Transcripts For CNBC Squawk On The Street 20170519

In fact entirely for those three in the green. Look at spain there right now, or italy. They may be up, i believe. Ten year note yield had been hovering around 2. 2. Moved up a little bit yesterday. 2. 24 is where we are right now. On the ten year note yield. You can see crude oil also edging above 50 bucks. Thats important because it should produce some sort of movement in the stocks. It has not. Schlumberger, the Great American the Worldwide Service company is pretty much where it was give or take a few points from the when oil was at 26. That group is the one thats lagged the market if you wanted to ask me whats the key. That group has i was going to do that later. Were just getting started. Well, its a sector key. Im sorry interrupt. But you mentioned are you interrupting . Never. Thank you. Our road map is where well get to right now. I will ask you about that key u. S. Futures pointing to a higher open. Deere surges, on the move. This after the companies came in ahead of the estimates and the in ls who follow them. A much different story for campbells soup and footlocker. And President Trump is set to make his foreign debut. He departs for saudi arabia later today. Well, stocks are still trying to climb back from the selloff on wednesday. Each of the three major indiss down more than 1 for the week. You have the dollar on track for worst Weekly Performance in six months. As you said, oil up. Should be a positive. That group has not followed as strongly as it might. Can you even call it a rally . I guess you can. We were 46 not that long ago. We dont have enough place to put it, okay . So its kind of frozen domestically. In other words, you can get a better deal than the world price because theres so much here. So were a supply kind of interesting but demand cant why do we have this glut . We cant send enough out. Theres not enough buyers out of our oil right now. So i mean i have Magellan Midstream partners on this week. A very good company. Theyre the export pipe. With we really exporting oil . We have a lot of oil coming in, particularly from where the president is, saudi arabia. They keep taking market share, but we have discovered much more oil than we uthought. Were pumping more than 100,000 barrels each month. Were in a situation where domestically, weve got a little too much worldwide that usually you dont have separation like this. But worldwide, there are places that you need oil. But just keep in mind that the oil futures have not kept up. Even though the dollar has been weak, so you would expect that old linkage. This is the group thats held back the market because theres so many of them. The last few years, theres a plethora and because of that, you see them weighing on the market at all times. Right. You say held back the market. Of course were still talking about an s p thats up 8. 4 over the last six months. About 16 over the last year. Absolutely. I guess i should have tied it into the fact that this is really at the crux. That this was a very much of a trump group. That people felt that no one liked fossil fuels more than trump. You cant find another president that liked it as much, but the problem, david, that is a selffulfilling philosophy. Now you can drill more. Theyre more aggressive. Theyre finding more. So theyre keeping a lid on oil in this country because its literally a blessing and a curse to have a president who likes fossil fuels so much. Right. By the way the environmentis environmentalists theyre looking for the blessing side. They are. The deregulation very meaningful in this industry. I always hear you enjoy hearing you talk about the Energy Sector because i learn something. Theres pipelines. They have to build four pipe lines out of the permian. Can you imagine how many people are going to be put to work on this . Four. Just to be able to get all of the oil out. Then they need a lot of pipelines and ships to take it overseas. Because our refiners are 24 7. And its an interesting kind of conundrum that isnt talked about enough. The production gains in the last year have been significant. A lot of fracking come back online. Right. And canada. What are you going to do with that oil . Well, why do we need keystone . Thats not actually for us. Thats going down and out. Right. The idea is we should be a major exporter, but were a major importer. I know it seems silly but thats whats happening. It is. Lets get back to the Broader Market itself. After a tumults you week tumultuous week, right back to business. Everybody is so trained to buy the dips. Its you would have thought it was so glib at the beginning of this socalled rally, at the end of the day, people went for the bond market equivalents because Interest Rates went down so much. The next day, they immediately came back to facebook and amazon and netflix and david, last night it can continue because because of last night. Two unbelievable calls. Marc benioffs call, a lot of the cash flow is from ecommerce. Including a big win from s. A. P. , ralph lauren. Eight out of ten retailers are using salesforce. And autodesk, they went to the subscription model, its kicking butt. Autodesk looking for a ceo still . I may be wrong in that, but i thought there were a couple of as i recall, there were a couple of activists in there. Eminence and another well, they have a guy. Yeah. Making a move on them for that would have been another one of the deals and we talk about that, where you winwin. Because the model change was very similar to some other successful model change to go software as a service. I dont want to bore people, but as you get cloud migration some companies have a Better Business models and some dont. Pure Cloud Companies like salesforce, they have had a big leg up on oracle or the s. A. P. But theyre charging. Benioff presented information on mad money about a survey, hes pulling away. Again, why does this matter . Because when you see a tech stock up 12, autodesk, salesforce up 3, theres a tremendous pin action. One other i would mention, applied materials. Gang buster number. What did they say . A shortage of equipment to make Artificial Intelligence chips. Read through, nvidia will have less competition. Lets put things in perspective. I feel like we race through i know. They make the equipment that makes the chips. Right. Which they sell to those that make the chips. This is important. A huge boom bust business, they make the machines and then theres too much machine. And then they cut back. Right. And there was something said, this is no longer a cyclical business. Because of this, david, im going to hold up my phone, which is basically a data center. Okay. Yes. This is creating a tremendous amount of year long demand. So theyre calling it a secular gain which is giving you a higher price to earnings multiple. Marc benioff he needs intelligence chips, the Autonomous Car. You have to stop thinking as that we produce enough machines it tips. Even with flash and d ram which has been the worst boom bust, theyre seeing more continuums. More demand for the chips. Theyre making some noise the Autonomous Car how many chips too many chips. The diodes, theyre talking about a cell phone penetration that basically says if youre apple, if you listen to what he said, just basically saying that everyone is going to adopt. That the 8 is a super cycle which is my read through that if they have any olead. Were on the earnings sure. Lets stay on it. You mentioned crm. I mean, it was a good quarter. Really anything interesting from benioff that you thought that was important with you or the Conference Call . Yeah. A new word not been associated with america for six years. Tail wind from the weak dollar presented a huge gain for salesforce. Now, think about this. Tail wind. So you had numbers that were inflated by a weak dollar. Get used to hearing tail wind for tech. This is monster because apple, the tail wind for apple would be a gigantic, just gigantic. A tail wind for a proctor is good too. He shocked me. We benefited from the big tail wind in the dollar. The tail wind in the dollar, been a head wind for as long as were talking. Thats going to help our international companies. And help a john deere i would assume. Well, david, didnt help it, but it made the quarter for them. This was one outside the u. S. They have plus 14 ag. Forestry is on fire. Plus 7. For the first time theyre giving you an ag and a plus number. It was up 12, attracts sellers. Deere historically does not give a great Conference Call because theyre so conservative. Its international branding and they can charge so much more because of their service reputation. The dollar goes down, theyll win there too. Quite a quarter. Read through it all. To cat or not . I would on the construction and for es tri. Theres a good read through to cat. Cat is putting out numbers that are okay. By the way china for everybody is pretty good. And applied materials, china i would say they were too they mentioned several times so my read through is that china is ordering a lot of semiconductor equipment. Thats important. We will focus when we get to it a little later on, the losers including footlocker. Campbells soup may be down thabit. I didnt think they were that bad. The one problem with campbells, even though the family any time one of the stocks is down, people rumor kraft heinz. Look, tmobile was upgraded and its basically not m a. People started to pick up the sprint and its totally m a. Tmobile was more about capital return and their ability to maintain leverage where it was and generate more cash. Return a lot more capital. Well talk about that as well. Didnt we mention dumb and dumber. They were kind of they say dumb and dumber. Theyre agnostic on those terms that john legere uses. We have to get to the president s trip. Trump will embark on his first foreign trip as president and hadley gamble is in riyadh. She has more for us. Reporter well, a few hours from now, u. S. President donald trump will arrive in saudi arabia and the saudis are excited to have