Busiest earnings day of quarter. The treasury secretary on the tax rollout. And the ceos of dow chemical and Southwest Airlines in the next 60 minutes. First up, the white house is pushing what it calls the largest tax cut and reform in history. This morning on the today show, the treasury secretary was grilled about how the plan will be paid for. And mr. Secretary, would you be willing to raise your right hand and look at the American People and say, i Steven Mnuchin promise you that this will be revenue neutral and deficit neutral . So right now, were working with the house and the senate. This is now about taking the president s principles and turning them into a bill that we can get passed and the president can sign this year so we can create Economic Growth. And were going to work closely with congress to get this done. So matt, yes, our principles are, we want to pay for this with Economic Growth and with reducing lots and lots of special interest deductions. Ive got to get your take on how you thought the marktss took market took it yesterday . Was the afternoon selloff a lack of detail or Something Else . Not necessarily lack of detail but as they layered on this massive tax cut, it became more and more clear that its not likely to happen. I mean, literally just seemed like, okay, lets just throw everything out there and see what sticks or some people can say it was the art of the deal. 1, which is what wilfred frost said this morning. I didnt hear border tax, yet when i hear the key man on the ways and means xhitss tee he says border tax. The combination of these two, just not going to happen. I really by the way dont like the way that the New York Times covered it, which says its a tax cut for the rich. Anybody who is calculated in the states that voted for hillary clinton, it is a tax increase. I just dont know how they possibly get that. Yeah. I have calculated it. I spent a lot of time with tax people in the last 24 hours. It threes the one thing it thats the one thing its not. The single biggest break is the deduction of the state and local, and that is just not right. And you know, im not trying to say that the times is wrong, i love the times but thats mathematically uncorrect. This is a major state for those in new york, california and new jersey. What are they talking about . The journal did a piece on hedge funds likely having fist bumps on carried interest. Yeah, well, you know, its funny because during the campaign of course, nominee trump and even candidate trump had discussed of course eliminating the carried interest but that doesnt appear necessarily. By the way if you get to 15 does it really matter if they actually were to get to that number . You can get rid of carried interest, its not going to make a difference. Jim is right though. I have been talking about this. If youre the governor of california or new york or new jersey or any of the high tax states you certainly are looking at the lack of deductibility of state and local taxes as a significant problem in terms of retaining top earners in your state and therefore the businesses that employee them. Jim, its not necessarily their taxes if this were to actually happen would go up. Its simply that in relation to everybody else, they wouldnt really go down. Up we should make that we should make that point clear if you can no longer deduct state and local. Frankly, that was a part of the house plan and so thats been a parent of every plan and well make its way into whatever we get when it comes to tax cuts. I think thats right. I think the characterization of it is obviously if you live in a state thats a low tax state this is a huge wind fall. But most of the wealthy dont live in those states, they live where we just described. Can you convert something into the llc and win . If i i own a bar, those are the businesses that i can convert. They will give me about well, lets just say a minuscule amount. If youre a Small Business owner its dynamic and large. I think theres a case to be made they didnt make it as well as i thought. Theres a case to be made, this isnt a budget as much as a budget buster as the Corporate Tax rate if they can get that because geez, you really do need a border tax or something to offset that whether they can or not is a big question. Ubs calls 15 quote, a bridge too far. I like that. Which they end up with essentially 25. It really is. Its a bridge too far. You cant pull it off because the law wont let you pull it off. I think thats really important. You only have it for two years. Like a tax holiday. They all know that down there. Which is why you keep hearing that we have to have a border tax. Its the law. You cant do what they want to do even with the socalled dynamic scoring. I dont want to say this is dead on arrival, but focus on the earnings today, if youre trying to make some money. If youre from the high tax states holy cow you cant get there even if youre a wamajama trade magician. One more bite from the treasury secretary this morning. This one was specifically on how repatriation is going to play into all of this. By creating a territorial system, we will bring back trillions of dollars that have been parked off shore because of complicated tax systems that these companies will invest in american plants, american equipment, to create american jobs. I cant imagine theres something about that you dont like. No, absolutely i love it. I talked to the ceo of Waste Management yesterday. Why do i mention waste . Because theyre in the 31 rate. What would they do, put more people to work, buy more trucks and become a bigger company. Isnt that the poster of whats going on. Now, could they buy back stock, thats not their inclination, they want to grow and hire people and get more plants. I like that. The president is right. A lot of companies with high effective tax rates didnt necessarily shine yesterday. Yeah, interesting isnt it, carl, that was the case. Listen, we have been talking for years and i think generally speaking Corporate America there is a desire for of course significant reform of the Corporate Tax code ending with the territorial system in which overseas profits are no longer taxed in the way that they are. That very well may be the end result of whatever we get here, which would be a positive. Certainly for those that have a higher actual tax rate. Remember, we always talk about 35 but we well know that the real tax rate is well below that. But 15 , thats more or less below anything out there at least for the most part. The question is, what are we going to end up with . We have talked about it so often. Guys, im sure well have this debate for many months about whether in fact lower taxes really can create higher gdp the likes of which the treasury secretary is talking about. Perhaps we need to go back to economics 101 and figure out whether and what that belief is based on to understand the roots of that debate. Well, i dont know, david. I have had a long talk with mark fields and mark has spent more time with the president than any other ceo out there, other than the one from dow. He said, look, it would. Remember he sells the pickup trucks which is responsible for the largest growth of the industry. That benefits the Small Business doing better. Small and medium sized business would do better under this. Too many ceos are telling me otherwise. But youre right. They could be selfinterested, maybe they want some more cash back. Well, speaking of pickups lets get to some earnings here. Ford is out this morning. 49 cents beats by four cents. U. S. Sales down four, market share down. Operating margin goes to 8. 3 from 12. 9. Look, fields has been honest in saying that look, this is not an up year. The u. S. Has peaked. I tried to come up the rest of the world is doing better but talking about 35 , yeah. Europe and latin doing better, but youre right. Hes not making a case for because of the investments of the Autonomous Vehicles that things are going to get better this year. I said, yes, it yields 5 and they would be a big beneficiary if this economy moves. This may be the call on the tax code. The call. In what way . Because this is a small and medium sized pickup Truck Company that sells other vehicles but thats where the cash is. Thats where they make the most money. If you think theyll pull it off, its interesting that fields spends more time with trump who he says listens to everything. Im looking for a 5 yield that can be a call on the options. David, jim is right. The pickup truck is often seen as a proxy for Small Business creation. Yeah, thats an interesting point. You know, jim, what was that line, i have to remember it. Specific to ford. Well, well remember it in the future. You said it of course about that. I dont know. Do we end up with a lot of Small Businesses buying a lot more trucks and we get to okay. All right. Lets just we have to accept the fact that theres got to be some growth if you come back and you have more money as a Small Business person from an llc and you can expand and you need pickups. Pickups i think are a great proxy. But you know, david, its absolutely right. If you offset it with people in high income high tax states where there was the hope for growth, no. So i mean, yes, theres a push me pull you effect. But overall im going with mark fields. If you can get this economy moving for taxes which he thinks he can, then it would be good for ford. Which is one of the largest employers in this company and largely domestic company. Well, well get to a lot of other names and under armour and their first loss as a public company. Dominos pizza, unbelievable. Comps yet again. Opening close to the all time high. And Andrew Liveris. And then gary kelly of southwest looking at higher labor costs and oil costs. Look at the premarket. The dows up 5 of 6. But still on track for the best week of the year. Were back in a minute. Attention. We and by we, we mean us, the entertainmentloving people of america, have updated our terms and conditions. One. From now on, the word television will no longer be defined as that thing over there on the wall. We want all our things to be television things. Phones. Ipads. Refrigerators. Heart monitors. Ok, maybe not heart monitors. Two. Our shows and movies. We want them when we want them. So they should go with us. Anywhere . You got that right, kid show thing. Three. Nothing beats live. So we want to stream all that sweet live stuff. Like football. Red carpets and yelling. Wait what are we yelling about, guys . Four. We dont just want unlimited data. We want unlimited entertainment. Like unlimited hbo. Can i stop dying now mark . Cmon man. Its unlimited. Last thing. We just want all our stuff. The way we want all our stuff. Thats not too much to ask is it . At t brings you directv, internet and wireless. All on your terms. Its entertainment your way. In whats a continual theme in this earnings season, dow chemical reporting a much better than expected profit this morns. I spoke to Andrew Liveris, and i asked him what drove this amazing quarter. Take a listen. Two big value drivers, jim. One is we build a portfolio for all seasons. 