>> the market should be going up a little. >> you're a dog person, not a cat person, right? >> i love dogs. sweet pea is trying to take my microphone. can you say good-bye to everybody? want to say good-bye? >> "squawk on the street" is next. >> join us tomorrow. bye, everybody. >> bye. ♪ everybody dance now ♪ everybody dance now good tuesday morning. welcome to "squawk on the street." i'm carl with jim cramer and david faber at the stock exchange. whether it is high profile earnings misses, the turmoil at the department of justice over immigration, the start of a two-day fed meeting today, futures are lower. the euro is powering higher. we'll talk about that in a moment. s&p out. we begin with president

trump holding a meeting with pharma executives at the white house. plus, peter navarro accusing germany of currency exploitation. underarmor slammed on the earnings and sales miss. plus, an announcement the cfo is leaving the company. the president holding another meeting with executives, this time from pharma. trump has been pushing for lower prices. he fired attorney general sally yates last night for refusing to enforce his ban in court. you have tech ceos meeting in opposition to the order. you have some retailers coalesce fighting border adjustment. >> right. >> we'll see what the pharma meeting brings. several sectors seem to be pitted against the white house. >> i think that's the right way to look at it. i think there are international companies that have really done fabulously under globalization. i think they're saying, this is all part of globalization.

we are globalists. we are not american. we are globalist companies and don't recognize the borders as closely as you do, mr. president. when it comes to employees, the borders, obviously, no one is challenging it. the united states should have borders. what we are is seeing international companies that are really going against the president who is pro-worker. and pro-protectionist. we don't know who is going to win out. but it is very clear that some of these companies are willing to say to the president now, come on. i mean, let's get serious. this is a big global world here. you can't think like this. i think, uniquely, the president really isn't getting it. >> another day of tax reform, deregulation being displaced. that explains a potential fourth day down on the s&p? >> yeah. we haven't heard senators break ranks, other than a couple guys. that is if you're pro tripod, pro deregulation, repatriation,

lower corporate taxes, every day, you're like, all right, these issues are -- someone is going to break ranks, is the way the market thinks. >> right. i think you've also got the question on that border adjustment tax. you hear it more and more opposition starting to gather or coalesce among, certainly, the retailers who will be dramatically, potentially hurt. the idea that the u.s. consumer will be because the dollar will not move up as much as needed to offset the cost increases that potentially will come. that will be interesting to see how that plays out. i'll also tell you, another monday passed, no deals, right? we're a month into the year, there had been an expectation we would have a very strong year. it very well may be. but a lot of corporations right now are holding back because of this week and immigration. because of last week and the mexican border. because of tax reform. not knowing specifics yet and wondering when we're going to

get them before you want to make a big move that involves your corporation. you want to know about all these things and whether your interest is going to be deductible if you take on debt to do the deal. not to mention everything else. >> look, we're trying to figure out, are they breaking eggs to make great omelets or just breaking a few eggs? >> you raise a point. i think you're eluding to, in some degree, our sister networks covering doj today, right? sally yates. of course, this refusal to carry out the immigration order. reports that tillerson and mattis were not well consulted in the drafting of the order. how much does that matter to us? >> i think there was -- yesterday, i said here, did he not realize he doesn't have his attorney general in place? these are obama holdouts. i have to believe he did recognize that, and he probably -- he had to foresee this. i mean, did he really think an obama justice department would be siding with his views? i mean, his views are completely

an different than the obama justice department. you think, maybe this is a way to see, you better get my guys in there or there will be chaos. the last tweet was how the democrats are sitting on his nominations. he is either crafty, or this agenda is going to not be as rapidly put through. in the meantime, you'll have the negative parts, which is protectionism, what that does to business, happen first, and then maybe you get that terrific trickle down from having good corporate tax rates. >> brings to mind what peter navarro said. echo on what he said on our air late last week. that is something we've discussed at this desk. whether or not germany, in particular, is manipulating currency to take advantage of not just the united states but the eu. take a listen. >> germany, one of the worst actors in the international environment when it comes to the vat. they've strategically raised it to 20%.

whereas japan's is much lower. they're sticking it to us. when they send a bmw or a porsche into our markets, they basically rebat the vat to those manufacturers. it is like a subsidy. then if we try to sell them a ford or chevy, they slap on the vat. it is not going to happen under a trump administration. >> well, here's what i've been saying. >> for months. >> they don't fight fair. remember, euro zone inflation was at a four-year high. what is the euro doing down? why are they forcing the euro down? >> right. there is a question in terms of whether or not you'll have to see rates move up over there. >> inflation. >> given inflation. >> a high. >> moving up dramatically and the currency may have to follow. you'd expect. jim, does anything good really come from saying that, you know, the euro is like an explicit deutsch mark, whose low valuation give s them an advantage over everybody else? >> it is good for absolutely

nothing? >> our audience. >> our audience does not want to see earnings cut because of protectionism. like, if germany says, you know what, we've had it and gm, here's a new tax on gm, which i don't think is going to happen, but this is what you have to worry about. the rhetoric is such that i almost feel that the trade people in this administration are saying, hey, guys, guys on wall street, look, get this through your thick heads. some guys have to have their numbers cut. we won't sell as much. we have to protect our workers. >> clearly, the u.s. and the uk now seem to be -- theresa may comes over. maybe there is going to be some trade agreement there. in a way, opposes the eu or puts us on, i guess, navarro would say, much better footing. >> i think that's right. navarro's comments are not designed to make so it that there's good, you know -- i mean, look, the thing about the

scenario. president speaks to putin. apparently, great talk for an hour with putin, right? where is merkel? the special relationship -- we have a special relationship with britain that dates back for years. the special relationship that has been cultivated between obama and merkel, now, we have navarro throwing a bomb at that relationship, right? isn't that how you look at it? >> yes, yes. >> point-blank agree with you? >> i'm with you. >> not even -- >> i'm reading what he said and listening to what he said. the answer is yes. >> this morning, response out of stockho stockholm, germany, cannot influence euro rate. germany has been called to have an independent policy. >> let's watch this. i think europe is coming back. there is a company that has been on my show that says europe is the bright spot. it is hard to continue to think they should have interest rates as low as they are and the euro should be as low. >> jim mentions numbers cut. underarmor is one, tumbling in

the premarket. company reports earnings below expectations. cuts guidance. margins down. cfo leaving. kevin plank, of course, on the call, saying q4 was hurt by challenges, disruptions in north america retail. jim, in addition to underarmor, others guiding lower, pfizer, coach, simon property, ups. >> i think these are all -- i think coach will be okay. i think lilly was good. pfizer was light, not bad. under armour was suboptimal. the cfo took office in january of 2016 and he is gone now. when i see a cfo leave, it is often more important than pretty much anything else i follow. what that said to me is, okay, listen, this is in the penalty box. as the call goes on, the gross story is in tact, kevin says. he talks about the idea that golf and basketball had strong results. but in the end, the numbers speak for themselves. the numbers are awful.

i mean, look, it is retail. we have to get it through our heads. retail is awful. amazon, maybe they have gross margin issues. i don't know. walmart instituted a new policy which is certainly not going to help their margins. no extra cost for two-day shipping. you see ups. ups couldn't figure it out. we'll speak to the cfo. the challenges, ups, what do they say in the release? they managed through a product mix. to me, it sounds like, once again, we didn't estimate what the right boxes would be on the truck. and continued industrial producti production. contrary. the industrial production has been good. i have problems with that. >> on ua, implied fiscal year 2017 eps, according to analysts this morning -- by the way, the conference call is going on now. sarah eisen has been listening in. she said at the outset, more humble kevin plank than you would have seen in previous

quarters. >> declining 6%, it tends to do that. >> yes. 41 to 42 cents now. down from 69 cents prior to this significant guide down in numbers. >> they guided it down three months ago. missed it three months ago. >> that gives you a sense here where things -- where implied numbers have to come down by as much as 38%. something along those lines. to your point, they've lost a lot of people. brad dickerson, the coo. 2015. they lost svp of footwear in march '16. chief digital officer announced they were leaving. now, the cfo after a year and a half. >> wow. that is turnover. that magnitude is something with a growth company you don't tend to see. go back to nike with knight, you really didn't see that kind of turnover. knight runs a machine. i think people felt this is the

