Transcripts For CNBC Squawk Box 20170327 : comparemela.com

nuanced. i'm not real happy with the freedom caucus. but i have empathy for their position. >> did you see there's one guy who already resigned? >> i have empathy for their position. i think it would have been better to -- i think the perfect -- i think they cut off their nose to spite their face. i don't know if they thought about it, the trillion dollars now that they have. >> 24 million people will have health care. >> there you go. >> whatever you think. >> whatever you're reading. whatever you're reading, probably continue with happy to get maybe 1% growth for the next eight years but -- >> now, the president is supposedly saying, if they won't work with us, we'll have to find ways to work with democrats. >> yeah. they seem very amenable to that. >> we'll hear some comments from him saying they'll be willing to -- >> schumer, i saw the compromises. we can go single payer. we can do drug cap price. nothing was compromise, just solely democratic position. >> president trump is the closer. he will be able to work with democrats to make this all happen. that's what the script says. >> the democrats -- if he can't work with republicans -- >> but that's not a big shock either. since he ran against -- >> right. there are a lot of things on his campaign that -- >> but there's no way -- as you know, there's no way the democrats are going to do anything -- >> it's all politics. >> there's no waysi they'd sidl up to donald trump. >> let's get to the markets asser that reacting. raising fears from future deals potentially getting done on capitol hill. primarily taxes. that's the big issue. that the markets would like to see resolve, be it taxes or infrastructure spending. the dow is down by triple digits. s&p futures off by about 15. the nasdaq down by 30 points. and right now, the markets have been down for seven sessions in a row. if they're down for another session today, that would be the longest decline that we've seen in quite a while, it goes all the way back to 2011 for that losing streak. a lot of those losses have been modest declines. this morning, we'll beginning to see if there's a decline of triple digits. overnight in asia, the nikkei down 1.4%. hang seng down. and shanghai especially flat. in europe, red arrows as well. looks like the dax in germany is off by 0.8%. the fete se a dollar decline. the cac in france down. crude oil down by 1.34. and this morning, it's down another 45 cents to 47.52. also, if you want to take a look at the ten-year note, the yield sitting at 2.4%. this morning, dipping below that at 2.6% i don't know what that tells you in terms of projections for breathe or whatever concern we're seeing in the ten-year but we'll continue to watch that as well. other big story, president trump planning to announce a new white house office in fixing the government with business ideas. the white house office of american innovation will be run by trump's son-in-law jared kushner. it will include elon musk, bill gates, and marc benioff. expects to operate as a s.w.a.t. team. also the judiciary committee is scheduled to vote on the nominations of neil gorsuch, as supreme court justice. but this procedural stuff could take a while. senator grassley said it could be held over a week as committee rules allow any member to push it back. uber temporarily halting self-driving car tests after that crash that happened in arizona late friday. it involved one of the vehicles in self-driving mode. there wasn't a backseat passenger. uber has been testing self-driving with volvos. they moved to arizona. at least in this case, at least according to reports, twaebts the fault of the autonomous vehicle. but nonetheless, the whole situation -- >> i'm confused. i've read some reports that said is there was a driver in the car. as all are. >> yes, there was. there was an uber driver in the vehicle working for driver but there was thought a passenger. having said that, we should note the autonomous speeches in these uber cars are not nearly as sophisticated as what we're seeing in the google cars. for example, .8 miles somebody has to take over the car as it workings. whereas, a google vehicle, you can go -- i don't know, thousands of miles, hundreds of miles before technically people are taking over every time. let's see things happening in -- as far as the economic indicators and things this week, full of economic data. the case-shiller, s&p home price index is coming with consumer confidence, a speech by fed chair janet yellen. on wednesday, pending home sales. and friday, personal income, chicago pmi and consumer sentiment. the earnings calendar kind of in the middle of that lull between quarters. a little light this week. but we do have results on lululemon, dell, dell technologies and blackberry. the gop's failed health care bill has republicans and the white house moving on to the next big item on the agenda and that is tax reform. kayla tausche joins us from washington with the latest. good morning. >> that's bhal we want to move on but the administration isn't talking tab yet. they're still in defensive mode following the failure of the american health care act on friday. the vice president on saturday in west virginia said the white house is still committed to reforming health care. >> even though congress isn't ready to do it yet, president trump will not rest, will not relent until we repeal and replace obamacare. >> and yesterday, budget director mick mulvaney who is deeply involved in the health care process as well said they're moving on. >> when it fails which it will, it may be may, the end of this year, folks will come back and say we can -- >> no longer a 100-day priority? >> no, because we've moved on to other things. the president does have things he wants to accomplish. he's not going to silt and wait for congress to do the right thing. >> congress chair asked when realistically congress could take up the mantel of health care again, he said, goshg, i don't know. the trump telling "washington post ""setting up the new government of american innovation it's going to be led by his son-in-law jared kushner as you guys just mentioned. it's a staff of business executives and other meetings that have taken place with ceos and it's led to al gore reinventing government or ronald reagan's kitchen cabinet. it's reportedly already been meeting twice a week. it's supposedly focusing on targeting infrastructure with a beachhead into that new trillion dollar program. and also technology and data. the white house, we should note has yet to appoint a chief technology officer. but it is interesting to see the white house making this announcement. and getting behind another business initiative which is familiar territory for the president, as we've seen that the legislative agenda is potentially getting log jammed. >> we may have another administrative presidency, kayla. we'll see. but that's how we finished the last six years with all sort of executive action. you know, it's commentary on washington, on both parties, i guess, although this is intraparty. it's pretty amazing -- are you saying guys like boehner, right, he finally said i'm going to play golf or smoke or whatever the hell he does. you know, the same guys, these are the same guys. where are they -- they feel good. they got their two-year things. and they're powerful. but i just -- i just wonder. >> right. and they did exercise their veto power. but the question on tax reform is first, the administration said about a month ago that details of a white house tax reform plan should be coming out. at that point, they said two weeks. and we haven't seen anything from the white house. and we know that the plan that congress is working with is part of the speaker's better way plan which is really the beachhead for health care. so does congress feel like it can actually get behind another paul ryan plan after the health care plan saw the fate that we saw on friday? and what does the white house feel it needs to put in a plan? will it actually now put a draft forward and how much longer will that take if there's less around seen -- >> kayla, before the trillion dollars is now not possible to offset, do you know how many sacred cows there are? you've seen herds of cows. you've driven around. there's cows everywhere. in tax reform, there there were sacred cows. i mean, where are they going to find a trillion dollars if they don't do voodoo economics with the scoring? i think so this will make health care look easy trying to do tax reform. he's going to have to do some executive action for the next 3 1/2 years. >> well, trillion dollars, joe, what they say as gathered revenue. there's a question whether that is now actually a viable alternative because that's a real source of meaningful revenue for the government. >> even if you do get to the house, the senate is the problem. >> i'm saving the tape of voodoo economics -- >> tom cotton, kayla, tom cotton is in walmart, now, need it more likely to get the border tax to get the trillion dollars. did he connect all the dots and say i'm going to speak out about this obamacare repeal to get the border tax because he's going to screw walmart anyway? >> it's hard to find a specific cause and effect without having to get inside his brain or have him say that on the record. certainly, the border adjustment tax does seem like the biggest source of revenue. andrew, the commerce secretary didn't necessarily espouse the border adjustment tax. but he did refer to this trillion dollar hole and say we'll have to fill up some way or another. >> kayla, what do you think, will the white house be the one that's going to try to push this now that they realize that the house has its own problems? and within the white house, if that's the case, who doesn't, which to say, i saw a number of commentaries over the weekend, it seems like the nyes were out for gary cohen. >> there's a specific defeat from "the new york times" who did mention that. it does seem like the economic wires are getting crossed especially now that jared kushner is spearheading this initiative because that's a big part of the agenda. i feel for business leaders they felt like gary cohen was their point person within the white house on economic policy. but if in fact he's becoming less popular within the four walls, it's unclear exactly who will be leading it. there are a lot of people who want ideas. want them to be heard. implement policy. and really depends on who the president decides to tap for that power at the end of the day. >> although some business leaders say they go straight to them. >> that's right. >> then there's -- we saw bannon tell those guys, hey, no debate here. >> one guy said no one said that to me. >> and it was -- he said his father. he didn't list ton hien to his . >> there was one other time i was channeling democratic influence, saying trump and kim jong-un, and i got tons -- people thought -- >> you were going to call the dynamic scoring. and it will not make up for the loss. >> assuming you don't get border adjustment -- >> that's why my whole you should not be floating on air. this is not good for anyone. you're going to get your market correction that you've wanted for so long pipe don. i don't know if it gets us back below 20,000. >> i'm not floating. >> you just said, i'm so happy with 24 -- you just -- you are floating. you didn't need a plane to get back from utah. >> thank you, kayla. it's not really kayla's fault. she's just -- >> she's just the messenger. >> who arrived in washington -- >> no, it was not. this morning, this morning, we get a full day of market reaction with the gop pulling the health care bill. joining us partner at trading analysis.com and cnbc contributor and jim kearney, chief executive officer of concentrated u.s. growth at ab. we're going to have katie later to look at the technical side of things. she's looked ted vix. this is the beginning of something that at least rings of a little speculation on the market, or not? >> yeah. actually, the last time around, dale from u.s. investment, remember that, we were talking about that -- >> are you asking me whether i remember what she said -- >> yeah. >> yeah, i do remember -- no i don't. anyway, tell us what you said and he said. >> well, we were both saying that the market is getting a little overdone here. >> did we have anybody on who didn't say that? >> well, a lot could go wrong in the first 100 days. and this is what's happening now. for the first time actually on march 21st, i went out of all equity markets. so, i'm out of all trades. i want to shore up the market, i think we're in for a 5% correction. just to put it in context, what exactly -- nobody is talking about the technology, the nasdaq 100, on a technical point of view to give you the context of how big this reversal was. the high of the march 21st bar and the low of the march 21st bar, that day encompassed the last 24 trading day. >> i think everybody felt the market was just going to go up indefinitely. i think we saw that in the last three or four months. now, we're going to see a little more chopiness. the question is where can we pivot and i think there are opportunities out there. >> you mean domestically, europe, where? >> i think domestically, even health care. health care has been unlugged for 15 months. >> how do you play it though, not knowing where this is going to play out -- as joey just said, or the president, it's going to explode and we'll be back in this again. >> here's what we know, 2017 is in the bag. all of the premiums are written. 2018 it will be around. we're really talking about fixing 2019 at this point. >> insurance companies are standing by figuring nobody is going to get pushed out? >> i wouldn't go to the insurance companies, i'd go to the providers or hospitals. >> glover is going to be on saying that these guys now -- the need to stand up for their principles have been satisfied. >> how do you sound like you're principled and then turned around -- >> and then how do you get the moderates in the republican party? and the total moderates in the senate? you know, listening to people, as you said, it's nuanced, andrew. seven years ago, it was different. we didn't know whether we wanted something like universal health care. we didn't know that everyone's birth right was necessarily insured. we put something in like this -- we know about entitlements. you cannot take back an entitlement. that was crafty and swift the way it was done. that's what the ryan plan sort of admitted to. that you're not going to pull the rug outside. if you're going to do this, it's a different world that we're living in right now. let's fix what we can about the things that are most advantageous about health care. but try to cover it. have it in the end as the goal to do. the freedom caucus, those guys just went right back to -- >> no entitlement whatsoever. >> no entitlement. >> well, the language they were describing, the biggest republican health care bill. and the worst bill i've ever seen. the language was so fiery. >> and you read again, the things that were in there that would have been beneficial to the freedom caucus, you read all of the different things. >> president trump tweeting about it himself this weekend. >> right. >> i don't know if you agree or disagree with the president on it of who owns it now? >> oh, no -- >> i i think it's much harder to just say the democrats own it. >> i don't think so at all. are you supposed to fix what you did seven years ago? >> yeah. he spent the past two years saying he was going to get rid of it and he gets there and he can't. >> do any problems that happen under the nation become your problem, whether he created it or not. >> that's another slick way. you put it in. you let it blow up in 2017 and then you blame the next guy. >> right. any problems under your watch, you're going to be -- >> the democrats always have to bolster their case. so that helps, too. it's hard to do anything. >> what about financials from a monetary and regulatory? he's lost a lot of capital. they could weigh on this market as well. >> thank you. when we come back, what should be done with obamacare now that the gop bill has failed to take off. a critic of the affordable care act but first look at this day in history. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? welcome back to "squawk box." futures under pressure this week. triple digit it's on the dow, 102, the nasdaq indicated almost 30 points. the nasdaq down 15 right now on the s&p. okay, let's turn to the future of health care act and the plan that failed on capitol hill. let's bring in the president of the foundation for research on equal opportunity. former health care policy adviser in mitt romney's presidential campaign. and author of how medicaid fails the poor. thank you for joining us this morning. help us understand where you think this all goes now? >> yeah, obviously agency you've been reporting, talking about, health care is not going to be a 100-day priority but to say that health care is over, as paul ryan said that obamacare is the law of the land for the foreseeable future, i think a lot of conservatives don't see it that way. there's going to be another opportunity to hit health care later in the year, early 2018, and that will be better because this process was really rushed. you had a bill dropped on a monday night. 16 days later republicans were supposed to vote on it one-sixth of the economy with half of a cbo score. it's going to take more time to get this right. >> there's lots of speculation on what the president can or cannot do in terms of executive action that could help or weaken obamacare, what do you think he should do. >> there's a limited amount he can do. the affordable care act was so printive, really micro managing how insurance companies could design their benefits and write their plans that there's only a limited amount of room for regulatory changes to change the way obamacare works. you really have to pass acts of congress to change it. that's why the repeal and replace is so important. as big part of obamacare care, just as a reminder for people, it's not so much about 00 employer-based or medicare for the elderly, it's more about people who buy health insurance on their own who don't get it from their employer or the government. medicaid was a big part of it. >> the president said that this plan will explode. the cbo says it actually may be more stable than some people think. where do you land? >> yeah, i stand a little bit more with the cbo. look, premiums are continuing to go up for this individual market plans. trump is a little bit right on that. but it's not responsible to sit around and wait for obamacare to explode or destabilize further if you think that's going to happen. you should actually try to fix it so people can have health insurance that they can afford. republicans need to get off the map get back to work, building a plan that actually has consensus that covered the uninsured and driving up the costs that are driving it up. >> just from a practical perspective, could you see a plan passed that actually captures the freedom caucus, meaning they vote in favor of it, and meaning that the moderate republicans are able to go along with it. >> i wrote an op-ed on this friday. there actually was a consensus or deal coming into place between the house freedom caucus and moderates. the problem is paul ryan set this arbitrary deadline. you have to vote on this bill friday, take it or leave it, or you're not. because he wanted to move on to tax reform. that was the problem. that deal is continuing. those talks are happening. so, if you have to basically structure the tax credits in such a way that low income people can afford health insurance while deregulating the market, that can be done. >> thanks. coming up, the green light for the keystone pipeline. will the flow flood the market? what will it mean for food prices? take a look at the s&p 500's winners and losers. ♪ ♪ ♪ wanna get away? now you can with southwest fares as low as 59 dollars one-way. yes to low fares with nothing to hide. that's transfarency. experience exciting offers on sales event is here. our most elevated suvs ever. get up to $2,500 customer cash on select 2017 models for these terms. experience amazing at your lexus dealer. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. welcome back. you're watching "squawk box," live from the nasdaq market site in times square. good morning. welcome back to "squawk box." taking a look at u.s. equity futures at this hour. we are in the red this morning. perhaps a result of what took place on friday, with the repeal of obamacare not being repealed. it looks like with an open, 104 points. nasdaq 28 points, s&p, 14 points. and north carolina took a little sting out of what happened friday. the trump administration granted approval for the keystone access pipeline. the approval came nearly a year after the obama administration blocked entrance. wow, out in steel city, nebraska, that's pretty cool. good morning. >> reporter: good morning to you, joe. that's right, you could say where i'm standing is the keystone or the keystone pipeline. this is the pumping station in steele city. that brings it down from canada. the existing lower leg that's going to take it all the way down to the gulf coast so that it can be refined. the irony here, when this was proposed years ago, we actually needed the crude from canada. now, you can make the case that we don't because of the shale revoluti revolution. oil prices have dropped under 50 again. that opec from their perspective not holding because the shale producers have upped their output time to take advantage ever the prices. the question is, if we bring oil in what's going to happen? do we depress prices even further from here? but there's a second question about visions and what this does for the industry. the trump administration would probably argue that the long-term vision is to build up the infrastructure to make sure we have things in place so we can be energy dependent. that's part of it but the short term, producers, analysts looking at oil prices are concerned that potentially it could go down in the 40s maybe even drop under that. bear in mind, there's that state approval required for the parts of it to pass. so this project still could take another year to get underground. steele city, nebraska, population under 100 people, the opinions here are mixed. >> it's kind of funny to listen to people, because one side of the bar, suddenly will go, oh, dammit. the other side of the bar, hooray, let's go! >> reporter: we talked to some of the locals and they talked about the positive impact for steele city, bringing jobs, traffic, that infrastructure all the way down to the gulf coast. right now, they're really looking at two pieces of this. the long-term impact that i mentioned. and of course, the industry looking at the short-term impact what could happen again if the oil prices plunge again. >> jacqui, given that you're in a city called steele. let's talk about steel. during the campaign, president trump said that the steel for the pipeline would be american-made. apparently that's no longer the indicates. is that a conversation that's taking place? >> reporter: well, it's partially the case. he did mention that he wanted the steel for these large scale pipes to be made in america. the steel companies are bracing for that. but he clarified and said that would be for future projects. when we were in arkansas and looking at the pipes that are already manufactured, the steel is nod made here but the pipes still are usable. so they will be used to connect through this pumping station. andrew, you're jumping on my story in a couple weeks. we're going to do a big piece on how that steel is going to be made. >> okay. >> jackie, thank you. more to talk about energy and what the keystone pipeline will mean for the markets is the founding partner of capital. john, how long do you think it will be before this actually is bringing right through america? >> oh, it's probably 18 months to two years away. i do think montana is a very energy-friendly state. and the governor there is supporting the project. pointing out if they got the dakota access pipeline approved, this will fly through. >> what it mean for the markets? >> it's a lot of oil. a significant amount of 800,000 barrels is about what the saudis justify cut back recently as part of their deal with other opec and non-opec producers. that raised oil prices about $10 a barrel at least. to show you, it's a meaningful amount of oil. it's the kind of oil, its chemical composition is dedisposed to our refiners so it will have a home but a lot of it will be exported as well. >> what happens to prices? we've seen prices come down significantly. back below $48. is that a reflection on this of what happens with oil prices? >> i think it's registered with the market to a degree right now. particularly because futures contracts have longer dates to them. like there's a 30-year treasury note. there's a ten-year futures contract. the back of the curve, as we call it will get pressed down a little bit but, look, demand does keep growing. beer in a glut right now. that glut isn't forever. there are adjusts being made. and other adjusts being cut back just as this is being made. there are fields producing. getting oil out via truck and train. this pipeline will make it easier for that oil to not only get to our market, but the global market, improving supplies. keeping a lid on prices is the bottom line. >> if nothing else, the extreme pressure on opec, thinking they can impact prices. >> they absolutely have their hands full now. and the rest of the world's producers, the u.s., canada, is taking it to them. >> but didn't we produce too much oil that would become self-defeating? in a global market, i'd love to own the global markets for oil in the united states. i don't really buy into that narrative. it can be too much and hurt rt price and then it was actually a bad idea to be so productive. >> unfortunately, my experience with the u.s. energy experience is they overshoot. >> you see what happens, the price goes up, price goes down. so it's a commodity that will come home if they do too much? >> i think so for sure. but it's self-correcting. as we saw with the last cycle, price it's collapse. >> is it just political that i'd like to put opec out -- >> no, i'm rooting for that -- >> much more powerful than they are. >> absolutely. our guys are driven by commercial interests. whereas, their policies quite often are political and wanting to harm our economy. >> and that's a reflection of the states need for finances? >> no doubt, desperate for it. what i'm worried about it, though, since the saudis are by far the lowest caught producer that they will flood the market in american beauty theory, like rockefeller did back in the day. and try to squeeze us, all of the u.s., out in particular. it happened in 2000. we can't come back for a decade. for a time. until then, we find ourselves, united states in a vulnerable position once again to these very folks who work against us so often. >> so, we need to keep this industry strong and it is, thankfully. but, you know, we've got to get -- u.s. calls are coming way down. pipelines like this will help that. because part of the cost problem for the u.s. producer is getting that oil to market. so pipelines like the trump administration is going to fight for here and push through is going to be a big help for securing the future. >> a price they can make money on. >> exactly. >> john, thank you. >> thank you. when we come back, leggings on a plane. how united dealt with the dress code violation and turned into a twitter spectacle also a public relations nightmare. stay tuned. you're watching "squawk box" on cnbc. surely, you can't be serious. >> i am serious. and don't call me shirley. 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(applause, cheering) new york state is filled with bright minds like victoria's. to find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. welcome back to s"squawk box," everybody, we've been watching u.s. equity futures. after seven years of decline, we're looking at another down day. futures include almost triple digits with the dow down. s&p futures indicated to open down by more than 14 point it's and the nasdaq down by about 28. this story just in, dow and dupont have received approval from regulators from the planned merger. that comes from divestiture of certain businesses. the two still get an okay from u.s. regulators as well. coming up, media giants that could jump 40% in the next year according to barron's. and leggings causing a twitter storm for united. plus, another beauty at the box office. disney brings in another milestone. a quick check of european markets, right at this moment. e*trade's powerful trading tools, give you access to in-depth analysis, and a team of experienced traders ready to help if you need it. it's like having the power of a trading floor, wherever you are. it's your trade. e*trade and the wolf huffed like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day. symbicort contains formoterol. medicines like formoterol increase the risk of death from asthma problems. symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. you should tell your doctor if you have a heart condition or high blood pressure before taking it. symbicort could mean a day with better breathing. watch out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort free for up to one year. visit saveonsymbicort.com today to learn more. it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? will your business be ready when growth presents itself? american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com. time for sectoromics with landon dowdy. >> the real estate sector has a tough run since trading last september. it's the worst in conception versus the overall s&p. the newly refined is dominated by companies as well as service companies. main reason for rise in performance. rising performance in reits to buy new properties and with business investor giving higher returns with less investments. there are bright spots. the winners, cbre up 21% since the sector began. web securities attribute that to successful cost control efforts pushing the real estate firm to outsource. host hotels and early earnings guidance despite higher uncertainty around the economic cycle. and the losers, the retail reits. kimco, macerich, and simon all down. and pointing to negative headlines about store closures and retail bankruptcies. along with continued growth of online retailers. guys barks to you. >> okay. thank you for that. we're going to now move to leggings, united airlines coming under some fire after two teenage girls were barred from boarding a flight because they were wearing leggings according to united. two girls were not allowed on to the plane because of the flying under employee pass that sparked firestorm on social media. in a tweet, the company passeng this morning were united pass riders, and not in compliance with our dress code, company benefits travel. to