him. What do they want . Well, they want a firmer u. S. Hand when it comes to tackling iran and theyre very interested in these multibillion dollar trade deals that are coming down the pike. You have the biggest names in finance gathering here over the weekend as well as some of the gcc arab leaders and other leaders all expecting to hear a message from the president. What theyre hoping for is theyre going to get more of an idea of what u. S. Security in the region will look like going forward. Of course, for saudi arabia, the biggest threat to regional stability has been iran for some time now. But of course the wild card here is the price of oil. Whether or not saudi arabia will be able to continue to Fund Economics in places like egypt or military operations in places like yemen. So some Big Questions on the horizon for President Trump as he makes his way to riyadh. Guys . All right, hadley gamble, of course well be following the president s trip all along. And the summit with a number of Business Leaders tomorrow theyre having. Hell be speaking at it, i believe, the president. Obviously, saudi arabia, jim, is going to have theyre going to take their country public not that long. I say that kiddingly but seriously, because when you take saudi aramco public, youre taking saudi arabia public. I think theres a geopolitical concern that people have to recognize. Israel is on the same side as the saudi. They go in and theyre proxy for you. This has been the United States. This has been a long time thesis for trump because but its not for obama. This has never been done under obama. Hes no longer the president. Obama. Just so you know. Yeah. Hes out. All right, when we return, salesforces Ceo Marc Benioff has many reasons to smile after his companys earnings beat. Hear what he told jim about the cloud. Oh, a lot of other things. Including im sure his love for me. We have a lot more to tell you as well this morning. Look at futures. You can see were headed to the higher open. More squawk on the street live from post 9 when we return. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. Start trading today at etrade. Com our 18 year old wase army in an accident. 98. When i call usaa it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family, and we will be with usaa for life. A used car, salesforce shares moving higher in the premarket, this on better than expected Quarterly Results helped by the cloud based products of course. The Company Raised the full year guidance. Last year on mad money, ceo benioff told jim how it fits into the transformation of the retail. Eight of the ten top ten are on the salesforce commerce cloud. Every retailer is going through a huge transformation from being primarily being brick and mortar based and going online. And in some cases theyre doing both. Linking their retail physical presence with online. That is really powerful and were doing all that through the salesforce commerce cloud. Salesforce commerce cloud. Should be three acquisitions in the last year. You can say the exact target is helped too. But what hes been able to do is what no one else has been able to do. Even though hes great partners with Amazon Web Services you know how you go to amazon, if you like that book, you might like this. Retailers have lacked that. Using einstein his Artificial Intelligence unit, he has now got retailers saying the same thing to you. If you go to deckers and you like uggs, you know what goes with uggs is this. So theres a prompt. For the first time, others besides amazon have Artificial Intelligence to be able to figure out what youve done. What you bought before. And what we think youd like. So its pretty much if you want to catch amazon or stay in the business, you have to use the einstein commerce cloud. It was a remarkable transformation. And he mentioned ral by the way, came out swinging like i had never seen him. The s p and they have to stop lying about my record. What hes saying, listen, you can look at idc, not him. The record is so clear about the share take, about up for Customer Relations management. It was a remarkable quarter because they blow it away, at 100 million in revs and nobody does a thing. Its not on takeover fluff either. Theres been a premium in the stock in the past because of some questions as to whether he might be a seller. That doesnt even seem to come up anymore. Its sacha nadella, its bad blood there. Remember the benioff joined the people who were saying that sacha maybe shouldnt have done linkedin. Competition about that. Theyre talking about 20 billion in revs. He has 14 billion in unbuild and build which as we know from the balance sheet, thats his money. So anyone who thought that this company wasnt profitable, operating cash flow is tripling. Unbuild deferred revenue then build it. Add the 5 billion build. 14 billion. So everyone thinks this company is not profitable or theyre building the largest tower in San Francisco because their eyes are too big for their head. Listen to this Conference Call. Because this all came together very quickly when he bought demand ware, he bought crux. What happens this is a good one. 21st century fox uses none of its kind of a centralized form that everybody has to fill out. And it was a remarkable quarter because just like he said about ralph lauren which was a shop that was an s. A. P. Shop. Won it back because ralph lauren was not ralph lauren himself wasnt happy with the way that they were coordinating a worldwide build. If you buy a purple suit, maybe you want some purple shoes. Coming up, we have jims mad dash. More squawk on the street. Hello, my name is watson. I am helping 8 million taxpayers get the largest refund they deserve. One Million People can benefit from precision cancer care. 197 million passengers can fly with less turbulence. I am on my way to working with one billion people. I look forward to working with you. With this level of intelligence. I am on my way to working with one billion people. Its a supercomputer. 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Hawaii what . Haha. Hawaii you might have less coverage than you think. Visit aflac. Com and keep your lifestyle healthy. Aflac welcome back. Squawk on the street. I see well have some members from the navy i believe. Mixed in there with nypd and other officials ringing the opening bell this morning. Lets get to the mad dash now. About 6 1 2 minutes before we have the final trading day of the week. Well talk footlocker. Not a good story at least this morning. It has been previously one of the names in fact you point out so many times that its defying the trend at the moment. Im going to preface this by saying and then there was one. Only childrens place was good in the mall. Maybe gap. Richard johnson is one of the most respected ceo. We dont know the whole story, but he said the First Quarter was one of the most profitable quarters ever, but it did fall short of original expectations. Its very rare that he does that. Now, he did blame the tax returns. And he did say that once again, that they have much stronger sales in march and april. One of the themes here, david, no one is believing that. People are saying, listen, i dont care. Target reversed. We dont care. You say tax returns, if your month of february was bad, then we tell you it doesnt matter what the cadence is. I think thats too harsh. Thats been one of my thesis. Its not borne out by the week. If you say march and april is better it hasnt had any impact. There are shoe wars and the shoe wars among adidas and under armour and nike were supposed to make their Profit Margins great. They didnt have an inventory problem, i was worried about that you cant own nike and under armour again. Wow, this is a tough week for those too. Thats where theyre bought. This is the mall. Not a strong performer. You read through this to say i dont want to own nike no, the price war is bad. Lets see what he a good time to buy athletic footwear. Absolutely. One of the things although their inventory isnt that bad, finish line which doesnt get the latest model, nike, youre going to be able to get some deals there. The only benefits here theres the end because kids have to try on clothes because you throw out their clothes in six months. The kids change sizes. Were the same size all the time, so we go back on amazon and order 42 long. Were shrinking, actually. 42. But the thing is, thats the one thing you cant amazon because, wow, my kid changed sizes. They offer it in plus size, maybe the most unheralded ceo today. Because the kids change size, we dont. I thought they change sizes in sneakers not enough. Not enough. We have an opening bell coming up on squawk on the street. Stay with us. Some build walls to keep people out. But these are walls that welcome you in. Within these walls, californias educators create safe places for every student to learn and grow. Where teachers open minds to history. Unleash creativity. 