we should go up a level to look at the installed base of iphones, which is still growing close to 20 and the retention rate, which is 90 . As long as those things are in place, you have a fairly consistent story here. Hopefully, longerwith new products coming, optionality. Tim cook in china today, visiting a china bike sharing company. He is on a Charm Offensive in this country. I wonder, steve, if it is a risk, if the u. S. Ramps up its trade rhetoric, even protectionist type measures or barriers on trade with china, is apple going to be immune because of visits like this because cook is working so hard, or is that a risk . China is critical to apple. Used to be 2 3 of growth and now it is a drag. How the iphone 8 does next year depends on how china does. We do think the issues that apple has had in china are more cyclical than secular. We think customers are waiting for a new form factor, which we think will be provided. The apple brand around the world is strong. The iphone has been gaining in every market except china. We do think youre going to have to see improvement there. Obviously, any kind of trade war with china would be problematic. I think tim cook is over there, in part, to try to head off any issues. Steve, really quick, it is said theyre building in augmented reality team. How does it fit with some are saying are over promises about the cycle . I think thats right. We wrote a report on augmented reality a few weeks ago. We think this could be the next big thing for apple. Youre going to have probably a 3d sensor in the next phone, which gives you facial recognition. With ar, you could be looking outward with the camera. You could have a piece of glass you hold up and look around the world and you have things overlayed on it. This is going to give the iphone new life. Tim cook talked about this as one of the few new things hes talked about. I think mark is spot on. Were bullish on augmented reality for apple. Good stuff, steve. Thanks so much. Thank you. See you next time. Opening bell after a break. The command performance sales event is here. Experience exceptional offers on our most refined models ever. Get up to 2,500 customer cash on select 2017 models for these terms. Experience amazing at your lexus dealer. [he has a new business teaching lessons. Rodney wanted to know how his business was doing. So he got quickbooks. It organizes all his accounts, so he can see his bottom line. Ahhh. Thats a profit. Know where you stand instantly. Visit quickbooksdotcom. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Youre watching cnbc, squawk on the street, live from the Financial Capital of the world. Opening bell in 30 seconds. Watching the president make his way to capitol hill to try to sell the health care bill. High profile earnings today well work through. Fed speak begins around lunchtime. Pretty much buying all across various Asset Classes. You have futures, europe, oil, gold, all at least marginally in the green. Lets get the opening bell. At the big board, tenneco celebrating investor day. At the nasdaq, tivo is celebrating 20 years. 20th listing anniversary for tivo. Amazing. I can remember somebody arguing that the verb tivo would outlive the company. Its been the other way around. We see dvr now instead of tivo. Good point. Looking at the opening trades here, tech again on top of the s p. When it comes to sectors, though we have big earnings to talk about today for a change. General mills, for instance, reporting earnings this morning. This is a classic packaged goods story right now when it comes to the Food Companies. Thats a beat on the bottom line because they are working on costs, which they can control, but a miss on the top line. The revenues number for general mills, i would say another miss. This has been a long running theme for this company. Struggling with baking products, with yogurt. The yoplait brand is not competitive. Cereal continues to be a problem. Falli ining 5. 2 . A lot of the Food Companies were downgra downgraded. General mills, kellogg, smuckers. Were at a point where the revenue declines will offset the bull case on the stocks, that theres still deal speculation going around. Who is going to be the next kraft hines target for 3g lt at th this point, the top line growth is harder to come by. The scanner trends are moving south. It is not working. I found that downgrade interesting. Tactically, as well. The staple stocks rebounded. The xlp, the whole group is basically back to where it was last summer. Interest rates have stayed so tame. Right. It seemed like a Good Opportunity if you think the fundamentals are going down. The stocks look too high. They pay dividends. Theyre considered bond alternatives. You have yields low, the bond proxies. But, you know, whats working is food in the perimeter of the store. The fresh food. With meat and dairy prices under pressure, it makes them more competitive. What supermarkets are doing is giving more shelf space to the fresher foods and taking them away from the packaged Food Companies. Record high for the nasdaq. Both apple and facebook at alltime highs this morning. Thats going to obviously give a lot of fuel to the nas. Facebook gets an upgrade over btig from a formerly spectacle greenfield, who says he cannot let this nonbuy rating to continue. He sat out the last 20, 25 points of upside in the stock. It is not a disastrous thing. Hasnt been embarrassed since 18 but its one of the names that has pulled people in. Very methodical uptrend. People feel like it is the incumbent. It is capturing a huge share of growth in digital ads. Hard to fight it. Also, i mean, you can actually make the case, it is not a stretched valuation. It seems like it is a little pit of a capitulation move by the analysts there. Sarah mentions the consumer products. A lot of research around consumer products. Jpmorgan and bernstein have an array, some good and some notpm beverage makers. The case on cocacola is youre not going to see real, meaningful Earnings Growth until 2019. Because the company is in the middle of a transformation. Thats something we continue to see. In terms of the top picks, pepsi, monster beverage, estee lauder. Speaking of consumer, another earnings mover, nike will be a big one. This was the worst performer dow component last year, down 18 . It is in the top three of the dow this year. Right behind apple and disney. It has come back. Theres a lot riding on todays numbers. What are invest gaers loervesto . Revenue growth. Nike has been pressured, particularly by adidas, its resurgence on the retro chic trend. Nike releasing basketball shoes in the last year. Two high price points for the lebron and kyrie irving shoes. The prices are down and investors are looking for better results. Theyre looking for them to talk about celebrity endorsements. Athletes, theyve got. Nike dominates that. You see it with march madness. Theyre in most of the top teams left in the sweet 16. It is the celebrities that adidas has gotten good at. The kanye west, rihanna and puma. Nike signed on drake. They have a collaboration coming along. Investors want to more details on what they can expect from the line and what the demand looks like. Im seeing a lot of sort of technical analysts look at the nike chart and say, looks like a base, looks like it is coming back. Not that many stocks look like that in megacap, where theyre welloff the highs but on the rebound. I think its got some money chasing it for that reason. The second biggest gainer on the dow for the year. Also 16 right behind apple. Another earnings number were watching, 56 cents beats by a penny, deliveries up 13. Backlog up 18. Repeated references to business sentiment, guys for lennar. As i said on twitter, the challenge may be finding electricians and contractors. Yeah. Actually making the deliveries because of the labor shortages everywhere. I do think that sentiment is leading the market here in housing. Also, with the