our regular customers, your legs are welcome. >> i think that's what decree indicated so much confew. >> people didn't realize that they were people lo were not actually paying customers. >> right. >> there were there as a benefit for some and that is a very specific dress code for those -- >> i think leggings are very comfortable when i fly. >> you wear them. or not? >> not really. not so much. what do you think about this? what do you think? >> i think -- i mean, i think there needs to be -- i can understand that it's in -- >> no leggings in first class. >> i can understand. i'm only kidding, but within united's corporate review to have a dress code when employees fly, if you want to argue about whether leggings violate that, that's fine. but you don't want someone going, i don't know, you can imagine that there's some line that you would draw for what you would want employee -- >> i think these are family members of employees. not employees. >> right, right. family members of employees. on united's pass, they can dictate. if it were just a couple of teenage girls wearing leggings. >> that would within a different story. >> and i don't think the people that fly -- you know the twitter world we live in right now is -- it's rough. you know. >> yes. >> i mean, everything, every, every -- i worry about, you know, i certainly -- >> you are on tv. >> this is only half. >> stocks to watch -- >> i'm all buttoned up. >> that's such a -- >> yeah, yeah, understatement exactly. yeah. it is. you're so -- you know, pc and everything here. if people only knew -- >> elon musk calls twitter now a health scape. >> it's a countries pool. >> if real life was what twitter is like we'd have problems. which is maybe why twitter struggles the way it does. >> i'm telling you when you're anonymous you can be such a douch compared to, you know, the normal -- right? i mean when you're totally -- >> you said it. >> the stuff that people do -- >> yes. you're -- >> you would never do that. >> the advent of the internet, it's just the trolls have found a home in twitter. >> yes. >> it used to be in the message boards. >> yes. >> that you'd read. and it's like god, is this person just -- just -- anyway. viacom is the subject of a positive mention in barron's which says the shares could rise 40% this year. paper says the stock will get a boost from the new ceo and focus on paramount pictures unit. as well as a handful of its cable networks. amazon considering opening brick and mortar stores that would focus on selling furniture and home appliances. that's according to "the new york times." and snapchat parent snap rated overweight. new coverage at morgan stanley as other firms have done. morgan stanley is focusing on snap's engagement with millennial users. one thing i didn't talk to you about becky was this article in the weekend on what netscape is spending dwshs netflix. >> i was like, wait, you're back to message boards. >> netflix is spending $6 billion on original -- spending five times what hbo is spending. >> right. >> so talent is getting bid up and producers are -- >> and spending i think maybe three -- >> it's good for people, for us. >> it's good for the content. >> that like content. >> creates a shortage. >> creates a shortage but it's amazing. so they went from dvd rental to they're almost, what are they? a tv studio? >> a production company. >> what it does show is that anybody, if you have a checkbook, you can create content. i mean it used to be people thought you had to be a studio and you had to have all these relationships. if you have a checkbook you can create those relationships very quickly. >> if you decide to be an investor -- >> money talks. >> you decide to be an investor in netflix stock what are you investing in now? >> you're investing in a distribution content company, and a creative content company. >> sort of like other companies i guess, maybe. >> right. >> but that seems to introduce a lot more risk in to what you're trying to do. >> there's a question about the margin long-term. if you look at the margins that hbo has or some of the other premium cable players have, they're significantly higher. the question, though, is, given the competition, what's -- are their margins going to compress because they're going to have to pay more for the content? >> good time to be an actor. probably. >> you go. >> another time -- >> or a screenwriter. >> no i've tried. you know that. i gave up. >> you gave up? >> no, they gave up. they said your emotional instrument is clogged. i mean there was never anyone stiffer than, you know, trying to -- the rest of the class laughed when i tried. >> which is hard to believe knowing how anything goes when you're on air now. >> that was after 25 years. drama. of being on air. >> another box office beauty for disney, the live action version of "beauty and the beast" topping the charts for a second straight weekend. the film took in $88 million. it's now topped $300 million in ten days. it febded off the power changers, which made $40 million over the weekend. >> and the last spot in the final four was up for grabs last night in a thrilling finish, between kentucky and north carolina. and i had north carolina. i'm telling you, i did watch, though. because it wasn't -- it wouldn't be the end of the world. andrew might have beaten me in the brackets if north carolina had not won, so there was a little bit of a problem. but down by three with less than ten seconds to go the wildcats tied it up at 73 with a clutch three pointer after a great free throw shooter missed the front end of a one-on-one. it was unbelievable. the tar heels were quick to get the ball in down the court and found the open player, and for a basket to put them up by two. north carolina wins 75-73 reaching the final four for the 20th time. it's a record in school history. the tar heels will play oregon on saturday night and the ducks haven't been in the final four since the very first one back in 1939. the other game features south carolina, it could be a north carolina/south carolina final which would be amazing. but they're playing gonzaga, which they three-pointed my xavier musketeers to death. it was horrific watching that. it's the first time either school has made the final four. but, you know, only got ten seconds. >> when we come back, gop moving on after a failed attempt to reform health care. we have former health and human services secretary tommy thompson weighing in on the politics of health care, next. ♪ from engineering and manufacturing... to stealth bombers... to next-generation fighters... ♪ to landing an unmanned vehicle on a carrier for the first time in history. just wait till you see what's next. that's the value of performance. northrop grumman may not always be clear. but at t. rowe price, we can help guide your retirement savings. so wherever your retirement journey takes you, we can help you reach your goals. call us or your advisor t. rowe price. invest with confidence. global markets sell-off. the futures pointing to a lower open on wall street as the failed health care bill rattles vefrs' confidence. former health and human services secretary tommy thompson will join us. we'll talk technicals, oil prices and currency straight ahead. after suffering his first major defeat as president, donald trump turns to tax reform. congressman from new jersey weighs in. and the stage for the final four is set. south carolina, north carolina, gonzaga and oregon. we will talk hoop dreams and brackets and what it all means for business as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." good morning, welcome back to "squawk box" right here on cnbc, live at the nasdaq marketsite in times square. we are in the red this morning. you're looking at the dow likely to open off 88 points down nasdaq would open down about 38 points. let's get you through some of the big headlines. dow chemical and dupont received european union approval for their planned merger. condition of that approval is the two companies still need approval from u.s. regulators for that transaction to go through. also gasoline prices have fallen over the past two weeks though not by much. the latest lundberg record says prices are down a penny with the average price down to $2.34 per gallon. two fed speakers are on today's calendar. both of them are voting members of the fomc this year. chicago fed president charlie evans and philadelphia fed president patrick harker have public appearances, both expected to address their latest views of the economy and monetary policies. in washington, the trump white house will try to move on from its defeat on health care. kayla tausche joins us with more on what's been happening. we guess that they're going to be moving on to tax reform from herein >> that's at least what the white house is saying. the administration has promised countless times that i would pursue tax reform, whether it's the campaign trail or stump speeches meant to sell the health care bill. on friday following the defeat of the american health care act the president said tax reform is on his mind. >> we'll probably going are right now for tax reform. which we could have done earlier but this really would have worked out better if we could have had some democrat support. remember this, we had no democrat support. so now we're going to go for tax reform, which i've always liked. >> we know the president likes tax reform. but the problem is there are a few policies on the table that have much more urgency. the debt ceiling for instance was hit two weeks ago. there's a hard budget deadline at the end of april, and there's already been money allocated for the border wall submissions for which were accepted until last friday. now all of those battles are going to require congressional support in some form, and that currently appears up in the air. speaker ryan on friday said the republicans need time to regroup. le. >> i will not sugarcoat this. this is a disappointing day for us. doing big things is hard. all of us, all of us, myself included, we will need time to reflect on how we got to this moment, what we could have done to do it better. >> well there's one specific big thing looming out in the distance, and that is the april 28th budget deadline. that's going to approach particularly quickly, considering there's only 12 legislative days between now and then. so the white house may view tax reform as a win, but unless it delivers a fully packaged plan, it's unlikely that congress has the band width to pursue that in the near term. >> kayla, thank you very much. joining us right now is former health and human services secretary, and former wisconsin governor tommy thompson. and sir, thank you for being with us today. >> well, becky, it's always a pleasure to be on "squawk box" and thank you very much for having me. >> what do you think happens next? the president has said he thinks that obamacare will kind of collapse under its own weight. what do you see hang? >> well i think obamacare is accelerating rapidly downward. and, i think it's only a matter of time that the premiums will go up, and more insurance companies will get out of the market because they can't make any money under the restriction of obamacare. so as a result of that, it's on a spiraling downward that's going to end up in a catastrophe for people that have obamacare. ed truth of the matter is republicans have got to regroup and they've got to pass a health care bill. there's no question about it. the first thing we've got to do is educate the congress about health care and what it means. and they're not going to have that much -- that long to wait because they have a big issue coming up in may, the continuing of subsidies. csrs are coming up sometime in may and they're going to have to vote on whether or not to continue the subsidies or not. so all of this points to the fact that health care is not something that they're just going to put to the side and watch it die a slow death. they're going to have to do something to repair it and to fix it and they're going to have to come together to do that. >> public opinion for obamacare was something that was not very popular until recently. recently it has garnered much more support. >> that's true. >> so how do the republicans kind of face that reality? >> well, i think the big problem was i think they tried to push it too fast. and i don't think the american -- >> the health care bill? >> the health care bill. tried to push it too fast. i don't think the american public really understood what the republicans were trying to do. and i don't even think a lot of congress people actually understood all the ramifications of it. so the first thing they have to do is educate the american public on health care. because it's a very complex subject. and then they're going to have to come in more and piecemeal, and so that people in the congress, and the american public understand what's going to happen, how it's going to affect them, and how it's going to improve their health care, and their lives. this has got to be done. this is elemental class 101. >> what did you think of the bill that paul ryan and the house leadersship had put forth? was it the right bill? >> it was the right bill. the problem was, it was not the total bill. and everybody was expecting that, you know, the total ramifications. paul was very up front and said this is a three legged stool. the first thing we have to do is get this one done. then we're going to go on to administrative rules. and then the third one is going to be a bigger one that's going to have to have bipartisan support. all of it together would have worked. but the problem was, the first one had a lot of consequences, because it was dealing with the budget reconciliation and not many people understood that there was a second and third act to follow that was going to fix some of those problems. >> governor, do you think that the members of the freedom caucus at this point, there's been a an opinion put forth that maybe they've stood for principle on this one, and that maybe next time they could say, well, we satisfied our constituents that wanted us to resist any entitlement whatsoever? could they turn around and come back and say, okay, this is something that we would -- that we would support? or does the bill have to move further right? and then that would alienate the more moderate republicans? or i mean, boehner -- boehner's gone because of these same 30 guys really. i mean do those guys, do you have to wait for a midterm, and -- who knows whether the ranks of the freedom caucus increase or decrease in 2018. i myself don't know. they come from some pretty conservative districts. what can the -- how does the republican party become more united in the house? i don't, you know -- >> they have to. and i think you've also seen the sort of a fracture where one member announcing over the weekend that from houston, one of the congressmen, said that he's no longer going to be part of the freedom caucus. he's going to go back and try and unify the party. that's a baby step forward. but i think the freedom party's got to realize, you know, that what did they do? they killed the health care bill, but they had a chance to repeal obamacare which they campaigned for. they had a chance to get immediate tax relief, which they campaigned for. and now they don't have either. and so i think they're going to have to reflect upon the consequences of their actions. and i think a lot of them are going to come to the conclusion that yeah, maybe we acted on principle, which is always good. and maybe we're going to have to