4 1 2 years of straight eps on year over year growth and 3 1 2 years straight. So we have done many, many prove points. High oil, low oil, volatile geopoliticals, the markets down here and up here. We can manage through that because we have the business at 60 of our portfolios now consumer led. That was deliberate as you know. Then of course productivity and cost savings. We have taken out 3 billion since 2012 and of course this quarters result, 200 million, 50 of thats cost savings from the dow corning integration. 50 from productivity. So those two value drivers in a low gdp world you have to go where growth is. Ebitda alltime record for our company is because of the big changes in portfolio. Well, andrew, also, i think you call out the fact that the rest of the world is really starting to do better. Thats one way you get to double digit Revenue Growth after the silicon situation. Tell me exactly which of the regions that are doing much better than in all the years you have been involved. Yes, look for the last several years i have been hearing people talk about china slowing and not doing so well. Now china number is 7 growth which is, you know, about the gdp rate at 6. 9 . But we have been seeing growth in china because we have changed our strategy. Not just on portfolio mix that they now need as consumers in their economy, but going west, and going north. So chinas strategy and dows strategy are hand in glove or aligned. Thats a big driver right there. Were growing that others are not. Lets talk about you, andrew. August this company should be merging with dupont. That deal could be done. Is there a division that you want to run . I would like to see you involved with some sort of plastics because the plastics numbers are so good. Well, look, so all of us at ceo land, as you well know, we have a use by date on their forehead. I have been here 14 years and i have repositioned the portfolio. Were very, very happy as a board and im happy as a ceo that we have the team to execute the merger. This is the deal for the sector, creating the three beautiful companies, and were working very closely now that we see daylight to the close with the ec conditional approval behind us. We were the other jurisdictions are going to give us what we need in the next little while. Come august, well hit the ground running. Over 550 projects to deliver the three billions of synergy which were recommitting to. Look, im quite happy with where i am, and i have no problem with future including my time on the beach in australia one day. Time on the beach in australia, but if the president told you, look, i need you, andrew, because you have been the most forward and aggressive guy in getting jobs created in america, wont you say i cant be on the beach, i have to serve the president . Im very much involved with the company on whats going on in the white house and im very pleased to see the reg reform agenda, im pleased to see whats going on in workforce training and activities there. Both im heavily involved with as are 30 other ceos. But put it all together when you bundle into whats going to happen in the next several years, of course im going to stay quite active in the greater business community. Right now, job one, two, and three, get the merger done, spin the companies out, materials will go first and then well have a lot more to say about that when we get to close. All right. Lets leave it there. Andrew, congratulations on an excellent quarter for the best one and it may be the last one. Great to talk to you, sir. Thank you, jim. These are remarkable when i listen to the big industrials, whether its be ford motor this morning, i know they have problems, dow chemical, these are big Cap Companies and the world is better. And i think that thats something even mario draghi because listen to this morning. Because hes still trying to keep the euro down. I dont know if he can. Not with the kind of things were hearing about in europe. Europe, the pmis at 72month highs. You have the confidence the h h highest since 09. At some point this Central Bank Divergence has to stop. It should be now. If you wanted to talk about protectionism, i look at the 70 Million People who live under the euro because its just not right. I think the president s got a little off pace here. He should be talking about how europe is trying to manipulate their currency because holy cow, it shown much higher. I know you covered dow and dupont as much as jim does. Yeah. Yeah, you know i think interesting, jim, he said one day on the beach. If you recall when i sat down with mr. Liveris and mr. Breen on the day they announced the dow dupont deal, mr. Liveris had made a commitment to be stepping down. Its not clear to me thats going to be the case. Based on at least my reporting and even listening to him in terms of what he said. I think we should watch this space closely, jim. Andrew liveris lives to work regardless of what he has to say about going to the beach one day. My guess is hes involved with the future of this company after the deal for quite some time. So lets keep an eye on that. I think youre right. Going to the beach in australia, thats the last place you are before armageddon. I have to tell you, armageddon is not here. I think this man wants to have performance, materials, plastics as being his next gig. I dont know. Ed breen will be the man who decides, i think. Wow. Hes andrews had quite a run. Yes, hes had. Done a remarkable job from when he had all the problems with the dividend. Its been a great quarter. I think he should be part of the triad. Well get cramers mad dash and count down to the opening bell in a few moments. Look at the futures. Holding in there steady. More squawk on the street straight ahead. Why pause a spontaneous moment . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. 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And the reason why they can do it again, carl, you can order pizza on your watch, order on facebook, you can order on twitter, order on your pc or tab let. Thats whats doing it for them. The three year stack, 31, prior quarter it was almost 35. A buddy of mine said theyre just showing off. I dont know. I have patty doyle on tonight. You have to include the special dividend, i said, man, i dont know how youll do it, the pizza tastes awful, it tastes like cardboard. Thai revamp the taste. I have the case this may be one of the best stocks ever. One of the best stocks 10. Hes taken its to 187. Not talking about the special dividend. Hes done it by making it so you dont have to speak to anybody. Yes. So do you judge mcdonalds the same way . Is this how we look at fast food essentially . A great question because the one thing you contrast this with Buffalo Wild Wings hes at home. Youre doing youre on activision, netflix, grand theft auto, playing candy crush. 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Youre watching cnbc squawk on the street, live from the Financial Capital of the world. The opening bell in two minutes. A lot to watch today. Reaction to the tax rollout, north korea continues to dominate the geopolitical discussion. The doj and ecb keep rates unchanged and then the president says in a tweet this morning, no plans to withdraw from nafta. Well renegotiate, if i cant get a good deal, maybe. But that a good deal is possible. Well, anything that drives the peso down is really good. Maybe this drives the peso down. Thats whats killing the united states, the peso is too cheap. You saw that action yesterday, all the rumors of that executive order. Yes. Look, i think that one of the things that really made it so that we were less competitive was the rhetoric against mexico. Had he said, listen, we have a problem with mexico but we wont make it a big issue then the peso could have dropped it. It was 4 to 1 when the nafta was created and then it went to 21 to 1. You cant compete. They used the word expansion in the statement for the first times since march of 08. There we go. Even though 2 looks tiff to get to. You know, i just think that theres more growth in this here and worldwide than people realize. We are seeing a company like Waste Management last night looking at 80 growth. One of the best ways to measure a countrys growth is to see how much trash you put out because thats construction. Otis elevator, heating, ventilating and air conditioning. Waste management a company too that has used technology to change the modern day landfill. Yes. Amazing how they can turn that methane into electricity. Using more natural gas, yes. Built here. Again up, big focus. Theres the opening bell. The s p at the bottom of your screen. At the big board its floor decor holdings, celebrating the ipo. Well talk to the ceo when the stock opens. Over at the nasdaq, meridian bioscience making. Maker of diagnostic test kits. When will we get the Parent Company of this network . Lets do comcast. Brian roberts said not only is it the the best start to the year in five years, but probably the best q1 for nbcu since the purchase. As adjusted ebitda is up 24 . Yeah. Thats the number i like to focus on because theres nothing like cash flow. Cash flow produces mothers milk for how you judge a company. If you got the kind of tax code reform, then if you look at the top ten nasdaq stocks, comcast would be the cheapest which is really rather incredible given the fact that they have the greatest growth in terms of cash flow of the companies i have