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A lot of washington of course figuring into our decisions that investors have been making about whether to buy or sell. What do you think is the key to sort of trading today, jim . Well, im going to give you one thats off the beaten track because we did autodesk. We can come back to that. Everything from cell phone, how do you make cell phones and buildings. David mckesson, this group the distributors have been under such pressure because they missed quarters. Cardinal and apc people have been tepid about mckesson blew away the number. Most of the analysts had downgraded it so theyre fighting the quarter and saying its a low, low quality quarter. Give me a break. The guide was terrific. So people are piling back into drug distributors. Wow. Mckesson. So hated. I like cardinal very much. They already guided down. They have a super, super ceo. Maybe cardinal so the ceo, get this. George barrett. He played guitar once with with the who. Really . With daltrey. Isnt that something . That is. Apparently hes a great guitarist. I met him at the rock roll hall of fame induction. I said, who do you do . Im a guitarist. And i play with daltrey. I find out hes a ceo and he was a humble man. That was the u. S. Navy ringing the opening bell. In celebration of fleet week. And veritone a provider of Artificial Intelligence analystics. Who isnt providing that . It would seem to be a growth industry. Yes, it is. Thats because of this cloud. Going toward the cloud. Kicking out the on premise hardware. Going into the cloud. Then everyone just think like this. People have to recognize that amazon was far ahead of everyone including google. Googles catching up. But everyone has to catch amazon to stay in business. I spent a lot of time on walmart yesterday. And you know what . They have the money to be able to catch amazon. Its a money issue nordstrom has not been able to. Its a tech issue. You have to use salesforce because of the cloud that they have thats analytical. They tell you. We talk about Artificial Intelligence, theres different types of it being used in different areas. Youre talking about something thats not watson. Not what ibm is using no. Youre talking about incoming increasingly the ability to decipher massive amounts of data and come to conclusions more quickly and more data, more advanced. Right. So i mean, if youre a retailer you cant compete with amazon because amazon knows ahead what you want. Well, guess what . Salesforce and einstein they too know what you want. So you can imagine youre duking it out with amazon. You basically have now have the same opportunities as amazon because you have hired salesforce. Thats going to be thats the chief reason why they blew away the numbers other than the tail wind of the dollar. Right. And its a good time to be in ai, ai researcher data scientist. Yeah. Dont forget, when you order here and pick up i mean, this is really still the engine, okay . Apple is the engine. I think that you have to recognize that the apple device allow a lot of this to happen. I know a lot of people feel that apples best days are behind them. Who are all the people as the stock is up another 0. 7 . Market cap is now 800 billion. Seems to me there are quite a few people who dont believe it. I went after them for a while and i had to pull back because my wife is after me to be nicer. Really . Listen, you like tony sanguinetti, why are you going to attack him . Im not going to mention any names. How about you . We hit autodesk enough to explain to people whats a going on there . The entire thesis first of all, when you sign up, david, 180,000 new customers in a quarter. That says to me you have youve got a demand demand high quality issue here. They have at if you want High Performance cars if you want to design them, you need their software. If you want to do motion pictures, you need their software. I mean, im sure if you go and fast and furious 438, we love you even more, whatever it is called, a lot of what you see the animated, crazy things you cant really do, computer aided design. Thats autodesk. Dont forget skyscrapers you need them. Autodesk. Its an Architectural Software for anything architectural. You have to buy it by subscription. 90 recurring revenue. Theyre coining revenue. I did a piece when theyre at 80, heres the best company you never heard of. They were a couple of activists went in there. They had the wrong model. Had to switch to the salesforce model. They got a few keyboard members. Lets take campbells soup for a moment. We hit it the stock is down lets call it 3 . Food particularly the middle of the stores. They like to say. Youre selling this stuff thats got a lot of sodium in it. Not selling so well for you. They did call out snacks as being better. Now heres whats important. David, you are familiar with the work of paul polman. Yes, i am. Unilever, he joined you as a guest. He may be one of the sharpest guys on earth and hes saying the center of the store its great for me. Hes hitting it out, why . Because you have to revitalize the center. You have to come up with new products. If you have things that dont work like the country crock, get rid of it. So paul polman is not tolerating the idea that the center of the store is bad. Lets go full circle to walmart campbell did have a 1 organic seams decline sales decline in the quarter. It wasnt bad. Kraft heinz, are they well positioned when it comes to the center of the store . No, terribly positioned. Terribly. Thats why they have to do a deal. And the one that would have revitalized the center of the store would have been unilever. Thats why they needed it so badly. Unilevers got the center of the store beaten. And thats one of the reasons why they have such great organic growth. Youre really a believer in unilever store. Im also a dollar shave guy. Polman has been working on for me a long time. Up ever since salesforce came in and he attributes a lot of the gains with what the customer wants to marc benioff. Really . From unilever to crm . Polman said you ever heard of benioff . I said benioff, game of thrones . No, marc benioff. He didnt know that you and marc benioff no, a joke. At your expense because marc doesnt talk about you. I was hanging out with neil young and seinfeld he wouldnt even look at me. He looked through you as a matter of fact. Right through you. All right. So unilever is the way to go. He likes you. The center of the store. Food is not particularly good here in the u. S. It would appear to me based on campbells numbers. But letting people hes going fresh, that fresh is the answer. Now, yes i know that steaks can be packed in ice. You think i havent bought those steaks, but i will say this, david. The ones that are advertised on our air, the omaha steaks. Theyre fabulous. I dont take but walmart is continuing to go higher here because everyone hated b mow said sell to hold. Early turns in the ecommerce, i tend to agree. By the way you know walmart has got you know, we did a piece last night on mad money. And the family is willing to commit anything. They are. As i pointed out, theyre roughly 50 . I mean, they control for a while they were even above that. How tough are they that theyre willing to challenge amazon . They just dont like theyre in for the long term which is what you need to be. 50 million items versus 10 million this time last year . 50 million online. I have to tell you, im going back to my walmart. I had stopped really kind of going to my walmart. Im going back there this weekend i think. Really . Yeah, i have to go to home e depot to pick up the flats. We were talking about the decline on alibaba, today up over 3 . Reversing it completely. And yahoo of course following alibaba as it often does. With a significant percentage gain. I spoke to a lot of people on this yesterday. You did. Yes. Where do you find the time . No, because i was out there with my neck out there, saying that this should be up. Because the Revenue Growth and a number of people said, yes, this is now the amazon moment. Theyre not going theyre going to give up some profit in order to dominate the world. I think its a great moment to still own baba. Thats the only chinese stock im recommending. A lot of people say watch ten cent, the ten cent is doing well. Doing well. Thats why i mean, i was out there, you know, lock, stock and barrel. So i did i made enough calls to know that stock is right and not done going up. Ge is actually up, jim. We havent talked about it a lot this week. But i noticed a significant decline in the stock. A turn around to be fair, ge did turn around yesterday. Ge is up . Yeah. Is it snowing . The weaker dollar benefiting crm and deere. Will it be a benefit to others that derive a good deal of their sales internationally . If they dont have is a big cash flow from this quarter i sense there will be a ratchet up of tensions. They have to have big cash flow. I think thats a fair assumption on your part. You agree . I do. I do. Im staying close i think there place a restive Shareholder Base at ge. And worth qualifying. But the board maybe the board has remember, even the dupont board at one point got tired. Yeah. All right. Looks to me like we have hit we have basically covered it all. Lets talk tmobile a little bit. The upgrade from goldman sachs. Very positive note this morning. But as you said and we mentioned very briefly, it was really not based on m a activity as much as based on the idea of return of capital. Now, the stock itself, from sprint also moving up. These guys are going through the motions where theyre really trying to get a lot of checks from their investor base, from regulators, in terms of could we, should we, will we try to do it again . That is put the two companies together. Remember, tmobile tried to sell itself to at t, it was blocked. Then tmobile and sprint had talk about getting together but before they were able to agree to any sort of definitive transaction they were told dont try from the doj. They didnt. Or the fcc as well. But theyll try again potentially, potentially, well see. And one question has to be and the goldman note is interesting because its not focused on that. No, talking about leveraging up the balance sheet. And the fact theyre going to actually increase subscribers. Now 15 . So they have gone from 10 to 15 , a 50 increase. Of course im trying to get john through twitter because id like john why dont you text him . Youre right. Well, ill wait until the commercial. He should come back to me anyway. You know, hes talking about calm horizon against him. So hes like being bold and but this is really the traditional ceo that hed want to do these kind of things. Hes not that traditional. Mr. Legere would most likely be running it, but the germans would want to consolidate. You dont need to be above 50 to consolidate. Maybe 42 explain that to me. It has to do with whether you control it not necessarily the economics, but the board seats, composition of that. You can get lower than absolute economic control to still consolidate. But it gets into the art as well as a science. But it may be a key consideration. Two ways to win, david. Then the question will still