♪ live from new york where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc. live from the nasdaq market site in times square. i'm becky quick along with joe kernen. andrew is off today. our guest host is bob doll, chief equity strategist from nuveen. you ready to go? >> ready to roll. >> are you picking things out as we're going through this morning? >> i'm trying. >> we'll talk to him about some stock picks in a moment. a look at u.s. equity futures. markets were slightly weaker yesterday. you can see red arrows again this morning. modest declines at this-poin po. the dow would open down by 13 points, the s&p down by 3 1/2 points. nasdaq down about 9.5 points. overnight in asia, the nikkei

was down slightly. down by less than 0.2%. stocks in china were higher with the hang seng up wi a thiby a ta percentage point. the early trading in europe at this hour, things are mixed. the dax and ftse are slightly higher. let's look at crude oil prices. again, yesterday was a down day for equities. if you see another down day today, that's the first time in -- the first time in -- first back-to-back losses in a month if you see things close lower today. energy markets showing wti by 11 cents to 53.31. now to the agenda. some government stuff coming out. economic reports coming out today. the january trade deficit out at 8:30 a.m. eastern. that's followed by january consumer credit numbers at 3:00

p.m. as for earnings, brown-forman, the maker of jack daniels and corbel sparkling wine that company will report results before the open along with dick's sporting goods, and after the close, h & r block. april 15th is coming. >> it is i've done nothing with my taxes. how about you. >> i've received things. >> i put them in a file. >> i just did this. it seems like. >> because we're getting older, time moves faster. >> i guess that's it. a big day, april 15th. today's top political story, republican leaders on capitol hill have released that much anticipated bill that is designed to replace obamacare. among the biggest changes t abolishes the mandated that requires people who don't have insurance to pay a tax penalty. it also gives states flexible to s flexibility to set up their own

programs. medicare enrollment will be frozen at current levels. republicans want s want to use credits instead of subsidies to pay for insurance. it's based on age and income levels. for some parts of obamacare, the setup will stay the same. the gop plan still requires insurers to cover pre-existing conditions. >> though i think you have to stay insured for that to happen. you can't jump in and out in order for that -- >> which is a good idea. children can stay under -- slackers can stay under their parents plan until they're 26. >> hard to call you a child when you're 25, 24. >> it is. democrats argue the changes will raise costs, cut coverage. house speaker paul ryan says he wants the bill passed by easter. house committees are expected to vote on a 123-page legislation,

versus 2,900 pages or something. let's check out some stocks that could be impacted. starting with some insurers. many of these stocks popped after president trump's address to congress last week. analysts say insurers could benefit from having more flexibility to offer plans. here's some of the biggest hospital stocks. obamacare helped hospitals by cutting the number of uninsured patients who could not pay their bills. >> bob likes some of these healthcare stocks. >> we do. uncertainty is starting to be reduced. when uncertainty gets reduced, out of that comes good news. >> you know when you give an entitlement out, no matter what you do it's not coming back. now republicans are kind of walking into the trap.

the entitlement is staying. you can't take anything away. all you need is one person to lose their insurance, you will see every network going into the hospital room where the person will be lying there without insurance. they'll just hammer that. so you have conservatives that are still mad from eight years ago, the way this was done, taking a fifth of the economy and using reconciliation, bribery, everything else to try to get it passed with the nebraska purchase, all the shenanigans that went on. but it's done. they did it, now there's no way out. conservatives will say whether you call them tax credits, either way it's an entitlement. republicans are like, are you crazy? are you going to try to take this away? in 2018 we'll lose the house. the way they set it up, a great trap. they successfully brought in a new entitlement that we'll never

get rid of. >> you have to feel good they're pufshi ing pushing some of this back to the states. >> i do but it's a quagmire. >> if you can find ways to get people insured -- >> if you let it die on its own, and you can. >> you still get blamed for it. >> it happened on your watch. >> you did nothing to try to fix the problem. but in solving it, it becomes yours. >> that is par for the course on what happens. >> i have new respect for the way they did it. crafty. for more on the day's political stories, eamon javers, eamon effing javers, up, with it. bright eyed, bushy tailed. you're going to bed at 9:00, 9:30, looking good. >> fresh. >> you're young, but you worry about the hair. >> you have to worry about the

timeline in television. >> worrying more since november 8th. >> there are some conservatives objecting to this healthcare proposal that came out last night from house republicans. one called it obamacare 2.0. so we'll see if paul ryan can thread the needle here politically and get the white house's support, get moderate republicans in the senate and keep enough concervatives in the house to pass this thing. this is paul ryan taking first mover advantage. this is a situation where we expected the white house to put out their plan. they say their plan is coming out mid-march. clearly paul ryan and his crew are moving forward. i wanted to brick up one other thing for you guys today. interesting moment last night. the president issued a series of tweets about common mobile. they're announcing a $20 billion series of investments, talking about creating tens of thousands of jobs in the gulf coast. the president issued a series of

tweets about this. he also cut a video. we have an excerpt here of the video from the president yesterday. >> this is something that was done to a large extent because of our policies and the pollities of this new administration, having do with regulation and so many other things. so, i said we're bringing back jobs. this is one big example of it. >> the president taking political credit for exxon's announcement. but buried inside the announcement is the fact that the investments started in 2013 during the obama administration. they'll continued until 2022. i asked sean spicer, the white house press secretary, in a briefing he did yesterday, i asked if the trump administration is taking political credit for something that started under obama. here's what he said. >> to answer your question, it is on information that exxon

provided us that they believe, based on what they see as a favorable business climate from the president, a commitment to help manufacturing grow here, and a commitment to american workers that they want to grow their investment here in the country. it's based on them telling us that they will continue to expand based on the president's vision and philosophy to help keep jobs here in america, obtain a more regulatory and tax business environment that will help them hire more, invest more and grow more in america. >> the argument from the press secretary is that it's fair for the white house to tout exxon's announcement of a plan that began in 2013 because exxon is telling the white house that they plan to continue their investments and they're enthusiastic about the president's approach to the economy. >> things happen in spite of administrations, things happen with the wind at the back because of an administration. we had an energy boom over the past eight years in fracking,

horizontal drilling and everything else that boggles the mind and changed the global dynamics of the energy business. >> can you imagine 20 years ago? >> no one can deny the obama administration was anti-fossil fuels for the entire time, at least with rhetoric, climate change, everything else. it happens because thank godfrey markets can work in spite of headwinds. the markets themselves -- >> this exxon investment program began in 2013. >> that's what i'm saying it happened in eight years. when it all was said and done. i saw the president say -- the ex-president say you like $2 gas? thanks, obama. it was duly noted by irony. >> i'm always interested in the way politicians take credit for the economy. politics have a lot less to do with the economy than they want you to think, particularly presidents. particularly when it comes to the stock market. there's no dial in the oval