seen so far in the nasdaq. Really kind of extraordinary. Made the point even as we see a week that there are layoffs at espn, people want to draw conclusions about the cable model. Roberts point this morning was youre going to stream, you need the best wifi and the best broadband. Well, its certainly true. 400,000 ads go back to something that john legere insinuated or insisted which is when verizon opened up the network to unlimited the speed slowed down. All i can tell you is that speed is everything. And come cast is well, i dont know. Comcast is faster. What can i say . Its why you need broadband. Net in exis why you need broadband. If you get net neutrality, comcast wins that spot too. Alltime high for our parent. This is Brian Roberts earlier on squawk. Its an exhilarating time to be in business because of all the change and depending what company you are and how well youre thinking about that, there can be winners or heres. We think were positioned for this evolution and when people go to more streaming the first thing you want is the best wifi. The best broadband. We added 429,000 broadband high Speed Internet customers in the quarter. Last year was our best year in a decade and were starting would have the same start as last year. So the momentum is continuing. Lets get to under armour as well this morning, jim. One cent loss is narrower than the four cent loss. Maybe you say its bottomed but how do you get it rolling . The Gross Margins were down. This shoe business, in the conference call, called the carry shoe, brian and i share that its sluggish and i think that the footwear business i dont know. Apparel plus seven, footwear plus two. When you go up against nike and go up against adidas, so its better than expected but you know what . Because they didnt cut numbers, i was supposed to buy the stock, how about not sell it. Lets go with that. The journal points out only 22 of analysts have a buy. Thats the lowest percentage its too hated. If you get a better retail environment and i have to tell you, we could get it. The small numbers they had things better. Dont forget the february trough and i like whats going on at kohls with the under armour. Theyre the most undervalued of the strip stores. So international is still good. Do you want to buy it here, its not going to hurt you. Really quickly, were seeing some night action on the rails today. Unp coming back along with Norfolk Southern. They give you a fabulous read on particular kinds of cargoes. I have to like the fact that auto parts is good, agricultural is good and coal, favorable comps. So youre talking about a railroad like Norfolk Southern and csx thats a better environment. Coal inventory is down and shipments overseas, theyre in the sweet spot. The rails are the most undervalued of any sector so far this quarter. David, i know just as a segue to what youre doing today, we we talked about buffalo wild. But some of the activist pressures are a big topic of discussion where you are. Yeah. Of course, in fact, well get some presentations a in a little bit from valueact which really is not an activist any longer even though its still in the name of the firm. But jeff smith presented earlier here, of course the starboard will be talking to him. He was focused on Marvel Technology a name that has been in their portfolio at starboard for some time. Where they already were active and of course the stock has been up but he seems to think theres a lot more to go. Well talk to him about that. But youre right, activision continues to be a big significant part of the overall markets. I cant tell you how many times im talking to bankers who are dealing with a situation that has not been made public and oftentimes ends it without ever being made public. But having a role in affecting the management or the strategy of the particular company. Funny, might not have anticipated that would be the case. Activision is of course here to stay. Ill be joined by the guys from trian. Well keep an eye on that and keep an eye on any of the news that may come out of here in terms of new ideas we hear about as well. Certainly in addition to of course the to the guests well be sitting down with. David you know whats interesting, some of the activists may have bitten off more than they could chew. When i look at what happened with Buffalo Wild Wings last night, you have to try to force a sale there because theyre uniquely involved with going out. Theyre doing takeout now. They cant make the money on the beer so david, what do you think in terms of stocks moving up so far. Are there still stocks that you can get into if youre an activist and make them sell or make them do better since the evaluations are so high . Yeah, its a great question. You know, jim, the playbook for these guys has to be more than simply change your capital structure or sell yourself, and thiss the criticism and thats the criticism sometimes from the corporations that find themselves under assault, but they have various ways of going about doing things and different focuses. I think starboard for example does tend to focus a lot on the operations overall. Not always sell yourself, but other activists are more interested in that. Back the our initial conversation on tax reform, whenever we end whatever we end up with, if we get a repatriation deal, guys, and lot of money does come back, you can imagine that that is going to yet bring another set of debates for investors and activists about what the companies do with all of that money that is coming back at a very low potential tax rate. Whether its returned in some form to shareholders, used for m a. That will be more kindling on the activist fire one could imagine. We should talk a bit about united this morning. Oscar munoz talking to lester holt on nbc news about a systemwide failure, raising their comp limits to 10,000 on changing seats. Establishing a seat where you can tell in advance how willing youd be to accept to volunteer to move your seat. This is munoz on nbc. Wed make sure half a Million People every single day get to somewhere safely and its a complicated process. When you have a complicated process like that, the operational mindset becomes front and center and we forget sometimes the people youre carrying are human and have interests and have desires as to where theyre going. Hes going to testify before Congress Next week. Takes out a full page ad in the Washington Post today. Right. I wonder if you can game this, get to 10 gs. Kind of like to the racetrack. Book a bunch of airlines to see where you pick up ten. Well speak to gary kelly, these are the kind of things that are really against the grain of what the airlines were dock. Higher fees. American raises labor costs and then you have this group going down. This costs money and what the airlines were doing, they were packing the joint and raising prices and now were hearing about friction. Southwests up 8 . Revenue is up 1. Its labor as you said, some older 737s that theyre going to try to retire soon. Yeah. My Charitable Trust owns it in part because i think that april was going to be very good. Well hear that garys going to say that. But look, this business was in the also onday halcion days and then Warren Buffett bought the stakes, it moved them up. Then we had the fracas on united and maybe the costs arent as controlled as we thought. I still believe in kelly. I think southwest is a Different Airline but obviously its a cohort. They all drive together. Well talk margins with kelly in a little bit. Lets check in with bob pisani, the dow is up nine points. Good morning. Happy thursday, everybody its a mixed market at the open. The numbers are crummy in the First Quarter of the year, so lets look at the sectors. A big day for tech after the close. Industrials have been doing very well, all the big industrials have reported. Energy is just a problem. 48 on oil again. Its been maddening covering oil for the last two months. 53 to 46 to 53, now to 48. This all in two months. Just a gigantic seesaw here. Materials slightly weak though. Had a good month overall here. Most of the big industrials have now reported. Todays the final day for most of the big names and generally the trend has been positive. So look, borg warner, they beat the raised guidance. Parker hannifin, big in the airplane auto parts and raytheon, they beat. They raised. This has been a trend. Industrials had generally been raising guidance so all of the big names, your caterpillar, 3m. Look at the names. Boeing, rockwell, raytheon, all have guided higher for the full year. Ge and United Technologies affirmed their guides. This is a big relief for the markets. Remember, we had big expectations, the earnings would improve this year. Look at the estimates for the full year. The worry is without some confirmation on the companies that earnings were indeed going to be higher as people were expecting the market would just be overvalued and people would say forget about it, lets get out. Thats not happening. So we started out in q1 with expectations up 10 . Its been going up. The other numbers, q2, 3, 4, are holding up very well. This is one of the main reasons the stock market has been so strong recently. And remember, these all modeled without trump tax cuts in them. None of the analysts are including if anything in the 2017 models. Now more tech after the bell. It will be tech stocks now well be hearing from. Youd know about google, microsoft, intel. Watch samsung. Theyre a very good bellwether, the chip manufacturing arm. They had good overall numbers and the profits were the best since 2013. In trades over in korea, but up 2. 5 another high for Samsung Electronics despite all the problems that the company has had. Keep an eye on that. Europe up earnings european earnings have been better than expected. Nokia was better than expected. Sd micro, better than expected. Bayer that was better than expected. Deutsche bank is showing improvement but it was still a little on the disappointing side. We see Deutsche Bank done about 3 . The Global Economy is improving. I hope you saw jim talking to Andrew Liveris from dow. He started off his report on the dow earnings. The Global Economy is showing signs of positive momentum with excellent leading indicators across the world. This is how he started his Earnings Report today. Hes on top of it as well. Thats the bottom line on stocks. Meanwhile the ipo market, well have seven this week if everything goes. Including one right now. Right behind me here, floor decor. The numbers were really big. They changed it. They had 8. 