kind of continued felt meltdown in retail, investors are looking at other things. Housing looks like it has a good supply and demand story. The entire home builder group, all the companies are Something Like 55 or 60 billion in market cap. Moment depot is three times that. It is a high leverage way to play the comeback but had a good run. I noticed that usa today money section took out the Health Care Stocks and looked at the relative position of strength given everything going on on capitol hill. The president there to talk about the new Health Care Legislation. Its the second best performing s p sector so far this year, just behind technology. You can look at the hospitals and the insurers, but interestingly, investors are looking at this one as a relatively cheaper valuation than some of the other stocks because of some of the uncertainties on the politics. Its led to a strong comeback. Massive under performance by the pharmaceuticals last year. There are individual elements of policy that seem also, the president brought up in his louisville rally yet drug prices. Hed like to see some come p competitive pricing as part of this bill. If it doesnt get into this bill, itll come shortly thereafter. No specifics on what itll mean for the drug companies. Famous phase two of obamacare replacement. Yes. So the dow is up 62. You have alltime highs from netflix, apple and facebook. Thats going to get you your nasdaq high. Lets get to bob pa. Nice start to the morning. 31 advancing to declining stocks. All ten sectors in the s p, 11, on the upside. Weve used this word, markets. Sectors fall and banks fall back, energy falls back, but they come back again. Today, banks are up, energy is up. The laggards are up, but also the sectors that have been leaders, like tech and, in particular, semiconstructers, health care has been a good leader, not all pharma but health care has been a leader, everything moving forward and the laggards hold on. Nothing drops that much here. This is the phrase we keep using, the teflon markets. The markets went up fast and now were moving sideways, is what consolidating means. There is no real selling pressure. Yesterday when banks were down, nobody is looking to get out of the market. Even in the weaker groups. The volatility has been very low. If you want real technical commentary, lowry is the oldest Technical Service in the United States. Founded in the 1930s. The intermediate term trends in the market remain healthy. Demand, breadth, and price confirm ongoing market strength. Not that there are outperformers or under performers but the under performers never get that far under. Great month for Home Builders. Tech has been great. Consumer discretionary has been great. Health care has been good here. It is true we have under performers. Talked about the transports and the Interest Rate sensitive groups like real estate underperforming and banks. They always come back and never completely fall apart. The only thing that had tough time is some of the Energy Stocks overall. This is what we mean when we talk about the teflon markets. The guys have been talking about leonard. The gross margin is a little below expectations. Look at this run, up 10 in the month. The Home Builders have been on fire. This has everybody talking. Stuart millers commentary. You wont see this bullish commentary often. Were seeing an improving macroeconomic environment. There is a combination of renewed optimism, wage and job growth and Consumer Confidence that is powering interest in home buying, and their personal operations from gone from slow and steady to a faster than expected sales pace. The most important line, they are positioned for increased Pricing Power and Solid Earnings going forward. Thats a signal to the market that theyre going to be able to raise prices. Doesnt get clearer than that. T this pretty much tracks it up 10 in the last month. Finally, an update on the nyc trading glitch. They just published a letter to the clients outlining a little more detail what happened. The arca platform, which is the electronic Trading Platform had an systems issue after the close. Some etfs didnt have a closing auction. Baa th they used a closing alternative calculation. What theyve done today is there was an upgrade to the software. It was a glitch. This often happens in the softwasof software upgrades. Etfs seem to be opening as normal. Ill keep an eye on that and give you any update we can. As of now, all the etfs have opened normally. Good open here. Dow up 54 points. Back to you. Bob, thank you. I will take it. The euro is on fire here. Lets head to the pond pits. Rick santelli in chicago at the cme group. Good morning. Sarah, im not sure if it is the euro is on fire to the upside or the dollar is on fire to the downside. Wow, the dollar is really getting hit here. Down almost 0. 75 cent. Havent seen these levels since the end of january, early february. Lets get to the charts. One week of tenyear note yields, the drift continues. You want to know whats going on . Get to know and befriend the word consolidation. Look at all the times in the last four months the stock market has been in a tight consolidation with no retracements. It always seems to compe back t the notion, the trend is your friend. One week of guilds, upward buys. Im doing a lot of uk instruments because march 29th, theyll trigger article 50. Nobody knows how itll turn out. You hear tough talk from brussels. I guarantee it wont be easy. Definitely an upward buy is there. Ready to overtake 130. If we look at the pound versus the dollar, definitely firming up. These arent huge moves but they are establishing upside. Finally, lets get to that dollar index, shall we . Theres your yeartodate chart. We havent settled under 100 since the beginning of february. It always makes me a little nervous when you see a dollar free fall and Interest Rates very steady and quiet. Theres a definite connection you want to Pay Attention to the correlation for the next hour. Carl, back to you. Thank you very much, rick. When we come back, tenneco among the Companies Participating in the rally. What might it mean for the automaker . Well talk to the ceo. Look at the hotel stocks today. Got some calls on wynn, marriott. Well be right back. Its an important question you ask, but one i think with a simple answer. We have this need to peek over our neighbors fence. And once we do, we see wonder waiting. Every step you take, narrows the influence of narrow minds. Bridges continents and brings this world one step closer. So, the question you asked me. What is the key . Its you. Everything in one place, so you can travel the world better. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Tenneco ringing the bell this morning. Joining us for the state on more u. S. Manufacturing in a Trump Administration, were joined by the bell ringer and chairman and ceo of tenneco. Greg, good to see you. Good morning. Great to be here, carl. Were talking about the trump white house. Has there been in your career a better time to be in manufacturing . Well, ive been in manufacturing 40 years now. Ten years as ceo of tenneco. Its in my blood. And i do think, obviously, through this entire campaign, we got a lot of attention on manufacturing. I think well deserved. It is still a strong part of our economy. Deserves the attention. Has not been maybe promoted like it should. That may be partly our fault, not just governments. Certainly, it feels good to have it being talked about in a positive light these days. You believe in a manufacturing renaissance. How many more jobs are we talking about . Ive always believed that manufacturing has been, is and will be a strong part of our economy. I dont know that i use the word renaissance per se, but clearly, we are going to be manufacturing the United States for a long time. Were excited about some of the policies that were seeing talked about. I have to say theres some policies that would