Headquarters in palo alto, 11 00 a. M. On wall street, and squawk alley is live. Good wednesday morning. Welcome to squawk alley. Im Carl Quintanilla with jon fortt, sara eisen at post 9. Obviously, a busy day, even though the markets arent showing a whole lot of volatility. The president is going to sit down with some infrastructure ceos at 12 30 eastern time. Attendees include teslas elon musk, apollo cofounder josh harris, real estate moegle Richard Lefrak and david tepper making waves on squawk box this morning, discussing the new regulation atmosphere in washington. Theyre going to give you less regulations for obamacare. Theyre going to give you a tax cut. Everything is this everything is neutral to positive that can come their way, versus an atmosphere for the last 16 years, lets call it, thats been regulation, regulation, regulation. Joining us this morning, ben mandel, jpmorgan global strategist, michael kacannon. I dont know if you heard what tepper said, but hes talking about growth breaking out in every corner of the world, Central Banks who are going to need to get a lot more serious and make a turn. Well see what the ecb does tomorrow, but are you there . Are you that optimistic about what he called smooth sailing ahead . Im not sure about smooth, but these are all part and parcel of global reflation trades, okay . So, let me be clear, theyre not trump trades, theyre global reflation trades, and we see those as having three drivers. One is the Global Growth environment, pickup in nominal global gdp and earnings as a result. Two, low Downside Risk from lower session risk. And three, you can imagine a policy overlay on top of trumpo the fed. So, we see flashing green lights on lower risk and Global Growth. Policy, once you average out the negative and positive notes over the next few months is more or less neutral, okay . So you dont have to be a big believer in tax reform to get on board with reflation trades. He did say, though, tepper, that is, this morning that we shouldnt do any crazy trade policies. Is that bullish argument he and others are making ignoring which direction the white house is going on trade . I think you definitely see that as a Downside Risk, okay . So, what are upside risks to the economy . Big boost from tax reform, potentially infrastructure spending, although were not holding our breath on either of those things. What are the Downside Risks . It comes largely from an inwardlooking, slightly more antagonistic economic diplomacy. I guess why does it seem like the market is pricing in the upside risks and not the Downside Risks . Id say the market is somewhere in the middle. Id say you cant have an outright fail on tax reform at this rate, but otherwise, the expectations arent extremely high. Part of that has to do with the calendar, right . I mean, the tyranny of the calendar. We have Affordable Care act reform ahead of that. We have the debt ceiling coming up. We have all the confirmations. We have the drafting of a tax deal and making its way through congress. So, theres a lot that needs to happen before you get to that up side. So, i actually think that its more tempered than you think. Speaking of the calendar, michael, goldmans out with a note if republican lawmakers are unable to reach a consensus on Health Legislation by this say late may or june, we would expect them to shift their focus to tax reform, and that would be no easy task because of the promises that were made. But does the challenges it faces in this very early going suggest that it would run up against that tight deadline . Well, if you remember, the Obama Administration said that it wanted to do Health Care Reform in just a couple of months, and that took 15 months, more than a year. I think thats overly optimistic to think that, either that republicans are going to be able to get a Health Care Bill together by may and to the president s desk, or that that will end the work they have to do on health care. Because if you look at the bill that they are pushing right now, it preserves the core elements of obamacare that are making Health Insurance markets so unstable and causing them to collapse so far in the eastern half of tennessee, where 43,000 americans are not going to have any coverage next year. Right. Republicans are going to have to come back again and again and again and try to patch up obamacare if they dont repeal it in full, and this bill does not. Michael, pretty safe to say you hate this republican proposal to kind of patch up or fix obamacare, but it seems the central problem is this how do you get Healthy People to pay for Health Insurance . From your perspective, what is exactly the right way to do that . The first thing you do is you repeal obamacare in full. That will cause Health Insurance premiums to drop for most of the people affected. So, Healthy People will see their premiums fall. They will be able to afford coverage better than they can now. More people will enroll in coverage. A lot of people will then not be able to afford coverage because theyll be not able to afford premiums. Thats a fairly small problem and you block grant the Medicaid Program so states can give that to truly needy people. There are a lot of people enrolled in medicaid who dont need to be there. There is a lot of fraud that would be gotten rid of if we block grant to medicaid. And you expand Health Savings accounts so you can move the money that employers are now controlling and spending on our behalf, using to pick our health benefits. You give that to the workers who earned it. Let them choose Health Insurance that meets their needs, thats portable, stays with them from job to job. That will reduce the problem of preexisting conditions, and they will put downward pressure on prices because theyll be spending their own money rather than spending