office that you can turn it up or down. you can set broad conditions -- >> you had him for a moment. >> you had me for a moment. but the animal spirits, the -- >> is there a dial? there's a dial? >> if you talk private sector, talk removing regulations, talk lower corporate taxes, you will get the bump. >> right behind the bust of winston churchill is the dial? >> i love watching this dance every morning. >> no, no, no. you can -- there's a bit of a dial. there's a dial that you can try to -- >> small dial. >> things happen in spite of and then with wind at the back. >> i don't disagree with you. >> eamon -- you're a business reporter, enjoy. if you're around for the reagan years, it's a time for happiness and relief. not where -- >> i do think presidents set broad -- >> you're not beating your head against the wall with everything you're trying to do in the private sector, not getting trash the on a daily basis with bank companies, drug companies, every single sector trashed

for -- is there anything not trashed? . y >> you mentioned drug companies. i'm not sure they're happy about the trump claims that drugs are overpriced and we need to bring costs down. >> it would be nice to do it with mar testimoket forces, neg prices, ways to do it without reimportation or price controls. i'll bring you along. you're young. you're green, i will bring you along. by the end of this -- >> i feel green. >> by the end of this you will be truly on board. >> this is great. i'm excited. >> eamon loves 6:00 a.m. every morning. >> this is perfect. >> i will finish this coffee now. >> cheers. see you in a bit. stocks to watch this morning. csx naming hunter harrison as its new ceo. mantle ridge had pressured the company to make that move. harrison previously served as

ceo of canadian pacific railway, and thor industries saying they saw shrinking profit margins for the second quarter. they are still beating analyst expectations on the top and bottom line. that stock is down by 3.8%. salesforce.com and ibm partnering on arrested ficial intelligence. data from ibm's watson will be available to salesforce customers, and the cloud technology will be implemented into the ibm systems for use. salesforce.com shares up. when we return, market gains slowing in the month of march. the jobs report friday and next week's fed meeting will be big drivers. we'll talk strategy after the break. and a programming note, tomorrow on "squawk box," don't miss david tepper. he will be our guest host starting at 7:30 a.m. eastern time.

among the stocks to watch, snap every day is interesting. shares of snapchat's parent

company fell more than 12% yesterday, closing the regular session below the first day opening price of 24. still well above the ipo price. a list of analyst calls compiled by cnbc contained five sell ratings, two holds. no analysts have buy ratings on the stock. all right. if i could do it, i would buy that today. >> 23.23? >> no, with five of them at sell, two of them at hold? none at buy? ch >> contrarian indicator? >> we talked about artificial intelligence. >> we being you. >> the artificial intelligence we bring in here on a daily basis. >> like i say, you have been talking about this. i'm pinning it back on you. >> here's another clue for you. didn't nbc invest 5$500 million -- >> so it must be a good deal. >> this is awful cheap. incredibly cheap.

>> even at these prices, you are still talking a massive -- >> oh snap. >> that's when you didn't even know what it was. >> i thought it was a play on oh crap. >> oh snap. >> oh, snap. >> people say oh, snap. >> the page will come back and say oh snap. >> why? >> i think it was a comedian from "snl" who started the whole thing. >> is he a senator now? >> no. >> oh. >> okay. >> actually he's still a comedian. nintendo's new switch is the fastest selling console ever. that's according to a new york sometimes report. the switch is just three days old, but it's already outpaced sales of nintendo's wiwi -- no, wii. zelda for switch beating out super mario 64 for the best selling stand-alone launch

title. it is jobs week in america. we are just a week away from the march fed meeting. joining us now in the broader markets is kathy jones, the chief fixed income strategist at schwab center for financial research. and we also have the investment strategist from oppenheimer funds, and our guest host this hour is bob doll. welcome, folks, to the table. tally, let's start talking about this we've seen some flattening, at least, just a down day yesterday. some slight red arrows this morning for the futures. is this the beginning of the end or is there more room to run? >> i think that there is more room to run on the condition that trump follows through on his pro growth policies. and that's the real concern right here. straight out of the gate he's been emphasizing the negatives in the form of protectionism. if he overdoes it on that score and gets too far away from

things like infrastructure spending, deregulation, tax cuts, that puts things at a risk. >> deregulation is already in effect, we have to get past the new healthcare regulations being rolled out now. is that something that wall street is measuring on a daily basis? >> i think so. we have no choice. if i were to point to one potential sign post, it would be the deadline that trump himself provided that would be august. he said and put a stake in the ground, that's the deadline for submitting comprehensive tax proposal before congress recesses for the summer. >> bob, how do you read this? >> i think a lot has to do with the economy. i think the stock market is up because the economy is doing better. last week trump speaks tuesday night, markets up 300 wednesday. thursday headlines say trump rallies the market. no, the global pmi was 200 of those 300 points. so the economy needs to remain

good to continued this. trump's policies could be icing on the cake. >> yesterday jim cramer was saying that the pull back was perhap the market thinking,, m gosh, we will get a rate hike. >> other markets have gotten used to one rate hike a year. that's done. >> what does that mean? >> i think it means the easy gains are in the rearview mirror. >> even if they're looking at rate hikes within an economy improving? >> yeah. look, when the fed takes rates to zero and keeps them there forever, that's a huge tailwind for the stock market. now they'll go the other direction. that tailwind ceases to exist. there are other things like earnings pushing the markets higher, but we no longer have the fed in our court. >> kathy, the fed not being at zero rates and continuing to look at things, maybe differences for the bond

markets. >> bond market is more skeptical about these things than the stock market is. so i think they're waiting to see the improvement nas a mmento come from the economy from the legislation. our view is the legislation will take some time to get through congress. we have seen global pmis do better, global rates move up a bit, but also flattening of the yield curve as we get closer to the fed hiking rates. that is a signal people in the bond market are not anticipating inflation picking up. >> are you anticipating more than one rate hike? you think you'll be looking at three or more rate hikes? >> we think two to three this year. markets are built in two to three this year. two next year. markets already anticipating quite a bit of tightening from the fed. i would argue they've been tightening since they started tapering in 2014. excess reserves at banks are

falling, seeing a bit of tightening in credit standards at the bank. >> does that mean if the fed goes ahead and raises rates next week as expected there won't be much reaction from the market? >> i doubt it. you can't get any more clear than janet yellen got last friday seeing they'll hike rates. >> what happens to yields eventually? even if you're raising rates. if you have a global situation where other central banks are still remaining very easy, this looks like a great place to be putting your money. maybe that draws in more investors and keeps yields under -- >> yeah, we're looking the upper end of 2.75, 3% on the ten-year treasury. not looking for a big boost. a lot of that is the effect of fed rate hikes, the term premium that you need to get in order to compensate for taking longer term risks. we're not looking for a big move up in rates. >> tally, go ahead.