next -- nike jr., being called into question. >> people wondering whether a company 1/10 of nike's size should be growing at the same rate as nike. >> hearing somehow great china is. you have steph curry. steph curry is not as much of a factor here as the cfo leaving. i'd rather have the cfo stay and steph curry go. >> james harden and russell westbrook wouldn't be bad, given they're averaging triple-doubles. >> i saw harden go a triple-double against the sixers. >> man of few words. >> harden was very, very nice. >> he didn't have a lot to say but he hit the basket. >> the selfie didn't have me because i was so low. >> i think there's another firm today basically being cautious on margins going into the break. >> you have to. amazon is going to take over the

world. take over the world mode. then margin mode. they're in take over the world mode. picking the brain mode. right? >> yup. pinky and the brain. >> something is the water with this segment. i have to throw a bomb at you. >> i'm sure you will. i have no doubt. >> thank you. amazon, yes, we have to worry. but the fact is, amazon is the undercurrent of everything in retail. it is not necessarily under armour. they are in a dog fight and there is a lot of issues with that. when you look at the numbers we're hearing from the stay at home numbers, they're extraordinary. go look at the buffalo wild wings downgrade by csla, which is a telling downgrade. they're talking about the -- if you didn't believe it, you'd think what happens is people have stopped going out. december comps were meaningfully worse than on a two-year stack, especially for casual dining. it is about people not going out. this is the domino's pizza, video game, selfie, snapchat,

facebook economy. where people go home and have pizza and beer. it is like ananti-al yanukovych. >> i agree. >> you're three for three with me today. >> maybe if i want some red wine and pizza. >> no? >> no. >> you should. >> i have to hold off. >> i think we all need to drink more. >> when we come back, rough morning for ups on news of its quarterly miss. we'll talk to the cfo. look at the pre-market. we're going to look for claret on what this pharma meeting is all about at the white house. chicago pmi, 9:45 a.m. eastern. back in a minute. hey , do johtio

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jet.com was bought by walmart last year. said free shipping is table stakes in ecommerce. it is a poker game of sorts. >> it is a table stakes game. to ruin your gross margins. this is, again, the problem, as we go back to the target. go back to the -- it was seminal when they had the incredible gro growth in the ecommerce. anything that makes it easier to avoid the store is plain bad. you sell a lot of impulse buying that is off the table. amazon, you have impulse -- i do a little impulse buying because the machine is learning. i bought something yesterday. if you like this, you may like this. i check it out. say in walmart, you want a rubbermaid, i don't know, cooler. you might end up buying some clothes at walmart. not if you're just doing two-day

shipping. the problem with target was by the time you get to the end of the racetrack, they had high single digit declines in entertainment. can't have that. >> amazon has been able to invest in logistics for the last decade, 15 years, without penalized by investors, who believed. that investment has paid off enormously for them and the ability to get things to people same day now. which seemed, a few years ago, as hard to imagine. now, when they say hours, you believe them. >> look, i got a rite aid that is closer to me. the end of the exchange, there is a rite aid in brooklyn. you think i get the toilet paper when the wife says to get it? no. i go to amazon prime. i mean, people don't get toilet

paper and paper towels in the store. i go to amazon. i picked it up, hun. >> by the way, as we're talking, reuters putting out a list of the pharma ceos who will meet with the president -- or are meeting right now. >> who is that? >> j&j, lily, along with amgen. >> well, j&j we talked about being responsible in terms of price increases. you certainly want that to resonate. if you own shares in pharma, today could be an interesting -- you've got to change -- >> so many issues here. a lot of the manufacturer -- not a lot, but certainly, there is manufacturing done overseas. will that have to move back? will that be considered an import? at the same time, as we know, so many of these companies had significant cash balances given their international sales overseas. pfizer, which is not enormous. amgen, perhaps the largest

percent of overall cash flow. >> positive note today. >> that will certainly be beneficial when we get -- if and when we get tax reform, that comes back at a reduced rate. >> president, again, focusing on fake tears chuck schumer right now. not focused on farming yet. he thinks pharma gets away with murder so i don't think hes going to make it into a class two homicide. >> won't downgrade the charges? >> no. when you're prosecuting for murder, it is not going to turn into petty larson, right? he doesn't seem to show a lot of pullback. >> i don't know what that comment actually -- >> the murder? >> what it follows through in legislatively to rein in prices. you can say they're getting away with murder. are you going to change how buying is done? >> in february, he gave a speech where he talked about the need to use the bargaining power of the united states.

that's anti to the republican view. >> you see an analog between drug prices and the f-35? >> i do. $600 million. governor pence, now vice president, is from indiana. eli lilly is table stakes. >> we'll get cramer's mad dash and count down to the opening bell on a busy tuesday. don't go away. ou takr edals, .e rc .e ut int sm

we've got five and a half minutes until the opening bell. we want to talk arconic. >> shareholder group targets

alcoa spin off. interesting the stock is down. this indicates there are people who will challenge on the fed fifth put names up. >> when the window opens for nominations. elliott opens 10.3% of the company in stock. they have three board members, jim. >> yes. >> according to the journal, there is dissension in the ranks, at least among shareholders, quoting the journal here, that your friend, and he is -- >> call him my friend? it is not about friend, it is about money. >> i know that. >> i think the article has great truth to it. i think there will be a challenge. >> you do? >> yes, i do. and i think that the challenge is about the overall performance of kleinfeld. you can argue it was the great commodity boom. yes, the article is real. i think there will be

challenges. it is about operations and why doesn't he say, listen, made this fabulous change where you got arconic, and move on. i think the challenge will be very interesting to follow. because the actual spin off together made a lot of money. that's just the last few months. so, yes, i think the article is real, is what i'm saying. including the view of elliott. >> you heard it here. that's cramer. we have the opening bell after this.

head licenlines out of the g between the president and ceos of drug companies. trump vowing to streamline the process for drug approvals. says he is disturbed when the drugs are turned down for terminally ill patients. the foreign countries must help pay for development costs and the outsource production because of currency devaluation by others, needs to bring the products back to the united states. >> it is the give and take. wouldn't spend billions for developing drugs would be good for the companies. how do you get lower prices?

the government bargains better. >> you know what, i mean, foreign trading partners don't always pay their full share. we're subsidizing the -- >> there's the opening bell. the s&p at the bottom of the screen. empire state reality trust and marmo celebrating. communications kicking off puppy bowl. animal planet network. cheers to our ex-colleague over at discovery. >> i want to stay close to something of what can be happening. -- is down. someone can come down immediately and start making the terrific anti-multiple sclerosis

drug. trump doesn't want people to get in the way of these young puppies. >> you get an at-risk generic competitor coming into the market. there are apparently five generic filers that could launch, i'm reading a goldman note this morning on this. you get that, jim. then there's some questions, i guess, as to whether that will delay buybacks. >> right. >> for the company. even though they say teva should have no problem meeting the obligations given the cash scale. >> i mean, the one thing i would say is this stock, this is like a five-year battle. there was going to be a competitive. it's been endless. this has been a great franchise. one of the reasons the stock isn't down more is because the string of their luck, people felt, would eventually run out. >> few shorted teva, myelin and

parago. when they were involved, trying to figure out how -- >> you left out valiant. >> they weren't involved. teva wanted to buy myelin. nobody bought anybody. >> argon sold for billions. >> generic. using using it for smaller deals. increasing the buyback. >> he bought stock back lower. i think the drug stocks and the retailers are two places you don't want to be. they're terrible. look, this whole rally has left those behind in anything retail. you can't look at it because it mind blind your eyes. >> simon property with soft guidance today in their earnings. the worst dow component. >> interesting, simon property is actually up. they boosted -- you know, simon

properties, i mean, people have been shorting them forever. they're a good company. they've been able to raise rents when somebody fogoes out of business because there are companies that sell things that can't be amazon. i mean, like puppies. use the puppy metaphor. you can't amazon puppies. >> don't talk to me about puppies. >> he doesn't understand. rescue dogs. >> amazon is in the rescue dog business. >> went to right route. >> i find these companies are so good at what they do. i mean, there are people who have been shorting these things forever. shopping centers, shopping mall. they don't understand some of the guys have long-term leases. when they expire, someone wants to come in. the occupancy rate is very, very high. trump will make new head of fda. any new tweets? >> about to name the fda chief and will oppose anything that

makes it harder for young, small drug companies to enter the market. >> well, i mean, remember, this drug -- the fda is gaining factor because it take dss -- l, a blockbuster takes $1 billion to $2 billion. >> before getting to market. >> if you're the fda, they don't want you to take a drug that -- >> we've been hearing this 20 years. >> yeah. >> certainly the hiv. >> right. >> crisis. >> i mean, right now, for instance, with gw pharma, compassionate use. to what point do we say, these parents have so little for their kids, why don't we just not look the other way but give them hope? >> maybe there is a middle ground. the same time, you put a drug on the market that is unsafe and starts killing people. >> it is a delicate balance. don't own the drug stocks.

