Transcripts For CNBC Squawk Box 20171102

The dodgers you dont score like that. This was a great series played out to game seven the perfect ending would be a great i remember when the reds won, i didnt want a nail biter. You just want it over for houston fans, they love the 51. For everyone else the franchise never won before i was hoping for something where where you stayed up late. There they are. I didnt get to see it. Im happy for them. Somebody said the dodgers are celebrating in these strange orange jerseys larry king was not happy theres jim crane. Had him on as a guest. Did you see larry king behind home plate i did not scowling. I think thats his natural face im becky quick. Joe kernen is here andrew is out today. Weve been watching u. S. Equity futures. Yesterday we saw the nasdaq hit an intraday high during trading. It ended up giving some of that back by the end of the session the dow and nasdaq ended higher. This morning there are a few givebacks. Dow futures down by 14 points. S p futures down by 4. Nasdaq off by 10 points over fair value theres a lot of news today that will move these markets. We think it will be powell well get a tax plan today all of that in play. Lets look at treasuries yesterday the tenyear yield dropped slightly this morning looking at 2. 378 thats exactly where we closed yesterday. Overnight in asia, the equity markets there, you will see the nikkei was up once again another half percent gain to a 21year high a gain of 120 points hang seng down by a quarter percentage point in europe, this morning, with some of the early trading taking place, things are mixed. Relatively flat for the cac and dax. Ftse is up slightly. In italy, stocks are up by a half percentage point. Things are flat in spain as well wow im prereading my this is long i dont know you may need to take over here we have some sound bites in there, too yeah. Look at this really before i get into this, markets seem a bit i dont know, a little tired up a bit yesterday the tax plan comes out what will the reaction be its already been telegraphed. Isnt that the way it works buy on the anticipation . On the rumors sell on the news im already seeing this criticism. All of it complain complaints, and representative king saying he wont vote for it. A lot of things they say theyre whimping out on. It will be phased in over several years. And vegetables, they dont want to eat their brussels sprouts. I dont like them either brussels sprouts are good if you roast them 400 degrees, for about 20 minutes. Okay. Thats what i was thinking we had such great 26 , 27 . This is the hard part they took it away earnings just in from dow dupont okay. The company earning 55 cents a share for the Third Quarter. Revenue was a little below estimates. This is the first report since the combination of dow and dupont the comparisons to the street forecast are complex well watch this, dig through some of this i think its 55 adjusted on a 42 estimate stock is unchanged here are the corporate stories. Shares of facebook slipping despite an upbeat Earnings Report much better than expected results. On the call, Mark Zuckerberg pledged to ramp up Company Spending for a lot of reasons, but also to confront the problem were seeing with the lugs election meddling, adding 10,000 additional employees to review the networks content. I am dead serious about this. And the reason im talking about this on our Earnings Call is that i directed our team to invest so much in security on top of the other investments were making that it will significantly impact our profitability going forward. Not expected to impact it going backward like we always say, the future is much harder to predict. You know, just by definition. Predictions are hard, especially about the future expenses, they did say, 45 to 60 growth due to that revenues slowing that sent the stock lower. Hurt the nasdaq. Tesla shares are down after the Company Posted its worst quarterly loss in history. The electric carmaker losing 2. 92 a share in spite of the subsidies versus an expected loss of 2. 29 revenue slightly better than expected at under 3 billion. Tesla spent heavily to ramp up production of their new model 3 sedan. They were supposed to do 1500, then did 200, they were supposed to get to 5,000 by the end of this year. It will be by the end of the first quarter. I cant believe people are surprised that there are some snafus along the way i dont know why. With the stock thats priced like that, i dont know why you wouldnt initially even make predictions that were further out than you were likely to deliver. Instead of ones you always miss. Elon musk addressed production issues on the Conference Call. He said the company was deep in production hell. Lets say level nine is the worst. We were at level nine. Were now at level eighth. I think were close to exiting level eight. I thought we would probably be more in level seven by now its obvious what we need to do. Its work to get there working seven days a week to do it we have it covered it will take us a few months longer than expected guess he was talking about levels of hell there hes all over the place down at rio at a thing, now courting some other starlet. I dont know well hear more of musks cements later this hour. Not all about tesla. People have personal lives his is colorful. Interesting i was going to say. A little more interesting than mine we have mike jackson who will be joining us mike jackson from autonation he will join us from 7 00 to 9 00 as a guest host. Gop lawmakers will be rolling out their tax reform bill today for a look at what to expect, lets get to ylan mui. The reduction in the corporate rate will be temporary. The rate will still go down to 20 , but it will expire within ten years, perhaps as soon as eight years. Thats according to one source i spoke to getting to 20 is one of President Trumps red lines, but to keep the cost of this tax plan to the 1. 5 trillion thats required by the rules republicans want to use to pass this bill, they have to make some tradeoffs, and this is one of them. Privately the initial reaction im hearing from the Business Community is they are holding fire for now, and letting this process play out house ways and Means Committee chairman kevin brady told reporters last night that he wants to make this corporate rate cut permanent but that it could take several steps to get there now some other provisions that are in this bill, the u. S. Would move to a territorial tax system and nbc news reporting there will be a 12 repatriation rate on cash and 5 on other assets there would also be a 15 minimum tax on foreign income. Now, for passthrough businesses, only 30 of their income would be able to qualify for that new 25 rate. Again, according to nbc. Those full details are expected to come out midmorning with debate beginning in committee next week. So there is time for changes, but this is just a taste of some of those tough choices that republicans are going to have to make if they want to do comprehensive tax reform this is the brussels sprouts back over to you thank you our other big story. President trump expected to announce jay powell as the next fed chair. Steve liesman joins us now with more hes dovish, but maybe even more inclined to deregulate the Financial Sector, steve . Is that why . Why not just leave her in. That would be the reason i think thats the question i dont think hes more dovish than yellen what does this mean for Monetary Policy and Bank Regulation lets talk about Bank Regulation many believe he will bring a lighter touch. The postcrisis Reform Program has been mostly completed. And has mostly been successful its our obligation now to look back at it and say which are redundant and which should be protected down to every level, but there will be some adjustments. Powell looks to follow the current framework of gradual hikes. He does not share the republican criticism over the feds postcrisis easing policy. After a tumultuous decade, the economy is close to full employment and price stability the problems that some commentators predicted have not come to pass accommodative policy did not generate high inflation or excessive credit growth, but returned full employment and returned inflation to the 2 goal the current discussions of normalization are a result of that success joe, its hard for me to answer your question i think he pressure on the right. Pressure also within the white house there of economists who want a change, who dont want a continuation of yellen who was a democrat appointed by obama. By the way, powell also appointed by obama i dont want to politicize things, steve. No. Far be it from me did you see the latest atlanta fed forecast yeah. What are you going to do are you going to take a couple of years off or something . What if you get 3. 2, 3, then 4 . I would tender your resignation if that happens . Why because im yanking your chain. That would be bad if that happens. Why would that be bad, joe . It would signal maybe some of these progrowth market oriented policies as opposed to, you know what we got for the past eight years, maybe they are bearing fruit. Maybe you would have to connect the dots that something good is actually happening somewhere in there it profits you to make viewers think that i oppose those things. No. No no. You dont exist in the absence of a straw man i am in favor of a lot of that stuff. I keep trying to tell you i like this stuff, you keep saying i dont like this stuff. All right just a perception ive got i will spend a minute here and talk about the atlanta fed, which is a weird thing it takes a bump a jump takes a village from the ism manufacturing to consumer spending. Its an outlier for the moment well have a real wrap up at the end of the day i would temper your enthusiasm a bit now. Im all in favor of higher growth and pro growth policies and i always have been whatever you think, joe is wrong about that even though i like joe all right steve. I knew i could get you good morning. Today is like a friday for me im off tomorrow my horoscope said i need to be a team player. This is you trying to be a team player . Im engaging you. Engage. Thank you. Appreciate that. And we have to prefer to keep our distance from people working with others doesnt have to be a pain it could be fun, steve it can even be fain. Change your outlook on life doesnt have to be a pain. Just i just proved it can be fun for 6 15 in the morning this was exciting Economic Business financial television. So exciting the producer is telling me to move on. Thanks. Pleasure. The price of bitcoin topping 7,000 for the first time ever. Up 4. 25 bubble not a bubble fraud, not a fraud lots of people to talk to about that lets get back to the broader markets. Were joined by david bianco and ed keon, Portfolio Manager from qm qma. Gentle men, what steve was talking about, this fed nomination f its powell, how does that affect the markets represents continued annuity of policy, markets dont like surprises. I think it will be received positively a lot of that is priced in, but a positive surprise not that impactful for now. David, i think thats the case you agree . Yeah, continued annuity, slow fed hikes from he continuity, s hikes from here. John taylor for vice chair might keep markets confident in the transition in terms of the tax bill that joe was pointing out, weve seen the expectation, the good news in the markets that could come from taxes it gets more difficult when you talk about details i think the details are disappointing. I dont think we get the tax cut until the spring spring . Spring. They moved thanksgiving to the spring its been one year since the election you dont think its thanksgiving i dont think its before the end of the year or in january. I think thats going to royail the markets. There are things being proposed that are astronomical if youre talking about the life cycle being eight years thats the only way to do it. Its not just that, but can they get to a 20 rate i dont think they can without a phasein the big thing is what they do for Small Businesses the simplest thing to do is get to a 25 tax rate, and any company, Small Business that wants to grow, defer dividends will choose to be a c Class Company rather than having this regulation it sounds like its not simplification sounds more complicated. And they need to get rid of this global minimum tax and deemed repatriation, it will do nothing more than panes to call their lawyers and say we want to redomicile now if this is disappointing as you think it is, how does that play out in the market i think this market is at great risk to 5 to 10 dip, as weve been saying for several months, but the enthusiasm for the tax plan still seems to be there amongst small caps, but the reality will set in at best we get this Corporate Tax cut in the spring and hopefully by then, this is simpler and truly an effective tax rate for corporate america. Are you as pessimistic about it i dont know whether well get a deal done or not its too complicated to call if we get a deal done by the end of the year, it will be a positive for markets we could get a 5 , 10 correction at any time for any reason that is typical market behavior. On balance, despite the fact that valuations are high, we think the surge of earnings and the fundamentals and Global Growth is Strong Enough to keep the market trending higher if we have a correction along the way were willing to live with that for upside opportunity. The whole continuity thesis, i dont know if i buy it. Continuity of the fed of everything continuity, we want hillary. We dont want changes. Sometimes youre not going in the right direction. Sometimes disruption is exactly what you need. And that explains the 27 rise in the Dow Jones Industrial average. Both of you guys are in the investment business, so you rub low Interest Rates all over yourselves every night you cant get them low enough. You would like minus 10 if you could get them not quite i dont expect to hear this is still a challenge for bikes. We would like to see higher shortterm rates continuity policy is to slowly tighten the market. That would be good cop bad cop. John taylor would be there if things got totally out of whack. I dont know about this continuity thing the question is what is normal thats the question, nobody knows what normal is does it feel tight to you in the world now . It does not, but its in the process of tightening. Gentlemen, thanks for coming in coming up, facebook posting a big earnings beat but the numbers are overshadowed by the companys Spending Plans well dig through those numbers. I think hiring 10,000 people is good well be back. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. That song is triggering me were playing this. I like it. Theyre spending a lot of money. Facebook got it. Facebook out with Third Quarter results beating on the top and bottom line. The companys Spending Plans for 2018 were more ambitious than expected facebook expects costs and expenses to grow between 45 and 60 year over year Capital Spending will be roughly double as the company ramps up video content and adds people in technology to monitor content. Joining us is Eric Sheridan managing director from ubs the news this week has been, you know, coming out of washington i dont know how much money were talking about, but its a big deal everybody is taking it seriously in terms of interference how much of that accounts for the big increase in expenses i think clooearly the compan wanted to send a message that they acknowledged what went on the last couple of months. They wanted to address it headon and a substantial amount of investments are targeted at security and areas where content could be monitored, accounts could be monitored, and you could have a cleaner better format and community in which people could feel safe that content is real and people can engage in a way thats respectful okay. Is zuckerberg 30 yet north of 30 you look at what is considered suitable content on College Campuses its strange who is allowed to speak, not allowed to speak. What do we feel about Mark Zuckerberg and his colleagues and associates deciding what the whole idea, it sounds like censorship, the whole idea is rife with the possibility that i will be getting information thats totally subjectively censored by these people i dont know if i agree with what they think. Should i worry about that . 10,000 new people . Who will they be how do you hire the right people is it just to see if its real, not fake are they telling me how to thing about things the Natural Inclination is to think that facebook acts as referee. Theres processes of understanding that User Accounts are real and not bots, and whon septemb concepts of who is propagating advertising, what advertising do you see as a user. The algorithm responds to what you respond to from a content standpoint if i like the New York Knicks i should trust them they wont try to mold someones thinking twitter does twitter will ban people yet the number of trolls on twitter doesnt go down. I think theyre trying to create the idea that what people are seeing is more real. Do you like this move i do leaving aside recent issues, theyre trying to build a massive video business and trying to pivot thats what i would spend the money on more facebook and instagram of your own time youre seeing video as a user. I think theyre trying to go to that i think its putting pressure on margins and content is expens e expensive. This is the right play . This is the right play, as far as credibility and building the type of business they wanted in the longterm youre bullish . I am. Price target . 208. Could get to 209 or stop at 207. 208 208 not 210 or 2 05. Coming up, tesla shares under pressure the company posting a bigger than expected quarterly loss idll show you what elon musk sa on the Conference Call last night. [lance] monica, it is absolute chaos out here gale force winds, accumulations up to 8 inches. Dont know if you can hear me, but [monica] whats he doing . [lance] can we get a shot of this cold front, right here. Winter has arrived. Whooo hahaha [vo] progress is an unstoppable force. Brace yourself for the season of audi sales event. Audi will cover your first months lease payment on select models during the season of audi sales event. Your bbut as you get older,ing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Thats it. Im calling kohler about their walkin bath. Nah. Not gonna happen. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] mmm. The kohler walkin bath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkin bath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. Everything is installed in as little as a day by a kohlercertified installer. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkin bath provides independence with peace of mind. For a free kohler nightlight toilet seat with consultation or visit kohlerwalkinbath. Com for more info. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning. Weve been watching the markets. Right now things are weaker after a day of gains for the s h and the dow yesterday. The nasdaq set an intraday high. The nasdaq right now indicated down by 15 points. Dow futures off 26 s p down 5 theres a lot of news on the wall street agenda initial jobless claims anderivia 8 30 a. M as for earnings, results from alibaba, aig, starbucks and dow Dupont Dow Dupont is out already. The big one to watch is apple. The tech giant reporting results after the Bell Tim Cook sitting down with lester holt. Heres what he had to say about Tax Reform Tax reform is sorely needed in this country. We dont focus on the individual side, but for corporations, we think we have a pretty deep perspective on this. The Biggest Issue with corporations in this country is that if you earn money outside the United States, which most Companies Increasingly will, the only way you can and its taxed in those countries, by the way. The only way that you can bring it into the u. S. And invest is if you pay 40 this is kind of a crazy thing to do so what do people do they dont bring it to the United States. Well, this isnt good for the u. S. Theres no tax receipts there. And its not good for investment in the u. S so this needs to be fixed. In my view, it should have been fixed years ago. But lets get it done now. Apple has about 2 250 billion in cash held overseas. Well have more of tim cooks comments throughout the day on cnbc i wonder if some of the pols politician politicians. Politicians in d. C. Saying absolutists that corporations dont pay enough already there are a lot if they just listen, that was a simple explanation. I wonder if that could make it into where they say maybe we look disingenuous with their take on it you hear what theyre saying time for the executive edge. Shares of tesla falling after the Company Posted a bigger than expected quarterly loss. Elon musk addressed production bottlenecks on the Conference Call phil lebeau has the details. Phil, we said elon musk, we know how hard it is the stock is priced for some good things to happen. Why not with production estimates, why not low ball them and beat them . Seems like we knew they wouldnt make those numbers its a choice you make as a ceo to low ball what you can do. Why do they always lower what theyre able to do they never make it do it the other way. Hes always been aggressive in terms of saying this is when we plan to come out with a certain why part of that is the culture of tesla they say well do it by x date though dont always make x date. They believe thats the key to setting the agenda, if you will, in terms of rolling out their future products. I think people to a certain extent have built in the expectation that things will be delayed. Two things in this report are spooking investors put aside the fact it was the worst quarterly loss ever for tesla, losing 2. 92 a share in the Third Quarter. Heres one thing that bothers them it has to do with the model 3 and production being shifted back one quarter they have found what the issue is in terms of slower production its the battery packs, putting them together. Theres production issues there. We wont get into the technical details. So they are pushing back their target of building 5,000 model threes per week by the end of march. Thats a quarter later than previously expected. Elon musk says in the grand scheme of things, not that big a deal i think this is a relatively small shift. The model three is a tenyear program, so were talking about a few months out of a tenyear program. From a value calculation this is immaterial heres the second thing that bothers people about the Conference Call. Where the company is in terms of cash position. They burned through 1 1. 4 billin in the Third Quarter sitting on 3 3. 5 billion they will be more judicious in terms of Capital Expenditures so they dont burn through cash in a quick rate as they move forward getting this production up to speed. Elon musk has a word for those skeptics who say this is it, tesla will throw in the towel and burn too much cash for the skeptics out there. I would like to say which one of you predicted tesla would go from 2500 units delivered to 250,000 units delivered now . I suspect the answer is zero he was feisty on the Conference Call he took a shot at the journalists who have written stories about mass layoffs after performance reviews. I will be curious to see if the stock bounces back analyst reviews so far have been not great, but we believe that this shift in model 3 production is not the end of the wall thats the initial take. Lets see what the stock does today. Would you need a or like a super computer that loss, lets assume zero tax breaks i know what youre talking about. I know everybody gets subsidies, take it out of the tesla sales, take it out of the solar stuff that theyre selling. Take all the subsidies out if they dent have any of them, what would that number be . And should we assume the underlying economics with scale comes up to where those subsidies thats the expectation, that you get rid of whats known as the zev credits, zero Emission Vehicle credits. And the somer stuff or the sole every stuff solar stuff is it 10 a share i dont think people have calculated that, but you take away those credits and those benefits, if you will, that eventually they believe that this is a company that will be generating a profit on the vehicles that it builds. I know im already probably getting emails from skeptics saying no way. These guys live on zev credits we will both get emails. Its the cool est car. It is. People are still in love with it but i dont know thank you. Thanks, phil all right. When we return, fda commissioner dr. Scott gottlieb will join us hell tell us what his agency will try to do to combat opioid addiction. And the mike jackson will be joining us at the top of the hour to talk earnings, the tax reform and the president s pick to be the next fed chair. And later, congressman Jeb Hensarling will join us to talk about the tax reform bill and why hes not seeking reelect n reelection. Youre watching squawk box on cnbc 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. Welcome back President Trumps Opioid Commission seeking easier access to alternative pain drugs. The fda announcing new plans on opioids in addition to trying to treat opioid medications, they will look at the additives of the addictive drugs. Joining us is dr. Scott gottl b gottlieb thank you for being here today thanks for having me. Lets talk about the dispensing of drugs, the packaging. What role do you think that has played in the opioid problems weve had in the nation . The question is what role can it play. One thing that we can do is look at blister packs as to how opioids are dispensed now and package opioids in blister packs where it might come in a 2, 4, 6, 8day supply, that would encourage doctors to scribe smaller durations of use like a zpack or a prednisone pack. You can contemplate if a doctor wanted to scribe a 30day supply, they would have to jump through some hoops, like mandatory education. This would be relevant to the Immediate Release formulations of the drugs, which are the most widely widely prescribed formulations like vicoden and percocet. That sounds like a basic commonsense solution to come at the problem. We have not heard a lot of basic commonsense solutions. How quickly can the fda act on this we announced a week ago looking at these packaging solutions. We have been talking about this for some time but its gaining traction as a potential solution to instigate different types of prescribing patterns Something Like this could move quickly. Were invested in looking hard at this and seeing what the opportunities are. Would Drug Companies fight this this means they would be selling less of that product could cut both ways potentially it could cost more to package things in this way. There are some costs to the packaging. Its cheap to dispense pills in bottles. It remains to be seen. Were having discuss cushions with the Drug Companies about this solution. What about treating opioid addictive pains witients with o drugs. What is the fda doing . I testified before the Committee Last week on some things we were doing we will put out guidance to manufacturers and Product Developers to lay out different pathways to alternatives for treatments available i think all work, they are good. All patients should be offered three options, but theres an opportunity to develop different treatments so we will look at whether or not we can allow sponsors to approve treatments for opioid addiction based on different end points like craving. Thats an important end point potentially to help people who are addicted translate to lives of sobriety. So were using science to open up the market a bit. Commissioner gottlieb, there has been some criticism, the war on opioids has been declared, theres been criticism that theres not additional funding put into this. But youre talking about measures that would not necessarily require additional funding, correct not necessarily a lot of the money will come from the private sector for Product Development and some costs will be imposed on manufacturers if we regulate opioid dispensing and require different ways of packaging. Not significant costs but costs ko associated with that, and also mandatory education, there will be costs from that were at a point in the crisis, we have to think of ideas and taking actions that will be more disruptive and uncomfortable to some parties we have to take more vigorous action to get ahead of this. Were talking about tens of thousands of deaths on a routine basis because of this. What would you consider success in terms of trying to fight this i think success is trying to dramatically bend the curve on the rate of new addiction, trying to decrease overall exposure to opioids. Most people become addicted become medically ae diblddicted. Their first exposure will be from a legal prescription, and then a lowcost alternative, street drugs so i think having better systems in place and treatment to address people currently addicted and help them live lives of sobriety. Theres a lot of stigma attached with some treatment, because theyre opioidlike drugs, and theres stigma attached with using opioid therapy to break addiction. People dont understand a physical dependence to opioids and an addiction people who use things like methadone might be dependent on it but not addicted. Dr. Gottlieb, thank you very much for your time please come back soon. Thank you. Coming up, convoy is looking to disrupt the Trucking Industry the ceo joins us next. Heres a quick look at whats happening in the european markets now. Big thinking in the finger lakes is pushing the new new york forward. Were the number one dairy and apple producers in the eastern United States supported by innovative packaging that extends the shelf life of foods and infrastructure upgrades that help us share our produce with the world. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov right in the heart of the was in his financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. What we do every night is like something out of a strange dream. Except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive, farreaching and, yes. A little magical. Fedex. Com slash dream yes, a little magical. Noteweve got a long way to go and a short time to get there a lot of truck songs we could use. A lot of the we should just through the interview keep playing different you know, theres a lot of them. A lot of semi trucks on the road diving empty thats a waste of resources and a wasted opportunity our next guest has a solution. Joining me now is dan lewis, the ceo of Trucking Network convoy is it okay to say or are you sick of it that this is like uber brought to trucks or does that is that the easiest way to describe it for someone not familiar with it probably the easiest way in three words but its moved past that at this point. Exactly how its now people have an idea of what youre talking about that if someone needs something moved they can customize when they need it as with uber and what do you, do pool different requests together so trucks are full . We dont do pooling but everything in this room was built on a truck so theres 800 billion a year spent on trucking so the biggest problem is finding the right truck for the right job and there isnt a lot of technology or data about where the trucks are and what theyre doing so weve connected thousands of trucks with our mobile app so we can find the best truck for the right job at any given time for any of our customers. Is there resistance from the big fright handle er or are the signing up, too . We work with small momandpop truck companies. Do so you dont do roadway or yellow or something . Today were not working with the big Trucking Companies you said its b to b. Big b to small b. So our customers like budweiser and unilever are also looking for more capacity but they dont have information about how their operations are hows the deal that youre excited about the anheuserbusch deal is this brand new . How did it come about . Its new, we Just Announced this it came about we had a bunch of conversations with them about six months to a year ago. Over a beer. A couple beers and we got started and they loved it. What it comes down to is they want more data about how their operations are running most of the providers they work with today dont provide a lot of data to them about whats happening with the trucks, where they are. What do you mean they want data this is their way of streamlining operations . How is their supply chain running . Its interesting because its anheuserbusch, 3g, known for being exacting. And more efficient so i think 3g is excited about what were doing and if you think about maybe they have a facility, how do they know how well that facility is doing . Each of the drivers that run for convoy rate the facility when theyre done with it and provide commentary so we can show our customer hereby how your facility stacks up against the other nearby and that impacts whether trucks want to show up at your site. I didnt think about it from the data perspective that you can get back on how your own plants are operating. And maybe one takes longer than others to load trucks and trucks have a choice about where they want to go so being operating better is helpful in terms of lowering your prices so we have data that helps our customers figure out maybe they could operate better and be a better experience for the Trucking Companies. How do you make money our customers pay us to move their freight soar time we move a shipment we get paid maybe a thousand dollars to move 400 miles. Then we pay the Trucking Companies and we take that difference. What kind of margin can you tell us . Industry margins are 15 to 20 on average we can operate significantly lower than that because we automate many steps in the pro dres there is another example of there is capacity in this industry and this is a way of utilizing that and you do it efficiently enough with digital sort of software to make it where i can do it and soak up the capacity and make money doing it thats right. Right now its hundreds of people in a room making hundreds of phone calls per day just to find the truck, track the truck, figure out where it is theres not gps in most of these vehicles flowing back to the customer so just knowing when your truck will show is up an innovation. And youve got real wellheeled guys like gates, cascade, bezos, a lot of names that this think will work. We all think its going to work. All right, thank you. When we come back, earnings alert, we are expecting results arceics d very, teva phmautalanyum brands at the top of the hour the governor has declared a Winter Weather emergency. Extreme risk of burst pipes and water damage. Soon, Insurance Companies wont pay for damages. That is, not if they can help prevent damages from happening in the first place. At cognizant, were turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. Get ready, because were helping leading companies see it and see it throughwith digital. Washington front and center today as President Trump names his pick for fed chair and House Republicans unveil their new tax plan we will speak to Financial Services Committee Chair Jeb Hensarling straight ahead. Facebook beats but is under pressure this morning. Investors will be looking for results from apple after the bell and a rundown of what you need to know for the trading day, thats coming up ferrari hitting on all cylinders. The stock doubling since its ipo and the companys chairman delivering on a promise to investors. Details straight ahead plus auto nation ceo mike jackson is here to talk auto sales and the companys Quarterly Results. Hes already sitting on the second second hour of squawk box begins right now. Do you know many ferraris no, they race on the european circuit, im in the piston cup what luigi follow. Announcer live from the beating heart of business, new york city, this is squawk bo. Good morning, everybody, welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Im becky quick along with joe kernan, andrew is out today. Weve been watching the futures. So far it looks like things are modestly lower dow futures down by 14 points, s p futures down by four, nasdaq down by 11 these are the levels weve been watching all morning it comes after the dow and the s p closed higher yesterday, the nasdaq gave background at the end of the day and well talk about the earnings that put pressure on the nasdaq in just a moment lets talk about whats making headlines right now President Trump is expected to name fed governor jay powell as the next fed chair later today an announcement is scheduled at 3 00 p. M. Eastern time at the white house. Weve been waiting to see if we get anything else on twitter ahead of that. Theres another widely anticipated event this morning, republicans will be rolling out their tax reform bill. Gop leaders will hold a late morning News Conference to talk about the details. Well talk to Financial Services Committee Chair Jeb Hensarling thats later this morning on the show also, economists are expecting a jump in worker productivity when Third Quarter numbers are reported in less than 90 minutes. Forecast calls for an annual rate increase of 2. 8 compared to 1. 5 during the Second Quarter shares of facebook are slipping despite an upbeat Earnings Report. On the call, ceo Mark Zuckerberg condemned russian attempts to influence the 2016 election and pledged to ramp up Company Spending to confront the problem and add 10,000 additional employees to review the networks content. Im dead serious about this and the reason im talking about this on our Earnings Call is that ive directed our teams to invest so much in security on top of the other investments were making that it will Significant Impact our profitability going forward. I dont even know how you train those 10,000 people and tell them what to do but i guess make sure its real. It gets into the old problem thats always been out there compuserve got in trouble because it used to be a messa messaging board. It didnt edit content once you start editing content, then youre like a newspaper publisher and youre responsible for the content on your board. Thats one issue they probably havent considered if you are editing material you are a newspaper publisher and you can be held responsible for the stuff up there. I can think of a lot of examples that illustrate my point. Lets say facebook was a chinabased company. Would you want the context that china decided you could see . Or a Russian Company if it was if russia . Were different here, hopefully in the United States but i dont take your pick of a Mainstream Media okay, im not going to say cnn because im not going to say that but what you want tricky how you did that would you want cnn deciding what you were able to see in terms of which news is pert innocent. Theyre in a tough place. Would you want them deciding fake news. Theyre in a tough position when there are 150 million americans who saw stuff that was bought by the russians. How do you train the 10,000 i dont know. And thats the mess is in the details just like this tax stuff. You are definitely putting yourself in a position of being liable for anything on your platform. Are there ten rules that you decide all 10,000 people are going to be this is the problem theyll run into time and time again however they feel like they are under siege, their credibility is being questioned and they need to come up with a solution. But youre right, once they hire these 10,000 people, what do they do. When the ads are being paid for in rubles maybe shall be should ask whats going on here. Political ads being paid for in rubles maybe somebody should say hello . All of a sudden everything the russians no, but political ads for our election. American elections should be funded by americans. I understand that but what if it had nothing to do with the election thats another whole story. You cant just say rubles how about swiss francs they shouldnt be buying ads. Were talking about interference in american elections. Youre deciding whether its an interference by the currency theyre using. No, no, i think youre are you allowed to do pesos. You should be looking back at who is buying political ads just like on television you have to say this is sponsored by this is one example. N terms of how they get content. This is the key one. It was 100,000. And probably seen to 150 million americans becauseof th way it was shared out. On television you have to say who bought these ads why is television held to a different standard than any of these social Media Networks other than the ideas that the laws havent caught up with social media. Its just a slippery slope from political ads in rubles to were going to monitor everything that goes out and Mark Zuckerberg will you know what his political views are so theyre going to decide what i see. Ive already seen it on twitter. Ive already seen people they block. People they dont block. Content they think is okay. Which will be the backlash that they have to deal with as customers. Id rather decide myself. When it comes to election ads specifically in that vein, there are all kinds of rules for other media that dont exist for social media so, yeah, i think they should figure out whos paying for political ads there should be an effort that theres not foreign interference in american elections. Period. Well, at least not for if theyre benefitting the republicans. If theyre benefitting democrats, that would be okay. Give me a break. If it was hillary, its okay. Give me a break. Lets talk about earnings that just came in are from the chinesebased ecommerce giant alibaba. They beat both top and bottom lines. These figures are in yuan with earnings per share at 8. 57 compared to estimates of 6. 85. Mobile usage, a key metric for alibaba, is 549 million, an increase of 20 million over the prior quarter and we should be looking at those numbers again when i say theyre in yuan, its 8. 