find ways in which we can compromise. accomplish the same things but do it in a way that's going to bring unity to the party. i hope that's the ultimate objective and the ultimate conclusion -- >> that's a hell of a principle to stand up for when it handed a huge victory to pelosi and schumer and the democrats, barack obama. it puts a -- throws a wrench in the works for subsequent -- >> everything. >> -- poll sill for the trump administration. it embarrasses ryan, it embarrasses trump. i mean all that for, you know, so that -- and i wonder is rand paul, i mean, is he -- is the principle there? or is it self-you know, running -- he's going to run-i mean you don't know what the motivation of a lot of these guys are. do you? >> i don't want to ascribe, you know, objectives or attitudes to anybody. all i want to do is say that the freedom caucus, the far right is going to have to come back and realize that people argued for so many years let the republicans have control of congress and the presidency, and watch things get done. the first bat, the first time up to bat they strike out. that is a failure. and we have, as republicans, we got to come back and say, you know, we made a huge mistake. a huge miscalculation here and we've got to come back together and start passing congress -- congressional legislation because we've got to show congress can actually work. that is always what paul ryan is always put himself up to accomplish and i am absolutely certain paul can do it. and paul is a fantastic leader, and i think hurt paul, hurt the president, hurt the party, and hurt, you know, even the freedom caucus, because they could have had tax relief immediately. they could have got rid of planned parenthood, that's what one of their causes, they could have got a lot of the restrictions taken out of. they could have changed all they would have had to have done is vote for the bill and know that there were other bills, other acts to follow -- >> mr. secretary, real quick in terms of what comes next, one question that we asked in the last hour is whether the president should, through executive actions, try to stabilize the current health care plan? or to the extent there's opportunity to undermine it, to the extent that it will ultimately explode, or try to hasten its explosion, what should he try to do? >> i never like anything trying to undermine something. you know, americans need health care. let's find a way to improve and change what needs to be changed and get on with really making health care work for all americans. we can do that. this is our -- you know, we're americans. we can accomplish that. and we should accomplish that. >> governor thompson, thank you for your time today. >> thank you. >> i'm unclear on implode for explode. >> you know i saw there was some commentary on the twitter sphere about that. >> which is it? which is better in this context? >> i thought it was supposed to implode. >> that's what i thought. >> then the president started saying it was going to explode. >> coming up we're going to talk -- and then tax reform now front and center after the health care bill fails, congressman bill pascrell is going to join us. and later congressman david sh week ert is going to dane us. you're watching "squawk box" on cnbc. with e*trade you see things your way. you have access to the right information at the right moment. and when you filter out the noise, it's easy to turn your vision into action. it's your trade. e*trade. at crowne plaza we know business travel isn't just business. there's this. 'a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. ♪ you'll have to deal with pressure ♪ welcome back to "squawk box." futures have paired their indicated losses a little bit. they were triple digits now down ott on the dow. 13 on the s&p, and 23 on the nasdaq. joining us now to talk technicals is katie stockton. chief technical strategist at btig. it hasn't felt like a really sharp pullback, sort of a death by thousands. six or seven days of downward momentum. which we haven't seen in a long time. but the biggest day was, you know, 1%, i think. >> right. >> so it the beginning of a 5%, 10% pullback? >> i don't think it will be that dramatic? >> not 5 or not 10? >> maybe 5 but not 10. and you know, this month has not been a great month for the market. we know that. now today, of course, we have the futures indicated lower. what i think we need for the market is really like a fleshout. and this day might be it. you never know. by that i mean you have a bit of a shakeout of the weak holders of the market. and as that occurs you've got these extreme readings in the markets internal measures, that's volumes. you'll get a spike in volume and oversold conditions will spread out very quickly. things like that that indicate that maybe a low is upon us. >> what, at 20,000 on the dow, what would constitute a -- i mean, you're describing almost some type of selling climate. >> mm-hmm. >> situation. i mean that -- 1% is 200 points. people get real nervous when that happens. even though i mean they'll be ready to, you know, if it was 2% -- >> right. it doesn't take much. >> it doesn't take much. >> really doesn't take much. and already we've had a weaker month. we've seen some of the sentiment data come off their sort of overbought extremes, if you will. the vix rallied for the first time year to date. >> when did that happen? >> last week. and now we saw a little gap up in it this morning. so when you get these spikes in volatility is when you do tend to see the selling climaxes. that's what we look for as opposed to an actual level. so we can look at support levels for the major indices, for the s&p 500 i'm watching 2280. >> 2280 would be another 63 points. so that's another 2.5%, 3%. >> exactly. >> the total pullback would be around 5% there? >> right. and that wouldn't really damage the intermediate term uptrend or the trump rally, if you will. to me would be a buying opportunity, the long-term momentum behind the market is still very solid. >> so you would say that's intact? >> intact. >> with an objective on the s&p of where? 25, 26? >> that's the hard part. without a breakout we don't have a way of gauging upside. we can look at other major indices around the world and resistance long-term, even some cases final resistance is 10% to 12% above current levels. if we do bottom around 2280 we get to be 2600 on the s&p 500 so we're getting a step ahead there. but really you know, 10% plus upside over the very long-term i think that's promising. >> let's say there's not a sharp downdraft that gives you what you were talking about. let's say it continues this slow move down and then goes under the 2280. when you would say there's a lower objective? >> that would do it, really. >> below 2280? >> the slow grind lower is much worse than the swift downdraft. and that's the case for an uptrend, right? s so there's no arguing against the fact that themaker the is an uptrend. the pullbacks in a market that's healthy tend to be swift and shake out that sentiment behind the market that got overly complacent. and ideally that's what happens. it's that slow grind lower that we don't want to see especially to the extent that it takes us below that 2280 decisively. >> that would be a sign that okay, there's still a lot more to come? there's still a lot -- beware of the big shakeout at that point? >> i think so. we'll also obviously look at a lot of stocks. so from a bottom up perspective, we'll look at support levels for individual names. much bigger than, of course, the major indices. so if we start to see a lot of breakdowns on the individual stock level, that's where we get concern because that means the market has lost breadth or participation. >> we have talked about how leadership has changed and how there have been some shifting sectors in particular. is that something that you take notice of, or no? >> for sure. and you know a lot of it has to do with what interest rates are doing, of course. the sector that i'm focused on right now is technology. it's obviously outperformed and really done so fairly consistently, semiconductors for one have outperformed now that they, of course, are relatively overbought. so i think it could be technology that's really responsible for that downdraft if we get it. a little bit more severe than that slow grind lower is a pullback in that technology. >> is there some area that you think is specificly underbought at this moment? underbought for the wrong reasons? >> it depends on the time frame. if you're looking short term i would say you should still see outperformance by the more defensive sectors. so relatively oversold conditions in utilities, and staples, even discretionary has seen a little uptick. but beyond the near-term which is really where i think we should focus, i think there's more opportunity in the sort of higher growth areas -- >> what do tacticals say about the retail world? all we do is talk about how the retail world is dead. >> talk about oversold, right? oversold isn't necessarily a good thing until you see the uptick in momentum. so you have these oversold conditions already. and last week we saw relative strength improve for the discretionary sector more broadly. so i think there's some promise there. but we run the risk of being early. >> so 2280 is right like i think halfway between philly and wilmington. >> a train analogy. get ogen the train -- >> you're going to d.c. you missed the train. >> right. >> i did miss the train. >> you didn't want to get on at philadelphia. so now, we're all the way down almost to dwi, almost down to baltimore. >> right. >> now it's back to between philly and wilmington. >> right. >> you've been hitchhiking. there's a stop. you can get on this train, are you getting on between philly and wilmington? or are you waiting? >> i got my dry powder. >> you're going to wait for it to come back? >> she says the train may be coming back -- >> last one went to new haven -- >> by consistent. >> you shouldn't, if you get a chance you should get on this thing. you do the wrong -- you've been -- just tell me yes i'll get on at philly you'll get on. >> if it gets back to trenton, or newark. >> it doesn't stop in trenton. >> newark. >> all right. then you got to hang out in newark waiting for it to get on the train. hate new jersey. >> i'm happy to be in new jersey. >> i'm saying new jersey smells. he does. he says new jersey smells. the factories, and you're so -- >> you know, newark is up and coming. technology. >> if you want to keep all that in manhattan -- >> you don't want it in newark. >> i went to a monster truck show in newark. >> every day we take all that waste in manhattan. 9 million people, shoving it all away and we get rid of it for you and then we've got to listen and we smell katie, thank you. >> thank you. >> appreciate it. >> okay. >> when we come back, new jersey congressman bill pascrell who has been listening in to this conversation about new jersey is going to be joining us. he sits on the ways and means committee. we're going to find out if the house can get tax reform done. and then, oil prices down more than 15% year-to-date. we're going to talk about where crude prices are headed and a rising inventory and production environment. "squawk box" will be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. remember here at ally, nothing stops us from doing right by our customers. who's with me? we're like a basketball team here at ally. if a basketball team had over 7... i'm in. 7,000 players. our plays are a little unorthodox. but to beat the big boys, you need smarter ways to save people money. we know what you want from a financial company and we'll stop at... nothing to make sure you get it. one, two... and we mean nothing. ♪ ♪ coming up, washington getting ready to tackle tax reform after the health care bill fallout. congressman bill pascrell is going to join us right after the break. take a look at u.s. equity futures. we are in the red this morning. the dow looking like it would open down about 95 points. "squawk" is back in a moment. yes? please repeat the objective. ♪ thrivent mutual funds. managed by humans, not robots. before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds.com. today fallout from the political storm, the impact on the ♪ your hometown your hometown ♪ ♪ your hometown good morning, everybody. welcome back to "squawk box" here on cnbc. we are playing bruce springsteen in honor of andrew. favorite -- >> well, no. we have a congressman who's coming up from a great state. >> from the great state of new jersey. >> yep. too late. >> we are live at the nasdaq marketsite in times square this morning. among the stories that are fropt and center today, amazon is reportedly considering the idea of opening brick and mortar furniture and home appliance stores. that's according to "the new york times." these stores would be showcases for items that consumers are reluctant to buy without seeing them in person. a judge has ruled that a u.p.s. illegally shipped millions of cigarettes in new york from native american reservations. the ruling entitles new york state and new york city to an undetermined amount of damages and penalties. the city and state had sued u.p.s. claiming that the move deprived the city and state of $35 million in taxes. and a new study says that a decline in home ownership is at least partly responsible for holding back u.s. economic growth. rosen consulting group said if home builders had bounced back to the normal long-term level of activity last year it would have added more than $300 million to the u.s. economy translating to a 1.8 boost to gdp. we're going to talk more about this later today. blame the millennials for slow growth. >> okay. talking about the great state of new jersey. now that congress has decided to put health care reform on hold the house ways and means committee can now focus its attention on tax reform. congressman bill pascrell is going to join us this morning. he sits on the ways and means committee. good morning to you. >> good morning. how are you today? >> i'm great. help us try to understand where you think this all goes next. >> well, you know, we made a mistake i think in 2009 when we went to cap and trade, first, andrew. if you remember that, what it did was, we knew the bill was not going to be taken up in the senate. and therefore i think we missed a great opportunity, because it set a bad taste in the members' -- our own party's mind, and mouths, because we passed it but we wasted a lot of people and we wasted a lot of time. because it set the stage for the health care bill. i think that was a big mistake that we made. i think that the republicans have made a big mistake by putting this out front first when they had seven years to put the bill together, and they came up with a piece of junk that i've never seen before and they all admitted it. regardless of what spectrum or part of the spectrum you're on in the republican party. they better be smart before they do the next thing, let's say the next big thing. >> what does it mean to be smart in this regard? as you know, the markets have been anticipating, "a," that obamacare was going to get repealed and that was going to pave the way for meaningful tax reform. when you think about tax reform now you have this trillion dollar issue which makes it harder, which is to say that you don't have the repeal of obamacare. you have the border adjustment issue which may or may not happen. and the other question is are we just talking about corporate tax reform or talking about a bill that encompasses corporate tax reform, and