>> under armour, the bar graph of s&p components looks skewed because of the degree under armour is down today. >> again, you didn't think the cfo -- that's what i want to focus on. the cfo leaving after a year. that is just -- when you see that, you have to say, okay, listen, i understand that they've got some good businesses. basketball sneakers. steph curry apparently -- looking at the twitter feed -- steph curry mentioned six times, thank you. steph curry is not -- it is not a steph curry world. in the end, it is an earnings per share world. it is not curry per share. it is earnings per share. >> that is really ugly. >> did you get your bottle of rye under armour was giving out? kevin plank went into the rye business. i'm not speaking of

pumpernickel. it is wry he went into rye. curry got a mention. killing in china. the problem with these, this business is just a tough business right now. if december travel was bad, if people went to amazon, amazon screws the margins of everybody, everybody. let's focus on the fact that retail is bad. >> yeah, but they don't cut price on amazon. it is the same price. >> no. i'm saying you can comparison shop. if you don't go to target for electronics because you're doing the racetrack, go around the food, the toys, apparel. >> depends whether you want to buy under armour or not. amazon is not the reason under armour is selling less. >> they're not going to the stores as much. >> resulting in overall. >> you can go with me to tj max and i can show you the under armour. that's been there before. what i'm saying is if people aren't going out that much to shop, then this is what -- >> i follow you.

>> you buy into that, don't you? >> i got you. >> decentage l agnalysis based facts. >> not alternative facts but actual facts. is that okay to say? not going to be targeted for that? >> never know. >> worth mentioning gold here. up almost $20. some making the argument along with the vicks, people trying to protect themselves from volatility. what do you think? >> when they were downgraded and the stock is up big, and -- we don't care what they'll earn. this is like insurance. this is the geico of your portfol portfolio. geico? >> geico, yes. >> it's a metaphor. what you got there? >> i'm looking for exxonmobil. >> i liked exxon. >> did you like it? what i was struck by is that exxonmobil earned, what was it,

little over $7 billion for the year. i think that's right. >> you had a problem with exxon? exxon is good. >> do you remember when exxon was making -- yeah, $7.8 million in 2016. do you remember when they were making $10 billion a quarter? that was back in 2011. they earned 40 billion in a year. >> they preserved the balance sheet, did a lot of things right. the secretary of state to be did a lot of things right to conserve the balance sheet. i wanted them tb aggress i have because some of the independents have been more aggressive and they've done well buying some shale properties. but exxon is a big needle mover. they need to have gigantic fields. i think exxon has done well to preserve the balance sheet. >> you think they have? are they covering their dividend without borrowing? >> got to drill down on that. >> drill down. ah-ha. >> drill down.

>> did want to talk about sprint. we were hoping to speak to marcelo, but they cancelled on us. for later in the show. sorry about that. decent quarter. >> decent. i thought it was excellent. >> that's all they get out of me. >> well -- >> when you cancel, you get decent. no, i'm joking. >> i'll give you the last filtered, better than expected. 3 $368,000. $2.5 billion versus $2.3 billion. he cancelled on us. >> the only buy is t-mobile. they say sprint's valuation with no material free cash flow expected until 2020 is pricing in a successful m&a transaction at this point. the company's operations have been improving and we suspect it to grow. but the need for additional capital investments in a highly

competitive industry make us cautious on the shares. overall, remember, wireless at this point is just a price war. they're at&a is, of course, one keys. when it comes to sprint, this idea that it is controlling shareholders. soft bank wants to do a deal with t-mobile. that's true. in fact, even on the conference call, what the print cfo said when asked on the conference call that just took place, about consolidation, the cfo of sprint said, yes. further consolidation may be necessary among the smaller players to compete with the big two. >> okay. >> so they're laying it out there. nobody is talking -- t-mobile can't certainly because they're under the restrictions from the -- >> i know the -- >> but they're going to. they're going to. we'll see what the germans want to do. they'll want their guy to run it, i think. but they might very well be

willing to be part of a scale player. whether or not justice would say four foing to thrgoing to threen you have a president that tweets about prices. will he say, there is good price competition? >> i don't want to be in verizon. i want to be in t-mobile. verizon seems -- where are the subs coming from? not just new people sn snapchatting. >> verizon is down over 7.5% this year. >> the worst dow component of the year. worse than exxon, ge or chevron. >> that is saying something. the stay at home factor. watch ea, all part of the stay at home thesis i've been harping on. i like it. it is good. the drug stocks are not being killed. >> no. but dow is down 68. waiting for the tape out of the white house. apple, tonight, of course.

let's see what's moving on the floor with bob. >> bit of a slow start down here. dowdo down 66 points. problems in japan. the yen has been strengthening and nikkei is down 2%. even no the gdp forecasts for good. been under pressure there. mixed pressures in europe. the retailers are doing better. h&m had good numbers, trading up nicely. take a look here in the u.s. not so with the retailers in the u.s., thanks to what's going on with under armour. most of the retailers here are trading for the downside. industrials also. let's go to the president, guys. >> bob, i apologize. here's the president. >> i think you know most of my team. you folks have done a terrific jb ov job over the years but we have to get prices down for a lot of reasons. we have no choice. for medicare, medicaid. we have to get the prices way down. that's what we're going to be talking about.

we're also going to be streamlining the process so that, from your standpoint, when you have a drug, you can get it approved if it works instead of waiting for many, many years. the u.s. drug companies have produced extraordinary results for our country, but the pricing has been astronomical for our country. we have to do better. new drugs led to longer, healthier lives. we all know that. but we have to do better accelerating cures. forced and focused on accelerating fda approvals. we'll get the approval process much faster. one thing that disturbed me, they come up with a new drug for a patient who is terminal. the fda says, we can't have this drug used on the patient. but they say, but the patient within four weeks will be dead. well, we still can't approve the drug. we don't know if the drug works

or if it doesn't work. but we can't approve the drug because we don't want to hurt the patient. but the patient is not going to live more than four weeks. we're going to be changing a lot of the rules. we're going to be ending global free loading. farm price controls reduce the price of american drug companies to finance drug and r&d innovation. you people know that very well. it is unfair to this country. our trade policy, we'll prioritize. the foreign countries pay their fair share for u.s. manufactured drugs. so our drug companies have greater financial resources to accelerate the development of new cures. i think it is so important. right now, it is very unfair, what other countries are doing to us. one thing i really want you to do, i've seen this over the years, but a lot of the companies have moved out. they don't make the drugs in our country anymore. a lot of that has to do with regulation. a lot of it has to do with the

fact that other countries take advantage of us with their money and their money supply. and evaluation. because our country has been run so badly. we know nothing about devaluation. every other country lives on devaluation. look at what china is doing. you look at what japan has done over the years. they play the money market. they play the devaluation market. we sit there like a bunch of dummies. so you have to get your companies back here. we have to make products back. we're going to get rid of a tremendous number of regulations. i know you have some problems where you cannot even think about opening up new plants. you can't get approval for the plant, and then you can't get approval to make the drug. other than that, you're doing fantastic. so we're going to get that taken care of. we'll be cutting regulations at a level that nobody has ever seen before. we're going to have tremendous protection for the people. maybe more protection for the people.

