Transcripts For CNBC Squawk Box 20170327

Nuanced. Im not real happy with the Freedom Caucus. But i have empathy for their position. Did you see theres 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 dont 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 youre reading. Whatever youre reading, probably continue with happy to get maybe 1 growth for the next eight years but now, the president is supposedly saying, if they wont work with us, well have to find ways to work with democrats. Yeah. They seem very amenable to that. Well hear some comments from him saying theyll 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. Thats what the script says. The democrats if he cant work with republicans but thats not a big shock either. Since he ran against right. There are a lot of things on his campaign that but theres no way as you know, theres no way the democrats are going to do anything its all politics. Theres no waysi theyd sidl up to donald trump. Lets get to the markets asser that reacting. Raising fears from future deals potentially getting done on capitol hill. Primarily taxes. Thats 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 theyre down for another session today, that would be the longest decline that weve 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, well beginning to see if theres 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, its down another 45 cents to 47. 52. Also, if you want to take a look at the tenyear note, the yield sitting at 2. 4 . This morning, dipping below that at 2. 6 i dont know what that tells you in terms of projections for breathe or whatever concern were seeing in the tenyear but well 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 trumps soninlaw 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 selfdriving car tests after that crash that happened in arizona late friday. It involved one of the vehicles in selfdriving mode. There wasnt a backseat passenger. Uber has been testing selfdriving 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 im confused. Ive 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 were 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 dont know, thousands of miles, hundreds of miles before technically people are taking over every time. Lets see things happening in as far as the Economic Indicators and things this week, full of economic data. The caseshiller, 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 gops 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. Thats bhal we want to move on but the administration isnt talking tab yet. Theyre 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 isnt 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 theyre 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 100day priority . No, because weve moved on to other things. The president does have things he wants to accomplish. Hes 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 dont know. The trump telling Washington Post setting up the new government of American Innovation its going to be led by his soninlaw Jared Kushner as you guys just mentioned. Its a staff of Business Executives and other meetings that have taken place with ceos and its led to al gore reinventing government or Ronald Reagans kitchen cabinet. Its reportedly already been meeting twice a week. Its 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 weve seen that the legislative agenda is potentially getting log jammed. We may have another administrative presidency, kayla. Well see. But thats how we finished the last six years with all sort of executive action. You know, its commentary on washington, on both parties, i guess, although this is intraparty. Its Pretty Amazing are you saying guys like boehner, right, he finally said im 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 twoyear things. And theyre 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 havent seen anything from the white house. And we know that the plan that congress is working with is part of the speakers 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 theres less around seen kayla, before the trillion dollars is now not possible to offset, do you know how many sacred cows there are . Youve seen herds of cows. Youve driven around. Theres cows everywhere. In tax reform, there there were sacred cows. I mean, where are they going to find a trillion dollars if they dont do voodoo economics with the scoring . I think so this will make Health Care Look easy trying to do tax reform. Hes 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. Theres a question whether that is now actually a viable alternative because thats a real source of meaningful revenue for the government. Even if you do get to the house, the senate is the problem. Im 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 im going to speak out about this Obamacare Repeal to get the border tax because hes going to screw walmart anyway . Its 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 didnt necessarily espouse the border adjustment tax. But he did refer to this trillion dollar hole and say well have to fill up some way or another. Kayla, what do you think, will the white house be the one thats going to try to push this now that they realize that the house has its own problems . And within the white house, if thats the case, who doesnt, which to say, i saw a number of commentaries over the weekend, it seems like the nyes were out for gary cohen. Theres 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 thats 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 hes becoming less popular within the four walls, its 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. Thats right. Then theres 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 didnt list ton hien to his. There was one other time i was channeling democratic influence, saying trump and kim jongun, 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 dont get border adjustment thats why my whole you should not be floating on air. This is not good for anyone. Youre going to get your Market Correction that youve wanted for so long pipe don. I dont know if it gets us back below 20,000. Im not floating. You just said, im so happy with 24 you just you are floating. You didnt need a plane to get back from utah. Thank you, kayla. Its not really kaylas fault. Shes just shes 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. Were going to have katie later to look at the technical side of things. Shes 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 dont. 