personal taxes as well? >> yes, great question. i think your last question is the key to whether we're going to get anything done. and we're insisting in our party, and we've insisted before the presidential race of last year that if you're going to have tax reform, for wall street, you need it for main street as well. we're going to insist upon that. that doesn't mean we cannot work together. there are a lot of things here we do agree upon. we believe in bringing down the corporate tax. there's no question about it. to what degree, that's another question. because the more you shrink the revenue, the more deep in debt you do go. and we don't want to do that. i'm sure republicans don't want to do that either. >> and let's talk about what on the corporate side the number could be. the president during the campaign obviously talked about 15%. that seems off the table at this point. the democrats and president obama, by the way, used to talk about 28%. is there still room to get to 25%? >> i think there's room to go between 25% and 28%. but again, whatever we're going to do on that side we need to do for main street. there's no question about that. we saw the tax cut that was going to happen, if the -- this bill on health care ever passed last friday, or ever was put up for a vote. most of that tax cut went to the top 1%, if not even a small -- sh ripging portion of that. so i have to look at this and see what the numbers are, and the members of the ways and means committee will do that. there's no question that they're moving towards tax reform. but don't forget we've had other efforts in the past over the past four or five years in ways and means to bring about tax reform. we started out on a bipartisan basis. we wound up being partisan and we got nowhere. >> but let's just talk about how partisan this could be. will the democrats vote for anything that the republicans want to put forward? in this instance? >> will they vote for some of the things? yes. i think we could come together. as i brought that example out on the corporate tax itself. when we get into the areas of depreciation, we get into the areas of having folks not being able to deduct their local taxes, or their state taxes, or their mortgage interest rates, i don't think that's going to fly. that's my opinion. >> and the question, of course, though is, how does the president deal with you, being on the democratic side, versus for example the freedom caucus which clearly upended the health care plan? >> well, you've got to talk to us. i think that is a good starting point. republicans have their own -- their own problems. they'll try to settle those problems. as we would do if we were in the same situation. we were very united on this issue, as you well notice. but that's not going to be enough to get us across the goal line in those elections of november of 2018. what we need to do is come up with some positive things, as well. we can't just simply say no to tax reform. but we will say yes if the main street is looked at, middle class is looked at. because they would have gotten it right in the neck on this new health bill and particularly those people between the ages of 40 and 64, they would be paying a heck of a lot more. >> final question from me on the health care issue. which is to say the president has suggested that he thinks that you're going to come back hat in hand in a year from now, he thinks that health care is going to implode, explode, use whatever term you'd like, and that your guys are going to be back on your knees to him. what do you think is going to happen? >> well, he can play that game. but the point of the matter is they're trying to bleed the money that's supposed to be in aca in the first place. they took the taxes, tax money and had no problems with that in the last three or four tax proposals. they wanted to do away with aca but they wanted to use the money, revenue that comes in for it. that's not going to fly either. so if we're going to have a dialogue let's have a dialogue. let's go at it. >> okay, congressman we appreciate your time this morning. >> honored to be here. >> great to see you in the great state of new jersey. back at cnbc hillary clinton. >> thank you. >> when we return, leggings on a plane plus we will talk dollars, oil and your investment. check out the futures at this hour. markets have been weaker this morning. it's been seven down days for the markets. right now dow futures indicated down by about 93 points. s&p futures down by 13. the nasdaq down by 24. stick around, "squawk box" will be coming right back. plus it's the top of the hour, congressman david schweikert will join us to talk about what is next on the trump agenda. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? at crowne plaza we know business travel isn't just business. there's this. 'a bit of this. why not? your hotel should make it easy to do all the things you do. which is what we do. crowne plaza. we're all business, mostly. your parents have been ittalking about you for years.. they're all about me saving for a house, or starting a college fund for my son. actually, i want to know what you're thinking. knowing that the most important goals are yours. it's how edward jones makes sense of investing. ♪ ♪ wanna get away? now you can with southwest fares as low as 59 dollars one-way. yes to low fares with nothing to hide. that's transfarency. ♪ welcome back, everybody. this is making some headlines this morning. united airlines coming under fire after two teenage girls were barred from boarding a flight because they were wearing white leggings. according to united the two girls were not allowed onto the plane because they were flying under an employee travel pass that requires a very specific dress code. there was a firestorm of criticism on social media. but united defended the decision in a series of tweets and the company released a statement late last night saying, the passengers this morning were united pass riders. they were not in compliance with our dress code for company benefit travel. to our regular customers your leggings are welcome. let's get a breakdown of the week ahead with the dollar on oil. on currencies, and on oil, kathy the dollar is inexorable rise which we all assumed was going to continue, really took a long turn at albuquerque or something. i mean it's been derailed. my question i guess would be, are these domestic issues that derailed it? with, you know, what happened last week, or could be brexit or could be netherlands, or could be le pen? could be all what's happening with the eu. >> the single most important driver of the u.s. dlar right now in currencies is interest rate. rates fell when the federal reserve raised interest rates. they're falling now. a lot has to do with the failure of the health care bill and the lack of funding for the tax reform. and also with the next step. which is a controversial border tax which is the other source of funding. as you mentioned we've got a lot of events abroad that make investors nervous. they don't necessarily want to be exposed to significant long dollar positions. just, you know, long risk i guess going into many of these events. >> but they've been pro-euro development. >> well some of them eurozone is doing quite well. but i'm very leery of this rally in the british pound. i think the markets are underpricing the risk. i think that when they do trigger article 50 we're probably going to see a significant drop. now with that in mind, it's going to be years before we actually see the formal -- the actual final exit. so it's going to be kind of passed over time. but at the end of the day, i think you know, with japanese year end happening this week, with the quarter half ending this week, as well. even though we do see some further u.s. dollar weakness, you know, we're at very key levels. i don't think we're going to see a crash over the next seven days for example. >> and you don't think anything happens in the french elections that's not in the market already? >> well the french elections we still have two or three weeks since the first round of votes. so i think, you know, there is a serious risk. i think just as here in the u.s., markets kind of underprice that. and even though we did have le pen not do so well during the first debates when we get closer to the first round you're probably going to see a little bit of unwind in the euro. that's why i don't want to say we're near a bottom in the u.s. dollar but i think that the extent of the decline that we'll see from here won't be as steep as the one that we've seen previously. >> okay. we talked, jacques, quite a bit about oil already and it's similar. we have keystone, things like that and supply in the united states possibly going up. but you've also possibly got the notion of not 3% growth. not even close, if we don't get tax reform, and a lot of these pro-growth inishives don't go through. you've got the ten-year below 240 again is not great for oil either. >> definitely on the demand side we've seen gasoline down about 5% on demand this year from the doe data and we think part of that is due to the fact that retail prices are up 50 cents year over year. >> long-term what's your forecast for oil? we're in a 40 to 50 trading range or 50 to 60 trading range? we're below 50 already. >> sure. i mean, we've had a forecast of a 40 to 50 trading range and our thought is you really need to reduce global inventories before you see a sustained improvement in oil price. so what have we seen this year? opec production down yet inventories have gone up. and a lot of that is due to the fact that the world uses a lot less oil in the first half of the year. what we need to see is when opec meets in two months they need to continue on a production cut into the second half of the year in order to get any bang for the buck. >> you're not looking at a slower growth scenario due to, you know, the tough road to hoe for the administration in getting a lot of these pro-growth initiatives? it's still more about supply with you? >> i think so. i mean you've got to remember this is a global demand. and most of the demand is not coming from the oecd countries globally for oil. we need to focus on taking supply off the market and that would reduce inventories. >> the dollar is not going to strengthen if we don't -- if we continue to do 1% or 1.5% gdp. >> oh, yes, absolutely not. but i think you know, globally, we do have -- the u.s. economy slows it's not as if it's going to be good for the rest of the world, either. and perhaps trump has a couple more tricks up his sleeve. we don't know yet. and so i think right now the federal reserve, you know, we haven't really heard much. we do have ten federal reserve officials speaking this week. if they have any comments regarding future growth now that, you know, we may not necessarily have the tax reform. but they could still be hopeful. and if they're hopeful, and they keep the door open to june, june odds have fallen certainly, i think there's still the prospect of growth. i wouldn't give up quite yet. >> hmm. >> all right. thank you both. similar to what happened in oil and what happened -- it all seems to be related right now. we talk way too much about politics. but, the world wins. thank you. coming up some stocks you need to watch ahead of the open, plus an alligator gets a snack after a golfer's bad shot. take a look at this. we'll show it to you. the video and the unseen recove. it is next. usaa gives me the peace of mind and the security just like the marines did. the process through usaa is so effortless, that you feel like you're a part of the family. i love that i can pass the membership to my children. we're the williams family, and we're usaa members for life. welcome back, everybody. let's take a look at some stocks to watch this morning. egg producer cow main foods. revenue was significantly shy of the street forecast with the company pointing to a volatile market with lower prices and weaker demand. crazy to think of weaker demand for eggs in such a big way but that stock is now down by about 9% this morning. g-3 apparel out with quarterly numbers this morning. the maker of fashion apparel lost 16 cents a share for the latest quarter. six cents more than analysts had anticipated. revenue also coming up short and that stock is down by more than 15%. and intuit was removed from the conviction buy list at goldman sachs although they still rate it a buy. the firm says that the environment for consumer tax companies has turned more challenging. >> this week's wall street agenda. tomorrow look for monthly s&p case shiller home price index. also consumer confidence, and the speech by fed chair janet yellen. just heard another ten speeches coming from various fed heads also on the docket. and then, pending home sales on wednesday. thursday the final report on fourth quarter gdp, and then friday personal income, chicago pmi, and consumer sentiment, not a whole lot on the earnings calendar. a little light this week. look for results from lululemon, darden technologies and blackberry. uber's halting self-driving car tests after a crash in arizona. the crash involved one of the autonomous vehicles in self-driving mode. there were no back seat passengers. they've been testing the volvos. there was a driver in the car ready to take over the steering. in this instance apparently it wasn't the result, guys, of the autonomous driving -- the computer didn't fail in this case. it was another car that either ran a red light or did something else but ran into the autonomous -- >> which also raises the questions about the driving skills of these autonomous driving vehicles, whether they can do it or not. not that anybody is perfect. but you can take the defensive driving courses and look out for everybody else on the road. >> the argument is that some of these cars when they're doing what they're supposed to do, and google's car is much more advanced than this vehicle, given the number of cameras on them, that they might actually see a car out of control or, you know, coming at you quicker than you might see in advance. >> right. >> in this case the technology wasn't there to do that. >> it's hard to say without knowing exact details of what happened whether a human would be able to figure it out or not. >> you going to drive in a self-driving car? >> i like driving. >> but i want my kids in self-driving cars. >> almost every car commercial now is featuring something that shows the driver not being -- >> not having to parallel park. >> or not being as quick about, like he's talking about something like there's even one where the car next to him slams into the truck and his car stops. >> yeah. >> because -- >> but everybody's selling the same thing that we've got a car that's going to put the brakes on before you even realize it. >> right. you can understand why in some cases certainly would seem like a better technology. folks check this out. a couple of golfers in cape coral, florida, ran into a gator on the third hole during their round. it was hungry. uh-oh. one of the golfers hit the ball that landed right near the gator. as you can see, wait for it. gator was a little hungry. he took a bite of that ball. what the video doesn't show you is how the golfer got his ball back. "squawk box" has obtained the exclusive footage. here it is. ♪ >> that isn't his ball. we saw they threw the ball at the alligator, right? >> okay. >> i get it. >> why else would they already have a video? >> have a video rolling. >> a lot of places there -- >> don't mess around with gators. >> they are around. on a lot of