>> credit spreads have narrowed significantly. can they narrow more or is optimism baked in? >> i think in the high yield market they're narrow now, especially since the default cycle is picking up. nervous about the high yield market. sure, they could narrow more, i would be careful there. investment grade probably has more room to run. as long as the economy is doing well. >> bob, what was the last gdp number? >> 1.9. >> just under 2%. >> right. >> that's worth n your vi, in y 3,000 points? you said the pmi -- >> the pmi, isms, not just in the u.s. >> we had 1.9% gdp for eight years. why all of a sudden is this a great economy in your view? enough to spur a 15 mr% move ine stock market. >> i will give trump 5% of the

10%. >> you think 2017 the gdp will be what? >> 2.5. 2018, assuming we get legislation, we have a shot at 3. we have not been at 3% gdp for umpteen years. give the market a half point for smart reform, we go 3 instead of 2. that's a big change. >> but not from an economy that was going to do that either way. >> i totally agree. had we continued where we were, we would be stuck at two. >> the biggest question in my mind can trump and mulvaney -- mult vein mulvaney was a freedom guy. one of the founders of the freedom caucus. could those two guys whip the freedom caucus into supporting this? or will 20 guys say no? >> the problem you have is up or down vote. you will vote no? >> will the 20 guys -- you can

only lose 20. how many can you lose in the senate? >> two. that's all. >> they have to come together. >> if this doesn't happen, it's a huge defeat and it derails tax reform. >> yep. >> then i might sell some stock. but it depends on whether they can whip these guys. we have some guys on today. >> we'll talk about it. >> the healthcare vote comes first. >> that's what i mean. >> got to get that done. >> then you have the trade issue on top of that how much protectionism do we get, how much does that hinder growth? >> that's a nexting positigotia position. we want to trade. >> wilbur ross sounds like he's eager to make these deals. >> i won't worry about it, if you say so. >> thank you. appreciate it. coming up, health insurance stocks have been on a tear. or is it a tear? >> tear.

>> since president trump was elected. what will the gop's repeal replace plan mean for the sector? we'll talk to an analyst coming up next. i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss

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translation? why invest in average? welcome back. you're watching "squawk box" live from the nasdaq market site in times square. >> looks like things are a little weaker, but just barely. they've been improving. dow futures down by 5 points. it was a down day for the markets yesterday with the dow closing down 51 points, back below 21,000 at 20,954.

s&p futures are down by 2 1/2. the nasdaq down by 7. some stocks to watch today, weatherford international naming mark mccullkucullom as new chai and espn expected to lay off more talent, no names are known, but disney is looking to pare tens of thousands of dollars in staff salary. and casey's general store profit falling 40% in the last quarter. it paid out more in wages to workers. that stock down by 4.5%. house republicans unveiling a proposal to replace obamacare. joining us with more is anna

gupta from lyrinc partners. now that the actual proposal is out there, and bit of detail, has anything changed from your previous thoughts and what do you think the most salient features are for investors? >> good morning, joe. i think overall it's an opening gambit in my view and largely in line with expectations. if i look to the most positive features of the bill, it's the tax treatment. the treatment of the obama care fees and taxes, levied on the insurance industry, the pharmaceutical industry, the devicen du industry, and fortuny for the industry those are being proposed for repeal starting in 2018 for the insurance industry and earlier for the other sectors. that's, i think, very positive. >> have those stocks moved to the point where they are already priced for this?

are there some that you think you would still be urging people to buy and what are they? >> i really like -- i still like anthem. i like humana and united. there has been a mean reversion trade that's been in play the first two months of the year. it's impacted healthcare facility stocks on the belief that repeal and replace will be watered down, delayed. the managed medicaid names have also seen mean reversion. but i still see a lot of upside for anthem because i think the repeal an replace is not as bad as feared. the tax treatment and then the tax policy, which is expected hopefully the second half of the year, there's a lot of upside to 2018/2019 earnings. the ps is meaningfully understated for anthem and

huma humana. for humana as well, the medicare name, it's not really about legislation. but about deregulation within cms. i think the rate environment for medicare advantage and medicare plans will be more favorable than it has been under the obama administration. we'll start to see that for the 2019 plan year. today a little under 1 in 3 american seniors are covered by the private plans. i would expect that goes to at least 1 in 2 by the end of the decade. that's very favorable as well from a top line perspective for humana. both those names, i think, have a lot of upside related to healthcare reform. finally united, where i think even with secretary price, we have seen a move to value based care under obama care, it was a byproduct and offshot of the law. but i done think that that train

has already left the station. and united, as you know, with optum, they have an ambulatory care delivery platform and health i.t., they're making leadership role in bending the healthcare cost trend or just solving the nation's cost conundrums. i have strong buys on those three names. despite some upside we've seen. >> we've had some discussions and proposed mergers that have struggled, fallen apart. once the dust settles on repeal and replace, do you think those transactions will come back? >> i think humana may still be in play. as you know, cigna and anthem, they're still in a state of appeal on the court ruling of their proposed merger. once we get some clarity around that, it is possible that either cigna or anthem may be interested in humana. i think the medicare story is

favorable regardless of repeal and replace. it's not tied to the legislation. just repealing the insurance tax as part of this bill seems to generally have consensus among the senate republicans as well. that offers upside. as far as medicaid names, could be names like molina health, well care, possibly santeen that could be of interest to larger cap names. however they may require more clarity on specifically what's happening in the blue states and the red states and how the funding flow throughs will actually get implemented, which may not happen for a while. so, you know, in that case i -- i done thi't think they will be play until we know more, perhaps by the end of the year. we need you on retainer. you are taking notes, doll?

she has forgotten more than you know about healthcare. >> i won disagree with that. y >> you need to come back for an hour. the medicare, didn't the obama administration try to de-emphasize that and make it much harder, yet they still flourished for eight years. how did that happen? >> that's a very good question. there was so much fear, if you recall, in 2010, those stocks, the multiples that compressed dramatically, but there with as lot of opportunity to cut back on the coverage, that's one lever they exploited completely to their advantage. the other change that they made is we had very open network plans. seniors were going to any physician, specialists without referrals from primary care. now they have moved from those open networks to gatekeeper primary care focused hmo plans.

which generally are far more cost efficient. so they were able to preserve margins to a large degree. the last couple of years we have seen margin compression. after multiple years of compounded rate cuts, you know, it did take its toll on the medicare plan. >> a lot of these companies had to get out of this business because they couldn't -- they weren't making money. i guess healthy people were not signing up. whatever the problem is. if they start making more money, is there going to be a blowba blow back, fizz a soif it's a z game, that consumers are on the short end of the stick if these companies are profitable again. will that work out politically? >> we'll have to see. everybody just walked away in max exodus. as i look at the legislative language and this draft proposal, i would think that that marketplace may shrink. it may get a little more

profitable. so far the plans were losing from 10% to 30% of premiums. i don't think they're going to be massively profitable even under this bill. we watered down the level of subsidies with these tax credits. so we may not have as many young and healthy people coming in. the demand is down to zero penalties as we said earlier, but they have some other provisions like continuous coverage, other ways to incentivize people and not just walk in and out of the marketplace only when they need expensive care or procedure. >> all right. this is not going away any time soon. so, you know, we'll be in touch. you have two lines if you're on the other line if we call? if we -- you have a couple lines to get through to you on if we need you? she does. we'll see you again. >> see you, thanks, joe.