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 didnt say that . Well, a lot could go wrong in the first 100 days. And this is whats happening now. For the first time actually on march 21st, i went out of all equity markets. So, im out of all trades. I want to shore up the market, i think were 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, were 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 , its going to explode and well be back in this again. Heres what we know, 2017 is in the bag. All of the premiums are written. 2018 it will be around. Were really talking about fixing 2019 at this point. Insurance companies are standing by figuring nobody is going to get pushed out . I wouldnt go to the Insurance Companies, id 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 youre 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, its nuanced, andrew. Seven years ago, it was different. We didnt know whether we wanted Something Like universal health care. We didnt know that everyones 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. Thats what the ryan plan sort of admitted to. That youre not going to pull the rug outside. If youre going to do this, its a different world that were living in right now. Lets 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 ive 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 dont know if you agree or disagree with the president on it of who owns it now . Oh, no i i think its much harder to just say the democrats own it. I dont 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 cant. Do any problems that happen under the nation become your problem, whether he created it or not. Thats 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, youre going to be the democrats always have to bolster their case. So that helps, too. Its hard to do anything. What about financials from a monetary and regulatory . Hes 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. Its 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 isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back to squawk box. Futures under pressure this week. Triple digit its on the dow, 102, the nasdaq indicated almost 30 points. The nasdaq down 15 right now on the s p. Okay, lets turn to the future of Health Care Act and the plan that failed on capitol hill. Lets bring in the president of the foundation for research on equal opportunity. Former Health Care Policy adviser in mitt romneys president ial 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 youve been reporting, talking about, health care is not going to be a 100day 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 dont see it that way. Theres 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 onesixth of the economy with half of a cbo score. Its going to take more time to get this right. Theres 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. Theres 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 theres 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. Thats why the repeal and replace is so important. As big part of obamacare care, just as a reminder for people, its not so much about 00 employerbased or medicare for the elderly, its more about people who buy Health Insurance on their own who dont 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 its not responsible to sit around and wait for obamacare to explode or destabilize further if you think thats 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 oped 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 youre 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 500s winners and losers. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats 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. Youre 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, thats pretty cool. Good morning. Reporter good morning to you, joe. Thats right, you could say where im 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 thats 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 dont 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 whats going to happen . Do we depress prices even further from here . But theres a second question about visions and what this does for the industry. The Trump Administration would probably argue that the longterm vision is to build up the infrastructure to make sure we have things in place so we can be energy dependent. Thats 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, theres 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. Its 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, lets 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, theyre really looking at two pieces of this. The longterm impact that i mentioned. And of course, the industry looking at the shortterm impact what could happen again if the Oil Prices Plunge again. Jacqui, given that youre in a city called steele. Lets talk about steel. During the campaign, President Trump said that the steel for the pipeline would be americanmade. Apparently thats no longer the indicates. Is that a conversation thats taking place . Reporter well, its 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, youre jumping on my story in a couple weeks. Were 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, its probably 18 months to two years away. I do think montana is a very energyfriendly 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 . Its 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 nonopec producers. That raised oil prices about 10 a barrel at least. To show you, its a meaningful amount of oil. Its 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 . Weve seen prices come down significantly. Back below 48. Is that a reflection on this of what happens with oil prices . I think its registered with the market to a degree right now. Particularly because futures contracts have longer dates to them. Like theres a 30year treasury note. Theres a tenyear 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 isnt 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 worlds producers, the u. S. , canada, is taking it to them. But didnt we produce too much oil that would become selfdefeating . In a global market, id love to own the Global Markets for oil in the United States. I dont 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 its a commodity that will come home if they do too much . I think so for sure. But its selfcorrecting. As we saw with the last cycle, price its collapse. Is it just political that id like to put opec out no, im 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 thats a reflection of the states need for finances . No doubt, desperate for it. What im 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 cant 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, weve 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. Youre watching squawk box on cnbc. Surely, you cant be serious. I am serious. And dont call me shirley. i moved upstate because i was interested in building a career. I came to ibm to manage global clients and big data. But i found so much more. its really a melting pot of activities and people. applause, cheering new york state is filled with bright minds like victorias. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Welcome back to ssquawk box, everybody, weve been watching u. S. Equity futures. After seven years of decline, were 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 its 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 barrons. 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 trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its 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 doesnt replace a rescue inhaler for sudden symptoms. 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And invesco believes doing that today requires the art and expertise of highconviction 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. Its 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. Were 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 thats what decree indicated so much confew. People didnt 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 its in no leggings in first class. I can understand. Im only kidding, but within uniteds corporate review to have a dress code when employees fly, if you want to argue about whether leggings violate that, thats fine. But you dont want someone going, i dont know, you can imagine that theres 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 uniteds pass, they can dictate. If it were just a couple of teenage girls wearing leggings. That would within a different story. And i dont think the people that fly you know the twitter world we live in right now is its 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 im all buttoned up. Thats such a yeah, yeah, understatement exactly. Yeah. It is. Youre so you know, pc and everything here. If people only knew elon musk calls twitter now a health scape. Its a countries pool. If real life was what twitter is like wed have problems. Which is maybe why twitter struggles the way it does. Im telling you when youre anonymous you can be such a douch compared to, you know, the normal right . I mean when youre totally you said it. The stuff that people do yes. Youre you would never do that. The advent of the internet, its just the trolls have found a home in twitter. Yes. It used to be in the message boards. Yes. That youd read. And its like god, is this person just just anyway. Viacom is the subject of a positive mention in barrons 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. Thats 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 snaps engagement with millennial users. One thing i didnt talk to you about becky was this article in the weekend on what netscape is spending dwshs netflix. I was like, wait, youre 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 its good for people, for us. Its good for the content. That like content. Creates a shortage. Creates a shortage but its amazing. So they went from dvd rental to theyre 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 . Youre 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 youre trying to do. Theres a question about the margin longterm. If you look at the margins that hbo has or some of the other premium cable players have, theyre significantly higher. The question, though, is, given the competition, whats are their margins going to compress because theyre going to have to pay more for the content . Good time to be an actor. Probably. You go. Another time or a screenwriter. No ive 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 youre 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. Its 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. Im telling you, i did watch, though. Because it wasnt it wouldnt 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 oneonone. 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 7573 reaching the final four for the 20th time. Its a record in school history. The tar heels will play oregon on saturday night and the ducks havent 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 theyre playing gonzaga, which they threepointed my xavier musketeers to death. It was horrific watching that. Its 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 nextgeneration fighters. To landing an unmanned vehicle on a carrier for the first time in history. Just wait till you see whats next. Thats 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 selloff. 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. Well 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. Youre looking at the dow likely to open off 88 points down nasdaq would open down about 38 points. Lets 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 todays 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 whats been happening. We guess that theyre going to be moving on to tax reform from herein thats at least what the white house is saying. The administration has promised countless times that i would pursue tax reform, whether its 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. Well 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 were going to go for tax reform, which ive 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. Theres a hard budget deadline at the end of april, and theres 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 theres one specific big thing looming out in the distance, and that is the april 28th budget deadline. Thats going to approach particularly quickly, considering theres 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, its 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, its 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 its only a matter of time that the premiums will go up, and more Insurance Companies will get out of the market because they cant make any money under the restriction of obamacare. So as a result of that, its on a spiraling downward thats going to end up in a catastrophe for people that have obamacare. Ed truth of the matter is republicans have got to regroup and theyve got to pass a Health Care Bill. Theres no question about it. The first thing weve got to do is educate the congress about health care and what it means. And theyre 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 theyre 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 theyre just going to put to the side and watch it die a slow death. Theyre going to have to do something to repair it and to fix it and theyre 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. Thats 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 dont think the american the Health Care Bill . The Health Care Bill. Tried to push it too fast. I dont think