not excite me too much. Weve got to navigate our way through that. Efforts in the policy field will be important for all of us as we go through the next few years. Definitely, im bullish on manufacturing. Thats for sure. Your customers are both, obviously, the large domestic auto manufactures, as well as overseas. How does that shake out, in terms of the tax proposals on import and export provisions that might actually affect you . For tenneco, we have a fundamental principle that we followed for many years. One of many fundamentals but one is we manufacture in the region where were going to sell our product. Our products dont ship well to begin with. Theyre bulky and youre shipping a lot of air. Duties changing, rates fluctuating. Look at our results over the last eight and nine years, even with changing currencies, weve had margin improvements. Not damaged the profitability at all. Were a small net exporting out of the United States. Having said that, the only problematic talk you do here is around economic protectionism, which i cthink would not be goo for the economy, certainly not manufacturing. Are you against the border adjustment tax . I am questioning it, thats for sure. On several accounts. Number one, the Global Supply chain has been put in place over decades now, right . You cannot unwind that very easily. Secondly, we know that this, because the United States is a net importing, that it is going to have an effect on prices. You can bet on currency adjustments or not. We dont like betting on them. Wed rather have a natural hedge against them, and we do. We know there are a thousand available variables that go into it. If you trouble protectionism with a border tax, my fear is the retaliation. It is something we have to be very, very careful of. Im concerned about that. Though the policy doesnt sound like itd necessarily affect tenneco. No, specifically. Ive never opinion one to look, i believe what is good for the overall economy, good for business, good for manufacturing is ultimately good for our company, as well. When people ask you about automation and how it is going to shape productivity, manufacturing, employment, over five tone year ten years, what say . Its been ongoing for many years. I just mentioned, i started manufacturing 40 years ago. The plant floor i walked on 40 years ago compared to the plant floor today, there is no resemblan resemblance. Now, it is technological jobs. The jobs changed and, yes, there are fewer of them. Yes, the productivity march almost has to continue to stay competitive. I do think we have a responsibility to look at certain dislocations that may cause and, certainly, help people transition into the newer skills required these days. Whats your take on the auto cycle in north america . Talk about sliding used car prices, heavy incentives. Have we rolled over from the top . Well, were sitting around 500,000 units, which is phenomenal. People are talking about pig volume, mention the things you do. The age of the fleet is substantial out there. There is still a level of replacement. Fuel prices are down. The mix of vehicles is very strong, if you will, for that reason. And we see were happy. If you can stay up in the 17 million, 17. 5 million, thats good for our business. No question about it. We see globally, china is growing. Certainly not at double digit levels like it once did but it is growing. Europe is more in a recovery but the units are growing. About the only region of the world, and it is not big for us, as an issue is south america. Any problems you sense on the financing side . Interest rates are rising in this country, including auto loans, and theres a number of sub prime auto loans out there increasingly i think Interest Rates need to rise. Its part of a stabilizing economy. We are not close to what youd call a high Interest Rate period. Im not overly concerned about that but it is something to Pay Attention to for sure. You guys have some crazy trailers outsideshede showing o your goods. Great to see you. Thank you all for the opportunity. Appreciate it. Ceo of tenneco. Still to come, more on how to play what were calling the teflon trump rally with the nasdaq hitting an intraday high. As we head to break, take a look at the nasdaq 100 leaders. Including marriott, facebook, netflix, tesla and apple. Squawk on the street will be right back. I joined the army in july of 98. I did active duty 11 years. And two in the reserves. Our 18 year old was in an accident. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. It actually helped to know that somebody else cared and wanted make sure that i was okay. That was really great. Were the rivera family, and we will be with usaa for life. Usaa. We know what it means to serve. Call today to talk about your insurance needs. Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. Awaiting comments from speaker ryan on capitol hill this morning as the president is also there selling the Gop Health Care bill. Well look for any guidance or comments from really anybody at this point, given the house vote is coming up on thursday. Expectations are largely that the vote is going to happen on a razors edge, as we continue to look for comments of support or not from various members. Yeah, signs that those factions in the Republican Party are coming together, to be able to vote. They cant afford to lose too many votes on this one. Certainly more in the house than in the senate. But well continue to watch as we continue to see the strength in the equity market. Two sectors, interestingly, that are lower are industrials and financials. Yeah. Once the leaders of the trump rally. And the transport stocks, too. Goldman sachs and cater piller, two of the losers on the dow. This shows you the market isnt about exactly what goodies will come out of washington. When we come back, the ceo of kohls, Kevin Mansell, or everything from the border tax to challenges facing Department Store chains. Dow off the initial high but still up 40 points. Back in a moment. 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. Good tuesday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sarah and mike. David faber is off today. We watch the president on capitol hill. Some high profile earnings today. Some fed speak this afternoon. A lot going on. Our road map for the hour begins with President Trumps teflon rally. Stocks remaining remarkably resilient, in the green. The nasdaq hitting an alltime high this morning. A breakdown of what is driving the market is straight ahead. Another update for apple. Fresh alltime highs after unveiling new products this morning. Plus, as carl mentioned, trump on capitol hill. As republicans unveil changes to their proposed health care bill. New travel restrictions for Electronic Devices on avoversea flights. We have all the details. First, the market. Stocks continue the climb higher. The nasdaq hitting an alltime high despite the drama coming from washington. Joining us is jpmorgan Global Market starategist and also a chief investment officer. David and david, welcome to you both. Morning. The resilience in the trump rally getting what looks like fresh breaths of life, up 24 points on the dow. Are you surprised . Given the comments weve gotten recently, im not terribly surprised. I think investors are focused on tax policy. To hear the new administration say that, you know, were working through health care, but tax policy is still our biggest focus, is a positive signal for where theyre sitting right now. Does that mean you see this thursdays vote, for instance, on health care as a market mover . I think we need to watch the vote very closely. Any resistance that trumps policies encounter in congress is going to make tax reform more difficult. The reason were focused on taxes is if we get lower tax rates, that adds value to the equity market. Were watching what happens. Not only with the Capital Gains tax but also Corporate Tax reform which we