>> it's complicated. who said that? somebody said that last week or the week before. the president! he was right. >> the main line was repeal and replace is not negative for these stocks as feared. that's good news. >> but is there a -- >> not negative, but also potentially positive. >> such a retractable problem. obamacare did not work. but can republicans solve this puzzle? >> look around, if you can fix some of the edges, you want to keep the idea that you can't get kicked off for pre-existing conditions. >> that's hard. >> if you stay on insurance the entire time, instead of being allowed -- >> if you force people to buy it, they won't buy it you need big groups to get such a big deal. >> the tax credits are only useful to you if you have a job and are employed. there's going to be people from the right and left chipping away at this. >> i'm not cashing in my chips at 75. >> age 75.

>> we're supposed to not go to the doctor anymore. >> it's over. >> shopping for tombstones. >> me neither. >> sii will revisit that argume at 7 14 1/2. when we come back, new data on small business hiring from the ceo of paychex. then we have barry stern lig sternlicht. after that, reaction to the gop healthcare plan from larry bucshon, he was a heart surgeon before he ran for congress. stay tuned, you're watching "squawk box."

welcome back. right now it's time for the executive edge. we are talking jobs. the paychex ihs small business jobs index is out for february

reporting an inkrecrease for th third straight month. breaking it down is marty mucey, ceo of paychex. what did the month look like. >> becky, the month looked good. this is the third month in a row that the index is up. this is the best three months we've seen in about three years for an increase. it's positive and it's across all sectors and most regions are up across the three months as well. so widespread. it looks like job growth is starting to actually happen, not just optimism. >> what do you attribute that to? >> well, i think certainly the positive piece of the administration coming in, the election getting resolved, a lot of things you've been talking about where you see tax reform coming up, reform in the affordable care act. these are positive signs for business. i think what we saw was optimism for a few months. for three months in a row the growth of jobs is starting to increase. do we get to the point where

that optimism carries too far into the markets, that is to say, you know, pessimism and skeptmism, markets go up, but optimist we start to worry? are we getting too euphoric. >> i think we saw a lot of only myself but less job growth since the election. now it's translating into actual job growth. that's better for the market than just optimism by itself. it's looking good to me from the market. the best three-month improvement in job growth that we've seen in three years. >> marty, you looked at the south, that looked like a strong area. taex texas, oklahoma. does that have anything to do with oil? no. the best part of the south has been georgia, florida, tennessee. tennessee kind of ranked number one, atlanta number one in the metros. we're still seeing construction,

which is negative year over year across the country. construction still very positive in the south, particularly in the florida/georgia area. that's positive. we're talking residential construction and commercial construction. that's good. tennessee itself looks positive. nashville has high-tech jobs coming in. last month we talked about shipping. e-commerce is 15% of sales, fedex being based there, you are seeing shipping pick up in the market. >> wow. marty, great to talk to you. thank you for joining us. >> okay. thanks. coming up, guest host weigh in the market. and don't miss david tepper tomorrow. bi he has made over a billion dollars more than a couple of

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welcome back to "squawk box," everybody. south korea, japan, taiwan, and hong kong have limited imports of u.s. poultry after the united states detected its first case of avian flew of the year on a commercial chicken farm. the strain of bird flu was detected in a chicken breeder flock on a tennessee farm that provides poultry to theisen foods. bird flu outbreaks in 2014 and 2015 pushed egg prices to record highs. >> chickens are gross enough, aren't they? they peck stuff and they're filthy. then you go to a chicken rendering plant, check that out. >> what's for dinner at your house tonight? >> we'll all be vegans. now you throw in bird flu or whatever it is on top of that.

do you remember what used to -- people used to play with the chicken heads. >> what? >> that's what spread it last time. there are parts of the world where they don't have fun stuff. so bob, previous -- i mean, i don't expect this to happen, but bird flu can be scary. we haven't had a pandemic scare in quite a while. in fact, we haven't had a -- >> shhhh. >> i know, but i worry. i worry when we start focusing on minutia -- if you recall before 9/11, do you remember the name chandra levy? then we were reprioritized what's important in the world. we never know what we're looking at. does north korea factor into anything? >> it's a mess. >> it's not only a mess, but this guy -- i'm afraid to say anything about him. maybe if i say him, he won't know i'm talking about him. this is a guy that has his hands

on -- >> the wrong buttons. >> fissionable material. i guess these latest tests are trying to subvert defense systems. >> defense systems we're testing. >> if the world ends, everybody loses everything. >> correct. in the meantime, it looks pretty good. >> you're back to your pmi. looking solid. i guess you can't prepare. >> i don't think you can. you can be more diversified sector-wise, but no, you really can't. who wants to anticipate that? the possibility of it is this, but the impact is this. we all know those events are hard to plan for. >> so you were out of health care for a while. i saw you taking notes. what else right now? you didn't get in on snap, did you? >> yeah, we did. we thought it was fairly valued, 20 to 22. we bought it and sold at 24 1/2. >> you sold it already. >> 20 to 22 was fair value in

our view. >> it's back there now. >> yeah. i think there's heavy supply. i don't think it's going up any time real soon. >> what would you do -- are you active in oil or energy? >> i cannot come up with enough global growth to get bullish on the commodity to own the stocks. >> could be bullish on the u.s. industry but not bullish on the stock, i guess. >> i think that's exactly right. don't give up on the financials. >> yield curve. >> better economy, higher interest rates, less regulation. nobody benefits more than the financials. >> are you talking the big banks or the small regional banks? >> yes. >> everything. >> but prefer the big banks. when we're really bullish, bank america and citi. when we're more cautious, jpmorgan and wells. >> all right. thank you, bob. >> thank you. >> see you soon. when with e coe come back, t host for the rest of the show will be barry sternlicht. plus, reaction to the gop's

health care plan. democratic congressman joseph crowley will be joining us after the break. stick around. "squawk box" will be right back. during the lexus command performance sales event, experience our most elevated suvs ever. including the lx, gx, rx and nx. experience amazing.

the american health care act revealed. a long awaited republican plan to repeal obamacare has been released. what the proposal means for the economy, insurers, and consumers. reaction to the bill from congressman joseph crowley is straight ahead. from wall street to washington, starwood capital's barry sternlicht shares his thoughts on the markets. he's our guest host for the remainder of the show. and soda tax spillover. two months later, we're starting to see the economic effects of philadelphia's tax on sweetened

drinks, and it is not a pretty picture. that story is straight ahead as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernen along with becky quick. in studio for the remainder of the show, barry sternlicht, chairman and ceo of starwood capital. he's not even in town, but you had trouble on fifth avenue. might have been an accident or something. >> yeah. >> but you made it. >> infrastructure spending. >> lots to discuss with barry throughout the program. first, though, you going with the jacket today? >> for now. >> all right. you know what -- >> what would you prefer? >> you work out, don't you? i would prefer -- no, whatever