the American Public really understood what the republicans were trying to do. And i dont 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 its a very complex subject. And then theyre going to have to come in more and piecemeal, and so that people in the congress, and the American Public understand whats going to happen, how its going to affect them, and how its 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 were going to go on to administrative rules. And then the third one is going to be a bigger one thats 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, theres been a an opinion put forth that maybe theyve 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 boehners 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 dont know. They come from some pretty conservative districts. What can the how does the Republican Party become more united in the house . I dont, you know they have to. And i think youve also seen the sort of a fracture where one member announcing over the weekend that from houston, one of the congressmen, said that hes no longer going to be part of the Freedom Caucus. Hes going to go back and try and unify the party. Thats a baby step forward. But i think the freedom partys 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 dont have either. And so i think theyre 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 were going to have to find ways in which we can compromise. Accomplish the same things but do it in a way thats going to bring unity to the party. I hope thats the ultimate objective and the ultimate conclusion thats 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 selfyou know, running hes going to runi mean you dont know what the motivation of a lot of these guys are. Do you . I dont 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 weve got to come back together and start passing Congress Congressional legislation because weve 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, thats 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 theres 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. Lets 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, were americans. We can accomplish that. And we should accomplish that. Governor thompson, thank you for your time today. Thank you. Im 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. Thats what i thought. Then the president started saying it was going to explode. Coming up were 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. Youre 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, its easy to turn your vision into action. Its your trade. E trade. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. Youll 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 hasnt felt like a really sharp pullback, sort of a death by thousands. Six or seven days of downward momentum. Which we havent 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 dont 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 youve got these extreme readings in the markets internal measures, thats volumes. Youll 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, youre describing almost some type of selling climate. Mmhmm. Situation. I mean that 1 is 200 points. People get real nervous when that happens. Even though i mean theyll be ready to, you know, if it was 2 right. It doesnt take much. It doesnt take much. Really doesnt take much. And already weve had a weaker month. Weve 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. Thats 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 im watching 2280. 2280 would be another 63 points. So thats another 2. 5 , 3 . Exactly. The total pullback would be around 5 there . Right. And that wouldnt really damage the intermediate term uptrend or the trump rally, if you will. To me would be a buying opportunity, the longterm momentum behind the market is still very solid. So you would say thats intact . Intact. With an objective on the s p of where . 25, 26 . Thats the hard part. Without a breakout we dont have a way of gauging upside. We can look at other major indices around the world and resistance longterm, 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 were getting a step ahead there. But really you know, 10 plus upside over the very longterm i think thats promising. Lets say theres not a sharp downdraft that gives you what you were talking about. Lets say it continues this slow move down and then goes under the 2280. When you would say theres a lower objective . That would do it, really. Below 2280 . The slow grind lower is much worse than the swift downdraft. And thats the case for an uptrend, right . S so theres no arguing against the fact that themaker the is an uptrend. The pullbacks in a market thats healthy tend to be swift and shake out that sentiment behind the market that got overly complacent. And ideally thats what happens. Its that slow grind lower that we dont want to see especially to the extent that it takes us below that 2280 decisively. That would be a sign that okay, theres still a lot more to come . Theres still a lot beware of the big shakeout at that point . I think so. Well also obviously look at a lot of stocks. So from a bottom up perspective, well 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, thats 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 im focused on right now is technology. Its 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 thats 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 youre 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 nearterm which is really where i think we should focus, i think theres 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 isnt 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 theres 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 youre going to d. C. You missed the train. Right. I did miss the train. You didnt want to get on at philadelphia. So now, were all the way down almost to dwi, almost down to baltimore. Right. Now its back to between philly and wilmington. Right. Youve been hitchhiking. Theres 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. Youre 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 shouldnt, if you get a chance you should get on this thing. You do the wrong youve been just tell me yes ill get on at philly youll get on. If it gets back to trenton, or newark. It doesnt 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. Im happy to be in new jersey. Im saying new jersey smells. He does. He says new jersey smells. The factories, and youre so you know, newark is up and coming. Technology. If you want to keep all that in manhattan you dont 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 weve 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. Were going to find out