think is the elephant in the room. Meantime, david, you also have, of course, breakouts in equity markets all over the place. Leading markets in india, switzerland, korea, germany, out performing the u. S. What is cheap, what has upside out there . We still like the u. S. We do expect a lot more volatility. In terms of placing new money, we look at some things that have done well, like financials, and wed also look at some things that have not done as well, like energy and health care. We think if you have a balance like that over time, over the next six to twelve months, you should do pretty well. David, b of a has a fund manager survey out. Theyre arguing the dollar, where it stands now, is reflecting trump trades that have been taken off. Is there any element in various Asset Classes that are losing patience with the legislative calendar in. You know, i think what youre seeing is equities in particular start to consolidate a little bit. To us, the big story this year is really going to be earnings. I think the key is that, given all the noise we expect to get out of washington, we need to see the fundamentals for these Companies Continue to look good. Cyclicals is in better position than defensives. Technology, financials, the higher beta parts of the market should continue to perform well. Were trying to accept brasepar noise from the signal, the name of the game. Technology is a standout. It is not just apple, though apple is the top performer right now on the dow. And for the year. Whats driving this tech Doppler Radar tech trade and is it too late to get in . Wed stay away from the 30 plus multiples. Sysco, qualcomm, we think have done well but have more to go. What is driving this is a better economy. Outlook for a better Global Economy in the next year and great deal of liquidity. These are higher beta stocks so thats where the money is plowing into. To follow on carls point about some of the cliche trump trades maybe cooling off, the banks have backed away from the highs, as well. I know you like the big banks. The question is what has to happen in their favor for them to underpin the evaluations youre going back to on before the financial crisis . What needs to happen is a lack of bad news. Interest rates are moving higher. That is going to help the earnings outlook over the next 12 to 24 months. You get a multiple expansion on thach. Were not expecting good things on a Regulatory Environment but itll be less hostile. Better u. S. Economy, less hostile Regulatory Environment, we think, should allow the stocks to get a multiple expansion on higher earningsm. T wed use the recent pause as a time to add into the banks. We like jpmorgan, wells fargo. If you have a 12month time frame, we think itll be a good place to be. Weve been talking about the deregulation theme. How do you quantify that for specific Industries Like banks or others . Its incredibly difficult. The bottom line is that, you know, those types of Investment Decisions should be based on facts. Unfortunately, we just dont have a lot of facts right now. Weve got a lot of ideas. We have a lot of things that are being thrown around. To us, thats why were so focused on the earnings. We think theres some upside. How much upside . Well, it is debatable and depends on the assumptions that go into your model. I think the key things are the head winds from energy are behind us. Dollar strength seems to have cooled off. That should allow the companies to go back to making money. The earnings recession from 2014 to 2016 seems to be behind us. Is the bar going to be higher because valuations are so much higher than where they were last time around on earnings . I think it is a fair question. What i say to myself is where else are you going to go . Equities look rich but do you Want Companies generating cash flow or fixed income, which is not paying you anything in real terms and is going to be sensitive to the back up in Interest Rates were expecting. I think the relative valuation argument is most important here, rather than thinking about stocks and isolation. David, q1 earnings look to be good but not as good as expectations were at the beginning of the quarter. Do you think the quarter will come in strong . We think the quarter is going to come in in line with the last few quarters where you had about 70 of Companies Beating expectations and giving reasonable outlooks. We dont think the quarter is going to reraderail stocks or s them on fire in terms of a new rally. It should set the stage for stocks to continue to do better over the next three to six months rather than a onetime catalyst. Final question. This rally has gone global. Euro stocks are hitting more than oneyear highs. Emerging market stocks are hitting multimonth highs. Is it the trump rally moving overseas or Something Else going on globally thats fueling it . Something else going on globally. Youre seeing a broad based improvement in the economic data. After a number of years where the Global Economy wasnt really online. Part of what drove the massive bout of Dollar Strength was stronger growth in the u. S. Relative to the rest of the world. When we look at whats happening in europe and emerging markets now in particular, we think the rally has legs. We look at the pmis, unemployment continues to decline in europe. Going international is going to be a good bet for investors going forward. Thank you, guys. Little news to get to here. A new job for the school of law. The u. S. Attorney for the Southern District of new york will join the school as a scholar and resident beginning in april. He has been in the news after his public disagreement with the president after he refused to resir resign as the Trump Administration attempted to install his own u. S. Attorneys at the justice department. That was quick after we were just reporting all over that story and where hed end up, what, days ago . A little bragging rights thing, hes a gradual of colombia law. Colombia and nyu have a constant fight for high profile faculty. When we come back, a travel ban being put in place on certain Electronic Devices. Were going to talk to congressman Eric Swalwell, former head of the tsa. Then kohls ceo Kevin Mansell is with us. Apple stock at an alltime high. Dow is up 11. Upstate new york is a good place to pursue your dreams. At vicarious visions, i get to be creative, work with awesome people, and we get to make great games. what i like about the area, feels like Everybody Knows each other. And i can go to my local coffee shop and they know who i am. Its really cool. New york state is filled with bright minds like lisas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. New travel restriction being put in place. Larger Electronic Devices will be banned on certain inbound u. S. Flights. Phil lebeau has details this morning. Hey, phil. Carl, may be likely to similar a similar type of restriction for flights in the middle east into the uk. Wouldnt just be the United States but you could see European Countries doing the same thing. Weve not been able to independently confirm if that is the case. Let me talk about the restrictions. Talking about laptops, ereaders, tablets. Theyre going to be restricted. In other words, have to go in to check luggage and u. S. Bound flights from ten airports in eight countries. Predominantly in the middle east and a few in africa. It impacts Nine Airlines. None u. S. Airlines. About 50 flights a day into the United States. Again, these are district flights from the airports into the u. S. These are flights out of the following countries. Saudi arabia, egypt, kuwait, qatar, jordan, mock crocco, tur united arab emirates. The restrictions being placed on people flying from the countries into the u. S. Do not impact united, american and delta. Again, it is only for Airlines Flying from those areas into the u. S. Directly. Again, it does not impact the u. S. Airlines. Again, guys, we are trying to confirm if the uk