8 million shares, they changed it to 21. New indications just flashed right now, 24 to 26 for floor decor. Thats going to be a winner at least at the open. We were expecting another one down here today. It looks like it will be put off until tomorrow. This is china rapid finance. Peer to peer microlending company in china. They had 10 million shares at 9. 50 to 10. 50 and they have lowered it to 6 or 7. That is now scheduled for tomorrow, along with about five six other companies tomorrow. Again, biggest week that we have seen for the entire year and if we go through all of this well go through the second biggest april in the last ten years for ipos. So well have that. As soon as we get the numbers all completed tomorrow, well go through those numbers. Final numbers right here. Up 11 points on the dow. Carl, back to you. Thank you very much. When we come back, profits and the state of the airline business. Well talk about that and a lot her with southwests gary kelly. And then we speak to jeff smith and keith meister. Oil is down a buck. Well talk about that in a moment too. And the ten year relatively unchanged at 2307. Whoa thats amazing. Hey, im the internet i know a bunch of people who would love that. The internet loves what youre doing. So build a better website in under an hour with. Gocentral from godaddy. Type in your idea. Select from designs tailored just for you and publish your site with just a few clickseven from your. Mobile phone. The internet is waiting start for free today at godaddy. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Jims got dominos tonight, the stock is up almost 3 . Yeah, closing in on the alltime high and i think patty doyle will be in the studio do give you a rundown on how theyve managed to take some share mostly from mom and pops. I have nick akins. I like the read on the economy and if its got a great yield and then john donohoe who used to be at ebay. Hes at series now. Theyre probably two of the best of the ten performers today. Very nice. You Pay Attention to the stock draft were doing on nfl draft day . Im picking im announcing the number four draft pick for the eagles on saturday. Ill be the mel kiper for this event. Its one of the more exciting things we can do. We have great contestants and guy adami and i will be giving you the color as we pick. Some people would say im more Adam Schefter than mel kiper and that guy is going to play that role but either way well have a lot of fun. If the draft is today, how which stocks shown at the combine, so to speak, right . Yeah. I mean, i have to tell you, i dont want to take anything away from the people. But we have had some report in the last 24 hours that i think id be picking. Theres some 4. 2 Wide Receivers you want. You can never go wrong with the cornerbacks like the series now. The offensive line is going to come back to being apple, all right . You get that repatriation. Apple, google, google is the offensive line now. Like the cowboys. Cowboys offensive line is the winner. Really good framework. And a nice tease for working later on today. David faber has some news over at the conference. Thanks, carl. We have some news out of valueact. I want to make sure that people know that its not an activist shareholder any longer. You can see why. Kkr is the name and if you notice its up over 4. 5, almost 5 . This on what they announced a moment ago, and why they said its another Morgan Stanley for them. Thats the position they took over a year ago in the mid 20s. They see kkr as very much undervalued. Remember theres super voting stock here. The position has been taken through derivatives. Worth 750 million. Not an insignificant amount, but what theyre attracted to simply is the franchise at kkr and the fact that at least according to their math theres about a 13 book value. So theres 5 or so youre paying for the actual business. When you back out a multiple, you only get 3 1 2 times multiple, hence they see it as cheap. That presentation ongoing for mr. More fete right now. Its had a response in the stock. By the way the company did report earnings that were pretty good as well. So the stock had been up. But again this is not about them getting on the board necessarily. Although in the case of fox, another family controlled company, mr. Oven has a place on the board of directors so this is a new approach from valueact. A company by the way that not long ago returned money to shareholders and they are focused on names than underowned lets call it. And kkr may be one of those because of frankly guys, what is really a lot of complexity dealing with its overall earnings. Even when they talk about things in the Earnings Release like after tax net economic income and net income per adjusted unit. You can see why it doesnt get as much attention as it should. Valueact, up over 5 . Back to you. Quickly, all of these if the ipo markets coming back, arent all of these companies the place to be . Yeah. I mean, certainly they benefit in their portfolio from being able to take some of the things public. Kkr has had a mixed record really when it comes to some of the larger deals they have done and we talked so often about an active m a environment in which private equity has been absent to some extent, jim. But youd think a vibrant ipo market as they but dont forget they benefit from the changes going on in the marketplace right now towards passive investments and very much structured products, things of that nature. At least in the belief of valueact they see that as positives over time. They owned these things for quite some period of time. Except to see them for some time to come. David, a lot more from you at 13d coming up later on. Well talk to Larry Summers. Well watch under armour this morning having the best day since january of last year. The dow is up 13. In july of 98. They i did active duty 11 years. And two in the reserves. Our 18 year old was in an accident. 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His on off splits are the best here. Yeah, but his offensive win shares didnt even break 4. Come on, check out that stopandpop what do you think . My tradeoff analytics indicate no one creates more space on offense. This allows him to nail a jumper from a densely populated urban area. What youre trying to say is from way downtown . I am still learning. I can see that. Got an all time high on the nas once again and draghi along with the ecb and boj left the rates unchanged. Wild ride this morning as initial comments from draghi made them think maybe theyre in for a change and then question after question came in from journals, hey, are you ready to change, he said no no no. He said the Downside Risk had diminished but the outlook for inflation subdued. Now its actually below its level. You can see there from the chart. The wild euro ride we had this morning. He initially said Downside Risk to growth have diminished but inflation remained unchanged. The market the journalist everybody is waiting for this imminent change of policy. For the ecb to follow the fed. Draghi is saying this morning, hey, not so fast. Carl . Steve, thank you. Were paying attention to the Airlines Getting some of the wind knocked out of this morning. This is a monumental move. I think one of the things that people have to recognize is that when you get a stock like american down this much, you kind of wonder whether people arent saying this this is the twilight period for the airlines. I dont want too say that but obviously when you have oscar munoz saying what he did this morning and how much theyre playing the employees you begin to wonder did we reach the peak . I need kelly from southwest, and my Charitable Trust owns it, but these are jarring. Youre bringing them back to where they were when Warren Buffett said they might be a good investment. Why do we go to gary . The shares are sinsinking, and s is actually a missed quarter in gary kellys, southwest, hit by the higher operating expenses and decline in fares. Gary, im glad youre here today. Because i have to put this this perspective. You said aprils going to be good. Obviously this was not the quarter that you necessarily wanted. People are saying the industry has peaked. Could that be the case . Well, of course not. You know, its a long journey and, you know, were very optimistic about the future of the economy, it looks good. Fuel prices look moderate. We have got great growth opportunities. As you well know, most quarters we beat consensus. This is one where the consensus was too high. We were right in line with our guidance on revenues and right in line with our cost guidance. So this too shall pass. All right. Well, gary, is there more competition . You referenced some competition, but i have always felt southwest likes to go low cost producer anyway, go where it wants to go you have a Great Service record. Should we be concerned after a nice period its a benign oligopoly and a price cut is coming . We had an operating margin of almost 13 and we have been managing with some yield pressure here for quite some time. Going on two plus years. It feels to me like the fourth quarter, the first and the Second Quarter is kind of an Inflection Point at least for southwest where were beginning to turn the corner. We have a better yield environment and were looking forward to positive unit revenues. We are growing cautiously. Were only growing our capacity 3. 