if the house can get tax reform done. And then, oil prices down more than 15 yeartodate. Were going to talk about where crude prices are headed and a rising inventory and production environment. Squawk box will be right back. Opportunities arent 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. Whos with me . Were like a Basketball Team here at ally. If a Basketball Team had over 7. Im 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 well 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 whos 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. Thats 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 longterm 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. Were 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 . Im 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 partys 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 ive never seen before and they all admitted it. Regardless of what spectrum or part of the spectrum youre on in the Republican Party. They better be smart before they do the next thing, lets 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 dont 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 were going to get anything done. And were insisting in our party, and weve insisted before the president ial race of last year that if youre going to have tax reform, for wall street, you need it for main street as well. Were going to insist upon that. That doesnt mean we cannot work together. There are a lot of things here we do agree upon. We believe in bringing down the Corporate Tax. Theres no question about it. To what degree, thats another question. Because the more you shrink the revenue, the more deep in debt you do go. And we dont want to do that. Im sure republicans dont want to do that either. And lets 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 theres room to go between 25 and 28 . But again, whatever were going to do on that side we need to do for main street. Theres 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. Theres no question that theyre moving towards tax reform. But dont forget weve 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 lets 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 dont think thats going to fly. Thats 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, youve got to talk to us. I think that is a good starting point. Republicans have their own their own problems. Theyll 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 thats 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 cant 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 youre 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 youd 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 theyre trying to bleed the money thats 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. Thats not going to fly either. So if were going to have a dialogue lets have a dialogue. Lets 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. Its 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 its the top of the hour, congressman David Schweikert will join us to talk about what is next on the trump agenda. Its 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 isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. Your parents have been ittalking about you for years. Theyre all about me saving for a house, or starting a college fund for my son. Actually, i want to know what youre thinking. Knowing that the most important goals are yours. Its how edward jones makes sense of investing. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats 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. Lets 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 its 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 whats 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. Theyre 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 weve got a lot of events abroad that make investors nervous. They dont necessarily want to be exposed to significant long dollar positions. Just, you know, long risk i guess going into many of these events. But theyve been proeuro development. Well some of them eurozone is doing quite well. But im 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 were probably going to see a significant drop. Now with that in mind, its going to be years before we actually see the formal the actual final exit. So its 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, were at very key levels. I dont think were going to see a crash over the next seven days for example. And you dont think anything happens in the french elections thats 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 youre probably going to see a little bit of unwind in the euro. Thats why i dont want to say were near a bottom in the u. S. Dollar but i think that the extent of the decline that well see from here wont be as steep as the one that weve seen previously. Okay. We talked, jacques, quite a bit about oil already and its similar. We have keystone, things like that and supply in the United States possibly going up. But youve also possibly got the notion of not 3 growth. Not even close, if we dont get tax reform, and a lot of these progrowth inishives dont go through. Youve got the tenyear below 240 again is not great for oil either. Definitely on the demand side weve 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. Longterm whats your forecast for oil . Were in a 40 to 50 trading range or 50 to 60 trading range . Were below 50 already. Sure. I mean, weve 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. Youre 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 progrowth initiatives . Its still more about supply with you . I think so. I mean youve 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 dont 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 its not as if its going to be good for the rest of the world, either. And perhaps trump has a couple more tricks up his sleeve. We dont know yet. And so i think right now the Federal Reserve, you know, we havent 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 theyre hopeful, and they keep the door open to june, june odds have fallen certainly, i think theres still the prospect of growth. I wouldnt 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 golfers bad shot. Take a look at this. Well 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 youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. Welcome back, everybody. Lets 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. G3 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 weeks 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. Ubers halting selfdriving car tests after a crash in arizona. The crash involved one of the Autonomous Vehicles in selfdriving mode. There were no back seat passengers. Theyve been testing the volvos. There was a driver in the car ready to take over the steering. In this instance apparently it wasnt the result, guys, of the autonomous driving the computer didnt 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 theyre doing what theyre supposed to do, and googles 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 wasnt there to do that. Its 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 selfdriving car . I like driving. But i want my kids in selfdriving 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 hes talking about Something Like theres even one where the car next to him slams into the truck and his car stops. Yeah. Because but everybodys selling the same thing that weve got a car thats 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. Uhoh. 