courses down there. i love them. they're amazing creatures. i think if they chase you you're supposed to -- zigzag because they can't go -- >> yeah, a little trouble -- >> they're pretty fast, though. >> they are fast. they have a hard time picking up a dinner check, too. very short -- right on the geico -- >> yes, yes. >> and then he finishes somebody else's duck. it's funny. >> you can eat that? >> yeah. >> the last round of the final four was up for grabs last night in a thrilling finish between kentucky and north carolina. north carolina wins. reaching the final four for the 20th time in school history. they're going to play oregon on saturday in the second game. i think it starts at like 8:30 or so. i'm planning that. and the other one is starts at about 6:00. the ducks haven't been to a final four since 1939. the other game south carolina versus gonzaga. the first time either school has made the final four. with my son as we watch, now he's watching, it's at 70%. it's at 30%. it's at 90%. no now it's -- you can just see from the scores, ridiculous to look at the probability of who is going to win one way or another. but they were down by five. north carolina was down by five with like four minutes left. then they were up by five, but then they were trying to inbound it did you watch this? and it took too long. that gave them the -- and then they scored on that. then the guy had a one & one, missed that. they almost lost. yeah -- and then they had to hit that -- there haven't been a lot of overtime games this year. >> respect. >> very few. >> your microphone so you can engage -- >> exactly. >> there you go. it's like the santa's little helper. >> that was the charlie brown teacher. >> you know, that makes more sense than you usually do. congressman david schweikert talks about what's next from congress and the trump agenda. and then the market's coming off the worst week of 2017. the futures this morning pointing to the start of another crappy we'll. we'll talk risk versus reward. and then grover, super grover norquist will be here. americans for tax reform. he thinks they're going to take another shot at this. maybe do it next time. andrew is going to interview him. "squawk box" will be right back. . you totaled your brand new car. nobody's hurt, but there will still be pain. it comes when your insurance company says they'll only pay three-quarters of what it takes to replace it. what are you supposed to do? drive three-quarters of a car? now if you had liberty mutual new car replacement™, you'd get your whole car back. i guess they don't want you driving around on three wheels. smart. with liberty mutual new car replacement™, we'll replace the full value of your car. liberty stands with you™. liberty mutual insurance. market alert. stocks across the globe under pressure after the gop's health care setback. >> the next task on president trump's agenda. >> working with this congress, president trump is going to pass the largest tax cut since the days of ronald reagan. and we're going to get this american economy moving again. >> the road to reform and what it could mean for investors. straight ahead. plus a multibillion dollar hit to the economy. all thanks to dwindling home ownership. we will get a reality check as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york. this is "squawk box." good morning and welcome back to "squawk box." cnbc, live. live every day from the nasdaq marketsite. we're in times square. >> and holidays. >> in the center of new york city. >> we are. >> is this the center? i know that -- >> yeah. >> close. >> pretty -- >> the news center according to the people that work there, "the new york times" building, obviously. but, which is also really close to where we are -- >> you know. you know what times square is name after by the way, right? >> "the new york times"? >> because it's down there? >> loud and proud. >> times square -- >> "new york times," is it? >> and the building right behind us, which used to be where the ball dropped, right? that old building, was "the new york times" building. annex of "the new york times" in the 1800s. >> you know ignorance is bliss. i didn't know that. >> you're going to stop calling it times square? >> it called anything else? >> i'll tell you, it's -- >> no. >> nope. >> joe kernen. along with becky quick and andrew ross sorkin >> getting a rash -- >> you should have told him that awhile ago. >> closing up. my throat's closing up. the dow jones indicated down 103. the s&p down 14. nasdaq down 26 or so. in europe, they're reacting to, i think, you know the prospects for global growth. down. down this morning. amazing that the world's equity markets have been rallying with us. if we pull back, won't be quite as positive globally. >> i'm trying to figure out what the ten year -- >> signaling problems. creating like 235 right now. and i don't know. is it possible to get to 2 again? some people were predicting that. our kiddy kumar. >> yes. >> i don't know. >> okay, other top stories we're looking at this morning. european union approved the planned merger of dow chemical and dupont but they're going to have to divest some businesses as a condition of that approval. the two companies still need approval from u.s. regulators. dow chemical up morning natalie. in washington, president trump expected to announce you any washington -- white house office aimed at fixing the government with business ideas. called the white house office of american innovation. run by trump's son-in-law and senior adviser jared kushner. the office will work with well-known business names including tim cook, bill gates, elon musk. >> in the huffington post today, all they have to say to their readers is someone is suggesting that government should be run like a company, and you don't even have to explain what you mean by that to understand how horrific and heartless and terrible that would be. they just assume that anybody that's reading that understands. all they got to say is can you imagine -- >> instead of talking about corporate efficiency. >> or you know, doing things well or cutting out waste, or any of that stuff, their readers don't even consider that possibility. it's just -- anyway, it's cute. president trump shifting to tax reform after a failed obamacare repeal and replace. joining us now congressman david schweikert a member of the house ways and means committee. you were there. at ground -- >> oh, yes. >> congressman. i mean i don't even know. talk about tax reform. but, you know, we're all sort f of, you know, a lot of people that were hopeful about the agenda need to go into therapy right now. after witnessing that last week -- >> it was -- >> and you've got a body that did it 60 times when they knew the president wouldn't sign it. and they totally choked and gag, you know, when push comes to shove. i mean, no wonder the democrats are partying and laughing and pointing fingers. i mean, where are you pointing fingers for blame, congressman? >> look, there's a lot of pointing of fingers. and it was an interesting weekend because i spent here in scottsdale, beautiful weather, spent lots of time on the phone talking to members on the right side of our conference, left side of our conference, those like me who were actually for the bill. those who were against it. look, i'm still pathologicalically optimistic if i can keep some of the -- some of the feelings, the hurt feelings and sort of deal with those, if you listen to the members who were uncomfortable with the legislation, they had a fixation on are we doing enough to lower premiums for that individual market? here in arizona, that market is i'm going to use the word imploding. i have a county right next door to me that had 116% increase in their premiums. and all of arizona has only one provider. so the problem hadn't gone away. particularly for states like mine. so it still needs to be dealt with. but we may need a couple weeks here, where at least we now know where everyone's key buttons are. and -- >> is there any not buyer's remorse, i mean, any of the guys on the right that you spoke to, many of them said whoo, man, we really -- i mean are any of them saying we're really glad we did this? or you see any remorse whatsoever that maybe you can -- like we keep saying again and again, you sacrificed the good to stand up for what the perfect is which is like the anti-right -- >> look absolutely true. and for many of this was an occasion where a third of a loaf was better than no loaf at all. but be careful also on the math. remember there was also substantial number of members on the very moderate side who had become no votes. >> now you're make the worse. you're lucky you live in arizona. i would have been fine, too, gone out and probably 80 degrees and sunny. >> yes. >> and i would have put this all behind me. back here we got 35 degrees and rain. all right. which was the perfect, you know, perfect setting for what the freedom caucus brought us, i think. >> one more time. remember. the freedom caucus, which i was one of the -- i'm one of the founding members of, had a large number of voters -- or members of that, who had great concerns who weren't doing enough on premiums. had a fairly substantial bloc of members on more moderate side which also had a concern we weren't doing enough on lowering premiums. so at least on the surface, our bill, we have a common theme, which if we're focused on the same thing i think there's a path to get there. >> but congressman- >> this may be one of those moments where those of us, the rank and file members are going to have to do the heavy lifting and not expect leadership to come to the table with a solution. >> that is not what we were hearing from the freedom caucus. we had on one member on friday who said, mel brooks who said, look, this is a situation where this is one of the worst pieces of lendl slags i've ever seen. this is nothing but a huge republican welfare. i mean that doesn't sound like not doing enough on premiums. it sounded like he wanted the bill completely scrapped. >> look you're going to have a handful of those. but we as a society have made a simple math decision. if we have as a society are going to have pre-existing conditions covered. at that point, the math decision has been made. >> right. >> now we're just discussing how to pay for it. >> right. >> we've already created the box. >> guys don't realize it's a different world than it was seven years ago. and you know, you've got to give obama credit, you know, we squeeze the toothpaste out of the tube it ain't going back in in terms of entitlements. you're not taking it away. then you do what you can. and you do it in anticipation of the greater good from tax reform that comes with a trillion dollars in savings. i mean it's like -- it's like a mule to be so stubborn to handle off to the new president who helped you guys to get in, to hand -- you know, to tarnish ryan and make and weaken him. i mean, no wonder schumer and pelosi were smiling so broadly. >> oh, yeah. look we grabbed success from the jaws of whatever those things are. >> you like imploded. >> not doing any more happy gilmore pieces. >> yeah. >> look. this was a bad end to last week and the number of hours that were put in. the one thing we have today that we didn't have last week is we now know where every member's, shall we say, levers are. what they were concerned about. what they were worried about, and also maybe what will move them to a yes vote. >> yeah. >> now we need to take that list and see can we craft something that actually is good for states like arizona, which are having these incredible cost changes and difficulties coming? but also work for other states like back east that have actually had this very expensive medicaid model. >> right. >> somewhere here there's a solution. it's just going to be complicated. >> it will come back, too. so -- it won't be -- will it be 2017 when they try and do this again? or god i can't wait for tax reform. god almighty, that's going to be -- >> for some of us we need another week or two for the feeling to mellow out. and at the -- do remember, during this whole thing, those of us on the ways and means committee were still doing our work on tax reform. >> yeah. yeah. >> so that track is there. >> is that an easier path than health care? >> hopefully this makes sense. i think we learned a lot about our listening skills in the health care discussion. >> yeah. >> so hopefully we're going to use what we learned there and roll that in so more of the members who aren't on ways and means are vested in the complications and the information, and do it early in the process instead of when we roll out a final bill. >> david, this sounds like talking to my son's preschool teacher. our listening skills. working on those things. >> you're right. well some of that is more true than you know. >> on both sides. >> i have an 18-month-old. so this weekend i was half talking to members of congress, and then half playing with her and listening to barney. it pretty much seemed like the same thing. >> what role do you expect the white house to play in all this? and president trump specifically? >> the white house, there are a handful of staffers over there that are really, really sharp. people like mick mulvaney who used to be, you know, one of the founders of the green caucus is brilliant. i'm hoping we can use some of their access to information, some of their economic modeling, as sort of an additional fortification of why what we're doing is so important, and why we have to do it. >> mick mulvanemulvaney, by thes not pleased with the freedom caucus. >> oh, no. yes, at some point i won't show you the texts i received from him. >> right, yeah. >> we love having you on. >> yeah, it was great. we appreciate you, congressman. and you know, you know we're broadcasting live here from the crossroads of the world. >> of the new york's times square. >> formerly known as longacre square. did you know times square is named after "the new york times"? >> everyone knows that. >> well -- you know, maybe -- >> good comeback. >> i might have been in denial. i'm going -- >> on every morning. >> i'm doing crossroads of the world. i refuse to say that other name anymore. thank you, congressman. >> "squawk box" will be right back. >> longacre. >> longacre. the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. containing this information. read it carefully. ♪ ♪ wanna get away? now you can with southwest fares as low as 59 dollars one-way. yes to low fares with nothing to hide. that's transfarency. welcome back to skwrk skwrk, everybody. take a look at the futures this morning. they are under some pressure for most of the morning we've seen the dow futures down by triple digits right now down by 111 points below fair value. s&p futures down by 14. nasdaq down by 27 and this comes after seven days of declines for the market. joining us to talk more about it is robert watts, the ceo of rsw investments. also, chris baveras, senior managing director and co-founder of macro economic advisers. robert, why don't we talk first about what happened with the markets. we seem to have sputtered out a bit. >> seven days in a row deaf kleins. eighth day in a row since this happened since 2011. most of these have not been significant declines but certainly not the gains we've gotten used to. >> correct. it's been pretty interesting. since the election was happened that investors have showed a great willingness to want to prepay for president trump's policies, despite the fact that they are still on the drafting table. so, i think that friday was