you feel more comfortable in. sometimes you go an hour with and an hour without. it's a different look. it's variety. >> i might take my tie off. >> so stick around, viewers. >> don't stop there. anyway, first let's get a check on the markets. futures at this hour indicated down seven on the dow, three on the s&p, and down aleight on th nasdaq. there wasn't much happening in europe when i looked earlier today. wow. yeah, i don't need to -- what do you say about that? we look, but there's nothing happening. there's nothing to say about that. >> wait and see. something could happen. >> it's not like it happens every day. >> at this point, the markets are taking a pause. >> that's news in and of itself that there's nothing going on. >> let's get you caught up on the headlines this hour. organization for economic cooperation and development is keeping its global forecast for the year intact. the oecd sees a 3% global

economic growth for 2017. but it did lift its outlook for the united states, japan, and china because of fiscal policy support. it sees the united states economy growing at 2.4%. their earlier forecast was 2.3%. a european court has ruled that regulators should not have blocked the proposed acquisition of delivery service tnt express by u.p.s. back in 2013. that's little comfort to u.p.s. its rival fedex acquired tnt last year. however, the ruling may clear the way for u.p.s. to sue for damages. one economic report is set for this morning. the government is out with its january trade deficit. that number hits at 8:30 eastern time. economists think the deficit will expand to $48.7 billion. that's more than $4 billion above the december level. and among our stocks to watch this morning, snap. shares of snapchat's parent company fell more than 12% yesterday, closing the regular session below the company's first day opening price of $24.

no analysts have buy ratings on the stock, and a list of analyst calls compiled by cnbc contained five sell ratings and two holds. the stock is down another 3.6% this morning. >> if we only knew. is it a facebook or a twitter? it's only a little bit above its ipo price. >> it's well above where they priced it at $17. >> if we only knew. if it's going to be facebook -- >> are you a snapchatter? >> my family is. >> do you snapchat? >> no, instagram. >> i don't even do that. >> we're not the right demo, any of us. our kids use it too. >> can you monetize it, can you make money with it. >> my son is 22, but he's going to have his first job. my youngest son. he'll be monetizable soon. he's a devotee. >> people use it, yeah. all right. house republicans releasing some legislation to replace obamacare. let's get to kayla now with some of the details.

if you look closely, it's like where's waldo. look at any of the gaggles down there. if you look closely enough, you're there. you're right in the mix. >> i try and thrust my microphone out there wherever i can. that will be happening again today. we have a lot of questions about what house leadership is calling the american health care act. it repeals the consumer and drug taxes from the affordable care act as well as the individual mandate and lets customers buy their own plans using tax credits based on their age, income, and family size, as well as using expanded health savings accounts. the expansion of medicaid from the previous law will be frozen in 2020. there are some similarities to previous plans drafted by gop leadership, but it's the structure of those tax credits that had to be adjusted in the last couple weeks to win over conservatives like congressman mark walker, who chairs the republican study committee. in a statement, he thanked house leadership, saying, i applaud the movement and believe it is the right direction. he says the steering committee will meet this evening to discuss how to move forward.

for its part, the administration has largely avoided wading into the health care thicket, except for one item mentioned by the vice president at cpac and the president last week in his joint address. >> the time has come to give americans the freedom to purchase health insurance across state lines, which will create a truly competitive national marketplace that will bring costs way down and provide far better care. >> that portion is not in this draft. i'm told because it wouldn't survive senate rules on reconciliation. so if it is a possibility, it will have to be done at a later date or through separate legislation. last night the white house did tweet about the draft, saying it is time to end this nightmare. we don't have a score from the congressional budget office, though, so it's unclear exactly how much this plan will cost. i'm told, guys, that should come before the legislation goes to the budget committee in the

house. that's something that has a lot of conservatives, both in the house and senate, senator rand paul has weighed in about how much this is going to cost and the ideology behind repealing the entire law. so it's still interesting to see which members of congress will be coming over to support the house leadership and which are still on the fence here. >> all right. kayla, thank you very much. we'll be watching later today. for more on the obamacare replacement bill, we're joined by congressman joe crowley. he sits on the ways and means committee. thanks for being here today. >> great to be with you. thanks. >> what do you think? there's going to be a battle over this. what are you thinking happens in ways and means? >> that remains to be seen. we won't have the budget numbers before it goes before the budget committee. we're going to be going into a markup without all the information we're going to need. but on first blush, i think many of us believe we see a decrease

of $200 billion to medicare. we see a decrease to the expansion of medicaid under this plan. that means poorer people will not have the opportunity possibly in the future to have medicaid expansion in the states. we already see that four republican senators have come out in opposition to this so far because they've seen medicaid expansion within their states and people being covered that will potentially lose that coverage in the future. we see also a movement which is typical, giving ceos tax cuts and tax breaks and poorer people paying more and getting less. >> we're confusing different bills at this point. >> it's actually a part of this as well. there are some hidden tax proposals in this bill that we're finding more and more out about. >> what are those tax proposals? is it a repeal of the obamacare taxes that were initially put in? >> what we know is in terms of the surcharge on passive income

over $250,000, that's being taken away. that leads to the $200 billion reduction towards the medicare system. it actually reduces the life span of medicare to -- for another eight years, as a posed to another 12 to 14 years. we see that already happening just in the first blush. we haven't had an opportunity to go through this bill yet. we're going through it now. tomorrow morning will be the markup. i can tell you my republican colleagues will have some tough votes tomorrow, starting with wlor whether or not to release the president's tacks. every committee meeting we're going to have, we're going to continue to drive that. after that, they're going to be put on the spot for every detail of this bill and have a vote on that. >> the tax issue for the president seems like a separate issue entirely. so let's leave that off the table. >> the point i'm making is they cannot conduct business -- every meeting, my republican colleagues cannot run away from

this issue. at every meeting, even on health care -- >> so the answer is there's going to be no bilateral cooperation on any bill then? >> if the bill actually increases the coverage for people, if more people have access, if they have good coverage, and if the cost is contained. right now we know under this bill it could cost seniors up to five times as much as it would cost a younger person for that coverage. right now under the affordable care anct, it's capped at three times. >> part of the problem has been the existing plan. the affordable health care plan as it exists today has all kinds of financial problems. premiums have gone up rapidly, and i dby double-digit increasen some cases because you don't have enough healthy people buying it to support the basic market. it's the older people and sick people who have signed up. as a result, you're going to bankrupt some of those situations. there needs to be some fix, would you agree? >> we said all along we want to improve the affordable care act,

not throw it out. as the president said, who knew how difficult it was. i would suggest that republicans attempt now to change it. they now own this issue. whatever changes that take place, they're going to see how difficult this issue is for the american people. >> where would you agree changes need to happen? what would reasonable changes? >> i think giving -- first of all, it would be nice if every state cooperated, if every governor had actually cooperated with the implementation of the affordable care act, that we were allowed to use some of the benefits derived from the cost savings, like getting people into the hospital earlier, have been better outcomes. those savings could have been driven towards the insurance industries to help maintain and keep those premiums low. that cooperation didn't exist for the eight years the law was in place. >> it's going to be reconciliation anyway. >> it's a ten-year bill. >> but we're going to be talking