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 doesnt show you is how the golfer got his ball back. Squawk box has obtained the exclusive footage. Here it is. That isnt 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 dont mess around with gators. They are around. On a lot of courses down there. I love them. Theyre amazing creatures. I think if they chase you youre supposed to zigzag because they cant go yeah, a little trouble theyre 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 elses duck. Its 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. Theyre going to play oregon on saturday in the second game. I think it starts at like 8 30 or so. Im planning that. And the other one is starts at about 6 00. The ducks havent 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 hes watching, its at 70 . Its at 30 . Its at 90 . No now its 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 havent been a lot of overtime games this year. Respect. Very few. Your microphone so you can engage exactly. There you go. Its like the santas little helper. That was the Charlie Brown teacher. You know, that makes more sense than you usually do. Congressman David Schweikert talks about whats next from congress and the trump agenda. And then the markets coming off the worst week of 2017. The futures this morning pointing to the start of another crappy well. Well talk risk versus reward. And then grover, super Grover Norquist will be here. Americans for tax reform. He thinks theyre 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. Nobodys hurt, but there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do . Drive threequarters of a car . Now if you had Liberty Mutual new car replacement™, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. With Liberty Mutual new car replacement™, well replace the full value of your car. Liberty stands with you™. Liberty mutual insurance. Market alert. Stocks across the globe under pressure after the gops health care setback. The next task on President Trumps agenda. Working with this congress, President Trump is going to pass the largest tax cut since the days of ronald reagan. And were 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. Were 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 its 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 didnt know that. Youre going to stop calling it times square . It called anything else . Ill tell you, its 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 throats closing up. The dow jones indicated down 103. The s p down 14. Nasdaq down 26 or so. In europe, theyre reacting to, i think, you know the prospects for global growth. Down. Down this morning. Amazing that the worlds equity markets have been rallying with us. If we pull back, wont be quite as positive globally. Im trying to figure out what the ten year signaling problems. Creating like 235 right now. And i dont know. Is it possible to get to 2 again . Some people were predicting that. Our kiddy kumar. Yes. I dont know. Okay, other top stories were looking at this morning. European union approved the planned merger of dow chemical and dupont but theyre 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 trumps soninlaw and Senior Adviser Jared Kushner. The office will work with wellknown 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 dont 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 thats 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 dont even consider that possibility. Its just anyway, its 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 dont even know. Talk about tax reform. But, you know, were 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 youve got a body that did it 60 times when they knew the president wouldnt 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, theres 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, im 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 im 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 hadnt 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 everyones key buttons are. And is there any not buyers 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 were 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 antiright 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 youre make the worse. Youre 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 im one of the founding members of, had a large number of voters or members of that, who had great concerns who werent doing enough on premiums. Had a fairly substantial bloc of members on more moderate side which also had a concern we werent doing enough on lowering premiums. So at least on the surface, our bill, we have a common theme, which if were focused on the same thing i think theres 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 ive ever seen. This is nothing but a huge republican welfare. I mean that doesnt sound like not doing enough on premiums. It sounded like he wanted the bill completely scrapped. Look youre 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 preexisting conditions covered. At that point, the math decision has been made. Right. Now were just discussing how to pay for it. Right. Weve already created the box. Guys dont realize its a different world than it was seven years ago. And you know, youve got to give obama credit, you know, we squeeze the toothpaste out of the tube it aint going back in in terms of entitlements. Youre 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 its like its 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 didnt have last week is we now know where every members, 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 theres a solution. Its just going to be complicated. It will come back, too. So it wont be will it be 2017 when they try and do this again . Or god i cant wait for tax reform. God almighty, thats 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 were going to use what we learned there and roll that in so more of the members who arent 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 sons preschool teacher. Our listening skills. Working on those things. Youre right. Well some of that is more true than you know. On both sides. I have an 18monthold. 