be if and when they get to trying to make a deal, will they . And could sprint pay enough . And whats the break will it be reverse, will it be spectrum. Can they make an argument that comcast and charter getting together with this new potential effort or dish doing something to commercialize their spectrum would represent another competitor to make the regulators feel better . Okay, i just got a text, im always here, jim, i never miss a show. What say you to david fabers hold on. This is the way that News Business works now. To david fabers issues . All right. Come back. Hes legere. He keeps avoiding me. We talk about having a beer. On the Upper West Side but he avoids me. Benioff does it too. Hell be back to us. Benioff avoids me, by john legere do you think the New York Times and the wall street journal can direct message a guy and have an answer, but well have it within the time frame. Well get back and talk about whatever we heard dom say. Youre on the floor. Tell us whats moving this morning. Im waiting with bated breath to hear what john legere says about the comments just made. Talking to the traders down here, we are getting that sense of calm back from the markets and making that ground up yesterday as well. I want to call your attention to the sectors moving so far. We are seeing at least in early action some of the more sensitive tech or thes, tech, and energy. And utilities some of the laggards, utilities are down onethird of 1 . The oil trade, 50 bucks and change, the first time we have seen that for Wti Crude Oil since april 21st. Almost a month and about a percent and a half higher. Thats translating into some of the strength that we talked about a moment ago for the Energy Sector overall. The Energy Sector select spider one of the etfs were watching closely today because of the move higher in oil. Its the second worst performing sector in the s p 500 year to date. Some of the names were watching in early trading, oil and gas and look at the chesapeake energy, halliburton, anna darko all up. I want to call your attention to whats happening with the technology stocks. The select specter spider has been more actively traded etfs out there. A lot more people are trafficking in the technology stocks. Maybe they bought on the dip as well on wednesday. And then well take a look what happens here overall with the bond market as well. The two big etfs to track Investment Grade and high yield bonds, they have been static and stable so far in 2017. Even amidst some of the turmoil we saw on wednesday. So if you take a look at those two etfs, they might be two indicators for whether or not well see some more stability, guys, in the bond markets. Back over to you. Thank you very much, dom chu. As you were speaking we did hear from john legere, the ceo from tmobile. I say im ready for that beer from david faber and that tmobile has many ways to win including consolidation which could benefit customers and shareholders. Nothing is off the table. Nothing is. Obviously, Marcela Claure at sprint has indicated that nothing is off the table. He watches the show. Lets go to him as well. While we do that well head to the bond pits and check in with Rick Santelli at the cme. Good morning. If we look at the week, it has been amazing in so many ways. You look at one week of twos, were only down two basis points on the week. Actually, now its only one. 1. 28. We settled at 1. 29. One week of ten down eight. 30s are down nine. So obviously the curve flattening. If you look at the one week of tens minus twos its breathtaking. Basically over ten basis points. Im not showing viewers, you, this chart because it has some symbolic meaning about going into a recession or maybe it has implications and channels for the fed with the two year being firm. But just the notion of how much volatility theres been on the long end reversing some of those big yield increases we saw after the election, while the short end has so many other issues keeping it much tighter from that perspective. All right. You know, dom chu brought up some great points. Lets talking about the relationship between high yield, corporate, volatility and equities. Lets look at a chart of the hygtf, a pretty good looking chart. So now lets take a walk through time. Lets isolate the credit crisis movement in the market from mid 2008 towards the beginning of 2010. Its pretty clear, when equities melt down, you have relationships that go on due to the correlations between high yields and equities. But it doesnt seem to be happening now. So is the market changing or is it telling us that the downdraft, that dom was referencing midweek in stocks just seemed to be overlooked by the fixed income markets . As a matter of fact, the ten year yields had the safety hedge feature that made the hyg and the lqd rally. Look at the dollar index, consider well do it in round terms. Basically we said last week around 99 and a quarter. Its hovering right now around 97 and a quarter. Boy, thats you know, easy in math, a 2 down week. Thats huge. We have a guest today thats going to talk about why volatility may be the enemy for how fx numbers line globally for the different developed an emerging economies. David, jim, back to you. Thank you very much. Mr. Santelli. Well, still to come we discussed autodesk after the earnings. One of the big winners. You see that. Its deserving. Up more than 90 over the last 12 months. One of the companys coceos is going to join squawk alley a little bit later. Brian, i just need to know if the customer app will be live monday. Can we at least analyze customer traffic . Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. A 10speed directshift 5. 0transmission. Ine. A meticulously crafted interior. All of these are feats of engineering. Combining them with nearperfect weight distribution. Is a feat of amazing. Experience the firstever 471horsepower lexus lc 500 or the multistage hybrid lc 500h. Experience amazing. We, the entertainmentloving people, want all our rooms to be tv rooms. Because those are the best rooms. Because they have tvs in them. And, when were not in those rooms, we want our shows to go with us. Anywhere . You got that right, kid show thing. Get a directv allincluded package for 4 rooms. Only 25 a month, price guaranteed for 2 years. Available for at t unlimited plus customers. Looking to overcome a slump in sales, jcpenney says it plans to provide b to b services to the hotel and property services. The ceo issued a statement saying, quote, our entry into the business to Business Program reinforces our home Refresh Initiative while providing new and innovative way to achieve Sustainable Growth and profitability. Well, this is actually a god send. You want one Central Place to be able to buy if you want to get the three as to get into the database, you need to have a desk and the correct appliances. Everybody has to have them, new beds. Theyre putting the best beds they have in it. And talk about custom window treatments. Thats been jg something for jcpenney. Many different inns, and i have you know, of course a lot of places are turning into inns because of airbnb. This is a very smart move. And dont laugh at it. Dont laugh at it. Im not laughing. But theyre dealing with some significant head winds in their overall business. Were talking about a Company Market cap is 1. 4 billion. I dont want to dispute that at all. Not one of my favorite stocks. I felt like some people say it smacks of desperation. I can see the utility of it. But i have to say that its not an not like sephora is. Got it. Well have stop trading with jim when we come back. All right. Time for stop trading. We started the show talking about oil. Yeah. Pipe lines. We want to end it sort of in the energy area. People have been saying when is chesapeake going to move, and then the lowest finding cost of all the companies, natural gas. You have to have more days like today. This is a weather story. Thats how you get rid of the inventory. If it gets cool again, you wont buy those stocks and its supposed to be you know, you have to look at the nation. Because its a nationwide market. Natural gas. If it stays hot this summer youll wish you had bought all the stock and cabot is the cheapest and probably the best. You want to own stocks based on the weather . No. Thats what i have been saying. Well see what comes up double zero. We gamble, we lose. What have we got on mad tonight . I have four square, morphing into a great back office and i cannot wait these are disrupters. I would put him higher on the list. Then 33 phonic. When they become public we get them on mad money because thats the way it works, partner. Yeah. Im trying to follow that blueprint myself. Im not happy about the autodesk coming up here. Youre not . Because i praised it so much, i said why is that person on mad money . You cant have everyone. And stay away from my sources, by the way, too. Oh, that double down just stay away. All right, have a great weekend. Coming up, well talk donald trump and infrastructure. Well have the ceo of siemens. Oh, wow. 340,000 employees at that company. Quite a few of them here in the states. Squawk on the street will be right back. E know how to cover t anything. Even a coupe soup. [woman] so beautiful. [man] beautiful just like you. [woman] oh, why thank you. [burke] and we covered it, november sixth, twothousandnine. Talk to farmers. We know a thing or two because weve seen a thing or two. We are farmers. Bumpadum, bumbumbumbum i cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise thereit comes to technology, about my Small Business so when i need someone that understands my unique needs. My dell Small Business advisor has gotten to know our business so well that is feels like hes a part of our team. With one phone call, he sets me up with tailored products and services. And when my advisor is focused on my tech, i can focus on my Small Business. Good morning. Welcome back to squawk on the street. Im sara eisen here with david faber and mike santoli live from post 9 at the new york stock exchange. Carl has the day off. Lets look at where we are on the markets after a turbulent week for stocks. Turbulent week for politics. It does look like things are steadying here. The dow is up 87 points. S p 500 building on more than half a percent gain and the nasdaq up 0. 