will follow the lead of the u. S. , the department of Homeland Security, which is saying, look, based on the Threat Intelligence weve been looking at, we think that it is a smart move at this point to say to people, you cant bring these on with your carryon luggage. These electronics have to be checked into the cargo of the airplanes before you get on the flights. Well continue working this story as it is certainly going to have ramifications for a lot of people who travel to the middle east and from the middle east on to different places in asia. Guys, back to you. Phil, thank you very much for that. For further details on the impact of the ban, were joined by congressman Eric Swalwell of california. A member of house intelligence, former member of the Homeland Security committee. Congressman, good to have you this morning. Thanks for joining us. Morning. Doesnt seem like a lot to ask, to have someone not carry on the larger electronics. We know phones are powerful, too. What do you make of this . I have received a number of briefings on an aviation threat, and ill have to leave it at that for now. But i can say that we have long known that many of our enemies across the world and in the United States see as their biggest target bringing down a u. S. Airliner. So we must always do everything we can to make sure anyone in the skies are protected. Reports suggest this is all based on evaluated intelligence. What possibly could that mean, knowing you cant address specifics . Yeah, i cant. I can only say that, you know, ive spoken with the department of Homeland Security. Ive spoken with our Intelligence Committee staff. Theyve assured me that the men and women who toil away in Law Enforcement and overseas on our behalf are looking at this and doing everything we can to protect americans. Just to be clear, can you tell us whether it is a new threat or something that was warned about from the Obama Administration Ma Administration . I cant go there, sorry. You support the effort by the administration and the new rule . I do, yes. I do, yes. You were on the hearing yesterday. What do you think is going to be the backlash and the spillover impact from the revelations we got from the fbi director and the nsa director when it comes to those, the confirmation they are investigating the russian hack of the u. S. Election and possible trump ties . What do you do next . I hope it is not a backlash. I hope it is an opportunity for democrats and republicans to come together and unify around having an independent Commission Look at how we were attacked, whether any u. S. Persons were responsible, and most importantly, how do we never again find ourselves in a mess like this, where a foreign adversary is able to undermine our democracy and divide our country . I hope thats what comes out of this. I wrote the bill with Elijah Cummings to do exactly that. Every democrat has supported it. One republican, walter jones, also supports it. I hope other republicans come on board. Are you guys talking about any potential retaliation, retribution, proportionate response based on what is found . Well, what i hope that we do, until an invest dpaigation by t fbi is complete, is to ask the president and white house not to make any changes toward the policy of russia. Meaning not to roll back the sanctions. Not to embrace russia in any way. Just put a pause on russian policy right now. I was not happy to see that secretary of state Rex Tillerson is not going to be meeting with nato Foreign Ministers next month, but he will be meeting with russia. I think, again, were seeing a dramatic change in u. S. Policy toward russia. What im concerned about is this is a convergence of the political, personal and financial ties between donald trump and his team with russia. There have been you mentioned tillerson skipping the nato meeting in favor of staying to talk to xi jinping and, of course, the russian visit in april. Some called for him to come in and explain those travel arrangements to foreign relations. Would you go along with that . I certainly think that we need to embrace our nato partners and isolate russia. I do think the secretary of state should explain that to the Foreign Affairs committee members. But i also understand that nato offered the secretary to move their meeting so it could accommodate his schedule. That was denied. Again, people are okay if business persons in the Trump Administration in their business professions had relationships with russia. Thats not illegal. But what we are starting to see is those business ties may have been converging with russias interference campaign. Now, the u. S. Policy toward russia is changing. I think thats alarming. Congressman, we appreciate your time. Covered a lot of important ground. Eric swalwell, thank you so much. My pleasure. For more on the impact of the Electronics Ban on the tsa and airlines, we welcome former head of the tsa, john pistole joining us by phone. Thanks for calling . Yes, good morning. As we try to contemplation the implications and ramifications of the new order, how do you see it . How disruptive will it be toward travel . I think it is being as precise as possible, given the intelligence that both dhs, tsa and the Intelligence Community have. As opposed to imposing a system wide ban, they are looking at those areas of greatest concern. For example, theres almost 275 airports around the world that have nonstop Passenger Service to the u. S. This is only ten of those. So it is as precise as possible, given the intelligence it says that there are threats out there. John, i wonder about that precision because, obviously, now that theres this transparent policy, somebody who would be willing to try and smuggle something on to a plane knows where else to go. Is it an evaluation of the particular security measures at those exact airports that are now having this ban . Well, during my four and a half years as head of tsa, we would look at poboth the intelligence again, starting off every day with a classified intelligence briefing as to what terrorists were intending to do, how they were intending to do it and when if we had that specificity, where is rare. Then you look at countermeasures in place at each airport. This is both the threats and the capabilities, both the physical and intelligence on the host countrys part there. And what we know in terms of the way the terrorists might try to exploit those potential vulnerabilities. So it is really a partnership with the host countries and the airlines to say, look, nobody wants to lose a plane here. So Everybody Needs to act out of abundance of caution and with prudence to say, lets buy down risk as best we can. So this device is called a emergency amendment, the procedure they used, is simply trying to buy down the risk for identified threats. Finally, i wonder whether or not a ban like this is a precursor to more restrictions on domestic travel. Should we be even thinking about that . Well, itd be premature. Again, dhs and tsa in particular are really focused on being riskbased, intelligence driven. Trying to mitigate risk through steps that can take actions that will limit the risk, while still addressing the security concerns. So if the intelligence says that the greatest threats are coming from the ten airports, thats where the security protocols are emphasized. If there is intelligence that indicates somebody is trying to get on a plane in the u. S. At one of the 450 or so airports, tsa provides security at, sure, they would issue the equivalent of an emergency amendment called a security directive to say, yes, exercise the same caution as youre doing internationally. But as weve seen since 9 11, virtually all the threats have been from overseas, whether directed at the u. S. , such as the underwear bomber in Christmas Day 2009 or cargo plot from 2010. Or liquids from london. All the plots emanated from overseas. Thats what the emphasis is on at this time. One