instead of being 9,000 pages, it can be 100 pages. and you don't have to double up and kwquadruple up -- we have companies where more people are working on regulations than in the company. it is unfair. we have to lower the drug prices. we have competition but a lot of times, the competition dissipates. i'll oppose anything that makes it harder for smaller, younger companies to take the risk of bringing a product to a vibrantly competitive market. that includes price fixing by the biggest dog in the market. medicare. which is what is happening. we can increase competition and bidding wars big time. we have to improve the program. the numbers we pay, we have cases where if i go to a drugstore and buy aspirin, the aspirin costs me less than what the united states pays for aspirin. and the united states is the biggest purchaser of drugs

anywhere in the world, by far. so i can buy at a drugstore the aspirin for less money, right in so we'll talk about that after these wonderful people that i like so much leave. we have to do something about that. we're going to have national security priority. very important. and we're going to basically work on innovation. we're going to work on price. we can save tens of millions of dollars. you people are going to do good. you're going to do great. what i want is we have to get lower prices. we have to get even better innovation. and i want you to move your companies back to the united states. and i want you to manufacture in the united states. we're going to be lowering taxes bigly. we'll be getting rid of regulations that are unnecessary bigly. somebody said the other day, what is the percentage of regulation? i said, maybe 75%. could be up to 80%, which is what you need. you can't even function. other countries have no

regulation. you go there for that reason. and you produce good product. you want to be -- you want to produce good product, also. so we're going to produce great product. we're going to streamline the fda. i have a fantastic person i think i'll be naming fairly good who can streamline the fda. and you're going to get your products either approved or not approved, but it is going to be a quick process. it won't take 15 years. and we're going to do, i think, a tremendous -- i think we're going to make a tremendous difference to you. i read where it costs sometimes $2.5 billion, on average, i guess, to come up with a new product. is that a correct statement? >> 15 years. >> 15 years, $2.5 billion to come up with a product. where there is not even a safety problem. it is crazy. surprised you can't get them to move faster. i know you. i thought you could do it. i'm very disappointed. that's why we're here today, right? that's why we're here today. so with that, i'd love to go

around the table. we'll introduce ourselves. let's see. then we'll start a little meeting and we'll ask the press to leave. just two seconds, you can stay for a couple minutes longer. go ahead. >> mr. president, bob h, headquartered in jersey. we operate all throughout the country. 60 countries around the world. when i joined the company 18 years ago, we were ranked one of the top companies to go bankrupt. today, we've provided cancer treatments for patients. great to be here. look forward to engage in discussion. thank you very much. >> thank you, bob. >> bob bradvic. we share a desire to advance and eradicate and diseases you talked about in your inaugural speech. we're confident on the outlook

of the country and proud to say we'll be adding 1600 jobs at anagen. confidence for the industry. we look forward to continuing to advance medicines for those who are seriously ill. >> i heard you're going to be adding a substantial amount of jobs. that's really great. thank you. >> i'm greg walden, chair of the energy and commerce committee. look forward to the administration on these issues. we have a lot of great work to being done. >> thank you. you've worked on it long and hard. you we'll get your labors to pay off. okay? thank you very much. >> mr. president, dave rix, the new ceo of eli lilly. 140 years in indianapolis, indiana. and that's where we make a lot of the product still. in fact, we're hiring and manufacturing jobs as i speak. which is good news for people in indiana. also some of the policies you've come out and suggested, i think would help us do more. i'm looking forward to looking ahead. tax, deregulation, those are things that could help us expand

operations. >> very good. thank you. >> thank you. >> our great vice president. >> i'm the current chair of the pharma association. representing a company that employs about 16,000 people in the u.s. most in manufacturing. one of the largest investments. >> thank you. johnson & johnson, good company. >> we spend about $3 billion in rooe research and development. headquarters are near boston. we have 13 manufacturing sites here in the u.s. employ about 20,000. >> and you're going to expand? >> yeah, we're looking -- >> within the united states. >> one of the things -- >> the rest i'm not interested in. >> one of the things that will help is the lower tax rate. >> yes. >> it is a massive help. >> we'll get it. >> mr. president, i'm with pharma. pleasure to be here. on behalf of the industry, we employ 4.5 million americans directly or indirectly. the industry invests about $70

billion in r&d in the united states. there is more than any other industry. we're delighted to be here this morning to talk about reducing regulation, lowering taxes. we think stronger trade deals, those things will lead to lower costs for american patients and for the taxpayer. >> thank you. >> i'm ceo of americmerk. we employ 23,000 american employees. we invest about $7.5 billion a year in r&d. almost all in the united states of america. we have tremendous numbers of hi p -- high paying, high skilled jobs, including manufacturing in the united states. we're bringing manufacturing back for the cancer drug. you may have heard we have a drug that stimulates the immune system to kill cancers. we're bringing the jobs here, mr. president. >> very good. thank you very much. thank you very much, fellas.

>> thank you. >> thank you, press. >> should senator mcconnell -- >> thank you, press. >> do you know -- >> we wait until 8:00 tonight for your announcement? >> thank you, sir. >> what's now becoming a familiar picture. the president surrounded by ceos, in this case, from the pharma industry. you saw the ceo of pfizer, eli lilly. >> merk gave a good call. bob acquitted himself. candidly, this group is moving up. he did not say, we are going to -- president trump did not say, we are going to go the way of the va. we are not going to make medicare, you know, crunch your margins. so it was better thanfeared. >> every one of the ceos emphasizing their contribution to the u.s. economy in r&d and

overall capital spending and manufacturing, which we know is such an important point for this administration. all of them mentioning how much they manufacture here or plan to and the jobs. >> right. >> we're getting, as carl said, accustomed to seeing these every morning. yesterday it was small business leaders. last week, ceos. again, pharma today. we'll see what tomorrow holds. >> look, this is an industry that is periodically demonized. the president said they get away with murder. i also, in the defense of the industry, it has been the great leader in the world. it has been. no one has been able to develop drugs like we have. >> the swiss have some good pharma companies. >> yes, they do. but i think in the end, when the president -- seems like the presidents -- when he hears things he likes, moderates his view, at the moment. then pulls back and -- >> we're getting into pattern recognition. it is a very -- it is a carrot

stick. bring operations home. we're going to make the fda easier for you. you bring manufacturing plants home. we're going to lower your taxes. right? >> yeah. >> quid pro quo element. >> eli lilly. it was a good quarter. should this stock be up 20 cents? i don't know. i guess so. what i feel better about, if i own eli lilly's stock or pfizer, which missed, is that the president did not say, you know what, guys, this was not an al capo capone, baseball bat meeting. he said, make the prices lower, but he didn't ruin the margins. >> we'll see what happens. >> lockheed martin, the margins were not ruined by the $600 million saved. the margins were not ruined for boeing. the margins were -- you have one to two cents out of united technologies for the carrier plant. again, if you are a shareholder, which is what i care about, this was not the most jarring of meetings. okay? >> based on what we heard there. obviously, the meeting itself hasn't occurred yet, or is now

in progress. >> he did not say, listen, i'm sorry, guys, but medicare is now going to tell you what price to pay, like they do overseas. >> no. >> did not say that. that's important. >> but there are a lot of promises made. tens of billions of dollars in cost savings. >> right. >> move up the time line. 15 years he was talking about, which is sometimes how long it takes to develop a drug. it is not how long the fda takes to review a drug. >> it is interesting he talked about the idea of a therapeutics -- companies that you better give compassion. how is it that a person who could live four more weeks, why isn't that person getting a drug? i think the answer is they don't look at a four-week period. but there is a lot that could be done. almost every single drug executive i have on off the screen says the fda is pretty tough. on screen, they don't want to do that. the fda, periodically -- >> i think he used the word free

loading from foreign, you know, outside the u.s. because they do pay sometimes -- >> who did he describe as a bunch of dummies? >> i forgot. >> a lot to handle. the day is not over. >> things were bigly. they're still bigly. >> very bigly. bigly, bigly. >> what is tonight on "mad," jim? >> i have arconic, which is controversial. perhaps there is a challenge to klaus kleinfeld. we are in uncharted waters. i'm looking at pfizer's quarter and thinking, wow, so what, the president blessed pfizer and now they're up seven cents. go through the conference call. >> if it is not an al capone, able bat -- >> i'm telling you that is the analogy, david. go back to the -- there was no baseball bat in that room. there was no hickory stick. there was no slugger. >> the untouchables was the movie. great movie.