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. Im hoping we can use some of their access to information, some of their economic modeling, as sort of an additional fortification of why what were 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 wont 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 were broadcasting live here from the crossroads of the world. Of the new yorks 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. Im going on every morning. Im 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 clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats 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 weve 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 cofounder of Macro Economic advisers. Robert, why dont 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 weve gotten used to. Correct. Its been pretty interesting. Since the election was happened that investors have showed a great willingness to want to prepay for President Trumps 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. Weve 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 youll get a comprehensive tax reform package passed. And even if its 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 youll 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 dont think that on the bond side 230 without having some sort of a drift back upward or the equity side we feel theres 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 its health care or tax reform, very difficult to get through congress, weve 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 dont get the tax cuts, we dont get spending increases that we might otherwise have gotten, the economy doesnt get the boost that we would have seen and with that were 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 were waiting for the clarity. What is it going to be . So we put nothing in. What that means to our forecast is theres still some upside risk that well get some fox reform, some tax cut, some spending increases but theyre going to be later in coming, likely smaller now because weve seen the Freedom Caucus saying look were just not going to do it. We might even enforce the rules and if we do that theres 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 rsws 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 fridays debacle with Health Care Reform, it is likely that we dont see anything thats potent, and Municipal Bonds go for that much more value than they did before. I think well 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. Thats 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. Whats 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 dont 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 weve had a very slow recovery, very sluggish in the Single Family for sale housing market. Were still 50 below where we might be based on demographics. And its primarily due to the extreme vetting weve 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 postforeclosure 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 theyve had Credit History thats been impaired, and theyve 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. Thats 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, wouldnt even try and make sure that they actually had a job. You dont 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 theres a lot of money, it is a Multiplier Effect in Housing Construction thats very large. And its 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. Were at the lowest share of Housing Construction relative to the size of the economy than weve been in 30 years. So this isnt rocket science. Its 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 its not going to be simple. But i think its 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. Were going to explain what he means next. Various shouting heigh ho its 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 americas emissions. Energy lives here. All while reducing americas emissions. The power of innovative thinking. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Good morning, everybody. Welcome back to squawk box here on cnbc. We are live from the Nasdaq Marketsite in times square. Walt disneys 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 mornings 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 . Wheres the journal . World financial center. Or used to be they were down there. All the way down there. No but now theyre nearby . Nearby. Can this you would feel actually i wont well, yeah. I want to call this on 6th avenue. Were live from the Journal Editorial Board square. Journal Editorial Board is that too long . Sounds a little funky. Not a marketing dont want to take credit for the recording side. Were in times square. There wasnt i think long ago, they actually tried to walk the line long ago until they became advocates. Youre putting youre 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 cant wait for this. Ive seen too much already. Joe its going to be a big battle and it is still raging in washington. Weve 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. Thats 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 arizonas economy. A large part of his state relies on trade with mexico. Hes worried about possible retaliation. Another important name for you guys, senator mike lee of utah. Hes closely aligned with the House Freedom caucus and hes completely against border adjustment. Business groups opposed to this measure have been keeping up the pressure even amid all the debate over health care. Theyve been holding rallies in lawmakers home states. They were in michigan last week, in arizona before that. Of course, manufacturers are fighting back. Theyve 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 lets 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 cant 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. Its 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 youre 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 were 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 its tough enough i completely get the argument. The question is whether you think thats 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 lets just play within lets play intramural ball within the Republican Party. On these two bills thats 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. Im not quite sure that theres 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 