6. Tech is another standout. Wti also joining the party. Its up 1. 6 , david. Lets get tour road map this morning. Its lets start with the president s first foreign trip as commander in chief. Well give you details. And stocks bouncing back after a wild week of trading as wall streets washington worries take a pause. Well bring you analysis straight ahead. Plus jcpenney making a shift in strategy focusing on a new set of customers, other businesses, will it work . But first, our top story is President Trump gets set to leave washington on his first trip abroad as president. Deputy attorney general Rod Rosenstein has just arrived back on capitol hill set to brief house members about the firing of fbi director comey. Eamon javers is outside the white house with all the details. After he talked to the senate yesterday, right . Yeah, thats right, sara. A rare session involving all of the members of the senate. So well see what the house members get from Rod Rosenstein as well today. Meanwhile here at the white house, they are getting set for this foreign trip. Theyre looking forward to it. Its an opportunity for a political reset here domestically and when you talk to aides here at the white house they use words like historic. Also reset in terms of International Relations as well. Heres the president s agenda. Hes starting off in riyadh, saudi arabia, where hes going to give a speech to the muslim world. There aides say even though the president has used tough rhetoric regarding islam in the past they think he might be a candidate who can make a deal here in a way that other president s who have nicer things cant make. Moving on he goes to jerusalem, vatican city and then brussels and belgium and then in sicily, hes going to attend the g7 summit. A huge, huge trip for the president of the United States. As i say theyre looking forward to some of it. Some of the aides have already left and some have their bags packed. Meanwhile, we are on sort of pins and needles in terms of some news on the fbi director. The expectation had been that Joe Lieberman was the frontrunner. Were still being told that from the white house, but there are other candidates in the mix. Take a look. Frank keating, the former oklahoma governor is in the mix. Richard mcfeely in the mix, Joe Lieberman, a former independent senator. Hes said to be the frontrunner right now. Francis town send, president bushs Homeland Security adviser and its not clear when the president might make that decision. Whether they would like to make some news when he leaves or save it for after the trip. I popped in and i spoke to sean spicer, when are you going to make the announcement and he said, i have nothing for you on that. No news pending from the white house. But stay tuned, guys. All right, eamon, i know youll be tracking that. Investors as well. Markets meanwhile, ending a wild week. Relentless news from washington impacting sentiment. Joining us for more on that, ed keyen and the Principal Global Investors ceo. Thank you for being here. Ed, lets start with you. You have been leaning a little bit cautious on u. S. Stocks feeling theyre overvalued. We had the shakeout in middle of the week, triggered maybe by political concerns. Does that give you a position does it sort of confirm europe stance . Yes. We started the year overweight stocks, we have been pulling back over the last couple of months. We came back this week now to a slight underweight position in the u. S. Equities. I just think the risk reward isnt all that compelling here. We are selling at relatively high levels of valuation. Earnings have been great, dont get me wrong, but the surprise is likely to be on the downside than the up side. I think the stocks will generally move higher i think at this stage the the proposition of buying stocks with these levels of valuation is just too risky for us. What would your posture be on this . How does policy expectation filter into your view . Well, mike, you know, i think that the market overdid its reaction on wednesday. It was thinking that the combination of the investigations, the constant rolling accusations and the Health Care Act locking up congress would make it difficult for the administration to enact the course it the market wants it to get on to which is tax reform and deregulation. So i think that this recovery since wednesday shows it was a bit of an overreaction. I think its very dangerous right now to underestimate the ingenuity and strength of the u. S. Private sector. So i think generally upwards as i said, but i would be buying on set backs and keeping up to the u. S. Equities. Does it also suggest maybe this quick recovery that there wasnt all that much in the way of specific policy expectations build into the market. Ed, whats your thought on that . Well t recovery has been impressive. And this is market that doesnt seem to want to go down. I think go back to the fundamentals. And although, as i said earnings have been quite good. So thats part of the reason why the market has performed so well. But i think as we look forward, we may have seen the peak growth in the First Quarter. Theres a big gap developing between the s p earnings and the general earnings of all the corporate sector through the National Income or the ge data. Im not that confident as we go into the second half of the year well see the same kind of growth we have seen in the First Quarter. For a lot of investors technology is an exception especially after the Earnings Period we came through. The nasdaq is shining again. Is tech overbought or oversold after a week like in . I dont think its either, really. I think most of it is pretty okay. I think you could make the argument that some of the very aggressive not yet profit earnings tech stocks have run ahead. That would be the only place i see it running ahead. I dont think tech in general is something to be really short of. Because i do think a lot of innovation going on which is good for the any. Ed . We heard ed say this is a market that doesnt want to go down. And or everybody seems to be so trained to buy the dips. You have been bullish for a long time and what would change your opinion . Well, i think two things could change my opinion. One is if you saw the market get to a rating where it really is fundamentally overvalued. Which would be what . That would be 18 times that would be well in the 20s. If it got there i would feel, yeah, i ought to be selling on strength rather than buying on set backs. The other thing that would get me negative on the market was any imminent signs of recession. When is next recession in the United States . Its been a long time, been a long recovery. The recoveries dont die of old age. Recoveries die when theres excess use of capacity and there are bottlenecks in the economy. Theyre beginning to emerge in the small way. I hear the construction workers are in really short supply which is slowing building programs. But we dont see generalized shortages of capacity in the economy. I think the next recession is probably 2019, 2020. If thats the case you could see the markets get into that 20plus times p e ratio. We have had a 2 any for a long time. If we dont get any fiscal health, youre suggesting the downside were still in a 2 economy. Its been pretty friendly for financial assets. I wonder if now in a 2 economy if the fed says we have full employment, were going to get on the move with the Interest Rates, does that change the equation . If you look at the signs that do tend to point to recessions, the Credit Conditions are tightening, especially in the auto market. With we do see some signs of some slowing of consumer demand. Retail sales are disappointing. Consumption in the First Quarter was a little weak. I think the question is the consensus is 2 growth, whats more likely we break up to 2. 5 or 3, or we break down . Absent policy change, of course we could get i think were more likely to break below 2 than above it. All right. We get fed minutes next week. Ed, jim, thank you. We want to get back to the top political story today. President trump set to make the foreign debut departing for saudi arabia later today. For more lets bring in former ambassador to nato, nicholas byrnes. Good to have you. Thank you. So do you see this trip for President Trump as a respite hes facing back in the United States or ready for another whole firestorm as he brings his America First message to the world . I think the president has some opportunities and hes trying to build the network of alliances we have had there for a generation. They frayed under the Obama Administration so strengthening our relationship with israel, with saudi arabia, with egypt is going to be very important for him. Then towards the end of course theres the nato summit and thats important because President Trump his America First agenda has riled the europeans. President trump is seen as someone who has diminished the european union. Hes rooted for brexit. Said some positive things about Marine Le Pen so he has a test to prove he can do what every american leader since truman has done support european and support european unity and support nato. Lets talk specifically about saudi arabia just for a moment since thats the first stop. It feels like the administration is really focused, were expecting some sort of arms deal. The New York Times is reporting it was personally brokered by Jared Kushner and marillyn hewson, the ceo of lockheed martin. What is the signal what does this signal with how the Trump Administration is going to approach foreign relations, the deal making aspect of this. Is it going to be effective . Well, i think the Trump Administration wants to get tough on iran. Theyre not going to walk away from the iran nuclear deal. Thats obvious. And that wouldnt be in the interest of the United States. But the iranians have been a real problem. In iraq, certainly in syria where they have troops on the ground in lebanon and gaza. I think youll see a bigger effort to promote arms sales to saudi arabia, to the other gulf states to help egypt and jordan to cope with this as well as israel. Its a tightening up of american policy. Its gathering our allies and friends around us to contain iranian power in the middle east. Ambassador burns, the president has to to put it nicely, a unique way of communicating, and even with foreign leaders. Should we be watching closely for any potential missteps and what would you know, what would the outcome be of something that is unexpected as we do seem to get from this president quite often . Well, thats very hard to say. Obviously, as americans we should hope that the president is successful on this trip overseas. Its his first trip as president to any country and we have major issues in the world. Major challenges in the world right now. He seems to have gotten on well with the leaders many of them who have visited him at the white house. I think he should probably restrain the tweets because of International Diplomacy of course, you have to be careful what you say, how you say it. How its interpreted in the different culture. And the biggest obstacle he has is about islam. He had he made i thought very unwise, very critical comments about an entire world religion. He needs to speak in a more positive way on behalf of the American People about 1. 