>> good scene. >> jim, see you tonight. "mad money" at 6:00 p.m. when we come back, more on the president's meeting with the pharma executives. later on, mark bertolini. aetna ceo. back in a minute.

♪ good tuesday morning. welcome back to "squawk on the street." i'm carl with sarah and david faber at the new york stock exchan exchange. a olot going on. the turmoil of the department of justice. fed meeting begins today. the pharma ceo meeting will end soon and we'll look for tape out of that. speaker ryan with x aq&a. rick santelli? >> if you look at consumer confidence, the last look at 113.7 was the highest going all the way back to august of '01. 111.8 is the number we just garnered from the january look. a bit lower than the 112/113 we were looking for. consider this, if we didn't have the 113.7 which, by the way, was

downgraded slightly to 113.3, this would still be the best numbers since july of '07. even though it lost a bit, it is still solid. earlier, we had our january read on chicago pmi. a big miss at 50.3. that ended up being the weakest level since april of last year. carl, back to you. >> rick, thank you for sha. -- that. we mentioned the pharma meeting with the president moments ago. we have the latest as we wait for some of them to come out and possibly talk. hey, eamon. >> they may talk. we'll see what they have to say after the meeting. going in, you saw the tape a few minute ago on our air. what struck me is you can kind of see the outlines of a deal just by listening to the introductory comments of all the players here. you saw steve, the head of pharma, the trade association, mention taxes and regulation as something that the industry would like to see. you heard the president's comments about lower prices bringing back jobs, bringing

back the companies into the united states. so somewhere in there might be a deal between this white house and the pharmaceutical industry in terms of bringing back cash that's offshore. getting a lower tax rate on that overall. lower regulations. then in exchange, the government being allowed to negotiate prices on drugs through medicare and medicaid and bringing down prices overall for consumers. that might be a net neutral thing for the industry. we'll have to wait and see how it shakes out. a lot at stake for them. one stylistic point, you saw the president there at the introduction of the meeting reading from a piece of paper. clearly, some pre-scripted comments there. keeping his off the cuff comments to a minimum. but he did also interject a thought about devaluation of currencies around the world. i want to play that for you and we'll talk about it on the other side. >> you have to get your companies back here. we have to make progress back. we're going to get rid of tremendous number of regulations. i know you have some problems where you cannot even think

about opening up new plants. you can't get approval for the plant, and then you can't get approval to make the drugs. other than that, you're doing fantastic. so we're going to get that taken care of. >> that wasn't the sound bite i was looking for. what the president did say about devaluation though was interesting. he said, other countries take advantage of us with their money and money supply and devaluat n devaluation. we've been run so badly, we know nothing about devaluation. other countries live on devaluation. look at what china is doing. look at what japan has done over the years. they play the money market. interesting comments there on global currencies, as well, guys. a lot to chew over here. we're going to hear more from the ceos, presumably, when they come out of the meeting. then all of that, we'll hear an executive order later today on cyber security. tonight, a supreme court nominee. a lot of news out of the white house today, guys. >> you know, so many currency comments. this is really throwing the market for a loop. you don't usually get it out of a president or his advisers. clearly, a lot of these ceos are voicing their concern over what

has been a very strong dollar, which hurts earnings and u.s. competitiveness. the question, eamon, is what can the white house do about it, besides jawbone and complain? >> they are jawboning. normally, u.s. presidents say, strong dollar. this white house, not saying that. they're saying, maybe a strong dollar isn't always the best case for american companies and american competitiveness, sarah. >> we're definitely getting practice at this, and so are you. we'll come back to you in a bit. let's bring in meg, who knows pharma backwards and forwards. talk about what she thinks this means for the industry. good morning. >> it was a balanced meeting as far as investors may have been worried about for the pharma meeting with trump. while he started out, of course, reiterating he thinks drug prices are too high and wants to work on bringing them down, he talked about taxes and deregulation. we focused a lot on the fda and says it needs to be streamlined. there shouldn't be so many

regulations around getting drugs approved. you may think it is positive for the industry. but the industry has been happy with the direction of the fda lately. there have been improvements to speed up drug approvals. they are happy with the rigorous but excaccelerated pathway. there is concern in the industry that if some of the rigorousness is removed, it won't be as good for drug makers. interesting to hear the president is talking about a very good person he is going to name soon to fda commissioner. we've heard a few names batted around. we don't know yet who the person will be. overall, you're seeing the sli. not bigly on this. again, people aren't so worried about what he is going to do about drug prices. we have to wait to hear what he says behind closed doors, guys. >> thank you. we'll continue to watch for pictures as the ce ovros emerge. today, pharma ceos. yesterday, the acting attorney general being removed. the key question right now for

investors, can trump's pro business agenda co-exist with the protectionist or anti-immigration rhetoric coming out of the white house? joining us is chase's chief economist and the head of investment group at aerial investments. good to see you both. anthony, can it still be a pro-growth, pro-business, strong market narrative? >> i think it can. i think what you really want to see, even though i'm not in favor or against the presidential tweets, i think investest will be looking to see whether they see a midnight tweet saying, tax reform or tax cuts and, of course, fiscal stimulus are still on the agenda and will happen this year. that'll do a lot to lay down the concerns investors have today. if you look at the index, it looks at newspapers, about 1800 newspapers across the world that mention stories about uncertain uncertainty. went up 30% yesterday.

today, it more than doubled. we've seen the index surging. by the way, research i've done finds there is about a 47% negative correlation between increasing uncertainty and what happens in the equity market. >> is that how you explain a triple digit drop in the dow? added on yesterday's losses, we're getting a pushback here. >> since last friday, you've seen uncertainty picking up by close to 127%. that historically meant the market has suffered. but this could be just temporary. if all of a sudden, the next couple days, things settle out, the market could come back. >> charles, one group that's bucking the trend here is health care. some of the pharma stocks are rallying. it is that photo opt kind of premium that somelately. are you a buyer, the fact there is engagement, after trump called them out for getting away with murder, they're finally getting a seat at the table. >> for us, it is valuation. a lot of industries and sectors

like financials ran a lot last year. the one space that didn't run was health care. we think there is a lot of opportunity there is. my favorite name is zimmer, which i think is up 3% today. it is going to benefit from the demographics, which are going on. more demand for health care. if they can get through some of these pricing risks, and we think the med-tech companies can, this is an industry where there are a lot of stocks. >> president trump is talking about ways he can get drugs to be manufactured in this country. eamon called out the fact he mentioned currency manipulation has been a big problem for u.s. competitiveness. is there anything the white house can do on that? >> well, actually, there are two major determinants of what happens to the currency. it is relative growth and relative interest rates. obviously, if we slow the growth, the currency will be weaker. we don't want to do that. if you jawbone the federal reserve not to be as aggressive and raise short-term interest rates too much, and raise them

less, the value of the dollar is weaker. the problem is stthere is a contradiction. the border tax will raise the valuation of the currency so it neutralizes the effectiveness of the tax. this is a contradiction financial markets have to settle. >> the dollar is slammed on the special against the yen right now. >> and navarro's comments on the euro, which we haven't really talked about. >> the deutsch mark. >> right. charles, you mentioned when you were touting zimmer there, you think the market, i guess, is not cheap, or at least i'm picking that up. is that the case? >> yeah. we think it is dangerous to try to tie in markets. we would say the market on a scale of 1 to 10, if 10 is a bubble and 1 is dirt cheap, we're 6.5/7ish. health care is 3/4. there are a lot of opportunities. i want to say the thing people aren't talking about enough is this idea of competitive devaluation. trump being the first president ever to try to talk down the dollar, to try and talk about a

weaker dollar, is going to be very pro-inflation. we're going to be talking three years from now about how this was an opportunity when inflation really started to pick up. >> we will see. we'll be talking about it a lot more for sure either way. anthony, good to see you. charles, thanks for joining us, as well. ups a out with its results. shares are down and early trading down almost 7%. joining us from atlanta is richard, the cfo of ups. good to have you back this morning. good morning. >> good morning. how are you today? >> good. this is the worst day for the stock since january of '15. i know you referenced some of the product mix shift in the release. you want to go into what exactly happened in the quarter? >> sure. when you look at the fourth quarter, we had a good fourth quarter. what we saw was a tremendous shift in the amount of volume that went to the consumer versus to the business. in fact, we looked over the last ten years, and this is the