to republicans about whether they can get their guys in line. >> as i said before, we know of at least four republican senators. >> at this point. who knows. obviously it's early. that's why people get whipped. whipped here, whipped there. that's why there's a whip. >> we'll see what mr. meadows has to say about that. it's new leadership. having said that, if they have the votes, they're going to pass the bill in the house. that's the bottom line. if they have the votes in the senate, they're going to pass the bill in the senate. we're going to do everything we can to put the light on the imperfections of that bill. >> so you don't think we need to pass it before we know what's in it? we tried that once. didn't work too well. >> i read the bill through several times, as did the committee. >> which one, the last one? >> the last one. >> why did you say that? that was a bad -- >> it was a snapshot in a moment. i can't answer to that question. what i can say, there was a

great deal of work. -- >> you read 2900 pages? >> we went through it line by line, exhaustively. >> you're not getting paid enough. >> no, quite frankly given that scenario. we went line by line in the library, constantly going over t highlighting aspects of it. i can bring in my copy of it. it's got notes and tabs. >> how long did that take, a year? >> we went through well into the evening many, many times to do that. multiple readings. as you get down to t you have certain things you're concerned about. the amount of time we've had to read this bill pales in comparison. the openness of the process that we have -- look, for better or for worse, people cannot complain about the openness of the process. we were much more open. >> it's only 190 pages this time. you can do that in your sleep. >> the devil's in the detail. we're already finding little jewels in here that give corporate ceos a tax cut.

that's not what the american people are looking for. >> you're talking about just wealthy people in general. >> no, no. it's actually ceos specified. we're going through the language. >> what's the ceos? i understand the point about anybody making over 200 -- >> i don't have the bill in front of me. >> did you lobby for that? >> we have facts and alternative facts. it appears any fact will do. >> there's actually a bill, you could read it. i doubt it has a line item for ceos. >> where do you guys meet? secretly at night, like casablanca? your wife say, where you going, barry? >> not all ceos are asking for this, by the way. >> congressman, thank for joining us. when we return, barry sternlicht talks politics and investigating in the current market environment. later, the soda tax battle heating up as cities weigh the results of what the tax has or hasn't done for philadelphia. that story is straight ahead. stay tuned. you are watching "squawk box" on cnbc.

tomorrow on "squawk box," david tepper on the frotrump presidency and the recent market rally. joining the bullish chorus of high-profile investors who think this market will continue its climb. find out where he's putting money to work and how high stocks can go despite this record run. that's tomorrow starting at 7:30 a.m. eastern time here on "squawk box."

let's get to our guest host. barry sternlicht is chairman and ceo of starwood capital. over the past 25 years, sternlicht has structured investment with an asset value of approximately $84 billion, but who's counting. trump just tweeted three minutes ago, our wonderful new health care bill is now out for review and negotiation. obamacare is a complete and total disaster. it's imploding fast. just wanted to get that out because we just had -- >> i thought he was going to say hi to me. >> although, he does watch. maybe he's watching now. i don't know. when was the last time you were on? do you remember? >> couple months ago probably. >> it was when i was on

maternity leave. >> i think it was after the election. after the election, before he took office. >> you've been on for, what do you think, 15 years? >> who's counting? >> but you got to the point as a business guy and someone that deals with real estate regulations. you got to the point where you thought there were significant government induced headwinds to the economy for the last five, six years. >> yeah, that's fair to say. >> is that fair to say? >> yeah. >> at this point, are you gratified or optimistic that there may be fewer headwinds eventually if there was a tax reform? >> if there was a swarm of regulation that was holding back the u.s. economy, we're clearly going to untangle some of that. i think the one thing that i think you see in the animal spirits of the business community right now is an administration that's no longer vilifying the business community. i think that alone makes us wake up in the morning and feel

better. i think there's other issues, but that major issue, it's a big deal. it's a big deal for business to feel like we're going to help the country grow, spread wealth, create jobs, raise incomes, and that we're not being attacked from washington every day as the villain. >> there is one indisputable fact. that is that the private sector creates the jobs that we want. if you're going to create government jobs, you need private sector jobs to generate the tax revenue to pay for the government employee. >> capitalism is like a baby. you need to put guardrails on it and let the child bounce before the guardrails. we were trying to pull those guardrails so narrow we couldn't actually create the jobs, create the wealth, distribute -- but we do need guardrails. we don't need the kind of toxic mortgages we created back in the financial crisis. canada never allowed second home mortgages. that's not an overbearing government regulation.

that could have one line. >> it was environmental and nlrb and health care. across the board. you know how many regulations were layered on. >> the funny thing as a businessman, we just like change. to some extent, any time there's government interference, there's an opportunity. some of the greatest opportunities in the last 20 years have become the government, you know, posing a new regulation, selling the air waves for cellular, all this stuff the government does that's always an opportunity. >> that's a really interesting point. >> this is going to have to be like three markets. >> so in the last three months, you've been traveling around, looking at what type of opportunities in this environment? >> i've been traveling a lot. i had an interesting dinner last night with lloyd blankfein and sam zell and ken griffin. they were talking about the things that are being undone. that alone would be enough to

spur probably a half a point growth in gdp by itself, which is important because all this other stuff that's corporate tax cuts, the individual tax cuts, are clearly going to happen slower. i actually like what's happening. i was hoping this would happen. i was hoping that the tea party republicans would inject some fiscal discipline into the programs. i think the score card here is interest rates. the rates have not moved. so they're telling you it's going to take a little more time. that's good for my business, for the real estate business. our greatest fear is rates would rise too fast. we like rates being accompanied by economic growth. we're not a fan of rates going up just because there's inflation in the marketplace. >> but you don't think the fed is not going to raise. >> we want them to raise. we want to remove distortions from the free market. clearly the rates have been suppressed. the more business feels that this is the real curve, the more they'll deploy capital. i think actually, it'll be accelerated to the economy. >> what does it take for it to feel like the fed is getting out

of the game, for it to feel like there's no longer this suppression? >> raising rates is the start of it, the short end. i thought the curve might flatten. it is, in fact, flattening. that's because global growth remains kind of tepid. growth is better than people think. >> it was a conference last night? >> it was a little private dinner. >> with those guys? >> yeah. >> you're cool. sam's in town? >> sam was in town. he actually wore a jacket. >> is he coming on? he's in town. you didn't book him? >> i think he left. >> oh, he left already? he could get a flight out on united? >> jetblue. >> when you say europe has a fire sale going on, is that

because -- and you mentioned the bad loans. a fire sale that's worth jumping into and buying at these prices? >> so continental europe is actually growing slowly. you see the biggest opportunity in places like spain and italy, but particularly italy. we were looking at things. prices are a little aggressive. yields in europe are so low. property years are 3% or something in the major cities. the cities are experiencing rent growth, which is shocking because england has paused. england is going the other way with brexit on the horizon and theresa may's unfloknown polici. we've been investing in england and ireland, poland, czech republic. now it's the wine drinking countries that are more interesting. although, we still avoid france. we spent a lot of time talking about the elections coming up in europe. that's going to grab investors as we into into the french elections. dutch elections are this month.