6 billion muslims in the world. How is the relationship with saudi arabia and the entire arab world under president obama who made it one of his early priorities around how does this frame this Trump Administration relationship . Well, you know, theres a handoff from one president to the other and President Trump now has inherited a lot of the problems that president obama was battling. The rise of the Islamic State. The power that the Islamic State has had both in iraq and syria and the military campaign that the United States and other countries have launched against it. Thats a big issue that transfers a second is the civil war in syria. 12 million homeless out of a population of 22. 4 million. This is a major problem and President Trump has mused publicly in past about whether or not we should be doing more to help the refugees by establishing these safe havens in northern and perhaps eastern syria. Thats actually a very good idea. Very difficult to bring about. So youre seeing the United States struggle with the instability and violence produced by the arab revolutions of 2011. President trump is going to have the deal with the same issues that president obama did. Well see what happens. Thank you for joining us. Ambassador nicholas burns. Coming up well have the global ceo of siemens with us. Ahead of his meeting with Vice President mike pence. Well get his thoughts on Infrastructure Spending in the United States. Possible border tax. A lot of things to talk to him about. Plus, jcpenney pivoting again, taking in the hotels. Squawk on the street will be right back. Got it. Rumor confirmed. Theyre playing. What . We gotta go. Where . San francisco. When . Friday. We gotta go. [ tires screech ] any airline. Any hotel. Any time. Go where you want, when you want with no blackout dates. [ muffled music coming from club. Blue monday by new order. Cheers. ] [ music and cheers get louder ] the travel rewards credit card from bank of america. Its travel, better connected. The travel rewards credit card from bank of america. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. The retail earnings parade continues and things are looking up, sort of. Lets go eto court get to Courtney Reagan with some of the movers. I do think its fair to say that this week actually retail felt less dire at least than what we felt last week. Both gap and ross stores beating analyst expectations for earnings sales and both reporting growth in comparable sales from last year. Not negative. So thats a plus. Gap Old Navy Brand is responsible for most of the gain and negative at the name sake brand and banana republic. Analysts said it was the easiest compare since last years First Quarter was so bad. The margin performance was pretty solid and gap upped the first half guidance but its operating in a challenging specialty space to be here. And ross stores upped the guidance too but some analysts point to the valuation. Saying its said to be gaining share at the expense of other retailers especially in Specialty Department store. Even though shares are down 9 for the valuation concerns there. It wasnt such a great Fourth Quarter for foot locker, however. They missed profit and revenue expectations. Comparable sales did gain a little, but short of consensus. Thats weighing on shares of the finish line and under armour too. So a little better than last week, but it wasnt a pure win all the way around. Nike is the biggest loser in the dow certainly doesnt bode well for the sneaker makers. Courtney, i wanted to ask you about this jcpenney story. So clearly, jcpenney is one of the Department Stores thats suffering across business but now its getting into hotels. Can you explain this one to me . So they sell home textile goods like curtains and sheets and they have gotten into appliances and mattresses so theres a whole opportunity for us in the hospitality area. Were talking about hotels, or even property managers. Jcpenney says they were actually already placing pretty high volumes of orders and for things like sheets, towels, curtains. So they figure why not go after this . Theyre going to hire and have a dedicated team. Theyre focused on targeting some of these Home Textiles and appliances for hotels and property managers. Jcpenney say its a 200 billion area so theyre probably some opportunity here. Albeit very different from what a Department Store would normally do. But im not so sure that its a bad idea. You know, courtney, just quickly, it occurred to me i saw yesterday that lowes acquired for half a billion dollars a company that surprised that mainly supplies to Apartment Companies and its done other acquisitions in the areas. So maybe they cant rely on the shoppers walking in the stores and business relationships might be more stable. Yeah, you know what . We talk about things like experiences. So if thats where folks are spending more of their money and theyre spending on going to hotels, then maybe thats an opportunity for a traditional retailer. If youre not going to buy the sheets for your home, maybe you want those sheets at the hotel youre spending your experienced dollars on or youre spending more on your home which goes to your lowes example there. Because we know that home depot has been doing so well. Thanks to the money that consumers and homeowners are putting into their home. So its out of the box thinking for sure. You know, its an interesting opportunity. Well see what happens. Especially with the jcpenney expansion into the appliances and the mattresses. Those are big high consideration items. That youre not buying all the time. So its good to generate traffic for a while. But how many washing machines do you really need . One at most. Thank you very much. Unless youre a Hedge Fund Manager with the big houses, then you need like seven. When we come back, infrastructure week is wrapping up in washington. The global ceo of siemens is there and hell join us ahead of his meeting with Vice President pence. Squawk on the street will be right back. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. Usaa gives me the and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. 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. Containing this information. Read it carefully. Steve, other than making me move stuff, im here at the Td Ameritrade trader offices. What are you working on . Let me show you. Okay. Our thinkorswim Trading Platform aggregates all the options data you need in one place and lets you visualize that information for any options series. Okay, cool. Hang on a second. You can even see the anticipated range of a stock expecting earnings. Impressive. Whats up, tim. See options data like never before. With thinkorswim only at Td Ameritrade. Our next guest is working with the u. S. Business roundtable on tax policy and infrastructure. Lets get his thoughts on what may be next. Joe kaeser is the ceo global ceo of siemens ag. Of course an enormous industrial company. Youre meeting with i believe the Vice President. What are you planning on talking about . The Vice President is going to address the Business Council and we definitely have a true interest on learning about what the plans are on the tax reform and also on how to build infrastructure for the country to make it even greater than it is already today. Yeah. Well, the latest infrastructure plans that we hear from the administration at least as reported seem to be indicating something along the lines of 200 billion and spending over ten years and then trying to leverage that with a lot of private investment. I think many people in support of infrastructure here in the u. S. Would say thats not nearly enough. What do you think . At least its a good start. We dont need to get to the big numbers right away. We have to keep that going. 200 billion asks a great start. If you look at the renewable energy, infrastructure, these are the prerequisites on building and bringing the jobs back into the manufacturing. We like what we see. Its important not only to talk about what can be done, but put the actions where the mouth is and this is a great future then. Were looking at a bit about siemens including how many employees you have around the world including what i believe is about 60,000 right here in the u. S. I know thats a point you have been keen on making to this administration. Made as well to the president s daughter ivanka when she visited with you not long ago. Does this administration seem to appreciate the importance siemens may have here in the u. S. And yes . As a matter of fact i believe its important that people understand who we are and what we do. We have about 25 billion euros in revenue here in the United States. With more than 55,000 people and counting. We are in all 50 states. 