5 this year. We have also reduced the number of development markets that we have under way. Its about 4 of our total system. But you know, these are really strong earnings and were going to have a really good year. Gary, in light of the united episode, i wonder for the industry, is the practice of overbooking and trying to manage for all of those passengers who end up not showing up and keeping load factors consistent, is the practice of overbooking now at risk . Well, i think thats an airline by airline decision. If i could ill just speak for Southwest Airlines. You know, we the airline ticketing has changed dramatically over the decades. And we overbook very, very modestly today. Obviously the reason we overbook is to try to fill empty seats, to the extent were able to do that we can keep the rest of our fares lower. So in todays environment, ill bet we dont overbook a flight more than one seat. But to more specifically address your question, yeah, were seriously reconsidering that practice. And i have made the decision the companys made the decision that well cease to overbook going forward. We have been taking steps over the last several years to prepare ourselves for this anyway. We never like to have a situation where we are oversold which is a little bit different than an overbooking practice. At least for us its something that we will be discontinuing here very shortly. All right. So gary, in other words the 10,000 that united is putting out as the new limit is not something that we should be thinking southwest has to deal with. Well, exactly, jim. But again, were in the Customer Service business. We are very highly ranked based on any criteria that one uses. Customers love southwest. Thats the way we want it. The last thing that we want to do is deny a customer their flight. So were going to work very, very hard to eliminate as many pain points for travel and for employees to serve our customers as possible. Gary, your company has the best profit record in the industry. Its got a Fabulous Service record. It is what drew Warren Buffett to your stock. There have been talk that maybe you have to be the Burlington Northern for Warren Buffett, that if you wanted to, hed buy your company. I know you talked to all of your shareholders, but do you have communication with Warren Buffett and what does he say to you . Well, i know mr. Buffett. Weve run into each other on several occasions over the years. So yes, i have talked to him of course about his southwest investment, but you know we never disclose any of our conversations with our investors. And, you know, were just trying to run a good company and create a lot of value for all of our shareholders, but certainly Berkshire Hathaway as well. One last question. You have been you have a lot of roots to texas. Oil has really stabilized here and in the area youre in, its actually a boon. Are you seeing that year over year nice declining fuel cost but at the same time, the boom is helping southwest in texas . Yeah, texas is really, really strong. Of course we live here in dallas and there are cranes everywhere. So weve got a very Strong Economy under way. Oil and gas is a component of the texas economy, but not the main driver. But even our oil and gas markets, houston, mid land, texas, two examples, theyre performing very, very well. So yeah, were seeing a lot of strength in many of our markets. And were talking about revenue performance earlier. Almost half of our markets nationwide are showing positive revenue performance even in the First Quarter. So i was very pleased with the First Quarter. It was a little bit better than the fourth. Looks like the Second Quarter is going to be a lot better still. All right. Thank you so much, gary kelly, ceo, Southwest Airlines. He runs a different kind of airline. Carl . Got a lot of work done today. See you tonight at mad money at 6 00 p. M. Eastern time. Welcome to squawk on the street, im Carl Quintanilla along with sara eisen at post 9 of the new york stock exchange. David is with us from the 13d eighth active passive investors conference. Meantime, markets in a muted range here. Watching oil which is down about a buck this morning. Our top story of course the Trump Administration nearing the 100 day mark unveiling the outlines of that tax code overhaul. The treasury secretary this morning calling it the largest Tax Reform Program in the countrys history. Take a listen. Well, when we lay out the exact details of the plan, what youll see this is about reducing taxes and tax simplification. This is about a middle income tax cut. This is about having sweeping tax cuts. The largest tax cuts in history. The largest Tax Reform Program in history. Joining us this morning, Mohamed Elerian from allianz. You said the balance between growth and debt and what is the most important part of this . I think the most important part is when do we get the details, not just of the tax plan itself. But of how its going to go through congress and be implemented. The markets have moved a very long on just announcement, an outline and to sustain the move, you now need the details and implementation. The details are going to be difficult if the administration is going to want to hang on to some optionality and the possibility of declaring victories later on. How much is reasonable at this early stage of the game . You know, if you want to get it done by the end of the year, thats what the administration has said over and over again, youre going have to come up with details pretty quickly. The congressional passage isnt going to be easy. There are winners and losers in a major tax reform. Winners and losers means political fights so you have to get out there and convince not just congress, but convince the nation. So i think well see the details in the next few weeks. And then the markets going to be able to assess implementat n implementation. There are also winners and losers when it comes to the companies. Based on what we have got, the details we know so far, who do you think that is . And the income brackets as well for the americans. Yeah, i think that the most people gain from the tax reform component. And thats important. Simplification, transparency. Thats really important. That has a pro growth element to it. The one the winners and losers that are most pronounced, what do you do on tax rates and what do you do on exemptions and deductions and we dont have enough detail as of yet to say the winners and the losers. You can make a general comment. The higher your tax bill the better in terms of you winning, but i think we need more details to be specific. Do you have enough details to make an Economic Forecast . Is the 3 plus Economic Growth that the treasury secretary says will pay for this and is achievable is it really . So first tax reform and the tax plan in itself is not sufficient to deliver 3 growth. You need more. You need movements not just on deregulation and infrastructure which is what the administration has already signalled, but also on other elements that enhance productivity. The first thing to do is you need movement on the other things. Second, getting to 3 , you can do it short term. Sustaining 3 is a different issue. And that requires help from the rest of the world so that happens in europe, sara is really important to the u. S. As well. Mohammed, this week alone weve got we each got le pen, melenchon off the table. We have something resembling a tax rollout. Weve got pretty good corporate earnings, we have a diminished risk of a Government Shutdown and yet the ten year yield has up six basis points. No one believes the inflationists anymore, is that true . I think you speak to something really important. Which is navigating these markets. You have to deal with massive contradictions. The first one is what the stock market has been telling us and what the bond market and the treasury market has been telling us. The second is what soft data had been telling us and what todays hard data has been telling us. Third, yes, you have removed the immediate Systemic Risk of political shocks. And we would have had a political shock had melenchon le pen made it to the second round. But you havent removed this antiestablishment movement. Remember, the two candidates going to the second round, none of them are from the main stream parties. So the market is trying to deal with all of these contradictions. And theres one good way of dealing with them, to get the policy actions that will validate the stock market, that allows for an orderly normalization of rates and that overcomes political issues. Thats what we need is progress quickly on implementing pro growth economic policies. Lets talk about trade policy for a moment, and the potential to hurt global growth. Clearly theres a sigh of relief today in the markets, the canadian dollar, the mexican peso rallying on the idea that the Trump Administration wont immediately withdraw from nafta. Increased trade protectionism, broadly speaking, is it bullish for the dollar or bearish for the dollar . How do you play that . Well, first of all, if it were to happen i dont think it will happen, sara. I dont think well end up in the major trade war but if it were to happen it would be stagflationnary. And thats the worst combination for the markets. Lower growth, higher bad inflation that thats not what the market needs. The first thing to recognize if it were to happen, protectionism would be bad for the stock market. It would be bad for the bond market as well. So that is really important. The currency my own gut feeling at the end of the day the dollar does better in this role, its a relative price and the u. S. Economy is more closed and selfsufficient. But what we heard this morning about nafta is important. I dont think nafta will be eliminated. I dont think were going to end up in the trade war. I think thats all elements of the negotiation to update, to modernize some of these trade agreements. Yeah. So were getting used to have it all done in public. One last question. In light of what draghi said today, has the policy divergence trade among central banks, has that trade peaked . I think so. You know, it was really interesting, it explains the roller coaster that you have seen in the euro. It was really interesting because the first half of his statement was all about lower Downside Risks and improving Economic Data. You cannot deny that Economic Data have been improving in europe. Then he went very dovish on policy. Very dovish given the facts on the ground. I dont think hell maintain that. I can understand why he wanted to get through this meeting without causing major ripples. We still have the french elections coming up. I dont think he wants to be a political football in this environment but i dont think he can maintain this uhber dovish stance given whats happening on the ground. Maybe hell sound different after the 7th. Mohammed, thank you. Appreciate