last question. The times this morning mentioned tsa has been on heightened alert. We wonder if that is something that is publicly announced. Is it akin to a heightened terror level . Well, there are aspects to that, but it is really just trying to evaluate the intelligence on an ongoing basis. Along with our assessment of those 275 airports around the world and saying, how are they doing in terms of, again, buying down risk, and if theyre doing a good job, then the protocols that are in place may remain constant. But if there is increased intelligence or concern about security not being up to protocol, then tsa as a Regulatory Agency can obviously fine an airline or the ultimate penalty would be to ban travel from a particular airport or by a particular airline. It is a significant hammer, if you will, to encourage, incentivize, those carriers coming from those locations to do their utmost to provide the best security. John, thanks for phoning in today to offer your insight on our top story. Sure. John pistole is the former administrative of the tsa. Apple hitting fresh alltime highs after unveiling new products. We have the details. Take a look at stocks. Actually, the indexes have reversed lower after a somewhat stronger open. S p down almost 2 points. Much more ahead. Squawk on the street. Stay with us. Welcome back to squawk on the street. Take a look at the tech names hitting alltime highs earlier this morning. Amazon, netflix, facebook, al a alphabet and apple. Were joined from san francisco, josh . Carl, lets start with the changes apple is making to its ipad lineup. Replacing that 9. 7 inch ipad air2 with a device just called the ipad. The specs remain generally similar, but this new ipad does come with a more powerful a9 chip. The price has been cut with a basic model starting at 329. Tech analyst Patrick Mooreheadnomoorehea moorehead notes it is a clear rivalry with samsung and amazon. Clips is a new app, creating videos to share on apps like facebook. Iphone fans have a new color to choose from now. Red. When consumers buy the red products, remember, apple makes a contribution to a charity which uses the money to finance hiv and aids programs in africa. The special additions 7 and 7 plus phones start at 749 and are available starting march 24th. All this news coming as apple hag on a tear here. The stock is up more than 20 this year as investors bet on a big upgrade cycle for the new iphone expected in the fall. Partners at kensho note three months prior to the introduction of the last six new generations of iphones, the stock has traded positively 100 of the time. With an average return of just o over 19 . Traded down following the announcement, dropping on average 1. 6 over the following month. Right now, apple is in the green and just hit a new intraday, alltime high this morning. Back to you. Josh, a lot of buzz, obviously, building on the new features of the iphone. Is this a surprise, the lower price point on the ipad . Thats gotten a refresh here. Yes. As i mentioned, Patrick Moorehead of moore insights and strategy, tech analyst, was going back and forth with patrick this morning, and hes pointing out the price point, in his opinion, very aggressive for the specs youre getting here. He saw it as apple taking aim at the rivals in that space, whether amazon and samsung. He also thought apple here, with the price point, was clearly targeting Education Market specifically, guys. Josh, thank you. Also watching the dollar here, which is helpful to a company like apple. Really any multinational thats been struggling off the back of the strong dollar lately. It is weakening sharply. Rick santelli noted this earlier. Below 100 on the dollar index is a big deal. Were seeing lower treasury yields. Wondering what it means for the overall trump rally. Because it was the dollar and treasury yield that first took off after the election. This is no longer the reflation trade. In fact, if you go back to the dollar index, basically where it was two years ago. It spiked in the early part of 2015. Youre nip and tuck where it traded in 2015. The idea of this dollar surge and all the investment, you know, asset market moves related to it is cooling off now. I think the question is, some of the economic momentum, everyone is embracing and celebrating we know has been the case worldwide, is this natural kind of stall in that effect right now. Yesterday, down to 2. 45. We keep referencing the surveys of managers. They still believe that secular stagnation, i think, 5 1 2 year low for expectations of what we used to call secular stagnation. That is no long eer part of the universe, right . Certainly not. If you went back to february or march of last year, i guarantee it was a fiveyear high or alltime high. Obviously, sentiment does follow what the market has been doing. I think thats what youre seeing. I would note weve lost some of the early gains on u. S. Stocks. Moo more industry groups. Financials, telecom and other groups dragging in the overall index. The, p down s p down 1. 4 . Banks losing steam. The first ever cnbc interview with the ceo of kohls. Kevin mansell, his take on the industry, the possible border adjustment tax and more. Squawk on the street, back after a quick break with the dow down 62 points. 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. 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We have an investigation thats been going on in the Intelligence Committee. Theres one federally. Were going to get to the bottom of all things russia. It is very clear we have seen no evidence and have been presented with no evidence that donald trump toor his staff were invold with this. Mr. President told you the majority was at risk. Do you agree with the assessment . Yeah. The president of the United States came to us and said, we all made a promise to the American People. We need to keep our promises. Everybody running for congress and the house, everybody running for senate, the president himself said to the American People, you give us this chance, this responsibility, this opportunity, with a republican president , Republican Senate and republican house, and we will repeal and replace obamacare. We are using the tools that we have to do that. Thats this budget reconciliation. You cant put everything you want into the bill. Thats why we have a threephase process that were confident works. The president was really clear. He laid it on the lines for everybody. We made a promise. Now is our time to keep the promise. We keep our promise and the people reward us. If we dont keep our promise, itll be very hard to manage this. Yeah . Were you doing the thing to your hair or raising your hand . I couldnt tell. I looked in the middle and saw your hand. If this doesnt pass by thursday we have a lot of Freedom Caucus members supporting this bill. Weve been working with all members on many of their concerns. I would simply say a lot of the members concerns have been incorporated in this process. If you take a look at what weve been able to add to this bill, the things that are huge conservative wins, giving the states the ability to take a block grant for medicaid, giving states the incentive to have work requirements, preventing nonexpansion states from gaming the system, this is the most prolife legislation since partial birth abortion. It is a massive tax cuts, effective in 2017. All of those things were requests by these members. So in this day and age, in this business, in politics, if you get 85 of what you want, thats pretty darn good. We know we cant get 100 of what we want every time around here in this particular case because of the senate rules. We dont want to put something in this bill that the senate is telling us is fatal to the bill being brought up in the senate. Thats why were going to pass the best possible legislation we can. We got it there. The president helped negotiate the changes. Send it over to the senate. Then the