57. Remember the last netanyahu election, jackson . Yeah. You do . Uhhuh. Wed never try to influence another countrys election after being pushed back a day the Republican Party is set to unveil its longanticipated tax reform proposal. Expected in the plan, reducing the Corporate Tax rate to 20 . Joining us now, mike weinberger, our guest host, mike jackson so you dont know more than we know, do you, mark you waiting around for this . When we booked this we thought wed be talking about whats in it but well have to wait another couple hours to find out for sure. Do you know this much do you know what weve heard that to do it under reconciliation or keep in the budgetary constraints that its not permanent . That makes it difficult because the whole idea is that corporations are going to be able to plan and if it you know, if it whats the word im looking for, where it goes away if it goes away in eight years sunsets if it sunsets in eight years, sunsets in ten years, that goes against the spirit of what theyre trying to do. Joe weve talked about this as you know all year we talked about the four ps that have to happen to have tax reform theyre made this a priority, policy, politics, and process. Clearly they have picked their policies here wheres the politics and process takes over we knew if you were going to have this done by a single party in budget reconciliation you couldnt have a cost in the out years and like back in 2001 and 2002 when the bush tax cuts were done, youd have to sunset some provisions in the tax code in order to meet that process which was a difficult part of the four ps so we knew this was coming. It shouldnt be that big of a surprise but permanent is better than temporary, temporary is better than nothing and the hope and expectation is that certain provisions like the International Provisions to make them more competitive dealing with foreign earnings will be permanent. Many others will be structural changes will be permanent but there is a strong likelihood that some rates will have to phase out and like the bush tax cuts hopefully be made permanent or reinstated before you get there. How about the you know whats going to happen with pass throughs i hear thats going to be make r maybe a lot of provisions on how that works does that make sense to do it that way we heard someone say we should go to 25 for corporations with. People can then become a Seed Corporation if they want to. This is going to undeuce some people to switch tow the pass through rate that shouldnt be in the pass through rate are we going to get bogged down in a lot of things theyve had seven years to figure it out. Should we take kvs in that or go, ow, this is it after seven years . Joe, this is a major change when you think about what theyre doing, theyre going to reduce the corporate rate immediately to 20 theyre going to take away the provision that takes over 2. 6 trillion trapped overseas and have foreign earnings without playing those games. Theyll have a middle income tax cut. Yes, the pass through rate will go down to 25 theyll put in certain safeguards to make sure you cant play games this is a big deal theres a reason it hasnt been done in 30 years, its very difficult. They have to fit it all in the political process. They have to pare back the state and local income Tax Deduction relief they were going to take away so theyre trying to fit in the this 1. 5 trillion package and thats what l make it more difficult to do this in a way that you and i would say this is the best policy. Its not policy only thats just one of the four ps politics and process take over and its never perfect. Its never perfect but when youve got the senate and the house and you still have a and what you just said is you have to make sure you satisfy all these different constituencies thats not the way its supposed to be. You should be able to take the heat from lobbyists, special interests and you should be able to be, i dont know, firm in your resolve i dont see it. Well, if the republicans were firm in their resolve, joe, they still only have 52 votes so if you want to deal with this process issue you need 60 votes. I know, but even to get to 52 with a watereddown version of what theyd like that do im not convinced they can do that you think thanksgiving is going to have we heard someone say spring of next year, where do you think it is . It doesnt get better with age. I think they have to get it done sooner rather than later weve heard the good things. There are going to be other things in this bill, theyll try to reduce the cost to get in the the budget window and lobbyists are going to come out of the woodwork one of the things at the ceo level were trying to do is make sure people focus on the overpall good of the package and make sure what it will do for Foreign Companies investing in the u. S. And not the short term up and down of their individual incentives thats hard to do in washington. Hard to do and youve had some representatives who said they wont vote for it, including representative king in new york because it gets rid of the state Tax Deductions. The question is, bucky, how much of this is posturing as theres pressure to improve the bill what we see today wont be the final bill it will change a lot a as the politics come out. It moves to the senate next, the senate will learn from what the house did. Theyll adjust things as well then frankly the senate will do whatever they need to do to get something passed everything will be decided in conference thats three, four weeks out until they see how that will shape up. Tim cook, you heard tim cook . He said its obvious we should do that. Now Everybody Loves tim cook cant you get the other half of the country they love their apple devices, they think he would never do anything mean. I think one thing everyone agrees on is the Corporate Tax system in america is uncompetitive and brokeen. And we need to bring back money from broad. And what drives me crazy as a u. S. Based retailer when i hear opponents of this say well, nobody pays full Corporate Tax rate. Im sitting there throwing something at the tv saying im paying 35 and theres a lot of american retailers who are paying 35 i think it will happen because after the fiasco of health care, the republicans are staring into the political abyss of irreleva irrelevancy if they cant get this done. Some arent running again. Flakent. Corker isnt. I believe theyre staring into the abyss. Would you take 25 if youre paying 35 , would you take 25 absolutely. Did mccain care when he gave thumbs down he didnt care. I think it will happen. I agree i think this is one of those things that oh, well that makes it but i agree with you, mike, this idea that somehow you dont pay the top rate you dont pay the top rate most Companies Pay a higher rate but the way you dont pay the top rate is you Pay Companies like others and others money to plan around it thats wasted resources, too, in some ways. You have to get a simpler system, youre not arguing over every deduction and being brought out in the newspaper when you take advantage of legal laws and saying theyre loopholes. Thats good to be good for the country. I agree mike with you this has to get done if haebs have a hope of showing progress publicly on what they committed to do in the midterm elections. I dont know if mccain is running. Hes not up in 18. He just got reelected he doesnt have to worry about it with no commentary on whether hes running or not. Although his numbers arent great right now i dont think. Hes a great american. All right. Hell support tax reform. Okay. Mike is sticking around for the rest of the show thanks, mark. Sure, joe. When we come back, auto nations Quarterly Results hitting a few minutes ago. Our ceo and guest host mike jackson will talk about that and the awe or tuto sector then Jeb Hensarling will talk about todays announcement on tax reform and who he thinks the president may or may not pick for fed chair. Stay tuned, you are watching squawk box on cnbc welcome back, everybody. Auto nation is out with thirdquarter earnings and announcing a partnership with alphabets selfdriving car arm w weimo. They will expand as they add additional brands. Fiat chrysler ceo saying a long standing partner in vehicle sales and service for our brands, fci commends autonation for preparing their operations to support the maintenance and service of autonomous vehicles, including chrysler pacifica. As we mentioned, autonation reporting earnings that came out with earnings of a dollar a share. That was well above the 84 cents that was expected. Revenue was shy of estimates but joining us to talk more about the deal and the quarter is autonation chairman and ceo mike jackson. Mike, it looks like stock is up about 3 on these two announcements. Why dont we talk earnings first. Then well get back to the waymo deal. You cant talk about th quarter without mentioning the hurricanes its unprecedented that in our two big states we had backtoback hurricanes and i have to thank all our associates for everything they did through these massive storms we as a Company Closed early enough that everyone was able to take care of their families but thousands of cars had to be moved and then put back into position and reopen all the stores and even with all that disruption, our samestore sales for unit volume was up about 2 in the quarter i was surprised it was only an impact of eight cents a share. Yes so what we did, we said when it comes to texas, harvey, we said okay we had massive disruption, losses, onetime payments but since it was a flood and vehicles were destroyed there was a massive replacement surge in september so we said from a bottom line point of view its hard to say it impacted the quarter results. You irma in florida is a different story. That was a wind storm, loss of electricity, Stores Closed for extended periods of time and you never get the parts and Service Business back since then thats an hourly production business so we only said about eight cents in all fairness. Biggest positive in the quarter is something i talked about the last time i was here that in the Second Quarter we had implementation difficulties with our one price but my feeling was they were resolved and in the Third Quarter we had a 7 increase in unit volume and a significant increase sequentially in Gross Profit Per unit resulting in an increase of 9 in our preowned business in the Third Quarter despite hurricanes and Everything Else going on in the Second Quarter when i said there was some difficultys the stock went down. I said i think it will be fixed. I told you here it was going to be fixed so i bought 9 of the shares in the Third Quarter at a very attractive price. Wow. And i joe ive been doing this coming up 15, 16 years that when were have a different point of view and you go through disruption to make important changes, thats the opportunity to buy shares and ive repurchased 80 of the shares. So its not automatic buying. When i feel the zstock is undervalued and ive been transparent about what i think will take to fix it and the market doesnt always accept that i buy the stock as a vote of confidence in our future and in the Third Quarter we managed to repurchase 9 of the shares in up with quarter. Thats a lot. You said youre turning it around you said new auto sales have perhaps peaked that margins for new auto sales have been under increasing pressure and so as a result you are ramping up the maintenance operations. Yes. And thats part of what this waymo deal is about. Absolutely. New vehicle sales have plateaued. September and october were good months for the industry and for us and inventories are in much better shape than they were at the beginning of the year but ive said clearly from several years ago here on this show i called the plateau so thats a certain head wind as far as growing revenue and growing profit so weve taken our brand, our scale, and our proprietary digital capabilities and are going to grow the preowned business fast and we just demonstrated that in the Third Quarter. Its a much bigger market, 40 Million Units a year, approximately. And we a have brand extension in our Customer Care business both in partings, we acquires six more Collision Centers, were one of the largest collision repair operations in the u. S and so we have an ability to grow that business at a faster rate so offsetting the head winds in new vehicles, we will grow our preowned business and our Customer Care business. A lot of people are worried about the overall economy because they dont think we can count on autos and thats i dont know whether i mean, will there be a weak spot other than just a plateau . Everybody still is driving old cars, right . The vehicle age is still approaching 12 years the economy, joe, is not growing as robust as we would like. Weve got to go does preown meaned used cars . Is a Collision Center just a body shop . Are you consulted with mckinsey . Where did you get these new is a Collision Center a body shop a Collision Center is a Collision Center is a Collision Center. Not a body shop you will not put words in my mouth. And preowned is it a used car its been previously used by someone. Used doesnt sound good. Someone has owned it before. Preowned by not driven check out this new duckchat from aflac the duck is answering my benefits enrollment questions in real time, without any confusing mumbo jumbo. Thanks duck yeah honey, im sure thats the duck. In fact, hes probably working overtime, just wingtyping away about premiums and deductibles the duck is working 24 7 to help answer all your benefits questions. Aflac duck chat. Lets chat in messenger. Gglobal bonds, and highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. Another day of work. Why do you do it . Its not just a pay check, you actually like what you do. Even love it. And today, you can do things you never could before. Youre developing ai applications on the cloud. Finding insights hidden in decades of medical documents. And securing millions of iot sensors. So get back to it. And do the best work of your life. Traders theyre always looking for advantages. The smart ones look to fidelity to find them. We give you research and datavisualization tools to help identify potential opportunities. So, you can do it this way. Or get everything you need to help capture investment ideas and make smarter trading decisions with fidelity for just 4. 95 per online u. S. Equity trade. Fidelity. Open an account today. Open an account today. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. One more time good morning, everybody, welcome back to squawk box here on cnbc, we are live from the Nasdaq Market site in times square lets check out the many Earnings Reports that have come out this morning yum brands earning 68 cents a share for the latest quarter rey nigh was above the forecast with comparable sales higher at cave seiff, pe kfc, pizza hut and taco bell alibaba reporting a 3. 8 increase in mobile monthly active users to a total of 549 million users. That stock is up by 3 and adp, which is in the middle of a proxy site reported profit of 91 cents a share. That Beat Estimates by six cents. Revenue beat forecast and the Payroll Processing Company Raised its forecast. Ing a ackman here yesterday that was one of the points jim cramer made, theres a lot of bureaucracy in great u. S. Companies. Adp wasnt his top pick for mismanagemented oh, this is u2. President trump is expected to tap jay powell to be the next fed chair. The president is going to be making that announcement in the rose garden. Steve leishman is standing by. Steve . Becky, thanks very much least as powells nomination the market priced in a december hike at sgh macro advisers they say powell is already aligned with a rate trajectory far more hawkish than anything t market is pricing in the selection of powell gives the markets some measure of policy continuity and gives trump some open to Bank Deregulation lags. Win win as they say. Monetary policy can contribute to growth by supporting durable expansion in a context of price stability, it can not affect the long run sustainable level of growth. De. So there will still be four vacancies on the board assuming yeltsin depart Janet Yellens joe . Steve liesman, thanks lets get you caught up on the markets now and what a new fed chair could mean here is the coportfolioof the Baron Discovery Fund and bob michael head of Global Fixed Income at j. P. Morgan Asset Management when we talked when our people talked to you, you were hoping it was going to be powell so this makes you happy . It duds i think its time that we have somebody in with the broad background who is a markets practitioner as we back out the experimental policy tools from the market. I want it to be done cautiously i want somebody in there who is not going to be purely driven by econometric models i want someone in there who understands free market practices. I think hes a great choice. You think that even though Inflationary Pressure arent evidence now, thats the risk and central bankers could be too aukish i think that is the risk. When you look at inflation its true its lagging, its not add the desired target everyone would like to see it higher but were seeing a lot of Economic Growth. Corporate earnings are coming out great, were looking at data thats coming through thats going back to 16, 20, 40year highs. The ifo data that came out of europe is at a 40year high. There are lots of pieces of data that tell us that the economy is humming along. I think a lot of it is being driven by Monetary Policy and ultimately inflation which is lacking. Doesnt seem like a great time to like the bond market but youre head of Global Fixed Income. I am. You still like u. S. Corporate bonds . Maybe you should switch to equity so you dont have to i dont want to like bonds here i dont like the zero to negative even steel analysts used to like steel they should have become tech analysts. I realize there is an enormous normalization that has to occur. But you still like because of the spread with high yields . I like credit spreads, i dont like the total yield or high yield market. What i acknowledge is that even though the fed is normalizing its Balance Sheets there are tremendous pools of money being printed in japan and in europe and that money is being exported to the u. S. Because were the highyield market. Randy, were going to get you for some of these you have some stocks that youve picked youre a Portfolio Manager. Absolutely. And because you were a bankruptcy attorney, thats not just in case your stocks dont work out, right . Exactly. No correlation . No correlation. Which ones are up 40 . We had four companies up 40 , a company that does nerve damage repair, a Company Called Foundation Medicine which does highend cancer testing. A Company Called novanta, an industrial that their end markets are robotics and highend Laser Movement which has to be done in a precision way because youre doing eye surgery, for example so these companies thats three. Yeah, teledoc was the other one. Teledoc an Exciting Company thats doing telemedicine. Its an emerging field, this is the market leader, 70 to 80 market share they have 22. 5 million members contracted with major Insurance Firms and we think revenues for this company which will be about 230 million this year can triple over the next few years. Thats exciting i hope people can rewind you didnt get symbols its a lot of stuff. They can rewind does ron get involved with does he know all four of these companies . Ron doesnt because my fund is smaller ron is involved in some of the stocks that we look at but we tend in discovery tend to focus in the smaller earlier stage that ultimately can graduate into the Baron Small Cap Fund run by cliff greenberg. Youre talking about 40 growth in profits . No, 40 growth in revenue and these companies kroftability can run higher because they have been investing so theyre underearning in their margins and they can expand and grow profitability faster. So logistically, you have a staff that peeks in and then you look at it absolutely. My partner and i are expert in different areas and we have a field of 25 Research Analysts plus other Portfolio Managers that will help with idea generation ive been doing this for 20 years so i was a bond analyst back at goldman. See, its possible . We train some of the best in the industry. Will you hold Something Like ron holds it the idea is that we want to find companies that are long term competitively advantaged companies that we can hold for a long time and earn 15 compounded returns it doesnt always work out when companies are smaller and sometimes you get lucky and realize your return early so wed get out ott that point and sometimes you make a mistake. Did you buy auto nation at five when jackson took over . I wish i had. You got all your options, too. That was back in 2000 wayne and i partnered up. But you got to buy some again. And the great crash of 08. Then it went down again down to four. And now 50. And you just bought back 9 of your shares. And we bought back almost 400 million of shares. You dont have to cure cancer to just have to get into the Service Business. I cant believe this waymo stuff. What do you mean you cant believe it i want a switch that lets me go faster. I dont want to go i cant drive 55. That you cant do. I cant drive 55. You have to. Randy, thank you. Sammy hagar over here. I need a switch. Theres no override, joe. There im overriding just like omydoten meodometer. When we come back, Jeb Hensarling will join us right after the break. It was worse. A sinkhole opened up under our museum. Eight priceless corvettes had plunged into it. Chubb was there within hours. They helped make sure it was safe. We had everyone we needed to get our museum back up and running, and we opened the next day. What we do every night is like something out of a strange dream. Except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive, farreaching and, yes. A little magical. Fedex. Com slash dream welcome back to squawk box, everybody. Joining us to talk about todays tax reform announcement and why he is not seeking reelection in 2018 is texas congressman Jeb Hensarling he is the chairman of the Financial Services committee and mr. Chairman, thank you for being here today. Good morning, thanks for having me. I want to talk taxes but i want to talk about you this is a bombshell to hear you are not running. What went into that decision why . Maybe a different way to ask the question is why did you stay so long . Youre leaving all this. Ive stayed longer than i anticipated. I never decided that i wanted to make elected politics a lifetime vocation my im term limited as chairman of the house Financial Services committee. Its a good time to go home. I eefz gve got two teenagers a and im sobered bety prospe ttte prospect that it will be a few years before they leave the nest. You still have 14 months left here what are your plans and what do you think about the plan we hear about today in particular. Well, we have a lot of plans on the Financial Services committee. Last time we talked about the reauthorization of the National Flood influence program. Thats been logjamed but i think thats been broken so i think you will see that move forward and hopefully we will have a more Sustainable Program that deals with Repetitive Loss Properties that opens us up to Market Competition because its fundamentally wrong that we are subsidizing people to live in harms way and that we have a clearly unSustainable Program so youll see that soon next i think this is the congress that after tax reform we can take on the great Unfinished Business of the financial crisis and this is reform over Housing Finance system, think fannie mae and freddie mac. I want to do it. I think theres consensus this has to get done. We cant have a governmentdominated system without innovation that leaves taxpayers on the hook for trillions of dollars and repeating the same mistakes of the past but right now today is tax reform day i dont know all the details because its not within my committees jurisdiction but even if i did i think theyre still embargoed until 11 00. But i do know House Republicans are very excited we are going to see a fairer, flatter, simpler more competitive tax code, particularly in the corporate rates. Our business pass through rates with the exception of the top prablgt all brackets will be r. O. Drooped i think for individuals a much simpler tax code they can fill out on a postcard and one that is built for a growth and i hope as people look at the plan that they see the whole forest and not focus on one individual tree were going to try to get rid of deductions and special interest provisions what we call k street up here. The lobbyists may not be happy but i think Small Businesses and working families will be happy and im excited the details are coming out. The details are coming out but weve already had a lot of speculation about these issues including the idea that this lower rate, lower corporate rate, would sunset, it may only last for eight to ten years, what do you think about that well, i hope that is not the case i know theres a real balancing of numbers and we have these very Arcane Senate rules dealing with reconciliation so i know the idea is to make as much of this permanent as possible, we will get our most bang for the buck in Economic Growth to make them permanent so that is a detail we have to see at 11 00 sometimes we might have to bite this off in pieces i hope this will be a permanent feature. I think its important stay tuned until 11 00. Youve said youd support just about any plan that came out. That you are eager to have tax reform go through but there are other republicans who are not so kp enthusiastic people like representative king who says he wont support it because a lot of his constituents will pay higher taxes because youre getting rid of state deductions. Do you have the votes . I think we will have the votes and what i would encourage my colleagues to look at is think about the difference between 3 and 3. 2 Economic Growth versus 1. 5 Economic Growth under the obama plan. That will be a huge difference to all working families so again i would encourage my colleagues to look at the whole picture, we are now finally will have almost a decade seeing wages rise for working people and so and right now under President Trump weve had two quarters of 3 Economic Growth and thats even without this plan. I think were capable of maybe 3. 5 Economic Growth that will make a huge difference to everybody so again i would encourage everybody to look at the forest and not individual trees. Do you think that jay powell is of a similar mind as new terms of the right mix of regulation for the Financial Sector do you like that pick . Well, i dont know. Got tom line is im not the president , ill respect the president s pick i dont know mr. Powell to the best of my knowledge i met him once. Who is getting your job, do you think . Patrick mchenry comes in here a lot. Wed like him to get it because hes a frequent guest. Is that the criteria. When you change your name, id go Patrick Henry everyone would give me liberty. But he does v a great name for politics. Unbelievable, isnt it . As i ride off into the sunset i ride with the confidence that there are great people who can follow me as chairman of this committee. Patrick mchenry is clearly one of them so thats not something im worried about and its not my decision. I dont know if its great to be named after one of our Founding Fathers anymore thats up for debate at this point. Well miss you. Well, thank you you can kick me around for 14 more months. Finally someone figures out your name isnt jim, its jeb and now youre leaving well, this president figured it out as well he got my name right the first time. Excellent. Youre pretty well miss you. But we have 14 months. 14 months. Parting is such sweet sorrow. Thank you mr. Chairman well see you you say 11 00, not 9 00 in 11 00 today . Yes, theyre revealing the plan to House Republicans this morning at 9 00 but i think the public rollout is at 11 00. Okay, zblangs thank you when we come back, ferrari revving up earnings and a promise the companys chairman made to investors. Theyre not just a car company but a luxury brand well look at how the highend camar r keis pushing profits thats nex from happening in the first place. At cognizant, were turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. Get ready, because were helping leading companies see it and see it throughwith digital. Today, innovation in the finger lakes is helping build the new new york. Once home to the worlds image center, new york state is now a leader in optics, photonics and imaging. Fueled by strong university partnerships, providing the worlds best talent. And supported with Workforce Development to create even more opportunities. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. Ferrari is making good on a promise of its chairman at its ipo two years ago. Ferrari, in his words, isnt a car company, its a luxury brand. From highend upgrades to sunglasses and office chairs, the Company Seems to be did you write this, robert hitting on all cylinders clever. I do not, joe, but talking about cylinders, we have two cool special cars. Ferrari about to release its earnings in just about an hour the stock hit an alltime high in anticipation of another quarter of 20 earnings. The stock has more than doubled this year. When they went public as you mentioned, ferrari told investors that they should not be valued with a car company multiple but as a luxury brand and thats come true the multiple is not only twice that more than twice that of gm, ford, other Car Companies but even higher than lvmh, a lot of the top luxury drands some of that is because they are selling more cars at higher prices theyre expected to make 8400 car this is year theres about a twoyear waiting list for 12 cylinder that starts around 335,000 and the 488 gtb spider, the twoyear waiting list for that as well. Three quarters of their cash is coming from cars but theyre making more money from the brand. They have 46 Stores Selling hats, mugs, watches. They have two theme parks, one in dubai, another in spain they did a deal for sun glasses and office chairs. Theyre doing better in formula one, that generates revenue and ferrari has a program that charges owners to certify a vintage ferrari selling for auction. All of this has the ferrari purists saying look, youre cheapening the brand, its becoming too ubiquitous but the real challenge and Inflection Point is about to come in the next year or two when they launch an suv and theyll boost production well over 10, 000 that means they will be subject to emissions standards in the u. S. And europe. Can they ramp up production from 8,000 to over 12,000 in maranello, which is not the most friendly business environment, and have electric vehicles and an suv and still remain ferrari . This right here, this is the formula one ferrari that Michael Schumacher drove to victory in 2001 this is going to sell at soth thi sothebys for over 2 million. The first time theyve ever sold a car. This is more affordable and buyable, this is the 488 gtb spider this car has a twoyear waiting list and it starts around 280,000, zero to 60 in under three seconds, guys, back to you. Great to see you, problem i think hell take off in one of those in a moment. When we come back, the president s pick for the fed is set to be announced today. Dino kos will join us. And later, cgronessman luke nesser squawk box will be right back. And highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. Breaking news, President Trump set to name jay powell as the next fed chairman, reaction from washington to wall street is straight ahead. Plus, tax day, House Republicans ready to release their reform plan today. The details and market implications coming up all this plus breaking Economic News on jobs and productivity just 30 minutes away the final hour of squawk box begins right now yeah, im the tax man announcer live from the most powerful city in the world, no, this is kwasquawk box. Good morning and welcome back to squawk box on cnbc live from the Nasdaq Market site in times square, im joe kernan along with becky quick, andrew is off today the futures out right now are down a little. Theres red arrows but five on the dow isnt as bad as it was eight on the nasdaq, facebook not helping and s p down about four. Bank of england just out with its decision, raising rates to a half percent. Well see if that is affecting treasury yields here, take a quick look. 237 on the tenyear. Last i saw it. And quick look at currencies after this news that just break. We have the euro at 116 and a half. Lets run you through stocks to watch alibaba beating estimates on the top and bottom lines the chinabased ecommerce giant reporting an increase of mobile monthly active user to 450 million. That stock is up by 3 yum brands topping estimates the restaurant chain operator says sales rose at kfc, taco bell and pizza hut and adp earnings revenue coming in better than expected. Theyre raising their Outlook Revenue as well and well see where that stock trades. In the meantime, wayfair missing the mark, posting a widerthanexpected los but the furniture retailer says its improving its Shopping Experience for customers the stock is down by more than 9 a mixed quarter for blue apron. Its lost was bigger than forecast the Meal Kit Company says average revenue per customer rose and that was good enough for a 3. 8 gain in the shares. Teva pharmaceutical falling short on the top and bottom lines. It experienced lowerthanexpected sales contributions from generic drug launches in the United States and that stock isoff at 8. 5 . The pounds being affected by this most recent move that becky just talked about. Off about a percent as you can see right now. Ninetenths, anyway. President trump expected to announce later today that jai powell will be the next fed chair. Joining us now, cls executive Vice President dino kos and guy lebaugh. You know this inand side and out what is this about he worked at freshfully the 1990s, worked as a banker in between so hes been part of the policy process this is about continuity its hard to see how the Monetary Policy itself will change very much between here and the period ahead some of the more interesting elements might be if theres changes with respect to how the fed approaches Bank Regulation and supervision because you not only have powell who is viewed as less hawkish, if you will, on the regulatory stuff but you have a new vice chairman for supervision thats just been confirmed as swollen to that might be some places where you see change but on the Monetary Policy side its about continuity rather than anything revolutionary in the near term. Guy, your comments . I have to defer to dino given his fedex peerns but if you were to put side by side experience from janet yellen and jay powell you couldnt tell the two apart unless you had a byline. Their views have been extremely similar. Theoretically even if it were a more hawkish candidate it would take a lime tyke to turn around policy mechanisms to a more hawkish point of view. So even if there were a slight more hawkish sort of tone to pauls comments, its still a long way off before we see a response. Joe, i know mr. Paul very well from my work with the fed, worked closely with him over the last five years and i think hes an outstanding choice and i fully agree on Monetary Policy and how to handle the Balance Sheet hes going to be disciplined accommodation which trump needs for progrowth but dino, to your point, on the regulatory side this is a big change from what was before. Before we had onerous regulation, very aggressive and jay is more common sense find the right line to protect appropriate regulation but not overregulation and i think thats combined with rendells appointment is a big shift for the fed. This is consistent with the signals out of the Treasury Department so theyve put out a number of reports over the last couple of months about how to approach banking in Capital Market regulation and that was consistent with the executive order of the president from earlier there year. And mnuchin was working with powell. Exactly. This is about stimulating economy growth now you can argue about what the cause and effect is but theres a tonal change in how regulation will be approached in the period ahead opposed to to what weve seen under yellen and dan you are the dan tir rouleau. I think jay is not an economist and has a broad background of experience and is a thoughtful thinker it will be a benefit to the economy in the years ahead and to the role of the fed in our economy. Guy, i dont know if youve noticed the rhetoric but there are those that think the world could end in terms of deficits i know 10 trillion came on in the last eight years but the same people in charge then a trillion and a half might be the zombie apocalypse. Is the bond market in big trouble if we blow out the deficit with this tax plan well, i am admittedly a fan of zombies posthalloween. I think we are so far from apocalypse with another trillion and a half look, the Financial Markets are telling us that theres very very little credit risk in the long term, little inflation risk that had been created by the last decade or most of a decade of greater deficits so i doubt that initial trillion and a half makes a material difference in that respect but on the margin it will increase borrowing costs. Simple supplyanddemand situation but the numbers were talking about, 10, 15, 20 basis points in terms of longterm basis costs. The thing that should be more concerning for the markets is the risk of a sugar rush stimulus coming at a time when unemployment is quite low as we all know and inflation as the potential mostly to go higher rather than lower. So thats the risk posed by tax reform is that it comes at the wrong time to provide a fiscal boost. Right its weird that when everybody thinks were stuck at 2 its hard to think were going to overheat even though the labor market seems tight all these weird things dont they dont line up with historically where things should be in the old days, crowding out, crowding out we were wasnt that worrying about higher rates because the government was going to have to borrow too much . It seems like ancient history. Thats a phrase from the 70s and 80s. And inflation worries. In the current world we have a world where savings crosses borders. That wasnt true as much in the 70s and 80s when the crowding out concept was coming to the fo fore you can import things from overseas and capital is much more mobile so i dont think that crowding out concept works. The interesting thing about fiscal policy in relation back to the fed is how will this fed react to a stimulus bill on the order of what you were talking about. Do they need to react by accelerating the pace of tightening i think the conventional Monetary Policy mieblgt say they would ratchet it up. Based on what we heard from the boe, we know they raised their Interest Rate to half a percent. But they are cutting their 2018 growth forecast. They say brexit is having what they call a noticeable impact on the uk economy and that the brexit reinforces a market slowdown in the economys potential growth rate. Those comments dont match up with why youre raising rates. Thats perplexing bank of canada has nudged up rates, the fed has begun tightening rates. Which gives us room if theyre raising rates. So youre seeing a shift in the groe the global cycle. Why are they raising rates if they have concerns about the economy . That is a great question. Certainly the evidence if you believe that the that growth is going to be going down and theres risks to the economy coming from brexit, its hard to explain. I dont get it. Youre just saying this for the sake of saying it . Lets see what carney and others have to say in the days ahead. All right so were going to survive. Unless theres that electromagnetic pulse then there could be some type of you like zombies, guy, thats bad. Theyre bad news but theyre slow moving. For whatever reason ive been known as a zombie lover. Its used a lot in economics. Thats when people promote ideas i hear one of my colleagues laughing in the background because she started that theme. Okay, good. Guy, thank you dino, thank you. Appreciate your you know what youre talking about thanks when we return, technology in focus apple is set to post Quarterly Results. Well hear from tim cook about what he thinks about the company and its market capitalization next plus facebook sharestrading lower despite an earnings beat well tell you why stay tuned you are watching squawk box on cnbc 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 gglobal bonds, and highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. His family. His steinway, which met a burst pipe. So grant met his insurance you are caller number 12. Which didnt quite cover the steinway. But what if hed met pure insurance . Owned by members. Hed have met lisa, your member advocate. Whod introduce him to gustav, a temporary address, and help him get tickets to the mozart festival. Excuse me, grant likes beethoven uh, the beethoven festival. Pure. Love your insurance. Its not about the money, mus be, money we dont need your money, money, money we just want to make the worl dance apple will post Quarterly Results. Tim cook post is to lester holt in an nbc news exclusive he weighed in on many topics, including the companys market cap. You may soon be held of a trillion dollar company. When you think about that, what goes through your mind the truth is, i dont think about it to be really honest i view a stock prize to be a result of doing other things well and so for us that means focusing on customer experience, making sure our customers are happy, treating them well and it means making the best products and we think that if we do those two well, then the revenues and profits are come but we dont get confused that the focus should be on that. That have is just the result. Execs from facebook, google and twitter have been on capitol hill this week testifying on the role of russian interference in the president ial election and heres what tim cook said about that issue. I dont believe the big issue are ads from foreign governments. I believe thats like. 1 of the iss issue. The big issue is that some of these tools are used to divide people, to manipulate people, to get fake news to people in broad numbers and so to ininfluenflue their thinking and this to me is the number one through ten issue. I like the tax reform stuff hes like, you know, leave the money over there, bring it back here. And by the way, they have 250 billion plus thats sitting overseas that he says he wont bring back until he sees a fair tax rate what he thinks is a fair tax rate. Getting closer to that trillion dollars, up almost a percent today and we need to hear about the i like apple x but its apple 10, right did they deliberately do that . Its 10 and president xi. President eleven lets talk more about facebook they beat wall street estimates on the top and bottom lines from the Third Quarter but while the social Network Posted strong growth, the company warned that the cost of protecting its users would drive up operating expenses joining us for more is the internet analyst and managing director at jeffries alex is senior operator at because feed theyre talking about expenses up 4. 