fastest rate of change. so while volume continued to grow, opportunity continues to grow because of the business to consumer. we saw the impact. at the same time, we saw top line growth that was fasted that we've seen in any quarter of this year. as well as internationally where we continue to deliver double digit profit growth. >> any sense that trend you referenced is going to abate? certain ly not reverse. >> we expect it to continue. the big news here is that no past trend has shown the movement or the pace of change. in fact, we're leaning into the opportunity where mid-cycle in an investment period to create more automation in networks. on the call today, we talked about we would continue to grow our capital expenses to create more automation in our u.s. network, to create efficiency and capacity. the market is expanding and we

want to take advantage of the expansion. >> what's a good example of that automation? can you give us color on that? >> sure. the concept is that you can automate many different parts of our network. for example, in the hub, where package would then come out of a trailer, it would then read by the label on the package, it would read through the whole building, how to get sorted to the right destination. then it would be manually put into a trailer to leave the building. there would be no touches in between. so we've done about three buildings so far. we'll do about 30 to 35 by the time we're done. we've announced over 7 million square feet of projects we're in process of right now to automate the u.s. network. >> richard, after the election, small business optimism surged. are you seeing a corresponding jump in business, particularly from small business? >> you know, when you look at the b to b side of the business, we're seeing it a little bit softer.

really, it's been the continuation of what we've seen for the last year, year and a half. the r4 forecasted the production would go up. you talked about the strength of the dollar is and it is hurting some smaller manufacturers, being able to take it more internationally. we're seeing that. that is why the business to business business was down slightly year-over-year. but we are expecting at least positive territory on the industrial production side going into 2017. >> richard, you say in the release this morning you're optimistic about the white house's focus on tax reform, infrastructure, simplified trade rules. these priorities are setting in place a framework for business conditions that bode well for our customers and for ups. is that agenda getting cloudier as a result of other things happening in washington or not? >> well, you know, it a peer - appears the message around regulation, tax reform, trade,

nose a those are all consistent. fortunately, the message basically is simplifying the process for us to complete commerce and participate across the country, as well as internationally, is something that is going to -- is crystal clear in their messagings. we look forward to seeing the regulations as they come out t proposed bills. depends on the agenda. at the end of the day, our job is to take what is complicated and make it easier for our customers to trade domestically and internationally. when we see trade agreements and help customers participate, in many cases, we're creating jobs in the local community and the smaller customers of the smaller manufacturers are also creating jobs. i think it is incumbent upon companies like ups to tell that part of the story. >> i'm not sure people would agree on the trade front, richard. the white house last week floated an idea of 20% tariffs

on u.s. imports. what would that do for ups' business? >> i think right now it is premature to talk about what exactly is going to be in the regulations. we are monitoring that. we're having communications with the appropriate people in the senate and the house to make sure that a voice of reason around what's most important is continuing to allow free trade. if you hear the comments around free trade, what they're talking about is making sure the u.s. is staying competitive for the 21st century. it is not that we're against free trade or -- >> you also hear border taxes and border adjustment taxes. wouldn't that directly hurt ups? >> you know, all of those proposals are proposals right now. until we get more details, it is hard to comment on what is going to impact ups or our customers. it is important that when the full story comes out, we understand all the particulars about it and what impact it has. but i do believe this administration is talking about

fair trade. and they are looking and talking about bilateral agreements and some multi-lateral agreements. those are all good things for trade overall. we want to make sure that we get our customers prepared for whatever it is. but it gets finally passed. that being said, it brings a tremendous amount of opportunity for customers. we want to make sure that we can make it -- that the complexity is a little simpler. as we operate in 220 countries. every country has different regulations when it comes to trade. we're prepared to adjust to whatever is necessary and help our customers, as well. >> especially where regulations are changing in those countries all the time. richard, we love talking to you every quarter. appreciate your time today. thanks. >> thank you. when we come back, under armour getting slammed today. we'll get details on the earnings miss and some of the departures at the top. plus, more on that trump meeting with pharma executives. plamarketing slimming down.

dow down 127. you're watching "squawk on the street."

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earnings report this morning. among them, lower than expected q4 profit and sales. lower guidance going forward especially for sales growth in 2017. 11% to 12% versus 20%. big decline in margins on higher spending. aggressively managing their inventory. current si pressu currency pressures. the cfo only on the job a year and liked on the street is departing following what the company says is personal reasons. this follows the departure of the chief digital officer last year. here's what kevin plank had to say on the earnings call for what was behind the weakness this past quarter. >> in the fourth quarter, slo r er traffic caused lower promotional activity. this was product that previously sold for us in years past.

in addition to higher demand for higher lifestyle silhouettes made us out of ball laance for assortment. we worked to adapt to the mix and pricing. >> kevin plank there eluding to what is plaguing a lot of companies in the retail space lately, which is significant deep discounting. athleisure used to be immune to some of the problems. not anymore. nike is declining on this report. the problem for under armour, and i just got off the call with kevin plank, they're in a maturing business. he feels humbled by the disappointing numbers reported today but they'll get back to growth again. that's his message. and they're going to be prudent. that was another word used often on the earnings call when it comes to the mix of spending for sales. they're not going to get to the promised 20% ref knvenue number any cost. they'll make the right investment.

who is replacing the cfo, there is criticism over the management changes, he said it is someone who has been at the company 12 years. he still has a lot of energy. it was a very different tone to this call than what we're used to of kevin plank, usually defensive right out of the gate. potentially because of the major slide in shares not just today but really since last year when they peaked. half of what they were. >> heavily shorted as we know. >> yeah. >> amazing run of 20% plus growth. >> the cut stock in half. 11% to 12% growth is what they're looking for down from 23%. what do you do about traffic? if there are fewer people -- and jim made this point earlier -- simply going to the store -- >> two things. grow your ecommerce business and international business. for them, it is a real area of growth. i mean, they're seeing nearly 50% growth. they just have to shift more of

the business. >> off a low base, right? >> more than 80% of sales out of america. kevin plank is making the point, as they grow from what they said repeatedly, a $5 billion company to a $10 billion company, there will be bumps like this in the road. it'll be weak the next few quarters. some of the trends last quarter they'll continue to see. there's been deep discounting in this space. that really, i think, caught this company off guard. and why investors were caught off guard. they weren't prepared for these numbers. >> if you've shopped, you probably were aware of some of the discounts. when we come back, pharma executives meeting with the president at the white house. we've got the latest on the meeting coming up on "squawk alley." we'll be joined by mark be bertoli bertolini. aetna ceo. that all and more.

coming back to listen to speaker ryan. >> what is happening is something that we support, which is we need to pause and we need to make sure the vetting standards are up to snuff to guarantee the safety and security of our country. that is what this does. we want that goal to be achieved. i support the refugee resettlement program. we are a generous country. it is important. we can be generous and watch the national security at the same time. that's why i'm confident secretary kelly along with cabinet members will make sure we have the proper review and vetting so we can get the program up and running with the proper national security safeguards.