>> dutch then french. >> i felt for our investing style that i wanted to see these first hundred days. i wanted to see what would happen with the republican congress with just two senate majority, whether some of the senators that might not have found the elections so delightful, maybe marco rubio or lindsey graham. i was wondering how they might behave in a republican administration. so far -- you know, it's hard to legislate for 300 million people. it's supposed to be hard. the process seeming to be working okay. i'm not disappointed at the moment. it's only 47 days i think. >> right. >> so we'll see. there's a lot of good stuff economically. joe and i kind of don't agree on the environment. other than that, we're okay. >> partially. >> don't go there. >> clean air and clean water. >> totally good with that.

>> you're worried about the trace levels of co2. >> no, no. i just think -- >> i just sent you a truck this morning. >> i got it. i saw it. >> in the last 800 million years, it's as low as it's ever been. it's 400 parts per million. >> maybe that's why it's 65 degrees in new york in february. >> what about the rest of the world? >> by the way, we own mammoth mountain, the ski resort. we have like 520 inches of snow. >> in one specific place it happens to be warmer. you've seen previous data from 80 years ago when it was much warmer. >> i know i shouldn't have brought this topic up. becky, i like your hair. >> thank you very much. i like you in that jacket. >> what happened to the commercial break? >> because of the trace levels of co2, that happened? >> look -- >> and it also causes all the adverse weather? when we come back, peter navarro speaking at the business economics conference yesterday.

we're going to ask former u.s. trade rep michael froman about those comments and the future of trade policy in america. stick around. we'll be right back. nt. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet?

♪ good evening, everybody. welcome back to "squawk box" here on cnbc. we're live at the nasdaq market site in times square. among the stories front and center this morning, luxury goods retailer tiffany's is expanding the size of its board by three directors. tiffany had announced its intention to do that back in february after a deal with dana partners. the board has now approved that move. tiffany is in the process of finding a new ceo after the resignation last month. ibm and salesforce.com are teaming up. the two companies will integrate their artificial intelligence services and create a new suite of offerings that will be available during the second half of the year. the effort is aimed at helping

companies better target products and services for their customers. and general electric and baker hughes are being asked for more information on their proposed deal. ge is planning to combine its oil and gas business with the operations of baker hughes. the two companies are still expecting that deal to close by midyear. the trump administration's trade adviser, peter navarro, is stepping up bilateral trade agreement talks, focusing on germany. but our next guest says bilateral trade agreements leave the u.s. vulnerable. joining us now is michael froman, former u.s. trade representative under president obama. thank you for being here this morning. >> great to be here. thank you. >> we've spoken a little about your concern about the bilateral agreements. this is something the trump administration has said they can move quickly on. what are your biggest concerns about that? >> well, i think as both germany and france have conveyed to the trump administration, they're not in a position to negotiation

bilateral trade agreements because they're part of the european union. the uk is a different story. when the uk exits the eu, there could well be an opportunity for a bilateral agreement. i think the bigger issue is that other countries are moving ahead with larger agreements, platform agreements with many countries, because that's the most efficient way to set rules for the global trading system. you take a set of rules like the digital economy, the free flow of data across borders, that's not something you can negotiate on a bilateral basis because a company needs to know whether it can set up its infrastructure, its servers, its business models and rely on data being able to flow around the world. that's why we made it a key part of the transpacific partnership why i think it'll be more efficient to do it through multilateral agreements. >> so you think that the biggest end result of us pulling out of some of these major agreements would be companies that are using information, maybe silicon valley type companies will have

a tougher time. >> it's not just the great internet companies. every manufacturing company is now a data company. ge relies on data from its jet engines to flow to data centers all over the world in order to make sure they're flying safe and they know when they need to be maintained. the rest of the world is moving ahead. china is moving ahead with a 16-country agreement. the eu, which is 27 or 28 countries at the moment, is moving ahead with all of the southeast asian countries. that's the way of the future. i think with the exception of countries like the uk, which is in a special situation, i'm not sure it makes a lot of sense to go bilaterally and have congress vote on 10 or 12 agreements, all of which are politically difficult, rather than having a single agreement that covers a greater degree of the global economy. >> ambassador, there are a lot of companies that will quietly mention some of these issues when you talk to them, but there hasn't been a huge movement from the business community to defend

globalism. why do you think that is? >> well, i think the u.s. business community right now is focused on tax cuts, on regulatory relief, and they've prioritized those over the global issues. i think as those get done, i imagine you're going to see more companies come out of the woodwork and talk about how if what we're doing is raising barriers to our exports around the world or making it more difficult for u.s. businesses to do business around the world, that's going to become a priority of policy as well. >> really, it's been very vocal, those who have argued for a fairer deal, as they see it. those are the people who we get pretty frequently who are willing to show up and talk on camera about it. if you're in the steel industry, if you're in manufacturing and you feel like you're not getting a fair shake, those are the ones who will come before a camera. do you think the other side of things are not just focused on some of these issues, you think they're afraid to talk about it? >> well, i think right now they've set their priorities with the administration. they don't want to be at odds with the president and his administration on trade policy

if they don't have to. it's not a live issue at the moment. but if the administration takes a series of steps that lead other countries to raise barriers to our companies, then you're going to find our companies are going to at least quietly, if not loudly, express their concerns. >> what do you think happens just in terms of some of these trade agreements once we pull out of them and other countries go forward? how tough is it for us to change our mind a year or two from now? >> i don't think that is terribly tough because i think the other countries very much want us to be part of these trade agreements. they're not moving ahead without us to spite us but because they firmly believe in the importance of liberalizing their economies and integrating them with the rest of the world and setting high standard rules. they're a little confused of why the u.s. has changed its mind when the rules that have been negotiated largely reflect u.s. interests and u.s. values. but as they move ahead, ultimately over time, they'd like the u.s. in.

i think they're willing to keep the door open for the u.s. to come in down the road. >> wilbur ross was just confirmed as commerce secretary last week. he's been charged with a large part of this trade policy. he sounds pretty reasonable, pretty knowledgeable, and pretty thoughtful on many of these issues. what have you thought in listens to what he's had to say? >> well, i think secretary ross has a lot of important experience in the private sector, particularly from the steel and textile sector. he was a supporter of tpp when he was in the private sector at one point, supporter of cafta when he was involved in the textile sector. he's also benefitted significantly from import restraints on steel and understands particularly the use of our trade remedy laws and how important those are, the anti-dumping and counterveiling duty laws to make sure the trade is fair. certainly everybody believes that, everybody supports fair trade. it's a question of whether we can also make sure we're tearing down barriers to other countries and raising their standards so

that we can increase our exports there and level the plays field for our workers. >> do you think that the dollar would strengthen if there was a border tax adjustment, making it net neutral to consumers? do you buy that argument? >> you know, i have to admit to being a little confused by this border tax adjustment. you can either believe that the markets will adjust immediately, the dollar will appreciate 20%, there will be no impact on trade, in which case there will be a lot of imports still and you'll raise a trillion dollars. or you believe it's going to be an incentive for companies to move their production to the u.s. and not import, in which case you're not going to be able to raise a trillion dollars. you can't believe both. i think that's been the nature of the debate right now. some people are focusing on the fact that it raises a trillion dollars and thereby facilitating corporate tax reform. others are saying it's going to change the nature of production itself. i'm a little suspicious of economists who assume immediate

theoretical adjustments completely, and i think that's why the business community is split on it. the import sensitive industries, whether it's the refiners or the retailers, are concerned that it's going to -- that the dollar won't fully adjust and it's going to affect imports and their business. >> ambassador froman, thank you. appreciate your time. hope to see you again soon. >> thanks for having me. >> you sold all your -- don't you have property like in miami or something? >> yeah. >> you're not going to sell? one foot out the door? >> are you talking about the water? >> let me ask you this. do you still fly private? >> will you stop? >> do you have a big carbon footprint? do you still fly private? >> let's go back to the border tax. >> you know leo had his eyebrow gal flown in from australia for the oscars. 7500 miles. leo, mr. co2, had his eyebrow girl flown in on a private jet.