5 . Is that a shock . It was a shock. Last year they guided 40 to 50 facebook has been known to give pretty conservative guidance and then has been blowing through that chl. Underpromise, over deliver. Right 50 operating margins, 50 growth, stocks up over 50 , head counts up almost 50 these are incredible numbers no other company tech is driving that growth and profitability in our universe so we look at this as yes theres increasing costs in video as well as user protection we think theyre handling this in the correct way Mark Zuckerberg mentioned that he would put protection over profits so i think theyre stressing this very hard that theyre not going to protect the bottom line to protect users. As an analyst, do you think thats the right call . I think its the right call for the user base, if you dont protect the user base, they wont feel confident posting and visiting the site. Lets talk about what the company needed to do its been under increasing pressure and scrutiny since its been called up before capitol hill what did you think of this move . You have to remember that facebooks customer is advertisers, not congress. You speak with advertisers and some of them i put this carefully they view this as the most prominent ad effectiveness case study theyve ever seen so theyre willing to spend more money i think you saw that with the Earnings Report yesterday and it seems like ad spend is up already in the Fourth Quarter from data ive seen so i dont think you have to worry about facebooks business. These are advertisers using this tool appropriately, correct . These are not about trying to influence people absolutely. The legitimate aboveboard Advertising Community is buzzing about how effective this 100,000 ad spend was so i think facebook will try to limit the bad actors and people doing it the right way will see hey, facebook works better than we thought. I was going to say is this a positive for them . The advertisers look at this and say by spending that little amount of money becky, as a major advertiser, when the story came out i thought for 100,000 i picked up my phone and called mark canon and said think about spending more money with facebook if i can get this kind of impact for 100,000 im dead serious. Youre increasing your ad budget to say this reaches much further than we expected yes. What do you with that, brent . I think again when you look at the rheal sell ration a lot of this concern that they voiced on the call is headline risk than fundamental risk so relative to the ad spend, thats what we see other advertisers speak to its google and facebook and thats taking up the lions share, the effectiveness, the reach. Theres other platforms such as twitter and snap that arent giving that effectiveness so we see them in the proving camp you have others in the experimental camp. Cmos and heads of ad s will adsl continue to place portfolio ads all over the place. And you have a buy rating youll see potentially 10 of earnings, you put stocks to 250. One thing that is true is that washingtons view not just of facebook but Silicon Valley in general has soured a bit. Theyre looking at these companies as getting big, big, bigger and maybe too big and having too much undue influence. Does that play out in a regulatory format . That will be unlikely to see any regulation if you look at what happened in the hearings, multiple members of Congress Asked facebook what an impression was. Thats the fundamental Building Block of online advertising. So they have no idea what theyre looking at. Let me put it this way. Its like somebody asking what a base is if theyre thinking about putting new rules in baseball its such a lack of understanding on many members of congress that if theyre going to put in place legislation to fix this company they have to think long and hard and make sure they understand what theyre doing before they do it. What was the answer to what an impression is for people that dont know good question and its something everybody should be familiar with. No, i dont mean whats the answer to the problem. Whats the answer to what an impression is. Im saying hes asking for a friend. Im asking for a friend mike are you on facebook yeah. You personally . Mike jackson well, Mike Jackson Autonation is on facebook and my wife alice is on personally. I have a whole family on but i would rather stick needles in my eyes. What do i have to share . Ive been on it this morning while weve been sitting here. Thats the first time youve been on in a month. Thats how you keep up. Its right there on my screen. Come on, joe, theres a whole generation that lives on facebook. I know, i know. And the number one source of news is facebook. I know. They need to go out and live. Well, thats over thats done. Living is over. Gentlemen, thanks for joining. My space, i love my my space kidding, not on that, either coming up, breaking Economic Data on jobs plus House Republicans are set to release their tax bill today. Gop policy chair luke messer will give us a first look. We need to know. On a needtoknow basis. Quk xn bcg youre watchin sawbo ocn i think its terrific. Your kids go to college and you start trading. Yeah, 5 years already. 5 years, hmm. You ever call your broker for help . Once, when volatility spiked. And . By the time they got me an answer, it was too late. Td ameritrades elite service team can handle your toughest questions right away with volatility, its all about your risk distribution. Good to know. Thanks, mike. We got your back kate. Does he do that all the time . Oh yeah, sometimes he pops out of the couch. Help from real traders. Only with td ameritrade. Welcome back to squawk box. Lets look at the tenyear note. The bank of england decided to raise rates to half a percentage point even though its talking about how its cutting its growth forecast for 2018 and saying brexit is having a noticeable impact on the uk economy. Weird. Although whats inflation theyre at i think theyre close but dino kos was pointing aou ining theyve ignored inflation and gone with the economy. Its odd when you look at the i want 125s they made coming out, its the antithesis of what youd be expecting from a central bank raising rates. Heres some stocks and there is the pond today. Stocks to watch, a shakeup in the senior ranks at under armour the companys marketing chief and the head of its womens youth businesses are leaving on tuesday, under armour reported its first quarterly drop in sales since being a Public Company and thats a threemonth chart. Go back a little further and its even more perhaps telling on whats happened but fireeye reported a narrow thirdquarter los but the psycher Security Firm says its likely to post an adjusted loss hurt by shorter contracts. The Company Expects lower billings indicating a weaker revenue forecast. When we return, breaking Economic News, weekly jobless claims plus productivity and labor costs. Stay tuned you are watching squawk box on cnbc my name is jamir dixon and im a locate and Mark Fieldman for pg e. Most people in the community recognize the blue trucks as pg e. My truck is something new. Its an 811 truck. When you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you dont hit them when youre digging. 811 is a free service. Im passionate about it because every time i go on the street i think about my own kids. Theyre the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then ill drive it every day of the week. Together, were building a better california. Theres no easy way out, theres no shortcut home, theres no easy way out we are just seconds away from jobless claims. In fact, its time in productivity rick, the numbers. It is time. 229,000, thats down 5,000 from a 234 that originally was released 233,0 233,000. You have to go back to the bell bottom era to see claims this low. Lets get to the money numbers shall we Third Quarter preliminary nonfarm productivity 3 boy, threes are wild gdp, productivity and its no coinciden coincidence. My guess is inflation is moving up, maybe not everybodys metric but the metric we muost likely all feel that follows. 3, our last look and obviously Third Quarter preliminary means they can ching but 3 , this is the enjoyable part of bringing out a good productivity number. I get to look how far back since weve had a 3 number. You have to go back to the Third Quarter of 2014 where it was 4. 4 so thats really a nice number it comes well and of course we want to continue to put these. You build productivity, issues go away. Dollar index is down but its been treading water at good levels were hovering at 236. Tomorrows jobs, jobs, jobs number most likely will be the defining portion of which side of 244 this market wants to play for the rest of the year back to you. When are we going to do tax reform, rick, and whats it going to look like joe, im confident well get tax cuts, im just not sure what reform would look like reform means a lot of things that are complicated and take time and im sorry but we have two groups of people that dont work very well together, just trying to get these tax rates lower. You mean in the Republican Party . Well within all parties i mean, listen, i dont mind people not getting along and greeding i hate conformity collecti iive thinking but those 535 people ought to understand that just because theyre doing something to stay in office doesnt mean the country is better off. This isnt a new problem, its an ageold problem read history, read burr. Its always been that way but it doesnt mean we cant strive to do better and have people that serve the people get something done. All right, you said you love disagreements, let me bring in Steve Liesman joins us now and remember you said that, santelli, lets bring in steve smile, steve with his take on the data, good morning. Oh, boy. There you go, steve remember the great discussions you guys are those i mean, did we outlaw those, steve well, let me tell you something, folks, hold on, hold on see this thing here . This is called the microphone and i keep talking many times and for some reason i dont seem to get through sure, leave it on, well have some fun. Steve, do you you dont actually have a button, do you steve. No, i dont i cant i cant take rick off the air. You mean a kill switch . I dont have that but, look, rick and i i dont know how far apart we are right now, rick. The fed is going to hike three times. You said the market has two built in for 2018. Theyre reducing the Balance Sheet, whats to argue about you. I think rick thought they should have done it three years earlier. I think they did right so were doing better than they are rick is about i think you, joe, blame the fed for low growth but you also blame obama so i say pick somebody and go with it. Maybe its the combination thereof but i think we did 2 growth, thats the speed limit of the economy and i think with some tweaks to the tax regime in this country we can do better i dont think it gives us a full percentage point and i think, joe, youre right and ive said this several times that there is an animal spirits aspect to this i know a lot of republican economists said the problem with previous efforts to change the tax code was that it was temporary. Here they are talking about a temporary one again. Tax credit, yes. You call it a tweak. Tax credits are no good steve, ill tell you where the next disagreement debating moment is going to be and it was interesting. He thinks 3 , maybe 4 is possible i think its possible. But the issue isnt whether its possible we know if we dont do serb things it will be impossible and thats really the way we should frame the issue. So, i think this productivity number is significant. You cant have higher Growth Without increased productivity and during the obama years productivity flat lined. And my view, many economists said it was inexplicable and i said no, its onerous regulation across the board. Looking for somebody to disagree with im going to pick on you. Go ahead. As you know, productivity is the product of very long trends, machines, plant, capital put in place, you cant say that the current productivity now is the the policies put in place by trump and the way this has to happen is that no economist would take one, two, three even four quarters of productivity and find the trend productivity are five and ten year trends. I dont think mike was saying productivity is changed. When you put rules in that are inefficient, it crushes productivity even if you are making real improouch improvements in productivity, onerous regulation can trump that completely that you have to do these inefficient things to get the same task done and thats what weve seen and people ask why everybody is so optimistic with the arrival of mr. Trump is because they know this onslaught of unprecedented regulation is taking a pause. It depends, mike. Its one side of the ledger. So you agree with jay powells nomination then the part that jay powell represents, the journal wrote a beautiful piece today is we can debate if he likes like donald trump, President Trump, low rates but hes also for a light touch on regs so i think our guest just nailed it. Exactly thank you. This is the secret world that not many people understand is going on and its a great thing. I would just offer you guys youre looking at one side of the ledger on one side of the ledger is the onerous regulations and the difficulty on the other side are sometimes the benefits of regulation and if you think about it, we havent had another financial crisis, we do not appear to have an overleveraged financial system, weve been doing 2 growth for a long time were about to hit one of the longest expansions weve had in a long time without riding the roller coaster of the business cycle. So theres that on the other side it also benefits to the environment that, you know, and benefits to health some people say that if you count the economic degradation to china as points of gdp they may not have grown it all in the last three years. 