didnt 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 didnt think about their own congressional district. Grover, do some math for us. Sure. If, in fact, we dont 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 hes going to go, and just about every other member of the house thus far saying that theyre 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 . Thats to pay for it. Thats what those people just did. And does that include a border adjustment tax or no . Im sorry, oh, no the border adjustment tax. You could double the border adjustment tax, and be okay, too. No, no. Youre 28 figure that includes the border adjustment tax or not . Yeah. Its 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. Thats the one unsettled issue, if you had, the actual opposition to it. Understandable. I think its a package, its 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 thats what those people just did. And you need to turn who are those people . Who are you blaming . Those people . Yeah. You cant 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 didnt understand that they were playing with fire. When they disrupted a very difficult piece of work that was put together, they didnt 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, im 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. Im sort of the same way. I see what theyre saying but the worlds changed, i think, and you know theres a difference, compromise is going in the direction you wish to go to, towards liberty, maybe not as fast as youd like to, because there are other people in the way. And you have to recognize how far could we get today, this year. Weve got no time. But this tax cut everyone says its 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. Its 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 its only rich people. Thats not the way they paid for it. And maybe theres something to it that i mean someones got to pay for it, i guess. I mean that certainly resonates with a lot of people, even if its not, you know, if its not exactly true. Obamacare taxes prescription drugs. Medical devices. Which raises the cost of health care. For everybody. Okay. All right. It didnt 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. Were 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. Doesnt mean you cant move on, and progress and call it skwak square. That would help you. Youre 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. it just feels like anything is possible here in upstate new york. at corning, i test smart glass that goes all over the world. But theres no place like home. Theres 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 samanthas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. Search for our page, with e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com one of the largest business process companies in the world. Whether its 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 gops 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 theres a lot of what. I listen to grovers 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 youre talking about, the 14 million that youre 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. Youre 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 someones income and making it based on someones age, youre saying to everyone over the age of 60 that your premium cost is going to go up somewhere between 5,000 and 14,000. Thats 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 didnt do anything to address that. No, but im saying were 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. Theres a way to make changes on a bipartisan basis that will go to the very heart of what youre 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. Ill come to the table. I think we have to do something about foreign profits. Ill come to the table on that. What we can reach agreements. Lets 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 youve dealt with, too. Theres 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 were in competition with. So i absolutely, fundamentally agree that we have to address that problem. Thats one of the ways to repatriate foreign profits, as well. And on that particular front, there should be a tradeoff. Perhaps thats a way to fund a portion of the infrastructure dollars that we need to spend in the United States. Lets get to the table. Lets get as many folks to the table before we roll out a package, and see where theres 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. Im 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. Well get his take on the top stories today. Stories today. Stories today. Excuse me, are you aware of whats happening right now . Were 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, its a squawk tease. Its squawk box. I think its fine. Okay. Excellent. Very good. Jim, the narrative is in trouble, dude. I mean, i dont 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 thats going to make it so its very convoluted because the border tax raises the cost of the goods that are the base that elected trump. So i dont 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 theyre going to make the debate the border tax then well be talking about for a long time, it wont work. I dont know about the crazy forefathers of ours, giving everybody so much power. The individual god almighty. You have to satisfy 535 people, jim. Whens 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 dont know if they want to block tax cuts. I dont think so. Maybe so. But did you ratchet down your market optimism, jim . No. Because i have always felt that a lot of whats 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 im 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 cant panic. It doesnt make sense. I think the deregulation is far more important than people realize. Jim, well see you live from the new york squawk exchange in a couple of minutes. Later today, dont miss a first on cnbc interview with chicago mayor rahm emanuel. Hell 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, hows 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 clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. What we do every night is like something out of a strange dream except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive farreaching and, yes a little magical. 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 werent in on the 17. Lets 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 . Its time now to turn it over to the boys on squawk on the street. Well see you tomorrow. Good morning, welcome to squawk on the street. Im 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 germanys vax is the biggest loser. As for the ten year note we are 2359