Markets. First trading day of the Second Quarter. A pretty interesting bid in bonds this morning to talk about. Scott is wells fargo global strategist and nicholas, strategist, joins us to talk about that this morning. Tenyear down. Obviously you have the equities off their highs of the morning. Whats going on there . Tenyear is one of those k contra indicators. The 10year yield should be higher if growth will be there for the back half of the year. These 10year low yields are propping up stocks. Scott, how long does that dynamic last . Do you go along with nicks view of whats driving bonds . When you look at the fed prong projection and they tell us theyll do three hikes this year and three next year, are bond yields going to go up on that . I dont think so. I think the bond market is telling us that in a slow growth environment, you know, you raise rates six times in two years, you know, thats a headwind for economic growth. I think the consensus, our work suggests that consensus earning estimates for this year are too high. Theyve been coming down. We have a 127 number. Theyll keep on coming down and gdp for next year, if we had to guess 2. 3 for this year but if we had to guess for next year, it might only be 2. 5. In that kind of environment, you wont see yields rocket higher. Nicholas, how much does Congress Matter in q2. By the end of the Second Quarter we should have a good idea of how much this ambitious gop agenda is likely to get done in 2017. At what point does that reality hit for better or for worse . Q2 is a time where it should hit to the positive. We waited patiently through q1. Were waiting on the actual tax reform numbers and negotiations. So q2 is where the rubber hits the road. If you dont see any action by the end of q2, something solid like getting ready to go markets will begin to lose patience and back half of the year will be volatile because it will prove the trump trade was all hot air. Scott, on that note, we had that Consumer Spending number on friday. We got auto sales today. Some of this market pmi internals are a little bit mixed. Was some of the ranker in washington during the First Quarter having an effect on either Consumer Spending decisions or Small BusinessInvestment Decisions . I think it might, carl. Obviously confidence at the consumer level and business level have skyrocketed since the election. You know, that takes time to actually result in businesses doing capital spending, consumers bumping up their spending. So we think thats going to happen. We think that the labor market is going to continue to improve and for us, you know, we think the s p 500 will end lower than where it is now and headwind will be based on work were doing fears over Wage Inflation and i think thats going to creep higher in 2018 and maybe a fed thats confused and starts talking about maybe boosting rates a little bit quicker than what some people thought. You know, for us, our work since last fall suggested high around middle of the year for the s p and it still continues to show us that. So given that, scott, what kind of mood should we expect . Looking back at the q1 chart, good january, amazing february and flat to down march. How do you expect that emotionally to work through in this quarter . Jon, i think that as far as earnings go, you know, youll probably see when you hear these First Quarter earnings, you know, theyll be pretty good. Consensus is around 10 . Somewhere in there. So those will be okay. What i think is going to happen is that the market is impatient. They want to see results. We certainly dont think anything the new administration is going to be doing is going to be felt in 2017. Thats a 2018 and beyond story. I think youll see the market maybe we might see the market run up here a little bit more. I dont think it will trade a whole lot higher. Well have that pullback. Close the year in 2230 to 2330 range. We want to trend toward cyclical stocks. I think people want to take money off the table. They want to get more defensive. They want to get less cyclical. Those are types of things well look to do should we trade up to those kind of levels. Im reminded of goldmans call earlier in the year when they argued that march would have been the point of maximum policy optimism, which is sort of playing out at least for now, right . Certainly were realizing it wasnt as easy as we thought in january. Yes. And as we talked about last time, congress is not a great investment catalyst. So having to wait for congress to develop your investment catalyst is a long and torturous wait. I would add that i think volatility has to move higher from here. We had a free lunch in q1. Better market, low volatility, that never lasts forever. Well see what q2 brings in the next three months. Dow down 85. Guys, thanks. A busy week for President Trump following this weekends wide ranging interview with Financial Times covering everything from trade in china to health care and taxes. Kayla tausche is in d. C. With the latest. It was a wide ranging interview indeed where the president said he accepts that every now and then on twitter there will be what he called a clinker. He also declined to discuss the timing of forthcoming tax reform but comments about china and escalating situation in north korea that are in focus as President Trump plans to meet chinas president on thursday. He blamed china for north Koreas Nuclear capability but says china will help us with north korea or they wont and if they do that, it will be good for china and if they dont. It wont be good for anyone. Trade is the incentive. It is all about trade, he says. Chinas number two leader said a trade war would have no winners and in march said upholding the u. U. S. china relationship is key. They want the meeting to be a winwin while upholding tough exteriors. These guys are going to look like they dont