i think it is regrettable that there was confusion on the rollout of this. no one wanted to see people with green cards or special immigrant visas like translators get caught up in all of this. i think there was, regrettably, the rollout was confusing. toen a go forward basis, i'm confident secretary kelly will make sure this is done correctly, they get a good review and we get this program up and running with the vetting standards we all want to see. >> is there a role for congress? >> congress oversees these things all the time. this is clearly in keeping with president's authorities. look at immigration law. the way the refugee laws work. this is similar to what we passed a year ago after the paris shooting. we just want to make sure that it is very clear, that people understand what this is and is not. and that at a going forward basis, it is executed and implemented so we can have both. a good refugee and resettlement program while making sure that we don't have people trying to infiltrate a refugee program and

take advantage of us. yeah? >> when you do a cost benefit analysis, people from these countries had the deadly terrorist attacks, not here in the united states since 9/11. you have a lot of military experts, intelligence experts warning this is going to serve as a recruiting platform for isis. are you sure that is going to make -- >> the rhetoric surrounding this could be used as recruiting tool. that's dangerous. but remember, these countries were named by the obama administration. these countries were named in legislation that we talked about last year. these countries were named by the obama administration. there is an issue with respect to terrorists trying to infill rate our refugee population. there is -- we're not here to debate. we're here to answer questions. there is nothing wrong with taking a pause and making sure we have the proper vetting standards in place so that we do not have a problem like france had with paris. >> from congressional

standards -- >> the judiciary committee on the as pepects of this. we weren't involved in this. i would refer to to the chairman. >> mr. speaker, when you talk about the role of congress, these are temporary measures. do you plan to have any measures or repo-- there are reports the are further immigration [ inaudible ]? some members said they were caught -- >> at the time it was issued. i don't know specifically. we were briefed on it, the contents of it, as it was being rolled out. then i had a very good conversation with secretary kelly to make sure that we separate fact from myth. make sure the confusion is cleared up quickly. clearly, none of us want to see people with green cards get implicated in this. that's not the goal. we want to make sure that is

cleared up toenon a go forward basis. the president asked us to focus on, and something we agree on, something we ran on, is we have to secure the border. we have a border security problem. that is what the physical barrier on the border is all about. we have security concerns given this age of terrorism. given the fact we have drugs coming across our border. we have an opioid problem. there are lots of reasons our focus first and foremost is on border security. thank you. >> that is speaker ryan defending the immigration order from the president from over the weekend. saying we need to take a pause, adding it is regrettable there was confusion in the rollout of this. referencing, guys, not any attack in the past on the united states with regard to the seven countries. but the paris shootings, in particular, which seems to be now a standard that the u.s. and the administration is going to be intent to say, we will avoid. >> that going the administration's words verbatim when it comes to defending the

order. the seven countries were designated by the obama administration. when he was asked, i thought it was interesting, about whether this is being used as a terrorist recruiting tool, he pointed to the rhetoric. the rhetoric may be. that doesn't make us safe. he also emphasized the need for vetting and says congress needs to take a closer look at this to try to make this a part of that. >> meanwhile, the president meeting with pharma executives this morning as you know, discussing the rising drug prices, pushing forward for a repeal on obamacare on the last day of open enrollment for '17. joining us this morning, the former head of the center for medicare and medicaid services under george w. bush. former ceo of the federation of american hopspitals. >> morning. >> what is the readout from this meeting from where you sit? >> well, obviously, i'm sure the pharma guys are scared to death of the things coming out of the trump administration flt th. they don't have friends around the world. they're worried about the free trade, intellectual trade with

canada and other countries. it's been rough for them internationally. i'm certain they're worried about the idea of negotiating for drug prices which, in my opinion, is crazy. i spent a lot of time designing and developing medicare part d, which tried to avoid that. the rhetoric has been tough. traditionally, republicans have been supportive of pharma. you know, a lot of the bad pr coming out of pharma has been from smaller drug companies that aren't members of pharma. these are the bigger guys that will meet with the president. i'm sure they have a long list of issues and they're probably scared to death. >> one of the points that president trump made repeatedly is that, not just with pharma, but in particular, we want to look at the pharma ceos. they're speaking now. >> -- exchange of the ideas in the room. the president is very much focused on how we could do better for patients, giving them more choice. helping them to deal with the medical bills that they have in a way that also stimulates noin

vati -- innovation. we had a great conversation. talked about the need to make the tax code more competitive. need to make sure trade deals work for americans. finally, and very importantly, to make sure that the companies that we represent continue to come up with the kinds of cures that will help people live longer, healthier lives. thank you very much. >> when the president talked about driving down costs, how are you guys going to achieve that? >> we talked about how to make the marketplace work better for competition and patient choice. that will help pay schetients. it'll help our companies and it creates jobs in this country. >> and regulatory reform. >> we also talked about that. it can also stimulate innovat n innovation. >> does one go with the next in order to drive down costs? do you need tax reform, regulatory reform or can you do it separately? >> i think all these things come together to actually create a system that's good for innovation. it is good for jobs.

most importantly, it is good for patients in the long run. thank you. >> are you more hopeful now than you were in the last administration that maybe prices could come down as the president talks about tax cuts and regulatory reform and the like? >> i think there are real opportunities if we work on all those things to ensure that we have a more efficient system that actually allows greater innovation for the drugs that we need for tomorrow, for conditions like alzheimer's and cancer. also, allows us to lower costs in the system for everybody. most importantly, including patients. thank you. >> let me share one thing, also. about how positive the president is and how constructive we are about reforming health care and the changes he is proposing are ones, i think, will be great for the country and consumers to get better health care, more access. have the coverage. we're excited to work with him on the continued reform of health care. very positive. >> agree. >> how important is it -- given the researchers and scientists, how important to your industry is the immigration issue?

>> well, we have employees from around the world. we have to get the best scientists, best employees around the world. so having access to those employees and having an environment in our companies that stimulates diversiitdivers inclusion, very important. >>en thatnks, guys. >> and obamacare -- >> thanks, guys. >> executives from big pharma having just met with president donald trump. talking about a constructive compan conversation. eamon is outside the white house. merck, that was the ceo, now at the top of the dow. >> that's right. you listen to ken frazier there. he was asked whether or not all of these different pieces of a potential deal between the white house and the industry need to come together. he said, yes, they all come together. in his mind, that may be the case. but in washington and washington's time lines, regulatory reform, tax reform,

negotiating on medicare and medicaid are on separate tracks procedurally. some could take months to accomplish. the question for the drug industry will be, do they need to see it all at once or will they trust the administration and the washington system, that they will get the things they want if they agree to the things they don't want here? clearly, the president wants to drive down drug costs over time. and wants to allow medicare and medicaid to negotiate with the drug companies. that's something they resisted for a long time. would they drop their resistance to that in the hopes they get regulatory reform and tax reform later on down the pike? that could be a difficult timing issue. you wonder how they'll be able to straddle that. the ceo of merck saying he sees it as part of one package. we'll wait for more information on what happened in the meeting to get a sense of the proposed deal on the table or if there is one at this early stage. >> getting some word from senate democrats that they will boycott some of the relevant committees

they're on to prevent votes on mnuchin and price today. is that essentially slowing down, gumming up the process? >> it is. it is a protest gesture. the republicans have the votes. one of the questions you want to ask, and procedurally, i'll check on this, is can republicans without democrats actually showing up, can the republicans simply report these folks out of committee to the full senate without the democratic votes, without democrats even attending? that's a process question we'll have to check on. you know, democrats very, very frus ra frustrated here. they don't have the votes in the house or the senate. there's not much they can do, except the protest gestures. i'll check on the process of the committees, as well. >> thank you. i want to bring in thomas scully back in. we were speaking to him before we heard from p ken frazier at the white house. you ran cms from 2001 to 2004. the idea of getting drug prices down without root negotiating.

i mean, how -- is it a logical thing to expect that it can be accomplished? if so, how? >> there are a lot of ways. if we had time, i'd give you 20 examples. negotiating prices is not one of them. the government tries to negotiate in medicare and the government fixes prices. they're too big to do that. what medicare part d is put pharmacy benefit managers at risk. in every part of the country, there are five or six medicare part d contractors who have money at risk. they've driven down prices. part d has been bringing the price down and the government has contractors as a proxy. the cms or government to, quote, negotiate the drug prices, you're fixing them. i hope he gets beyond that. you can change the exchange benefits. change the way part d works in medicare to let the formulators be tougher. there are different ways to drive down the drug prices. having the government do it,

meaning fixing prices, is a bad idea. i'm sure i know a lot of the people around 15 years ago, paul ryan and others, understand that. i think eventually, we'll get a good outcome. >> the president keeps coming back to that. he seems to be fixated on that idea. of all the buying we do in the government, and the fact we don't get the discounts we should. >> yeah. well, we do get discounts in part d because the contractors are driving them down. the part d prices have been low. there are other problems. i think he is fixated on it because it is a populist idea. i'm sure he'll get great results from people by just, you know, yelling about it. he's got the pharma guys attention. i'm sure to some degree, it'll work. the technical side of it, fixing prices won't work. never has and won't with drugs. >> the other request on the issue that president trump keeps coming back to, tom, on this is manufacturing drugs in this country. how much -- how many of the drugs are manufactured in this country versus abroad, and how