their employers money, and thats how you make health care more affordable for the most vulnerable. So, ben, it looks like thats probably not going to happen the way he out lines it, so how much of a risk is that . How much of a drag on the economy, on the markets, if this blows up . I mean, i think its a negative signal, for sure, right . I think it prices into the general view on risk even more so than the idiosyncratic effect on the Health Care Sector and the rotation story weve seen. This is all about the global reflation trade, and the fact that youve seen you know, as i mentioned, the first two drivers of reflation firing on all cylinders is an offset to that. So, you know, you cant have an epic fail on trade policy, you cant have an epic fail on tax reform, of which health care is a precursor. But other than that, neutral outcomes will be welcome. Were going to find out what the calendar can hold over the next few weeks and months. Ben, michael, appreciate your time very much. Thanks. Thanks for having me. We do want to check in on the markets at this hour. The dow right now trading down about 19 points. Caterpillar is the biggest drag on the dow. The s p and the nasdaq stay positive. Nasdaq actually outperforming, up 0. 4 . A blowout jobs number out of adp this morning, 298,000 new jobs compared to estimates calling for about 189,000 created in the private sector. You also have Doubleline Capital chief executive jeffrey gunlocke weighing in on Interest Rates and the fed. You may start to go oldschool and start to see more sequential fed rate hikes. And if we are going to go oldschool, whats happened historically, precredit crisis, the fed gets into sequential hiking mode and they keep doing it until something breaks. We will see what the fed does next week and what the main jobs report on friday looks like. I mentioned caterpillar, that is a big mover to the down side today. A new government report accusing them of accounting fraud to boost its stock price, according to the New York Times, and that stock now is down a little more than 1 . Its actually not doing as bad as some might have thought, carl, because you have more talk of infrastructure coming from the white house, and caterpillars considered a key beneficiary. Were awaiting arrivals for that very meeting. When we come back, snapping back. Why david tepper is a fan of snapchat. The stock is bouncing back a little today. Peter thiels warning for Silicon Valley. Well break down what he said in houston. And the ceo of adidas on the record. Well get his take on europe and how you can get the latest fair of yeezy sneakers, when squawk alley comes back. I love to see businesses that just started from ground up grow into further success. It just feels good to know that im helping someone else. My first goal is to learn about their business, what theyre currently doing in their advertising. Pull some research, create a great story. Trying to figure out some way of building some kind of trust in a very quick moment. You have to love to work with people. Our goal, without a doubt, is that all customers are satisfied before they leave. Shares of snap getting a little bounce. The stock was set to open lower. That was before apple managements david tepper weighed in on the company and its ipo this morning on squawk box. Listen. Im not jumping through the hoop to buy at 21. 80, but should it go down closer to the original offer price, i would love to buy the stock there. Im a believer in the company. Its a valuation question to me. For me, im in the nowhere land of valuation right here. You know, you can call that, you know, 19 to 23 or whatever, 24, that you know, you dont touch your position. And up near 30, its too high for right now. One day it may be 30, one day it may be 100, but today its too high at 30. All right. Today its at 22, which i guess is still that no mans land. Farhad manjoo of the New York Times is joining us along with christina norman, former open wa Oprah Winfrey network ceo and mtv. Good morning to both of you. Christina, youre a media network. Where does snap fit into this ecosystem in terms of its importance . It seems like they embraced content at a level most Tech Companies have not. Most seem to hold their nose, say okay, well do content if we have to. Snaps into it. Well, definitely, but also theyre really into superserving their audience. If youre going to reach millenials, youve got to be on snarnsion and thats what weve seen from a lot of our clients. Theyre interested in finding ways to play there and into finding the right opportunities to be there. Whats so great about snap is that the environment is completely it riotive, so you dont have to do the same thing all the time. Is it a problem that growth seems to have slowed down with instagram copying some of the features . It is early days, for sure, so i think were seeing people responding to the offering out there, advertisers still really trying to figure out what the right way for them to be in that space is. A lot of trial and error, a lot of test and fail, and i think were going to see some interesting innovations and interesting executions coming out of that. And farhad, we asked kara swisher a few days ago what she thought was the most important metric to watch on snap. She said revenue. Is there Something Else that youre looking at to sort of gauge it . I mean, we could watch the stock, but we know thats all over the place. This is not a metric so much as just watch what they create, watch the products they create. I think one of the interesting things about snap is that theyre the most sort of imaginative, innovative Consumer Tech company out there right now. Theyre coming up with the ideas that everyone else is copying, and everyone else is copying them for a reason. Its because theyre just doing crazy things, things