your time as always. Mohamed elerian. One of the big movers today, u. P. S. Reporting this morning, beating estimates on revenue and earnings per share. Its trading a little lower. Joining us first to discuss it is richard paris, and a distinguished member of the cfo council. Nice to see you again. Good morning. Good to be here. So it looks like the take away from the quarter, higher volumes and higher sales but also higher costs. Give us a little color as to what you saw. Sure. Across the enterprise, were pretty happy with where were at right now. In the International Business we saw exports grow at the highest we have seen since the recession at over 14 . And then on the supply chain and freight business we saw profits up 22 and in the u. S. Business, revenues were up about 5 . What we did see through the quarter we saw a pause in the Consumer Spending in the month of february. We saw it come back in march and seeing it in february as well and that did have an impact on the quarter. As well as some onetime costs that we called out. Fuel prices were about 50 higher this year over last year and that had an impact. But overall, we think the First Quarter is a good start to 2017. Are you talking about the u. S. Consumer pausing in february or was that a global phenomenon . It was definitely in the u. S. We attribute it to a few things. There was some election passed by congress that changed how refunds were given out. Specifically in the month of february and that moved refunds between two and three weeks from everything we have read. We think that had a piece of it. As well as you saw some snowstorms this year you didnt have last year, both in the northeast and the northwest. We think that contributed as well. Hard the same thing from pepsicos cfo yesterday about the delayed refunds impacting Consumer Spending, richard. What about the cost side of the picture, the rising costs, is that saturday delivery . Whats making i would more expensive to ship so many packages via ecommerce . Sure. So i think theres two sides to that. The first is that we did have some onetime costs that i called out a minute ago and then the second is the investment costs. We have about 5 million square feet that are currently under construction to build the automated Smart Logistics Network as we transform it. So there was some costs about 35 million for that and the startup cost of saturday. Our startup has heavier costs because theres not as much revenue early in the year and that does catch up. We do expect to see positive operating leverage through the year. But we knew the First Quarter would have some of that startup cost in it. Richard, one of the great things we can ask you about virtually anything regarding the economy. One other thing regarding wages is people wonder whether or not automation or even the threat so to speak of automation is putting a lid on wage growth in ways we havent seen in prior cycles. Certainly from a logistics standpoint you might have some experience with that. Do you agree thats the case . Well, not really because for us when we think of the technology, using Artificial Intelligence and realtime data, its still about the experience of using our driver to deliver to the front door. The credibility. And we do believe while the processes will change, well still be a very big employer of people and offer a great package. But we believe that some things will change and as things change well make the adjustments to the network but well still need a lot of employees, just saturday delivery alone will add about 6 ,000 jobs this year. A question on trade. Were you relieved to hear that the Trump Administration isnt going to immediately withdraw from nafta and instead try to renegotiate the deal . What would that mean for u. P. S. . Well, you know, we obviously are strong supporters of trade. But we know that nafta is almost a quarter century old. So its time to bring the standards of nafta up to todays standard, especially when you think about how trade has changed. Theres a lot of ecommerce that crosses borders and so to modernize nafta i think is a good thing. Were looking forward to working together with the administration and congress where we can to help make sure that customs laws, the process of how things cross borders is modernized to use technology and to really make it more efficient. So i think its a good step. I think yesterdays last nights conversation that they want to talk about how to modernize it is positive. Were encouraged by those discussions. Finally, were getting amazon results later today. Maybe you can give us a quick early read. How much of your volume growth is tied directly to business from amazon . Well, we dont talk about an individual customer but ill tell you our business to consumer continues to be the fastest growing. It also gives us a tremendous new market opportunity, so our market is expanding because of the shift. But you have on the other side is the as business to consumer grows, you have more physical stores, brick and mortarser who redefining mortars who are redefining what it looks like and you are seeing store closings. We saw our business to business grow in many of the sectors but the physical stores have actually continued to grow slower because the number of stores of Different Companies is starting to come down. Yeah, were seeing it in the jobs numbers as well. Richard, thank you for joining us for a snapshot of the business and the economy. Richard perrettes. When we come back, well have david sit down with jeff smith. The dow is up 28. Plenty of new highs once again as the nasdaq sets an all time high. Back after a break. Finally. Hey ron theyre finally taking down that schwab billboard. Oh, not so fast, carl. Oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. And four times less than vanguard. Whats next, no minimums . No minimums. Schwab has lowered the cost of investing again. Introducing the lowest cost index funds in the industry with no minimums. I bet theyre calling about the schwab news. Schwab. A modern approach to wealth management. Welcome back to squawk on the street. Im david faber at the active passive summit, joined by the first guest of the morning. Jeff smith, of course, founder and ceo of Starboard Value and active activist, not running away from the label as some seem to want to in your general asset class if i can call it that. You presented marvel technologies, why . We have been involved in marvel for a little over a year. We never discussed it publicly. We invested and when we invested it was uninvestable for the rest of the universe. They were going through the challenges. They had some accounting issues in the past. Over the past five years before we had gotten involved, the margins had eroded, cash flow had gone down, and things didnt look really great. No. Things didnt look great. But we were able to get involved. We filed a d with less than 7 ownership. And like many instances now were able to work with these companies faster, and in some cases privately. So in this case were able to work with the board and be able to reach an agreement to be able to put on five new Board Members of the company and essentially change a majority of the board, have the founders be able to leave the company in a friendly manner. And then be able to insert a new Management Team to be able to turn around the business. Now, you have already benefited as a result i mean the stock is up 50 or something along those lines. Some would look at that and say, all right, you know its worked. Why arent you exiting . Yeah, no, its a good point. So the company has started to execute. Again, good new Management Team, murphy as the ceo is doing a terrific job. If you look at the board now theres actually over the past year seven new Board Members out of the eight. Theyre refocusing on the core businesses. The stock has performed in the year that we have been invested. But its only really retraced some of the declines that it had had in the prior period. Its still not kept up with the industry. We believe theres still a large portion of improvement, not only in operations, but also in value. If you compare the companys fundamentals, the operating improvements, the multiples and whats happened to the Semiconductor Index we think theres a lot more to go. Whats your average hold period in your portfolio these days . On average its 18 months but when we get involved and we go on the board, its longer than that. It could be two, three, or even two or three years or even longer than that. So when we talk about perrigo, youre on the board, three seats at starboard, you can have two more you agreed to yeah, myself and two independent people and we can put on so five out of 11. Is your expectation about the hold periods that youll be in perrigo for a number of years . It would seem its that kind of a turn around that might require that patience. Its a company that has a great opportunity. In the right place, its in Affordable Health care. Store brand and generic prescription products but its a company that needs some operational improvement and needs some help from the board and the Management Team. Have they gotten past that omega deal which was not a good deal . In terms of getting past it, its the european branded over the counter business. We have a new leader running europe. And we do expect improvement in europe and at least from starboards standpoint when we came forward with our idea and perrigo, we identified there was almost 1,000 basis points of potential improvement in margins. I mean, this is a stock obviously that people have been following for some time where previous management under joe papa certainly somehow managed to convince shareholders to reject the deal. When you look at what you feel is fair value for the company, what number do you potentially get to . So its hard to say. I cant do that. The quiet is in a the company is in a quiet period and im on the board. The reconstituted board which includes again our Board Members as well as some new Board Members that have come on is working really well together. The Management Team and the board are working really well together. So you know our belief is that, you know, things may look better in the future. You know, so often activists are tagged with the idea, well, its