realistic is it to bring some of the manufacturing back home? >> well, reimportation has been around ten years. may be something that happens. i'm sure the pharma guys don't like it. that is probably not something they'll be fighting as hard. i think they're focused on intellectual property protection. countries around the world have gone after the ip, drug companies. president obama was pretty weak on that from their opinion. i think they're hoping president trump will be stronger. those issues are probably as important to them as the domestic issues. there are different things they can work with president trump on. i think there are -- the biggest thing to drive down drug prices is probably take part b, the infused, extensive $100,000 drugs, most in medicare, and put them into part d, where you have somebody at risk. a lot of ways to change the drug pricing and drive down prices and create positive pressure. but having my old agency go out and negotiate drug prices, basically fixing prices like we do for docs and hospitals is stupid. we went through it 12, 14 years

ago for part d and it didn't work. part d has worked quite well. >> tom, good guidance. we hope you'll come back and talk more about it soon. thanks so much. >> sure. thanks. >> tom scully, the former head for the center of medicare and medicaid services under george w. bush. amid his executive actions, is optimism over trump's ideas on economy being overstated? for more, we're joined by the former vice chairman of the federal reserve. good to see you. >> good morning. >> you've been skeptical of the trump 4% growth rate economy. i'm wondering how you think these meetings with ceos, these twists and turns and optimism in the markets is going other in the federal reserve which, today, begins its two-day meeting and has to come out with a statement tomorrow? >> well, i'm pretty sure they're not talking about that at the fed meeting today. as they talk among themselves, over coffee and things, these are mostly economists or people who think like economists.

most of us economists don't think that the way to get things done is to throw a stunt like they did with carrier. like the president did with carrier. and was so pleased with saving whatever, 730 jobs. when every month, 5 million jobs in this economy get destroyed. a little more than 5 million get created. i mean, it is not even a drop in the bucket. >> what you just heard from some of the pharma ceos was, we're excited to work with the administration. we think it'll be pro-growth and friendly. don't you think the fed members are talking about the optimism boost in business and the home builders for investors and how that might impact the economic outlook? >> could be. but you don't want to be taken in by too much rhetoric. if you're called into the white house and representing the top echelons of a business, you don't want to come out the door and bad mouth the president at all, in general, especially not

this president. who doesn't take to things like that. so all you can expect from that is happy faces. there is a downside, having to do with potential trade wars. there's a lot of people talking about it. i think you will get a fiscal stimulus out of the congress and the president. that'll boost the economy a little bit in the short term. the big hazard economically, we got bigger hazards in the non-economic world, but the hazard is a trade war. >> i had to laugh. you mentioned stimulus in your op-ed last week. fed officials must be shaking heads in disbelief. for years they begged congress to lift the economy out of the muck for stimulating demand. congress did the opposite. now with a stimulus no longer needed, congress is poised to deliver it. does that get discussed today? >> yeah, i think so. not so much the looking backward. fed meetings are not only tend

to be really are very non-partisan. try to keep politics out. but the federal reserve in its monetary policy thinks of itself as managing total demand in the economy. pushing it to grow faster or trying to make it grow more slowly. right now, they're trying to take the foot off the accelerator gradually and achieve what's called in the trade a soft landing. they do not need a fiscal stimul stimulus. they won't come out and say so directly, but indirectly, you can sort of hear it, that they believe -- most of them, anyway -- believe a fiscal stimulus is just not appropriate at this stage of the business cycle. basically at full employment. >> you just mentioned that a trade war was the number one risk to the economic outlook. i think a lot of economists and investors agree with you. we've been hearing warnings for a long time. can you get more specific? who is the winner and the loser if the u.s. initiates a trade war? >> well, the biggest -- so let

me start with a trade skirmish and then go a trade war. the first trade skirmish looks like it is happening with mexico. mexico is going to be the big loser. we are the 800-pound gorilla. they're the whatever you want to continue the metaphor with. the coconut or something. the gorilla can just throw it around. mexico has some ways to retaliate but not many. they're more or less at our mercy because of the relative sizes. china is a whole different thing. so far we're not hearing so much about china, but i suspect, and many people suspect, we will be hearing a huge amount about china, including currency manipulati manipulation, the bilateral deficit that we run with them. then there are other things like taiwan, which is a gigantic, colossal issue for the chinese. those islands in the south china sea. and so on. the u.s./china relationship is fraught with peril right now.

one fan femanifestation of that be a real trade war with china. then you leave other countries with the choice of, whose side do you take? not good to side with china. not good to side with the united states. i don't know what they do. >> it sounds like kind of a nightmare situation for a central banker. what does janet yellen do in the event of a trade war? >> first, you wait to see how it is going to develop. in particular, what is it going to do to gdp growth and, of course, employment goes with that, gdp growth and inflation in the united states? so it could be inflationary. and halting growth at the same time. that word, stagflation, could come back. in a different context than we used to use it -- than we're used to using it. we haven't had a trade war in the world in a very, very long time. but it can have that kind of an

effect. that puts the fed in the classic dilemma of which of these twin evils do you try to fight? the higher inflation or the slower growth? >> it is a big predicament. see how it plays out. thank you so much for joining us. we'll talk to you soon. the former chairman of the federal reserve at princeton university. coming up, we'll talk to the head of aetna, mark bertolini, on trump's meeting with pharma executives today. dow is down 141 off the lows. back in a minute. c

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if history is a guide, february could be a tough month for the market. one technician explains why. you have to go to tradernation.cnbc.com to find it. more "squawk on the street" coming up. lourti ste

time to get to the cme group for the santelli exchange which, of course, is led by, yes, rick

santelli. >> thanks, david. i'd like to welcome first-time guest, actually, gerome snyder. thank you for being here. >> great to be here. >> duration, you have a big presence with regard to how the market is moved by the fed. today is the first day of a two-day fed meeting, anything to see there? >> balance sheet won't be a discussion point until later on. >> many on this trading floor, we have fed funds, the options, whether they believe that or not, how do you deal with the volatility of the uncertainty of where the fed is. >> the fed has to take a couple things into consideration. jobs, employment data, wage

pressures, and global financial conditions that can be extraneous things. it is time training. the deviation if you will between where the fed perceives that market to be, specifically managed fixed income portfolio managers. or more recently when we think rates were too low, be defensive. so, it is a lot of things as a fixed income manager that we can do to provide a more balanced and lower volatility. >> there is a lot of issues that no central bank can really get their arms around, right? if we get to an event that weakens the dollar, or gives an

extra amount of horsepower, does that or does it not affect the growth and what the fed may do. >> that is the third element that we learned last year. it weighs on the fed decision making process. ultimately, that reaction function is based upon the evolution that they forecasted. if it deviates, we want to find ways to mute that volatility and that's where fixed income comes into play. you don't necessarily need to pick what the fed is going to do in the fixed income market, but in our job in the short end. >> the trump administration said really interesting things. things i said, things that we talk about, they say there a shadow d mark.

in the final comment, the yen is higher, the euro is higher, the dollar index below a key threshold, say the dollar gets hit, what does that do to your portfolio? how do you adjust to that quickly? >> you have to find ways to immune yourself to that volatility. it is something that is very -- >> a lot of our guests talk about that. where money market funds are trading near zero. >> david faber, back to you. thank you, rick santelli. let's go to john fort now to see what is coming up on "squawk alley." >> we have trade experts on president trump's protectionism and tax cuts. we have the post earnings and resistance to trump on

immigration. all of that in just a few minutes on "squawk alley." pos alalys omeououskanurs. ke wioar

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down 160. the nasdaq down half a percent. industries are down. under armour is the biggest loser so far. a big day when big pharma is at the white house. stay with us.

congressman kevin brady,

leading the charge for what could change for companies and investors. welcome back to "squawk on the street." gold prices today about a $20 pop at a session high. you have a weaker dollar today and a little safety trade and we're seeing a decline in equ y equities over the last few days. but you can see the etfs are doing well. the gdx, and the gold miners are having a run with it today. >> thank you very much, it is 11:00 a.m. at the white house and here on wall street. "squawk alley" is live.