senate, without jeopardizing the bill, can make improvements to the bill. If we do it here,ntire bill. I think people respect this process. I think members in the final analys analysis, when we get the majority of things we think should be in the bill, at the end of the day, it is a choice. Want to stick with the obamacare status quo . Do you want to stick with the idea that we made a promise and wont keep it . Or do we want to replace this bill with a much, much better law, something that makes good on our principles and promises and gets this country on the right track . I think people in the final analysis will make that decision. I think the president i have to say, editorial, the president just came here and knocked the ball out of the park. He knocked the cover off the ball and explained to the members how it is important to unify. How it is important to work together. How we are advancing our principles and we are doing what we told the American People we would do. This is our chance, and this is our moment. It is a big moment. I think our members are beginning to appreciate what kind of a rendezvous with destiny we have here. Thank you. Speaker, 100 sure itll pass . A very confident sounding House Speaker paul ryan after President Trump has just been on capitol hill. Speaker ryan saying trump was there to close the deal on health care. He knocked the ball out of the park. Knocked the cover off the ball. He also said, importantly, guys, many members of the conservative House Freedom caucus support the new version of the Health Care Legislation. Spokesperson for the Freedom Caucus just tweets, reports that the Freedom Caucus wont oppose are incorrect. No position was announced last night. Doesnt mean they wont vote as a block. That faction is preserving flexibility to respond to exactly what the form of this bill is when the vote is taken. Yeah. Were going to continue to watch this. Oos where the Health Care Legislation goes. We have to send it out to cou courtney ray geagareagan, sitti with a special guess. We are here sitting down with koels kohls keo Kevin Mansell. Youve been ceo since 2008. Ill start with stores. Kohls has more than 400 more stores than macys. Youre resizing, making some smaller but not going through a store closure promise, despite productivity dropping off consiste consistently. Why is the fleet size still right for you . You think weve made the decision that our best chance for success in the future is an an an omni channel retailer. Creating a experience thats special for the customer. We need scale. We have to be convenient for people. We have to do a better job at leveraging the stores we have. But youre right, sales in stores, at kohls and other retailers have come down. To some extend, we have to acknowledge that fact. And resize, as you said in some case, open Smaller Stores and lean on technology a lot to make the experience better. Do you think that the death of the Department Store has been exaggerated . For sure. Department stores have evolved over a long period of time. Ive been in this business for a long time so ive seen it. You know, from a positioning perspective, kohls is not a mallbased retailer. We have less than 80 stores in malls ayosz tcross the country. Almost 1100 in strip centers are free standing. Were a little kind of store. Were more of a destination for customers, for sure. Mall traffic is down, no question about it. We see it. Store traffic is down. You know, our perspective is we have to work on making our stores more productive for sure. Using technology to enable associates to do that. Then at the same time, making them more engaging. Then together, those two things, we think we can leverage our stores more effectively. You brought under armour to kohls, a big deal. Youre excited about it. Think itll add somewhere between 75 to 100 basis points to your comp without cannibalizing some of the other brands. How is it going so far in is that what youre seeing . Definitely been great. Great, new brand for us. Very young customer. Particularly with women and children in a particular way, its been amazing success. Adds to our active and wellness portfolio. Its a place we put a stake in the ground and tried to make a strong position in the marketplace. We do over 3. 5 billion of our business in what we call active and wellness footwear, apparel, healthy living, sleep healthy, eat healthy, as well. Great to hear. Traffic, you mentioned, has been a tough point for you. Its been down for seven consecutive quarters. Womens accessories and apparel have been weak. Thats 40 of the mix so it is an important part of your business. Have you seen traffic or women turn . Youre 2 3 of the way through the quarter. The key thing on the womens apparel business for us is to improve our speed. We know if we dont improve our speed, by that, the entire supply chain, from the design standpoint to the sourcing perspective to the logistics piece, we have to get faster. We have to get more nimble because were competing against Companies Whose supply chain now is better than ours. For us, from a longterm standpoint, the real key to success will be shrinking the supply chain, getting faster. Thatll get the womens business turned in the right direction. Speaking of the supply chain, if the border adjustment tax goes through, what does it mean for kohls tax rate and profitability . The most important thing is what does it mean for consumers . The impact on our customers is going to be massive. It is going to be a raise in prices. Fundamentally, higher prices on the goods we sell isnt good for american consumers. Yeah, of course, it is going to have an impact on our own pnl, as well, and itll take us time, i think, to navigate that and figure out how to make that less impactful. But really, the most important thing to me, is were focused on the price to customers. If prices are going to go higher, i dont think it is a good thing. What kind of price hikes, 20 , 25 . I think so. I mean, certainly open ended, what this will look like. Certainly some of the propoe as made would have an impact like that. Weve seen price increases in our categories before. Weve had areas of time and periods of time where cotton prices, for instance,spiked. We had to pass it on. There is a correlation to demand when it happens. Jcpenney said 170 tax rate. Whats kohls . The Common Thread is higher. The calculus, probably 75 to 85 is probably about right for us. But the bigger issue to me, frankly, is the impact on prices for customers. Because thats what drives demand. Over time, im sure well figure ways to navigate through higher tax rates. It is a bad thing for our pnl for sure. But the pricing impact for kusers many, ku custome customers, to me, is what is harmful. At this conference, Different Companies come together. Traditional retailers like kohls. Ecommer ecommerce, Venture Capital and everybody seems to be pitching everybody else. As compartment stores are consolidating, getting rid of brands, are you looking to buy new brands or buy new of the Ecommerce Companies . We believe a lot more, i would say, on the Technology Side in developing our own talent and our own skill set. Certainly use outside resources for sure. From a product perspective, we think there is an amazing opportunity for us, as we continue with this store structure we have and this massive fleet of over 1,100 stores. As other companies have to make decisions to close stores and become smaller and their footprint becomes less, we have an opportunity to attract new brands. Thats definitely a focus of ours. Part of the strategy, of course, in improving the experience and giving a more exgaungaging experience is product. Under armour is a key part of that. Im hoping with our path to success, coming through the leverage of our stores, well be a more enviable opportunity for suppliers. Some say that Department Stores are losing their core customer as they age. Is kohls able to gain materially more customers . You didnt have before, because theyre aging into kohls, or is there a lost generation for you . No. I think kohls has always had a blueprint thats focused on families. Theres a broad array, of course. Young families come into our customer portfolio as they have children often. They go through it. Obviously, our core, key customers are is woman in the 35 to 45 age range. She often has children, a house, is spending more. Shes our target for us from a spending perspective. But the move of customers through our store has always been pretty similar. That hasnt changed a lot. Just sort of to wrap it up here, as you look at technology, kohls has an app and you also have this omni channel idea. Are your customers cross shopping . How does that impact your margin . Yeah. It is amazing, right . 