about capital structure or selling. When it comes to the company like perrigo and any of the others you have mentioned, it seems that youre much more focused on operations. That certainly was the case at darden which i would argue certainly brought you to prominence when you took over the entire board. Is that typically how you sort of like to follow things at starboard . Yeah. David, dardens doing a great job. You dont own any of it any more. I know. They just did a terrific acquisition of cheddars, right in line with their strategy. It is within us. We at starboard we focus on the operational elements of companies. We look at companies that we believe can be improved operationally. Can they be sold, are they candidates to be sold, sure. Companies can be sold all the time. But we dont if in with the primary purpose of getting a company being sold. We do buy backs if it makes sense but there has to be an operational element. Thats what we get excited about. We get excited when we see companies that arent performing where we truly believe they can be turned around and improved. Yahoo is a case, and we have spent years about this. This may be the last time actually where you did get very much involved in structure of a potential deal to sell the core business. It took place. It will close soon. Youre on the board. Youre stepping off when it becomes ataba. Theres an expectation of a significant return of capital at ataba. Are shareholders going to receive as much as they expect to, as much as 10 billion in cash once the deal yeah, look this is a long time coming. But were in a good form with yahoo . Were getting a good operating business, buying at a good value. The Management Team is working on the transition. With verizon. But yeah, some time in june we are looking forward to the close where it will be closer to the pure play company owning the alibaba shares. And a lot of cash. What can i expect as a shareholder of ataba . Theyre trading at a 35 discount to Net Asset Value. A lot of ways to close that gap to create a value for what will be altaba shareholders. One can help is a return of capital. So theyll have approximately 10 billion of capital and to the extend we can buy back shares at a significant discount to Net Asset Value that should that should benefit if shareholders. And the tax reform will be a benefit. Tax reform will be a huge wind at the back. Theres a lot of ways to win with altaba and the 35 discount. You were not particularly enacere enamored of the management of meyer, but she is being paid millions as she exits. Are you okay with that . Marisa has been great and has been helpful in working with our partners as it relates to verizon. Her compensation package is based on her contract which was signed before i was a board member. Would you have signed on a deal like that . I was just checking. So often we talk about situations and the ones that have succeeded for you. You had good performance last year. But sometimes you dont. Macys is an example. You guys are out of it. How much does this end up being about stock picking i wonder. You had an idea at macys in terms of trying to monetize real estate, but you picked a company that was in basically an industry that seemed to be in secular decline and the stock went down a lot. Yeah, stock picking is at the crux of what we do and what all of us do as Investment Managers so what we add to stock picking is we look for undervalued companies and then what were looking for is plans to unlock that value. And having a clear path to be able to implement the plan if management is unwilling to work with us. But at the end of the day you have to buy into Good Companies that have good core businesses so you can refocus on those core businesses and improve did you get it wrong at macys . Sometimes you get them right. Most of the times you get it right. Sometime you dont get it right. Repatriation is a real possibility at some point, 17 or 18, a lot of cash will be coming back. Is that going to embolden the activists in the decisions they make or what to do with that returning capital . Its going to give, you know, additional flexibility. Its another tool. So companies that have extra cash have a job as Board Members and Capital Allocators to decide what to do with the cash, whether to invest in their business, to make acquisitions or turning that cash over to shareholders. Yes, there are more tools in the tool box. Thats only good for companies and for boards and investors, whether we use that as a tool or we have to Push Companies to do it, i dont know. It depends. Hopefully companies will do it on its own. They seem to be much more aware with what their shareholders want these days. They want to work with not just activists but Board Members and as a board member when Companies Receive letters, phone calls from the large institutional investors, evens ones who arent activists we take them seriously. You take them seriously, if investors have a good idea. Theyre presenting those ideas or expressing their opinions the boards are listening to those more and more. Jeff, thanks. Always appreciate being able to sit down, check in with you. Thank you, david. Jeff smith from starboard. Thanks very much, david. Back here, floor decors ipo opened for trade on the nyse. The hard floor retailer trading under the ticker fnd. Well be joined by the ceo, thomas taylor, in a few moments. A nice gain after pricing at 21. Look at prices of ford, the automaker beats on the top and the bottom line. Higher costs for product recalls, commodities, lower sales in north america. Fords down 2 . The atlanta fed just cut their number for tomorrows gdp figure from 0. 5 to 0. 2. The dows gains get trimmed to three. 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 . When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Lets[ whimpers ] dog. Find pingpong. Okay, lets go. Find your awesome with the xfinity x1 voice remote. Thats amazing good morning, everybody. Im sue herera. Police in paris clashing with protesters marching against far right president ial candidate marine le pen. Police sprayed tear gas after protesters started throwing projectiles. Hong kong authorities expanding their crackdown on dissidents with a new round of arrests of pro democracy activists. Police detained nine people. It comes ahead of an expected visit by xi jinping in july. Parts of northwestern arkansas are still trying to recover after storms ripped through the area on wednesday. High winds uprooted trees and knocked power out to thousands. According to a new survey, 74 of employers say they plan to hire recent College Grads there year. Thats up from 67 last year and the highest since 2007. More than happen say they will offer higher salaries as well. Thats a little bit of good news. Thats the news update. Sara, back downtown to you. Very encouraging, sue, thank you. As we head to break, take a look at this hot ipo. Just opening here at the big board. Hardwood floor retailer going public, called floor decor, topping 43 . The companys ceo will be joining us next here on squawk on the street. The dow is up 7 points and the s p barely remaining positive. Well be right back. Hey, im the internet i know a bunch of people who would love that. The internet loves what youre doing. So build a better website in under an hour with. Gocentral from godaddy. The internet is waiting. Start for free today at godaddy. 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 united unveiling new passenger policies for booking and handling passengers. A move of course sparked by the video of the passenger being dragged off of the united flight. Our phil lebeau has been covering this story. What is the latest on what united is trying to do here . They have implemented a number of changes. Some over the last couple of weeks and some relatively soon. Here are the changes. Some of the more significant ones that stand out is increasing the amount of money that can be offered to passengers so that they volunteer to give up their seats. It may go up to 10,000. It will start far lower than that, but thats the cap at 10,000. Seated customers cannot be bumped unless its a safety or a security issue and united plans to reduce the amount of overbooking. With regard to the incident about 2 1 2 weeks ago involving dr. David dao, united admits there were mistakes in handling dr. Dao. One of the problems that the crew lacked authority to offer more compensation and this morning during an interview with nbc news, uniteds Ceo Oscar Munoz said the combination of offering more money and working with the passengers is key to avoiding the situation like this in the future. Its not just monetary, but a combination of when can i get to my destination . What we have done is not only provided the up to the 10,000 mark but well have an alternative solutions desk. When you come off the airplane, we have we have a process for you individually. Those teams will be put together over the next couple of months. As you look at shares of united one of the other things that the airline says it will be working on is increasing training for the crews and giving them more tools including an app that they can use at airports so they can handle these situations quickly. And that its not handled the same way it was 2 1 2 weeks ago. Well see if the changes make much of a difference, guys. Were looking at declines across the entire industry group. Looks like the worst performing industry. Southwest is down 4 . I heard cramer talking to the ceo. Whats their read . The reason theyre down today is because of what happened with american airlines. It reported earnings today, but last night the airline announced that its going to be offering pilots and flight attendants about 930 million in pay raises over the next three years. Theyre in the middle of a contract and theyre going into them while this contract is going on, and saying well be bumping the pay so youre equal with our competitors. Well, jamie baker from jpmorgan came out, knocked the stock down today and others are saying wait a second, whats going on with airline costs . Thats whats weighing on the Airline Stocks today. And phil, we talked to gary kelly last hour who said apparently although theyre overbook their overbooking practices are fairly mild theyll discontinue