like each other. Theyll say tough things. One friendly thing xi wants out of this is he wants the words out of donalds mouth that this is a winwin story they put together which in secret code means we are peers and well do this with mutual respect. That will be key. Well see what the tenor of that meeting is later this eke. It kicks off a geopolitically focused week at the white house. A meeting with egypt today and on wednesday with the king of jordan. That conversation likely will be focused on how to fight terrorism. Where the economy is concerned, i think its clear china is the elephant in the room for the u. S. Economy, for the China Economy and for the operations of companies that do business in both places. Carl . Busy week ahead. Thank you very much for that. Kayla tausche in washington. When we come back, more details on the potential apple tv product. Well check in. And addicted to apple . One stock getting crushed after apple says its cutting ties with it and mind games at uber. A new indepth report on how the company uses psychological tricks to push its drivers buttons when squawk alley continues. Cdw brought i. T. Orchestration to growing businesses across the city, increasing productivity like never before, which is amazing, unless youre a barista. Cdw implemented Dell Poweredge servers with intel xeon processors to allow people to work from anywhere, so lucky me. So nobody wants coffee . hey, can i get a couple copies . Enhanced mobility by dell. I. T. Orchestration by cdw. Apple dominating the dow in the First Quarter. The best quarterly performance in five years as the company is working on a premium tv bundle to bundle hbo, show time and starz in one package and shares of Imagination Tech taking a nosedive as apple says theyll stop using the Companys Technology in two years. Imagination does not trade in the u. S. But was valued at one time around a billion dollars before the news broke. Lets get that and more. Good morning to you. How are you doing. Lets tackle this bundle news first. Is this really the beginning of the next chapter in apple trying to package content . Absolutely. Theyve obviously moved more slowly than others in this area. Peter wrote the story. You know, they have to find ways to entice users to use apple tv. They sell each of these products individually under subscription. Theyre around 10 each. The idea of bundling them together because thats how people consume them is probably great one and cherry picking off all of the channels that people love. Usually with cable you have to buy the other tv part, buy a whole burcnch of tv stuff. This is picking what people want and bringing it together presumably at a lower price. Peter didnt have those numbers of the price. Kara, isnt this a step backward in a way . After this time apple says you should be able to buy these channels one at a time and only the ones that you want. If the economics are going to move toward a cheaper bundle of three channels here, four there, whats to say that starz is going to keep offering an individual app if the economic shift in a different direction and were back in the same cable box all over again. I dont think theyre putting the whole cable box together. This is just premium channels that people like to use. I think the whole concept around these is people could pick what they want. If they want one channel, they can have one channel. If they want them all at a lower price, its not an uncommon pricing technique. Its also a matter of convenience. I was trying to find one show the other day. I remember thinking this is a lot of stuff i have to go through all at once. It would be nice if it was in one place and i could buy it at once or if i dont feel like it and dont want to watch whats on starz or the various channels, i dont have to. How would you characterize the threat to traditional content Delivery Services like our own . Thats the issue. The question is the way weve been served up is the way providers like comcast and Time Warner Cable want it. If you want one thing, you have to take the other. Increasingly thats not going to be the case. Eventually the way you can buy stuff on netflix or amazon, this stuff is going to pull apart in a way that its been doing because consumers are getting savvy and apps are easy to use and selection has been easier. Even in the way that you do select them, the guides are getting easier to use. So i think that people have to think hard about the way the paradigm is and everyone is talking about the idea of cutting the cord and Cable Companies resist that idea but a lot of users are buying in this fashion and should be able to buy the way they want to buy and then figure out the pricing that works for it. Carl, im cynical about some of this stuff. Please. Blow me over with a feather. You cant buy game of thrones by itself without getting hbo. Everyone is bundling to an extent. Players want the power to make the decision on what you buy. You argued about subscription fatigue. We have a limit as to how many other pipes we can all subscribe to. There wont be a million of these. I dont know if one is so much more beneficial to the consumer than the other. Well have to see how it plays out. What do you make of the graphics chips news . Is that an indicator of some other larger intent . Im not sure. I mean theyre working on a lot of other things around vr and y other things. They probably want control of their future. They just wanted to get ahead and signal where theyre headed. I dont think its unusual. Too bad for that company that dropped 70 or Something Like that. Eventually a lot of the key parts of their future theyre going to have to control themselves and have a lot more ability to manipulate the technology. Its not a big surprise. Potentially enormously significant though because if theyre developing a gpu, Graphics Processing