2 gdp growth in the Obama Administration is anemic for Recovery Period and the flat lining for the last eight years definitely was shackled with extreme owns you regulation. Youre going to love this, steve. I lived it. Youre going to love it, steve. Just sit back and enjoy, right, rick i dont know, joe, when i look at some of the rules that have been limited when it comes to clean water and clean air, i dont love it so much. Im sorry, i think theres an Economic Cost to that. Look at the paris accord agreement. Look at the paris accord agreement that were not in. Look at the people that are still in because those countries most likely are getting all the coal were exporting at a record pace and not only that, you look at the numbers they strive for, were already here in many ways. You know what . Children look at things in binary ways, its either all this way or that way, whether its regs, taking care of the planet, as adult wes need to understand it cant be none or all, theres a whole area in the middle despite what politicians do to us with these straw man arguments. I agree im just saying rick economics says look at both sides of the equation both sides. I agree. Theres a cost and benefit. We need regulation. I didnt like unregulated derivatives back in 05, 06, 07 either. I agree obama may have gone too far. Im just saying both sides. Kumbaya, baby. Nobody likes particulate pollution and waste sites and any of that stuff. Right, exactly. I dont know about. 04 co2 coming up, House Republicans are set to release their tax bill today. Gop policy chair luke messer gop policy chair luke messer gives us an inside look next is the monolithic view gop policy chair luke messer gives us an inside look next of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming Auto Industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Another day at the office. Why do you put up with it . Believe it or not you actually like what you do. Even love it. And today, you can do things you never could before. Youre working in millions of places at once with iot sensors. Analyzing social data on the cloud to create new designs. And using blockchain to help prevent fraud. So get back to it and do the best work of your life. Weve been watching futures and for most of the morning things were in the red the House Republican tax plan is set to be unveiled to the Party Conference later this morning. Lets bring in congressman luke messer of indiana. He serves as gop policy chair thanks for joining us do you know anything we dont know . We understand the broad parameters, the details will matter i cant jump chairman brady and the speaker well led that roll out but we can talk about some of it. I enjoyed your last debate one of the things i think lost in that last debate is frozen paychecks, stagnant wages in the middle of this economy 308 ive seen estimates as high as the bottom 80 of americanworkers have seen a ne decline in real dollars in their income over the last five to ten years. The American Worker needs a pay raise and thats what yo eel see with this plan, more jobs, fairer taxes, bigger paychecks thats our focus and that will be good for American Business, too. The Unemployment Rate maybe not an apples to apples comparison of where it was in the past in terms of people working more than one job or part time. Its not necessarily you would think back in the 70s or 80s if you had unemployment where there is that you would have wage Price Inflation and its global, too, right now. The Corporate Tax reform to be on a better Playing Field it seems like well have Less Movement of everything. And the real answer is growth the only way to give the American Worker a pay raise is to get to 4 growth. Thats why we need to cut middleclass taxes but we also need to cut taxes on Small Businesses which are the real engine of new jobs our plan will do that from 339. 9 and we need to get americas Corporate Tax rate competitive with the rest of the world. I dont know that most hoosiers understand that america has the highest Corporate Tax rate in the world. Thats bad for American Business but thats bad for the American Worker if we could cut those taxes and get real growth, well have better paying jobs. The other side immediately says no Corporation Pay those rates anyway evens got a narrative and answer let me ask you something specifically this is a good question. Do you think that 25 Corporate Tax rate permanent 20 for eight years . Which is better. Do you want a temporary 20 or something you can do permanently . Are you sure that thats the right approach i think our goal is to get permanent tax relief i want to see us get to that 20 and the senate has been a mess weve talked about this before on your program. Many of their rules stand in the with way but i want to see us get that Corporate Tax rate as low as we can. The reason is because we need to get away from this pattern of stagnant wages and the only way to do that is to cut taxes mike jackson is our guest host, the ceo of autonation. Mike, you talked about how you pay 35 . Would you rather see a permanent tax cut of 25 or a 20 tax cut . No, you take the 20 temporary and then you deal with it down the road and i think when everyone sees and the chairman is right, we need a faster growth rate to increase compensation for our Middle America and hardworking americans, when everybody sees a 20 tax rate and you saw these other things in the broken Corporate Tax rate leads to higher growth and the benefits for our society, extending it further, well get it done so i would go for 20 . A temporary 20 . It will be evident to everyone and if thats the tradeoff you would make, thats the deal i would make. I would add when were talking about temporary nobody is talking 18 months were talking eight to ten years. Can you fill in other areas were not sure on . The 401 k , nothing happen there is i agree with the president , we need to do more to encourage savings not discourage savings for the American Worker so i hope we stay away from that provision and as ive talked about, we need to be careful with jackie chan tax reform where were fighting a thousand different people at the same time lets keep it simple and cut taxes, youll see the reductions in the business rates. How about state and local mike jackson from florida. He cant stand paying new york can you believe that why should i subsidize new york i love the city but why should i subsidize . I was putting words in your mouth. Im with you, though i dont like subsidizing. If you want to live in states with those tax rates, pay them and live there. Its going to kill me but it makes no sense will that happen there are a lot of republicans in these states. Im from a low tax state in indiana, im proud of our local leadership i hope we are able to keep that state and local provision in youre right, we are subsidizing the high tax states and low tax states like indiana are funding those higher Big Government states its not the right way to do it. Hopefully we can work that out. Heres the argument that. Cos back they say states like new york send more money into the federal government than they receive. Thats because theres rich people there that have great jobs. Sure but if you change the economy that drastically will it end up cutting the amount the state sends back into the treasury or other states send back into the treasury i can tell you nobody in indiana cares about that. It will impact your budget needs down the road if thats the case. Were moving to florida anyway. Is there a way to do it where you phase in the over time i think it would be a harsh as justment to come up with automatically. I think our number one goal needs to be growth and whatever it takes to get this plan put together and build the majority we need to get a real tax cut that creates better paying jobs 4 growth. That needs to be our goal. The rest are details we can work through. What are you people hanging your hat on now . Notre dame thats it, right notre dame looks good. The bengals, the colts. Im a giant andrew luck fan we hope we can get him healthy but its a tough year for colts fans. And notre dame is for real . My tenyearold son is living and dying every week by notre dames score. Hes been living except for one point. Georgia is a good team. Mr. Chairman, looking forward to having you in miami. We look forward to it. Chairman messer, thanks for being with thus morning and come back after we know the details thanks. Obvious. When we come when we come bn jim cramer, who is live from the new york stock exchange. In the meantime, take a look at the futures again this morning yeah, dow futures now up by about 18 points. S p futures and nasdaq futures almost turning positive. Maybe if we sit here for a second, they will. Well check when we come right ck lets get down to the new york stock exchange. Jim cramer joins us now. You know, jim , theres been a lot to talk to you about recently, every day. So today, apple, facebook, tesla, so many things, so little time well, tesla loves to underperform and then overpromise. And facebook likes to underpromise and overdeliver both of those strategies on the day of the blast zone when they report produce a lower stock price. And then you let facebook, the Insider Trading window opens, they sell some stock it goes down for a couple oaf days, and then youve got to buy it tesla, what can i say . People love tesla. Well say, wow, its down. Ive got to buy it thats why both stocks work ultimately Mike Jacksons here today with auto nation and along with earnings today, that were better than expected, he announced something i hadnt realized they bought back 9 of the shares in the last quarter, because he thought the stock was undervalued at that point. Its not something he does routinely. He does it wheng when he thinkse stock is under valued. Thats what i want. That stock should be even higher a guy believes like that, he comes on your show and hes always straight, but he speaks softly he carried a big buyback stick i love it. Hitt her it never ceases to amaze me, jim, i tell them exactly what i think, exactly whats going to happen, the stock goes down, i buy it youre a man of your word i followed everything that you said for years by the way, you were the most you dont think somethings good, you say it at the top exactly should really believe me. Thats my point. Your Conference Calls are a gem youre never afraid to say whats bad that means you have so much credibility when you say whats good and whats good is that you bought back a lot of stock ive never thats probably the most concentrated buyback i have seen. Congratulations. All right all right, jim good seeing you see you in a few. Good seeing you also coming up on squawk on the street, former wells fargo ceo, Dick Kovacevich stay tuned well be right back. This is electricity. This is a power plant. This is tim barckholtz. Thats me this is something he is researching at exxonmobil using fuel cells to capture Carbon Emissions at power plants. This is the potential. Reducing co2 emissions by up to 90 . While also producing more power. This could be big. Energy lives here. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. President trump expected to name a new fed chair this week after previous announcements, the dollar and the s p tend to perform well welcome back, everybody. Lets take a quick check on shares of dow component, dow dupont it is its first report since dow chemical and dupont merged revenue and earnings came in above estimates. It announced job cuts as part of a push to save 3 billion. Our guest host this morning, mike jackson another thing youve tried to do is, you know, sales of new and used, preowned are important, but service is a big deal. And this whamo deal, you think google is one thats going to do it google is the one i first visited googlex six years ago. I think i was one of the first Auto Industry guys in there. Met with the engineers to understand what they were doing. And i cant tell you how much i admire their technical ability and their discipline and their commitment to do this right way and the safe way because when it comes to autonomous, overpromising and underdelivering is a very dan dangerous route. And i have seen that with other players. So i think, if i were to sum this up, i mean, whamo or google is playing chess and everybody else is playing checkers so we have now signed a Strategic Service partnership with waymo on these, probably the most sophisticated vehicles on the road, where they will be having a Ride Sharing Service nau thats fully autonomous. We have taken on the responsibility to optimize and maximize the life cycle of these vehicles, into the hundreds of thousands of miles and we have from having serviced 40 million vehicles, have such an understanding of how to proactively, ahead of the curve, always make sure these vehicles are in the best condition, and absolutely safe. And say, you know, our brand, auto nation, is drive pink, drive safe, now we say, ride safe thats good for you and its waymo, so it helps both companies, i think its going to be a great partner. I wish we had waymo time, but we dont thanks for being here, mike. Great to be here with you guys hope to see you all back here tomorrow right now its time for squawk on the street congratulations to the Houston Astros on their firstever world series title. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with david faber and jim cramer on the new york stock exchange. A tax bill rollout, a new fed chair, a bank of england hike, plus, tesla, facebook earnings, apple, starbucks tonight europes red a