17 manufacturing sites. So we really are a local part of the society and the business. Thats important because i truly do believe that, you know, buying american is a good thing to do. But its important that people know to produce and manufacture in a country, they want to make the sale. So i do support the notion that localization matters. We do support the notion thats important to create jobs. Not just to create jobs but also to train people. Because there will be massive changes in the manufacturing side before the next industrial the fourth industrial revolution. The skill set is completely different to what we have today so its very important that we not only create jobs of today, but also get our people fit for the future. Thats been one of the major topics that chancellor merkel and i have been raising at the white house, talking to mr. Trump and ivanka trump on how to secure good training and how to secure the requalification of people to make them fit for the future of manufacturing. What are you hearing back from if administration on this . Do you foresee an Apprenticeship Program like a lot of the german manufacturers do here in the United States . Is that going to happen . Absolutely. When i was raising the topic at the white house to the president , saying its eualqual important to train people as well as retrain them for the future he immediately said, hey, ivanka you have to go see them in berlin. So i have been inviting ivanka trump to come to our International Training center in berlin. She was there a few weeks ago. We have about 1,500 young people from 65 nations there and she said, hey, can you build that also in my country . We said, of course we can. Because we have been here for more than 100 years its a deep manufacturing foot print of many german companies. So yeah, thats a possibility. We are happy to pursue that matter further. A quick question on timing. What are you hearing from the administration about when this infrastructure plan is going to be released and passed and when its going to go through congress . Now, investors are trying to figure out the agenda after the events that unfolded this week. What are you getting on infrastructure . Well, first of all, so far its been an announcement and i think theyre trying to get the stories right. To get it started, but as i said earlier we need to now put the action where the mouth has been. But it will raise credibility, that will keep people interested in investing in the country. So its important that we see actions now, but so far, obviously the administration has been a bit calm on the reaction of the topics. Sir, the debate here over tax reform in the United States is often has often been positioned as perhaps reforming the tax code for companies especially industrial manufacturers based in the u. S. , so that they could be more competitive against Global Companies such as yours. If in fact Something Like that happened, would it be on a relative basis, a bit of a disadvantage for you . Thats the way its being couched in the u. S. Debate. Well, first of all, we are as i said we have 17 manufacturing sites here in the u. S. We have about the revenue which is almost three times as much as we have in germany. So we are incremental part of the country. So if you talk tax reforms i believe its important that there is a level playing field. Also for the ones who manufacture and produce here in the country. Its important that theres competitiveness on the tax side. But i think its even more important that tax reform is not going to be confused with competitiveness through innovation and productivity. So therefore, i think if people think that tax reform will be the sole instrument of making companies more competitive, i believe that its very premature assumption. Specific to siemens business, i think it was lass november they separated out the Health Care Division and your ceo talked about three possibilities, an ipo. A reverse merger into another Public Company or simply a straight spin. Whats it going to be . What are you going to do with the Health Care Division . Well, were going to make a great business, a fascinating business. Thats what were going to be up to and well do whatever it takes. It is going to be a stronger focus on the Health Care Industry which i believe is a leading part of this country. This is what were going to do. When are you going to make a decision . Well, i think the topic is more when are we going to announce the decision. We are very clear about what needs to be done. We pretty much know where were going, how were going. So its just the timing and to the public about how well do it. Its clear plans. Well take our time because our customers matter. Our employees matter. The shareholders do. So we dont want to make mistakes here. Its a diligent process and when the time comes to inform the public what we do, then well make an announcement. Back to this country, the issue of jobs is a key consideration for this administration. A number of companies that made certain commitments to some would say gain favor with the administration. Have you done that on the jobs front here in the u. S. . Well, look, i mean, its been a big splash about talking to the administration about what can be done and how many jobs are being created and what else we can do. We of course do the same thing, but you know, we actually are focused on our customers. We have been here as i said for almost 150 years. Weve got a very Good Business here. We have been investing 40 billion in the last 15 years in this country because we believe its a good place to be. Actually the best place to be at. And so we focus on our customers. We just a few weeks announced to build a new manufacturing site up in massachusetts, we reinvested because theres deand what. We invested because our customers want to buy from us. We dont invest because the Administration Says you have to do something to make me look good. It is about customers. It is about creating value and it is about growth and then at the end also about creating value for all the stakeholders. I wanted to ask you a related question. Just because you had such a major Global Manufacturing footprint, one of the reasons this market and markets around the world have climbed to record highs have been on the idea that the Global Economy is undergoing a synchronized healing and improvement. Do you see that looking out over the next few months . Yes, i do. I truly do. I just came back from china two days ago. I was attending the socalled one the summit with president xi jinping. I really did listen to what they had to say. They are up to building the biggest trade conglomerate ever done. They have 65 members. They want to push it up to 100 members. Which they make about 70 of the global population, 63 of the global gdp. So theyre really, really trying to fill this gap which i think has been left by the west when they didnt, you know couldnt agree on tpp, or talking about the nafta renegotiation so china is pushing it hard with thepartners. Look at the u. S. Theres been a lot of good talk about what needs to be done on tax cuts, on infrastructure. On creating jobs through training and education. Fostering innovation. So its the biggest economy in the world has made a lot of i think very directive prospectives to help the economy grow. If you look at areas like argentina, theyre really pushing hard. Africa, time and again, people would call it probably the promise, but the people look at india. I mean, the Prime Minister mody has been doing massive reforms. Hes been fostering infrastructure and i look at the its about 8 gdp growth, which is the best time as its used to be in as it used to be in china. So i see a lot of good things. I do believe that we are going to see a massive gdp growth for the Global Economy. Wow. All right, thank you for joining us. We appreciate it. Thank you. Joe kaeser is the ceo of siemens. A trip around the world. We got one. A massive gdp growth. Pretty bullish. Lets sent it out to sue herera right now. Good morning. Heres your cnbc news update at this hour. Former u. S. Representative Anthony Weiner is expected to please guilty in federal court this morning to criminal charges of sending sexting messages to a 15yearold girl. An fbi investigation led agents to seize his laptop computer. That led to the discovery of a new set of emails that Hillary Clinton sent to top aide huma abedin who happens to be Anthony Weiners wife. Authorities in sweden say they have dropped a seven year investigation into rape allegations against wikileaks founder julian assange. He took refuge in 2012 to es case extradition. He still faces arrest for jumping bail. Ayatollah khamenei voting in the election. Its viewed as a referendum on rouhanis more moderate policies for the country. And a painting by basquiat sold for 110 million last night. The sale of untitled set a record price at auction. The artist died of a Drug Overdose in 1988 at the age of 27. And it has been in private hands since then. Thats the news update. Squawk on the street is back in a few. T. What did you think about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading Companies Lead with digital. Treasury secretary Steven Mnuchin telling the Senate Banking committee yesterday that 3 growth is achievable while mentioning what that means for the u. S. Economy. Take a listen. The difference between 2 and 3 gdp is roughly 2 trillion over a ten year period of time. Its a lot of money. Economic growth will help us deal with a lot of other complicated Economic Issues we have. For more on all of that, whether its realistic, we are joined by the president of the committee for responsible federal budget, maya macguineas. So clear up this question, which i think is going to dominate the conversation on tax reform. Can tax cuts pay for themselves via Economic Growth . Yes or no . No. Theres no question