people didnt expect would work online, and i think thats whats interesting about them. I think its true that its a problem for them that other companies that have bigger audiences are copying them, and apparently, kind of like stealing their thunder. Whats interesting, i think, about snap, though, is that, like, its just really hard to think of any other company thats coming up with sort of so many new and novel kind of features, products, just ways of doing things online. And if they can continue that, i think, you know, like that could serve them well in the future. I think thats the difference between them and twitter, for example. Like, twitter for a long time just languished on the product, and snap hasnt, which i think is, you know, thats why im kind of optimistic about them in the long run. Im not so sure, farhad, investors would be happy to buy a company that sets trends that everybody else can then copy. I thought your piece today was interesting on why this companys calling itself a Camera Company and what the future of that is. Whatd you learn . Yeah, so, theyve been calling themselves a Camera Company, which is a little bit odd, since they only sell one camera so far, and you know, theyre known for an app. But i think what they mean is they are on the forefront of this trend of the whole world moving to visual culture, basically. Were talking through pictures, were using emoji and, like, animation and videos. And snap is sort of leading that way. And when they say theyre a Camera Company, i think they mean that theyre going to lead with visual elements. And you know, a number of other companies are doing that. Obviously, youtube is doing that, instagram is doing that. Right. But snap has sort of tapped into it and led with it from the start, and i think thats sort of you know, theyre part of this larger cultural trend, which i think bodes well for them in the long run. What insolates them from competitive copycats, other than the fact that theyre cool . I dont know that they need to necessarily be insolated. You dont just use one thing. You use a lot of different things. And i think theyll find their place with their consumers. But whats interesting about them being a Camera Company is you invite everyone in that way. And i think theyve been able to invite advertisers in, users in, in a tactile, immediate way, and in a very, you know, a way that really allows them to prove their worth and their value in someones lifelong term. Do you think weve heard a couple of people this morning use an mtv comparison. Do you think theres truth in that . Well, i dont know if theres a truth in the comparison. I think that snap has the benefit of seeing what everyone else has done before them, and theyre smart, so theyve seen what twitters done, theyve seen what mtvs done, theyve seen what content works, what devices and hardware they need to invest in, and im excited about their future as well. It is exciting to see what theyll come up with next. Christina, thanks for joining us on that. Thank you. And venture capitalist paypalko founder and trump supporter peter thiel speaking last night at the sierra week keynote session in washington. His outlook on the economy. I think the tide on globalization is just going out. Really . Its going out on all these different dimensions. So, if you have movement of people, i think, and immigration is getting more restrictive, not just in the u. S. But throughout the western world. I think movement of trade, i think thats you know, i think theres big headwinds there through goods, movement through people, movement through goods, movement through capital, which is mainly through banks. Banks are going to get more regulated. And then Even Movement through information where i think there may be some headwinds for, you know even though designed to survive a nuclear war, but even so, i think there are a lot of regulatory challenges that Silicon Valleys going to be facing from western europe and elsewhere in the years ahead. So, i think the tide on globalization is just going out in a pretty big way. Farhad, that strikes me as kind of a weird argument from an early facebook investor. Just in barcelona last week at mobile world congress. Reed hastings of netflix was arguing that global niches are whats powering products like netflix. How do you square those two, somebody whos investing in the internet, in global technology, arguing that the tide is going out on globalization . Yeah, mine, hes a board member of facebook, and facebook is the globalization company. So, it is odd. I mean, Mark Zuckerberg a couple of a month ago, wrote this huge manifesto, sort of arguing that he wants to create this new Global Social fabric to ease the pains of globalization. And so, its odd. And the other odd thing about thiels comments is that he voted he was the main supporter in Silicon Valley for a candidate who in many ways, like fought globalization on all the dimensions that hes talking about, so maybe thats less odd because tactical. Its hard to tell if hes against this or for this. Hes sort of smartly bet on, i think, kind of all eyes on this question. So, its possible that, you know, hell benefit either way. But it is an odd comment, i agree. We also aditi roy did a great report about how his company that he backed may have a role in the immigration crackdown from the new administration. What else do you hear about thiels role at this point within the administration . Ive heard him described, and it seems like this is true, that hes trumps brain in the valley. I mean, he has become sort of the lead for tech policy questions, and even policy questions that it seems like arent related exactly to tech but may be in the future, like hes sort of become the point person for whats going to become the future of the fda, for example. This ide