pretty important. at least for us from the fixed income side. the way we look at it. we've been more defensive in our portfolio positioning, but right now, you have to pay attention to what happened on friday. with the debacle of repeal and replace, it is now much less likely that you'll get a comprehensive tax reform package passed. and even if it's passed, it is very likely that it comes down to a more watered down version of what the markets had anticipated. so, the other thing that we need to pay attention to is that at some point in time, what you'll get is a conversion between sentiment, which has been extraordinarily high, and certainly off the highs. and reality. because we feel that these -- these policies, even if passed, will have a much more muted impact than many investors think. so to answer your question more directly, we feel that it is more of a pullback that is likely, but we don't think that on the bond side 230 without having some sort of a drift back upward or the equity side we feel there's probably more pullback before a resumption of some upward price movement. >> would you agree with the idea that the legislative goals just got a little more complicated on friday? and what do you think that means for growth in the nation? >> right. no question. i think all of these reform proposals, whether it's health care or tax reform, very difficult to get through congress, we've seen that. with what happened on friday, i agree with robert completely, that the prospects for getting tax reform sooner, or comprehensive as it might be, are really, really limited. so if we don't get the tax cuts, we don't get spending increases that we might otherwise have gotten, the economy doesn't get the boost that we would have seen and with that we're going to see the pullbacks that we already have seen. >> how much have you built, in terms of your model in terms of where the market was, what premium was built in with the expectation that obamacare would get repealed, a comprehensive tax reform plan would happen, and the infrastructure plan would happen? >> so we were very cautious about this. we put absolutely zero change in fiscal policy into our forecast, assuming they would be extremely difficult and we're waiting for the clarity. what is it going to be? so we put nothing in. what that means to our forecast is there's still some upside risk that we'll get some fox reform, some tax cut, some spending increases but they're going to be later in coming, likely smaller now because we've seen the freedom caucus saying look we're just not going to do it. we might even enforce the rules and if we do that there's going to be a lot less stimulus. >> robert, very quickly, looking at yields today, below 2.35% are you say you think it will be pick up if it gets 2.3%? >> i think 2.3% will cap the recent rally. certainly a little bit more to go. on the municipal bond side which is rsw's specialty, municipals came under pressure even more dramatically than treasury bonds because they kind of got doubly hit. people were anticipating some sort of tax change, which would have reduced the attractiveness of municipal bonds. but now, like i said, given friday's debacle with health care reform, it is likely that we don't see anything that's potent, and municipal bonds go for that much more value than they did before. i think we'll continue to trade in a wide range. >> robert, riis, good to see both of you. >> am coulding up, just how much the sluggish housing recovery has cost the u.s. next. right back with that story and a lot more when we return. when w. my business was built with passion... but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet? welcome back, everybody. new data from the rosen consulting group shows the slow housing recovery took a $300 billion toll on the u.s. economy just last year. joining us right now is ken rosen, he is the chairman of rosen consulting group. ize also chairman of the fisher center for real estate at uk berkeley, and ken, thank you so much for joining us today. this report i thought was incredibly interesting. so we appreciate your time. >> thank you very much for having me. >> so, i was a little stunned to read what you had laid out, which was that so much of our below our sub par growth is due entirely to housing. why don't you explain that. >> so usually, when we get recovery in the economy, the housing sector leads the way. lower interest rates, we get a very strong recovery in housing markets. this time we've had a very slow recovery, very sluggish in the single family for sale housing market. we're still 50% below where we might be based on demographics. and it's primarily due to the extreme vetting we've had of people trying to get mortgage loans. tighten credit dramatically, because of new regulatory environment and reaction to what happened in the great recession. so the regulations are very tough. hard for a middle income person to get the down payment and meet the credit criteria that would normally allow people to buy houses. the second is i call it post-foreclosure distress syndrome. that we lost 7 million people, lost our houses during the great recession. only 7% of those people have come back into the market again to buy. because they've had credit history that's been impaired, and they've really had shock. and lenders had the same thing. lenders are very reluctant to go outside a very conservative lending box because of all the penalties and fines. multibillion dollar fines for many of these banks and other originators of mortgage loans. >> that's not to say that we necessarily want to go back to the way that we were kind of vetting loans before. that was the reason, in large part, for the housing collapse, we were willing to give loans to anybody, wouldn't even try and make sure that they actually had a job. you don't want to go back to those days, correct? >> no. i think we should go back to where we were before the period of 2003, 2004, normal lending environment. and if that were to happen we think gdp for each of the next two years could be 1% higher, growth rate, than we have. which will put us back on a normal track. so mr. trump can get the 3% plus growth he needs by just moving back to regulatory environment and giving a safe harbor for those lenders. expand the safe harbor for those lenders in the marketplace. >> i knew housing was important. but can you explain the knockoff effect why every dollar that you spend in housing, what it leads to in terms of other jobs and other money spent? >> sure. so we know that housing is the largest sector of the economy overall. people spend between 20% and 40% of their income on housing. but new housing construction, when people buy a house or a new house, things like refrigerators and appliances in, furniture, landscaping, so there's a lot of money, it is a multiplier effect in housing construction that's very large. and it's actually bigger than infrastructure program which also has a large multiplier. but housing properly is the sector because it is a durable good, that has the biggest multiplier of any sector in the economy. we're at the lowest share of housing construction relative to the size of the economy than we've been in 30 years. so this isn't rocket science. it's pretty easy to see what caused this and how to change it. it can be changed i think within six months. >> it could be changed just by releasing lending? >> by lowering -- by making lending standards more available, and also i would say, counseling. we do have to counsel those people who have been through this crisis, and problem, and help them get credit again. so it's not going to be simple. but i think it's something that can be done with changing regulations, rather than a bill in congress. >> all right. ken, thank you for your time. i appreciate it. i really enjoyed reading the report. we look forward to more. >> thank you. >> okay. when we return, tackling the next task on the trump agenda. tax reform. groemp norquist says the only way to move forward is rourn to the scene of the crime. we're going to explain what he means next. various: (shouting) heigh! ho! ( ♪ ) it's off to work we go! woman: on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. and each job created by the energy industry supports two others in the community. altogether, the industry supports over 9 million jobs nationwide. these are jobs that natural gas is helping make happen, all while reducing america's emissions. energy lives here. all while reducing america's emissions. the power of innovative thinking. the power of 100 of the world's top companies. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio at powershares.com/qqq. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. ♪ good morning, everybody. welcome back to "squawk box" here on cnbc. we are live from the nasdaq marketsite in times square. walt disney's "beauty and the beast" accommodating the weekend box office once again. in its second weekend the movie took in another $88.3 million in north american ticket sales. it helped the yoefr all box office hit a billion dollars in ticket sales for the month. gasoline prices are holding fairly steady according to a industry analyst. prices felt by a penny just over the last two weeks. that brings the average price to $2.34 a gallon. and shares of industrial gasmaker are higher in this morning's trading. the company is packaging its cleaning and chemicals unit with its food hygiene unit and telling it to bain capital for about $3.2 billion. the company is up by 1.2%. >> where's the "journal"? >> world financial center. or used to be -- >> they were down there. >> all the way down there. >> no but now they're -- >> nearby? >> nearby. >> can this -- >> you would feel actually -- i won't -- >> well, yeah. i want to call this -- >> on 6th avenue. >> we're live from the "journal" editorial board square. "journal" editorial board -- is that too long? >> sounds a little funky. not a marketing -- >> don't want to take credit for the recording side. >> we're in times square. >> there wasn't -- >> i think long ago, they actually tried to walk the line long ago until they became advocates. >> you're putting -- >> you're just making it difficult. >> wonderful newspaper. you know i spoke to abe, had a long conversation -- before he passed away he totally -- you know, people say he became a right winger in his old age. rosenth rosenthal, he did. but he totally realized that whole front page is used as an editorial. >> he did not. i will defend "the new york times" as long as i -- as long as i live. >> all right. all right. >> with health care reform now on hold, president trump is set to tackle tax reform with some business leaders and elected officials speaking out against the border adjustment tax. joining us with more -- i can't wait for this. i've seen too much already. >> joe it's going to be a big battle and it is still raging in washington. we've been tracking the lawmakers who are concerned or downright opposed to this critical component of the house gop plan. 15 republicans in the house could be a no. that's about half the number that leadership can afford to lose, an even bigger problem looms in the senate. 19 members are skeptical. and gop leadership can only lose three. so one of the most recent lawmakers to raise questions is senator john mccain. he told politico that border adjustment would destroy arizona's economy. a large part of his state relies on trade with mexico. he's worried about possible retaliation. another important name for you guys, senator mike lee of utah. he's closely aligned with the house freedom caucus and he's completely against border adjustment. business groups opposed to this measure have been keeping up the pressure even amid all the debate over health care. they've been holding rallies in lawmakers' home states. they were in michigan last week, in arizona before that. of course, manufacturers are fighting back. they've got a new tv ad airing on the morning news shows. at the very least we might see some concession from house leadership about how the tax is phased in. but this is just the beginning of negotiations. back to you. >> okay. thanks for that. and meantime let's talk more about tax reform. joining us, grover norquist founder and president of americans for tax reform. great to see you this morning, grover. >> good to be with you. >> when we teased this segment, we said that you said that we need to go back to the scene of the crime before we can move forward. what do you mean by that? >> the reason we had health care, the abolition of obamacare reform first and then tax reform, why one and then the other. the reason is under the rules of the senate, when we do tax reform, you can only make it permanent, remember the bush tax cuts were not permanent. they disappeared, poof, like send he wi cinderella in ten years. and it was very damaging. people can't plan ahead if they think that the whole thing changes again in ten years. the goal of making it permanent requires that in years 11 through 50, not the first 10, but 11 through 50, that it be deficit neutral. now, when you start before tax reform, by reducing taxes by a trillion dollars a decade, with getting rid of the obamacare taxes, about 20 taxes in obamacare, that tax the stethoscope to it and called it a health bill. it's 20 taxes, a trillion dollars. getting rid of that trillion, means when you do tax reform you have a trillion dollars more in tax reduction to work with. add to that from last year, $600 billion in tax reduction, when paul ryan did the extenders. when he made the extenders permanent. people were asking, scratching their heads, why is he doing this? some of these extenders are silly. in order to get the baseline down because paul ryan thinks ahead. so we now have $1.6 trillion over the next decade to reduce taxes as you're doing tax work. but only if you first do health care. so, when all those nice congressmen show up and go, okay, we messed up health care, now we're going to, you know, do tax reform, and everyone will love us again. okay? you try and fit that into that package together missing a trillion dollars a decade. >> grover -- >> it's tough enough -- >> i completely get the argument. the question is whether you think that's plausible given where everybody seems to stand. whether it be the freedom caucus on one side. moderates on the other, and the democrats on a completely different side. >> well, first of all on both tax reform and health care, the democrats are not on the playing field. >> okay, so let's just play within -- let's play intramural ball within the republican party. >> on these two bills that's the way it is. yeah. and what you have there, as you saw the freedom caucus, mark meadows say the other day that he wanted to go back. he thought this was in the middle of the negotiations. i'm not quite sure that there's sort of a time limit on some of this stuff. but i do think we can and have to go back and explain both to those who didn't vote for it or who wondered about voting for it, they need to lay out their alternative, and their 218 votes for that and come together with where we do have 218 votes. there was a lot of imaginary thinking going on about what might happen. what if everybody did what i wanted and then they still voted for my plan and didn't think about their own congressional district. >> grover, do some math for us. >> sure. >> if, in fact, we don't go back to the scene of the crime, and the republican party does not come up with a new health care bill before they try to tackle taxes, given what the president has suggested the direction