there that tax cuts cannot pay for themselves. They can grow the economy, but not by nearly enough to actually offset all of the costs. So what i hope the secretary of treasury and the administration is going to end up doing is putting out a plan that lowers tax rates, but also broadens the base so that there are a lot of policy proposals that off set that huge reduction in revenues and generates growth. But they have to be realistic about the kind of growth that it can bring. Our overall economy getting to 3 is really an ambitious goal. Its one thats terrific but its very, very unlikely we can achieve that in a sustained way. The main reason is because we are growing. We are i mean, were aging. Were an aging population. We are getting older, we have gotten older. That means that labor market just isnt going to grow the way it used to. So the numbers to get us to the 3 growth number are really quite heroic. We shouldnt be counting on them. Even if you throw in deregulation of certain sectors and big bursts of Infrastructure Spending, as much as 1 trillion . Yeah, there are a lot of things that we can and should be doing that will help grow the economy. One is the tax reform that the treasury secretary was talking about. Others include regulatory reform. Immigration reform which theyre not take talking about. Better spending to help grow the economy. A debt deal, something that would bring the debt down. That can help grow the economy, but theyre having effects that are a few tenths of a percentage point of growth. Not a full percentage point. In order to get up to that 3 that theyre talking about, and that we hear may be assumed in the budget, every single smart policy would have to be enacted. Along with a lot of luck. So what i really worry about is lets shoot for it. Lets put in all the policies we can to grow the economy but lets not assume them. Lets not spend, you know, our lottery winnings before we have won the lottery. Lets not try to assume the Growth Numbers to cover up our fiscal challenges but instead lets use the guide through smart policy making. It seems that the argument is going to be about exactly how you score things today, not exactly how it will translate into growth. The treasury secretary is concerned that the models wont give as much credit for the dynamic value of tax cuts. Is that what were arguing about if this bill passes . Im afraid well spend some time getting stuck in the dynamic scoring. Let me say that dynamic scoring is very useful because it helps push us in the direction of policies that will help grow the economy by more. But its also not very precise. So we dont want to assume the most aggressive or most optimistic assumptions which is what people tend to do. The problem with dynamic scoring regularly if it doesnt take into account the increases in the National Debt which actually are a drain on the economy, it misses part of the picture. So Dynamic Models that look at the whole economic picture often find that deficit finance tax cuts ones that arent paid for are a drain on the economy. We should look at dynamic scoring but lets be conservative. Lets not pretend its some kind of magic that will make everything go away easily. Maya mcginness, well have you talk about the president s budget soon. Thank you. As she mentioned washington is gearing up for tax reform. So the stakes are high for the business round double and josh bolten. He was the white house chief of staff under president george w. Bush and he worked on the big 1986 tax reform that was signed by president reagan. He sat down at a speak easy interview with john harwood. So my hope for the tax reform is that we can get to a point where the administration has done enough with the leadership in both houses to get that outline. The kind of outline that packwood and deefen doorer if came up with here and build up that momentum that looks like you know, its not present. Youre not seeing that at this moment. If its only tax cuts and not reform, is that good enough . I doubt it. One of the most important reforms that can happen is switching from our very outmoded worldwide system of taxation to a territorial system. That would be that would be a big, a dramatic change in the way the u. S. Does its taxing of business. And it would be a dramatic improvement on measures that currently basically incent corporations to move overseas. The border adjustment tax, i know you dont have a position on that because you have businesses on both sides. If there isnt Something Like the border adjustment tax, theres going to have to be some other base broadening that brings in revenue. If its a rate reduction of any substantial size, it wont be fiscally irresponsible to do it without a base broadening. Now were seeing from what we can tell much more interested in the cut part than the responsibility part. A fiscally irresponsible tax reform would not be a net benefit to the u. S. Economy. So clearly, business, david, is excited about the prospect. I think republicans have returned to talking about tax reform in a week filled with scandal because its a lot more comfortable for them. But the question is is wall street more skeptical this time versus a few months ago when remember, the market just rally on talk of what was it, an extraordinary plan . Yeah. I think its highly likely we havent gotten the plan yet from the administration. Lets not call what we got on one page a plan. Goldman sachs lowers the fiscal policy changes over the year as well. So wall street is starting to respond. All right. As we head to break, look at shares of campbells soup. Theyre down. Actually less than they were earlier. The company did miss, negative 1 organic Revenue Growth was a concern. Continues to be. Sara will tell you about the center of the store when we come back to squawk on the street. Om tra . E can we puse offer online . Brian, i just hada ick ques. Brian . Brian. Lecy thnologcaca handff any cpany. But yes here. Yore sayg the w appwi go live m th help om hpe, can finally rk the waye want with t right m o hyidt, how much does a d. C. Drama mean for investors . Find out on tradingnation. Cnbc. Com. More squawk on the street coming up. Welcome back to squawk on the street. Rick santelli here. Ill welcome my last guest of the week. Thanks for taking the time. Thank you. Im going to start off with a quote nochlt valid economic argument in favor of global disarray. Multiple major currency shifts that take place every year, and this week in particular served to exasperate trades and spawn protectionism. Instability does not provide any it is just turbulence and waste, sluggish Economic Growth, which contributes to rising political stresses. Sean, why should we Pay Attention to this quote, and is there anything that could be done to stem some of the volatility that seems to be, in at least this economists mind, a real problem . Yeah, sure. Hi, rick. The big swings in the big Exchange Rates has been a problem going back decades. A lot of people will remember mondel in the late 70s. He said the dollar was too weak and that was driving inflation and he wanted to appreciate the dollar, tighter money. Thats what we got and that did drive down inflation. In the 80s, he became very concerned about the overvalued dollar, the dollar soaring. He and congressman jack kemp worked together in the 80s to basically realign to get the plaza accord in 1985, which secretary james baker and the Reagan Administration used to bring down and then stabilize the dollar. And that helped to create the positive conditions that led to what we now call the great moderation, which was a period not only of good u. S. Growth, but good global growth. And thats really kind of directly opposite to what we see today, which is, you know, tepid global growth, both the u. S. And europe are really struggling to get real growth under way. Most importantly, we see that monetary conditions have not been able to normalize after all of these years. Asset bubble, crash and then ongoing malaise on both sides. Sean, let me interrupt you here. In order to actually get people to the table, to discuss these issues, my guess is you need two key players. You need d. C. But, most of all, you need central bankers, the fed, the ecb. The problem is, the central bankers have an exit to try to deal with, stockpiles of securities and they have issues that might not be conducive to try to stabilize the Foreign Exchange market. Theyre probably going to contribute with their exit. Your thought in that regard . Yeah. I mean, look, all the people we had a conference. Jack kemp had a conference, james baker, paul volker all acknowledging its not going to be easy but you need to have leadership on this issue. Mario dragi at the ecb gave a speech saying he was open to coordinating among the Major Economies and so really the question today is where is our own Treasury Department . Are they going to take him up on that . Moving towards even if were not talking about it listen, sean, sean, lets stop at mario dragi. I dont mean to interrupt you. A man who has helped to orchestrate negative yields, minus 65. How could anybody say i want to work to stabilize and normalize Foreign Exchange volatility when their short end is so negative . Right. Well, they are moving into, you know, more normal, 2 range for inflation and thats positive. I would note that the dollar is up 20 against the euro. And they have to know on their side if that continues, if we stay high and go even higher from here with our own rate hikes by our fed, that potentially creates conditions that down the road sean, im coming up against a hard break here. I want to have you back. I think volatility is a huge issue. It is. Thanks for being a guest. John forte, whats coming up on squawk alley . Have you seen auto desk, up 16 strong move to the cloud on earnings. Well talk to one of the ceos and former fcc commissioner. Dow is up 114. The high of the day. [vo] when it comes to investing, looking from a fresh perspective can make all the difference. 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