that service. That sounded significant. Thats a significant piece of news, the fact that southwest has said we were already looking at it, but well stop overbooking. It puts more pressure on other airlines to look at whether or not they ultimately get rid of overbooking as well. And while some people will sit there and say, well, you dont bump that many people, go ahead. It is important to know that wall street looks at the metric in terms of load factors. Are you going to leave empty seats because you dont want to overbook a flight . That may change how people look at the airlines. Well continue to watch the shares. American in particular, getting slammed down 7 . Phil, thank you. Were keeping our eye on other big earnings movers. On the flip side, look at shares of under armour, soaring to the top of the s p 500. The Athletic Apparel maker losing one cent per share for the latest quarter. That was smaller than the 4 cent loss that analysts had expected. The revenue did beat wall streets forecast as well. It expects to hit the full year targets and the stock was down more than 30 so far this year. There was a lot of Short Interest in this stock potentially explaining the big squeeze higher on the beat today. But the analysts are saying theres lot not to like in here. 2 Revenue Growth in footwear is a sharp slowdown. The curry shoes not getting it done, especially with adidas resurgent and nike very competitive as well. Theres the issue of negative sales in north america which is the most important market. Yes, its getting double digit sales overseas but that could be problematic for under armour. Still only one in five analysts have it as a buy which is a very low percentage going back to 2010. Some viewers took note of the phase of the call in which plank decided to bring up the shoe. Fairly early on. Yeah. Mentioning its a weaker point for them right now. Its true, if you go into my best gauge is to go into some of the resalers, where all the sneaker heads hang out and they go for the incredibly inflated prices. You dont see under armour shoes there. Youre increasingly seeing adidas there, the kanye shoes. Its usually nike limited edition, but the shoe theme is so important. Its a smaller percentage of sales for under armour. Theres room to turn it around. They have one of the biggest nba stars in steph curry but theyre faulk falling behind. Floor decor is going public. The ceo will join us. And then later, hensarling will join us on the administrations tax plan. At fidelity, trades are now just 4. 95. 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. And at 4. 95, you can trade with a clear advantage. Usaa gives me the 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. Hardwood retailer floor decor opened up for trade this morning. A nice 42 gain at the open. Just a little off for the highs of the day. Joining us for a cnbc exclusive is the ceo, thomas taylor, who is here at post 9. Great to have you. Thank you for having me. The whole concept is forcing people to rethink what think about brick and mortar in the first place. Yeah. Absolutely. The reception we have gone through the road show and talked to investors and theyre excited about it. We have Great Associates and stores are really different. So is the lesson that depot should have opened more, is the lesson that things this heavy are immune to ecommerce . Why does it work . I think its a little bit of both. We commit a lot of space to the categories where our stores average 72,000 square feet. If you think of the Home Improvement center theyre 124,000 square feet. We have the broadest of assortment ready to go today of every single hard surface category. The stores are staffed well. So our store managers actually they create the selection in the store. So we have localized assortments in every store. In other words the customer is not saying, i like this one, but it will takes me eight weeks to get delivery. No, you take it out today. We define in stock differently. We have lots of jobs in stock ready to go. Is it amazon proof . I dont know if its amazon proof but its a difficult category to buy online. We sell some online but 90 is picked up in store. When youre doing hard surface flooring thats something you need to see. We do a lot of Natural Products that people like to interact with. Wood is a huge story this week. Whats going to be the effect of these tariffs . Not to us. Its actually the the tariffs that were imposed on what you use in House Construction but not so much hard surface flooring. Is it your sense that domestic inventory can fill whatever might be more expensive as an import . I mean, i think if you go away from wood, i think theres good opportunities domestically to buy the category. But we import a lot of categories so we have to make sure were getting the best possible prices that we can. Your sales growth is impressive. If you look at it versus retail. 13 same store sales and consistent double digit samestore sales. Is that sustainable in the environment . Listen, its been working out inkredz my well. We weve finished the eighth consecutive years of double digit sales. Well do what we can do to satisfy our customers and hopefully we can do good things. You were at home depot previously. Is that the big competitor . Are you going for to do it yourself customer or cater to more the professionals . We cater more to the professionals. Were more like a supply house than a retailer. You know, the Home Improvement centers do a terrific job. We have a lot of respect for all of them. But its different. Our assortments are significantly broader. Everything is in stock. Again, if you just think of the size of the stores, 72,000 square feet. I have to imagine rents are getting cheaper. Does that mean you can continue to build at this pace . Yeah, were committed to open 20 new units for the next unit. With a lot of closings our stores can go anywhere. We use old warehouses. Old grocery stores. Well use old jcpenneys or sears or kmarts. It gives us the ability to get into hard markets quicker. We hope it brings rent down. Do you see it as depot is, i guess, mostly domestic business or International Aspirations over time . Im just trying to get to long island right now. Look, eventually well think about that. For today, we know what we do is working. We can grow six times what we are today just here in the u. S. We want to create jobs. We want to create uniopportunit to move ahead. We want to create as many jobs in the u. S. And create opportunities. Hard flooring is more trendy than carpet. That in new york city or is that everywhere . Thats everywhere. Hard surface flooring has changed. Its become much more fashionable. If you go look in our stores, youll see that its different. Theres been a lot of innovation in the way the product looks. Open a rug business on the side. Congratulations. Nice open. Thank you. I really appreciate it. I appreciate you having us. Thomas taylor. Big pop. Lets go over to jon fortt with a look at whats coming up on lee schultheis. Squawk alley. Well talk about taxes and maybe talk financial deregulation. Formerretary Larry Summers is going to join us. We have all that coming up on squawk alley. Think again. This is the new new york. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov a bit of reversal in stocks after rising earlier. Dow down negative to the tune of 27 points. S p also turning negative down three. The nasdaq is the big outperformer of the group and is currently trading at a record high. It is above that 6,000 level. This comes ahead of some key nasdaq earnings tonight. Amazon, alphabet and microsoft. Crude oil fall bing aboubelow barrel. Larry summers will join us on trumps new tax plan. Much more ahead. Stay with us here. Dow down 30 points. With this degree of intelligence. Its a supercomputer. With this grade of protection. Its a fortress. And with this standard of luxury. Its an oasis. The 2017 eclass. Its everything you need it to be. And more. Lease the e300 for 549 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Weve done well in life, with help from our advisor, we made it through many market swings. Sure we could travel, take it easy. But weve never been the type to just sit back. Not when weve got so much more to give when you have the right financial advisor, life can be brilliant. Ameriprise welcome back to squawk on the street. As we look at the first 100 days for the Trump Administration, we want to put it in context for some of the recent performances for other president s recently over their last 100day span. As we approach that mark, look at the best performers as of late. President obama had an 8 run for his first 100 days. Some say thats the wake in the financial crisis and thats the reason for the pop. We want to put numbers up there. President trump up 6 . One of the best runs weve seen in recent memory. And then of course you have president bill clinton up 1 during his first 100 days and then george w. Bush down 7 there. Certainly things to watch there. How does it rank in terms of context overall. Over the more medium to longer term . Well sam crunched numbers about president ial first 100day sessions in the markets ever since world war ii. This is what it comes down to. President john f. Kennedy had a 9 run during his first 100 days. The best run for a president since world war ii in his first 100 days. President george h. W. Bush up 8 and then President Trump up there with 6 return. So on pace right now for the second best Republican Administration in terms of the first 100 days overall. As we talk about the way that the markets are performing, its going to be one to watch as we see whether or not we can get one of those best performances and whether that keeps on going for the longer term. That does it for squawk on the street. Lets send it back downtown for the start of squawk alley. Thank you for that. Good morning, 8 00 a. M. At alphabet headquarters in mountain view, california. 11 00 a. M. On wall street and squawk alley is live. Good thursday morning. Welcome to squawk alley. Post 9 as we watch the markets here. The dow going a little bit into the red. Its been a bit of a seesaw action today. Dow on track for the best week of the year. The dow, s p, and
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