he's going to go, and just about every other member of the house thus far saying that they're going to move on to taxes, what kind of corporate rate could you imagine and map out using the dynamics for it? >> you could, if you lose a trillion dollars, you would take the corporate rate back up to 28% instead of 20%. that's to pay for it. that's what those people just did. and -- >> does that include a border adjustment tax or no? >> i'm sorry, oh, no the border adjustment tax. you could double the border adjustment tax, and be okay, too. >> no, no. >> you're 28% figure that includes the border adjustment tax or not? >> yeah. it's everything in the present plan. >> right >> requires health -- the health care tax cuts did the tax increase of obamacare to be eliminated. and that gives you the plan, 20% corporate rate. the border adjustable. full business expensing. three individual rates, no death tax, no amt. all of the good stuff in the package, complete consensus on all the good stuff. now, to pay for that, because they take it down significant to the total tax burden down significantly you have the trillion dollar over ten years border adjustability of the corporate income tax. that's the one unsettled issue, if you had, the actual opposition to it. understandable. i think it's a package, it's a thing of beauty. but i understand the people would say, well i prefer not to do this part. and -- but, without doing health care first, you can either double the size of border adjustable, get 2 trillion, not 1, or you give up on any meaningful corporate rate. >> but -- >> lose the border adjustment or not? >> it includes border adjustment. >> but not the -- >> so grover you just said that's what those people just did. >> and you need to turn -- >> who are those people? who are you blaming? >> -- those people? >> yeah. you can't use those people. >> those people are the people, the republicans, who did not vote for a final package in the zone of what trump and the republicans have put to the. you had 90% of the republicans, and president trump, in the same place. you had a handful who were negotiating but they didn't understand that they were playing with fire. when they disrupted a very difficult piece of work that was put together, they didn't understand when you pushed here, you were losing votes over there. they thought they could get things without driving other people away from the bill. this bill had been prenegotiated with the broad caucus and the senate, and the white house. >> you know, grover, i'm a little surprised -- i think most people on the left think of you as like a charter member of the freedom caucus. i mean you probably have some sympathy for their viewpoint i guess. but you also are i guess more pragmatic or something. i'm sort of the same way. i see what they're saying but the world's changed, i think, and you know -- >> there's a difference, compromise is going in the direction you wish to go to, towards liberty, maybe not as fast as you'd like to, because there are other people in the way. and you have to recognize how far could we get today, this year. >> we've got no time. but this tax cut everyone says it's a big tax cut for the 1%. that was -- that was it the redistribution that was in here and in the original plan that -- i mean he socked the 1% with paying for obamacare in the first place. so getting that back, is that specifically a tax cut for the 1%? i mean can you view it that way? >> no. it's reducing the damage he did. but, obamacare taxes 30 million people with flexible spending accounts. 20 million people with health savings accounts. at the poorest americans who have their health care up over 7.5% of their adjusted gross income he specifically targeted the poorest and sickest americans. this is not a 1% tax. this is a tax -- a tax charitable hospitals in obamacare for crying out loud. i know they like to say it's only rich people. that's not the way they paid for it. >> and maybe there's something to it that -- i mean someone's got to pay for it, i guess. i mean that certainly resonates with a lot of people, even if it's not, you know, if it's not exactly true. >> obamacare taxes prescription drugs. medical devices. which raises the cost of health care. for everybody. >> okay. all right. >> it didn't work. we need to get rid of it. we need to get rid of those tax increases so that we can have the substantial tax reduction in tax reform. and i think when the house members, moderate, and freedom caucus guys, get that, they will be back at the table so we can do tax reform. >> thank you for joining us. we're back in squawk square talking -- >> and alliteration. squawk square. >> we can start that. how about we start that? >> the great david carr who is no longer with us used to say they call it times square for a reason. >> doesn't mean you can't move on, and progress and call it skwak square. that would help you. >> you're going to go against me on this? >> you guys keep settling this. >> squawk square. >> when we come back, health care in america. we will talk to governor dan malloy next. 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( ♪ ) at corning, i test smart glass that goes all over the world. but there's no place like home. there's always something different to do like skiing in the winter, jet skiing in the summer. we can do everything. new york state is filled with bright minds like samantha's. to find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. search for our page, with e*trade's powerful trading tools, right at your fingertips, you have access to in-depth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. ♪ ♪ it's like having the power of a trading floor, wherever you are. it's your trade. ♪ ♪ e*trade. ♪ ♪ start trading today at etrade.com one of the largest business process companies in the world. whether it's in health care, customer care, technology, transportation or government. we touch millions of lives every day. conduent. advancing the everyday. welcome back, everybody. president trump turning his focus to tax reform after the gop's health care reform setback. joining us right now is governor dan malloy of connecticut. governor, thank you for being here. i know that you were homing obamacare would stick around. you got your wish. now what? >> well, listen, i think that there's a lot of what. i listen to grover's admission that taking on the health care issue was simply about saving money. and to save money you had to deny people coverage, you had to throw out or eliminate coverage for 26 million americans eventually. and right off the bat, about 14 million folks who are covered by -- >> although the 14 million that you're talking about, the 14 million that you're talking about, i believe the cbo said those were people who would choose not to do it. so we can go through the numbers on a lot of different issues. but the cbo -- >> becky, one second. this program took apart on medicaid in a name of a bloc grant to states which would not increase, and would otherwise cause states to have to drop people back to the 100% as opposed to the 138% funding. >> you're right. it froze medicare and that was a huge part of how it was going to be going through with this. >> medicaid. >> medicaid. but i think a huge part of the question that we still get to is how do we attack health care costs that have been spiraling? no matter how you look at this, for decades. how do we get to that point? >> you make it affordable for people that have coverage. so, when you take -- when you take an assist from being based on someone's income and making it based on someone's age, you're saying to everyone over the age of 60 that your premium cost is going to go up somewhere between $5,000 and $14,000. that's another reason it lost. >> well there were changes that were made in the final, additional changes were supposed to come from that. but back to the real problem with health care that existed for decades before we had obamacare or anything else that was out there, health care cost inflation has far outpaced inflation to the point where it is now 18% of our gdp. that is not a problem that we can live with as a society. a continuing growing cost. >> yeah, but this package didn't do anything to address that. >> no, but i'm saying we're still dealing with that problem one way or the other no matter what happens. >> i just -- i think the president's admission that governing is complicated is a reality. >> sure. >> it is complicated. and getting those things done are going to be very difficult. and what you really need to do is invite as many people to the table as possible, rather than excluding them. there are changes that could be made. there's a way to make changes on a bipartisan basis that will go to the very heart of what you're trying to do. but, throwing millions of people out of health care was not chosen as the way to get it done. and now, of course, with your superior coverage this morning we understand that what this was really about was a tax package. let me state this right up front. i think we have to do something about corporate taxes. i'll come to the table. i think we have to do something about foreign profits. i'll come to the table on that. what we can reach agreements. let's try to do it. >> in terms of the tax issue, i mean, this has been a very complicated one. and one that you know in your own state you've dealt with, too. there's a point where taxes that are too high are going to turn business away. how should we be thinking of this as a nation? >> well, i do think corporate taxes are too high comparative to the nations that we're in competition with. so i absolutely, fundamentally agree that we have to address that problem. that's one of the ways to repatriate foreign profits, as well. and on that particular front, there should be a tradeoff. perhaps that's a way to fund a portion of the infrastructure dollars that we need to spend in the united states. let's get to the table. let's get as many folks to the table before we roll out a package, and see where there's actually agreement. because there is agreement on some of these points between democrats and republicans. >> infrastructure in particular -- >> if you exclude -- >> infrastructure in particular -- >> i think -- >> where are there places? i mean if you think taxes need to come down when it comes to corporate taxes, how do we get there? what do we give to get that? >> well, i think we have to hav repatriation of foreign profits is part of that, part of the tradeoff. again, there has been a fair amount of talk about using some of that as a funding vehicle for infrastructure investment. but we have to admit that one of the reasons we have offshored a lot of jobs is because the folks who control the jobs wanted to affect a lower cost in foreign countries. i think we have to wait -- we have to address that. i'm all for it. >> all right. governor, thank you for joining us today. >> thank you. when we return, jim cramer will join us from the new york stock exchange. we'll get his take on the top stories today. stories today. stories today. excuse me, are you aware of what's happening right now? we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that. welcome back to "squawk box." broadcasting live from the squawk roads of squawk square. joining us now is jim cramer who i think will sign on to squawk square because "squawk on the street," "squawk box." any problem with that in your view? >> no, it's a squawk tease. it's "squawk box." i think it's fine. >> okay. >> excellent. >> very good. jim, the narrative is in trouble, dude. i mean, i don't know. i mean, really there has been some soul searching. thank god north carolina won. but i mean, can you imagine trying to do tax reform with these guys? >> no. i think that the border tax is going to be the -- this is going to be one of -- another thing that the speaker dreamed up and his team dreamed up that's going to make it so it's very convoluted because the border tax raises the cost of the goods that are the base that elected trump. so i don't want -- the gop needs a win. and i think that cutting taxes is easier than fooling and with health care. but you know what, if they're going to make the debate the border tax then we'll be talking about for a long time, it won't work. >> i don't know about the crazy forefathers of ours, giving everybody so much power. the individual -- god almighty. you have to satisfy 535 people, jim. when's the last time we did that? >> a long time, but a tax cut does go down easier than trying to figure out what -- you know, how many people lose health care which is not necessarily what -- look, grover norquist represents a constituency that was going able to block whatever happens in health care. i don't know if they want to block tax cuts. i don't think so. >> maybe so. but did you ratchet down your market optimism, jim? >> no. because i have always felt that a lot of what's going on has to do with the actual companies and the idea that deregulation is a very powerful concept. when i see the interest rates go down like this, am i worried? people are throwing away the financials. look i'm not as concerned as others. only just because i never really hated it when interest rates are lower and inflation is not on the rise. i just can't panic. it doesn't make sense. i think the deregulation is far more important than people realize. >> jim, we'll see you live from the new york squawk exchange in a couple of minutes. later today, don't miss a first on cnbc interview with chicago mayor rahm emanuel. he'll be on "closing bell" which i think is broadcast from the nyse. kevin kevin kevin kevin kevin kevin kevin kevin kevin kevin trusted advice for life. kevin, how's your mom? life well planned. see what a raymond james financial advisor can do for you. the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses. call 800-983-0903 for the prospectus containing this information. read it carefully. distributed by invesco distributors inc. containing this information. read it carefully. ♪ 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 e-commerce fedex networks are massive far-reaching and, yes a little magical. ♪ is happening before our eyes. shift in human history sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. partner with pgim the global investment management businesses of prudential. welcome back. one stock to watch this morning, take out morgan stanley initiating coverage of snap with an overweight rating knowing that the parent engagement was hard to reach millennial users. the original ipo price was $17. >> where did it open? around $24? >> when it closed the first day -- i think it was around $24. >> where it opened that day -- >> if you weren't in on the $17. >> let's get a quick final check of the markets. we have been under pressure most of the morning and the dow futures are opening down close to 120 points and nasdaq is off by 25. nasdaq by 16. europe is under pressure today as well. keep an eye on the ten year today because that yield has been one to watch. yield on the ten year still sitting at 2.36%. >> it's time now to turn it over to the boys on "squawk on the street." we'll see you tomorrow. ♪ >> good morning, welcome to "squawk on the street." i'm david faber with jim cramer. we have live from the new york stock exchange. karl quint anil low is off today. 30 seconds later we are looking for the lower open and the european markets have been in the red all morning. you can see that germany's vax is the biggest loser. as for the ten year note we are 2359.

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