Unit for mobile, are they doing the same for the mac . Does this extend to apple tv . Implications for amd and inindividuinvidia and car down the line because this gets into vision technology. Well have to see how this develops for apple. Video is the future. They have to have control and vr and all kinds of applications. Headsup technology. All kinds of stuff. Some more headaches over at uber. City officials in pittsburgh where uber launched its Driverless Pilot Program are pressing the company to give more back to the community saying in a partnership is is not just what we can do for them and times published a detailed report on how they use psychological tricks to push drivers buttons as the Company Continues to face growing pressure over reports of gender bias, harassment from management and drivers themselves. How does this all move the needle with regard to at least ubers public face . Well, pittsburgh, you know theyve had issues in pittsburgh, arizona, San Francisco around these selfdriving cars. Pittsburgh its the mayor trying to shake them down for more stuff. So they want its a good time to put public pressure on uber because they are saying, yes, im sorry quite a bit so they want more stuff. Its just a mayor being a mayor. Thats what i would do if i was mayor. I think in the psychological tricks, i thought it was a fascinating story. I just did a long podcast with Tristan Harris who worked for google and other companies. Every one of these companies does these tricks. Facebook, google, get you to buy more. Amazon. Its not surprising that since every driver on uber is pretty much interfacing with the company through an app that theyre not going to use similar techniques to get them to work more, to get them to move to places that uber wants them to and feel like theyre in a game and trying to earn money. Of course theyre going to do things that advantage uber. Google has 1,000 engineers to make sure you click a red button and then try to say you have control of it. Its the gambling addiction idea. This loopic loop. Its so common to every company. Facebook, google, our entire digital experience is based on psychological tricks whether youre a consumer or contractor. Is the real story here perhaps the uber pylon whether pittsburghs mayor or these different reports coming out about various things, various entities that uber is or is supposedly taking advantage of. If you are the investors in this company, what is your way out of it pylon of being cast as a bad guy . I think if travis saved a cat out of a tree, he would be charged with animal abuse. I dont think he can do honestly, i was talking to someone there and i said he should stay inside and never go out for the next couple months. You know, i think this story was interesting. Again, i think that they do it and its interesting on the implications on workers and its no surprise because every company does it. You should listen to this podcast. It was fascinating to me about how they do it and how apple and all of them. Extending it to workers, of course, is a thing. People have done it in the past by having contests at work and things like that. Now they have the data of what actually works if you show us certain kind of thing. Youre almost to 100. Get there. How people sort of participate in that kind of are very easily moved. I do think drivers are pretty smart and they catch on to this stuff and their goal is to make as much money as possible. I think theyre more savvy and do have more control. Theyre not sitting there like dummies. When i talk to uber drivers, they know exactly what tricks uber is doing. They really do. They seem to be very up on it. Theyre doing this and this and this. Its interesting. Its definitely a fantastic read and interesting read about how were manipulated by apps and will be more so going forward. Absolutely. Kara, good to check in with you. See you next time. Thanks a lot. Today the federal government begins accepting visa applications for the first time under President Trump. A Program Trump called flawed and in need of reform. O i talked to Immigration Attorneys preparing applications saying they are handling fewer application this year because the fees have been getting higher and that happened under the obama administration. And also because of uneasiness over the current political climate. There are 85,000 coveted h1b visas given out. Last year they received 236,000 applicants. Companies including google, microsoft and amazon are the ones who apply for these visas on behalf of perspective employees but critics of the system, including President Trump, argue the Current System lowers wages in the tech sector and favors outsourcing companies. Flood the system with applicants and clinch the majority of these visas. The Trump Administration signaled it would reform the system, so far no changes have been issued. We talked to one current h1b worker. She says entrepreneurs here on the visas do create a lot of value. Now that i have my h1b, i am able to work fulltime. There are bills in congress that propose raising minimum salaries. A recent study found if higher minimum salaries were enacted, Companies Like google, microsoft and amazon would not see a meaningful change. Back to you. All right. We wonder if investors would. Still to come, signs of life overall. How a few high profile ipos in q1 are reinvigorating the market for Companies Going public. Shares of amazon also trading at record highs. 880 bucks a share. Squawk alley is back right after this. [vo] quickbooks introduces rodney. He has a new business teaching lessons. Rodney wanted to know how his business was doing. So he got quickbooks. It organizes all his accounts, so he can see his bottom line. Ahhh. Thats a profit. Know where you sta instantly. Visit quickbooksdotcom. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which