3 billion of our almost 19 billion in revenue comes from online. But a large part of that actually occurs in the store. We might ship from the store and leverage the inventory there. Our customers might decide to pick up in the store. Theres shopping in both places. 15 of our business is online generated demand. 85 of our business still happens in our stores. Our most profitable customer, by far, is the omni channel customer. The one that shops both in store is and online. That makes sense, why youre wrapping it all up together. Right. Thank you so much, kevin c s mansell. Ceo of kohls. Hope you come back soon. Not another nine years. Will do. Back to you in new york. Very nice. As we go to break, courtney talking to the ceo of kohls when Retail Stocks are among the biggest designers on the s p. Under armour, gap, macys and nordstr nordstrom. Banks of america ceo, camden fine, will discuss his meeting with the president and more. Markets close to sessions lows as dow is down 54. Stocks have turned lower. The dollar is getting pummelled. Gold is popping. Lets get out to the cme group. Rick santelli. Id like to welcome the president and ceo of the independent Community Bankers of america association. Camden fine, thanks for taking the time today. Thanks, rick. Thanks for having me. Listen, youre in an Impressive Group that recently met at the white house to discuss some of the regulatory issues facing Community Banks. Maybe you could share with us, make our viewers a fly on the wall in that room. Well, the bankers, these were all main street Community Bankers. They talked about the Regulatory Burden and the crush. They talked about the fact that 30 fewer Community Banks exist today than in 2007. Almost entirely due to the increase of 40 more regulation on Community Banks than there was ten years ago. And most of these regulations were designed for the largest internationally active banks, and they were crammed down on small Community Banks throughout the nation. And it is just crushing these banks. In addition, you have hurdles in front of bank organizers. It is very difficult for an Investment Group to charter a bank in this environment. Those things combined have really decimated the ranks of Community Banks. You know, cam, when i lump not only your group of smaller sized banks but lump all banks together, even the two big to fail jumbo half a dozen banks, and what you arrive at is, and the fed has done Much Research on this, a real reduced amount of loans being dealt to smaller businesses. Maybe you could drill down on that. Is this the answer . Are Community Banks, if they make a resurgence, going to fill that void, sir . Absolutely. Even today, Community Banks account for almost 60 of all Small Business lending. Even though they only hold about 20 of the deposits and assets of the nation. So theyre nation. So theyre outside Small Business lenders. More Community Banks means more Small Business lending. We urge Community Banks. Community banks also make 90 of thing a cultural loans in this nation. Community banks are a vital part of this nations economy, both on main street and throughout the country. Even in urban areas and suburbs, Community Banks are there for the customers. You know, after any crisis and i know that 2007, 8 was a biggy, we shouldnt be surprised the government overcompany say its. I get it. But in this instance that overcompensation needs to be reversed. Is President Trump going to deliver and is it current with the setup in washington the issues of the day, your final answer, cam, he will be able to put out a lifeline for some of these Smaller Banks . Absolutely. I think the Trump Administration is committed to helping Community Banks and Small Business men and women. I think that they will move aggressively in that area, buns they get some of their other priorities in order, but i am very confident that both the administration and congress will help smaller Community Banks and regional banks. Excellent. Cam, its been a pleasure. Please stay in touch with me as we move through kind of untying the regulatory knots in the industry. Thank you again, cam. I will. Thank you very much, lets send it over to john for a look at squawk alley. Good morning, mike, apple has a new product, including a new iphone, how does that affect the smartphone wars with samsung coming out with a new phone. Well take a look at that also, Gordon Bethune continental ceo will join us to talk travel restrictions. Iris uber, all that and more to talk about on squawk alley. Stocks taking a leg lower, down 82 points. President trump has just been on capitol hill this morning, talking to republicans about health care, how did that key vote on thursday . We now have an update with the president s visit, kayla. Reporter sarah, worry just getting new details from a person in the room from the House Republican Conference Ahead of that vote on thursday. He suggested like republican versus this as a singular opportunity to repeal and replace obamacare. He even went so foras to suggest republicans couldnt lose the majority in the house in 2018 if they did not support it. The House Freedom caucus is the group in the house that has been very vocally opposed to this. To that and the president i am told singled out the leader, congressman mark meadows, applauded him for that vote and said can you blame me if you want, mark, if his followers actually get angry or his constituents get angry for actually voting in favor of it. People laugh at that, he said,ly come after you saying a lot is not acceptable. He went on to say by doing this deal, will they be able to go on this aggressive agenda, to see the comments by the leader. Guy gls thank you for the update. Taking a quick look at stocks here, as i mentioned, they give up earlier gain, Goldman Sachs and caterpillar by themselves shaving 84 off the dow, its down 84, well be right back. i moveupstate use i was insted in building a reer i me to ibto manane gln and big ta. But i found souch more. its really a melti p of activities d ople. appuse, cheing new york state ifilled wi bright minds like victor toind the compans and talent of tomorrow, search for ourage, joinnewyortate on linkedin. Search for ourage, oh. Ncome on. Och od whats going on here . You know how ge technos to froblems before they. Theylow pruction, yeah. Well morcatchy business acryms. Wait, weont neeto smooch . Ire we can smooch solution caic lem just l it go. The heorry i latfor team budi. Smoooooooch what wng with yo . Heso trusting welcome back to squawk on the street. Stocks have been off a half a percent, Home Builders sticking out for the downside here lennar showed more homes, profits fell, sending that stock down 3 , pulte fall income sympathy with the most, s p off by 1 . Tech giants, apple, facebook, netflix, holding on to some gains, netflix just turning negative now. They hit fresh interday highs earlier today. Thats a look at Big Cap Technology stocks. We will paulk talk more about it with the crew. Back over to you guys. It is 8 00 a. M. In cupertino, squawk alley is live. [ music playing ] good tuesday morning, welcome to squawk alley