>> this is going to be the crutch of whether they can get this tax bill through. they have to pay for it. congressman ryan wants his border tax. it's a trillion dollars. that's how he gets the corporate tax cuts. they're going to have to untangle that. this particular provision, this is going to be to the business community like dodd-frank was to the banking community. it's going -- they don't sort this out, it's going to impede growth in the united states. we have to actually know what's going to happen here. this is a big deal. for ceos trying to invest either domestically or abroad, they need to say what's the rules of engagement. the banking community sort of said, i don't understand the regulations, you're holding us back, we have to sit on all this capital because we don't understand what you're asking us to do. this is a whole new -- i didn't expect this. i didn't actually anticipate -- i don't think anybody really did, this border tax. >> there's some really smart people and people that you, i'm sure, respect that can make a great case for this. >> i'm not saying yes or no.

just some clarity. pick a position, we'll adjust to it. >> you just said it's going to slow growth. >> no, not knowing. >> right now you don't know if you're pro -- >> correct. >> you don't have an opinion on the border tax? >> the bet is the dollar strengthens automatically overnight. that makes it neutral. i just think when you're going to create jobs and we look in the united states, all the talk about jobs, we know why these jobs were exported. we wanted to buy our sneakers cheaper. >> but just let me ask yo u thi. would you be okay with maybe not paying for everything right now and assuming you get 3% growth. would you allow them some leeway on dynamic scoring? >> no, his concern is that you hurt growth because of the uncertainty. >> if you do it in another way, if you take that trillion off the table, would you allow dynamic scoring to try to get --

>> i probably would err on phasing things in because the economy's underlying is reasonably strong. >> we're going to talk more about this with barry sternlicht, who's our guest host. we'll also get his thoughts on the debut of snap and where he sees technology stocks headed. as we head to a break, take a look at the u.s. ek quity futur. around the flat line this morning. they've improved. they were down more earlier. "squawk box" will be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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♪ joining us now is short seller carson block, founder and chief investment officer of muddy waters capital. i just like the name. >> nothing to do with the blues singer. >> yeah, i think i understand

it. you got to sift through some muddy waters to see what some of these companies are doing. then you can do what you do, i guess. >> i started the firm when i was in china. we focused on chinese frauds listed in the u.s. there's an old chinese proverb about muddy waters making it easy to catch fish or there are opportunities in opacity. that's what goes on in china a lot. people use opacity to rip others off. we were basically turning that on them and exposing the problems. >> a lot of opportunity, but here's what i've seen over the waters. if the stock market when i started was at 800 and it's headed to 20,000, if you're going to make your living short selling, you're going to be like swimming upstream for most of the time. you even measure your performance. some people that pressumeasure

performance against the benchmark, it's difficult to do. >> according to one of the hedge fund publications, i guess globally assets under management for short only hedge funds are 5.5 billion now. meaning, it's nothing. so short selling is a niche. most short sellers are what i called gentleman short sellers. they don't really talk about it. we're a niche of a niche. we are loud mouth. we short and we talk about it. >> i was going to ask you about that. i'm smart enough to say if a guy is long and talks up a stock, no one says anything. if you're sport and point out something with a stock, they're going to immediately say, you can't do that. it's the same thing basically. >> yeah, it's the same thing. we put our money where our mouths are. there are definitely easier ways to make money. >> how much of your business is selling advice to people to short your situation? how much do you have on the line in the hedge fund? >> i mean, we don't have an

outside business where we're selling research. >> you don't at all? >> no, so we're managing -- for a little over a year, we've been managing outside money. before that, it was internal capital. so now it's internal and external. >> and you'd write about it and people take it or leave it, the information. you weren't selling any of it. >> that's correct. >> you're not long at all? >> we did a long once. >> once. there was one time. still have it on? >> no. >> it was valeant. >> it doesn't work as well on the long side because we're looking backwards. most people in investing are trying to figure out what's going to happen next. we look at the information that's been released to the market and say, all right, is this actually representative of what's really going on in the business. if it's not, then we think there's an opportunity to come out and say, no, it wasn't really -- >> everything you're looking for is fraud, or is it sometimes where management may have just gotten it wrong and you

disagree? >> a lot of it is actually legal, but it's financial engineering. so to me, i'm -- i guess i'm a purist. i think it's intellectually fraudulent, the legality of it doesn't really matter. so companies don't have to commit fraud to really juice their earnings and revenue numbers. depends on the industry. >> basically everybody you short you don't think is on the up and up, whether it's illegal or not. >> we are almost exclusively shorting companies where we think management has been a bad actor in some way. the thing that was different most recently was st. jude medical. that was just where we felt the company had been grossly negligent over a number of years in terms of not putting cybersecurity protections into its implantable cardiac devices. >> that is crazy. that was your reason? that's amazing. >> yeah, abbott was about to take them out. the fda had been talking a lot

about how cybersecurity was very important. we thought, okay f t, if the fd serious, this company is going to need to pull its devices from the market for two years. turns out the fda wasn't that serious. the acquisition went through. a couple days after the ak we i acquisition, the company announced yes, indeed, it had these flaws. >> who wants to hack someone's heart device? >> if you're north korea, you do not have plausible deniability if you launch a missile against the u.s. cyber attacks, everybody has plausible deniability. >> that's just mean. or short st. jude. that's unbelievable. everything we do is going to be wired up. >> what's your favorite short now? or among your favorites? >> in december, we came out on japanese company. has not been a great short for us so far.

it should be down 60%. >> what is it? >> they make widgets. they make small motors for hard drives. that was their core business. they've since tried to diversify the business into these automotive systems. they basically make widgets, but the implied valuation of those nonhard drive businesses, it's about 22 times ebitda, which puts it near facebook valuations. which makes no sense. and the management is hyper promotional. they've constantly missed their forecasts over the years. but nobody holds them accountable. it's japan. >> what kind of cap? >> it's about 25 billion u.s. not a small company. >> widgets really are -- >> i like widgets. >> i thought they were croquet things you hit the ball through. it's a small little machine. >> a thingamajig. >> it's a small mechanical

advice. the name is usually unknown or unspecified. it really does make widgets. you're not lying. >> i'm not lying. they do. >> 25 billion. i saw a couple of your other ones. much smaller market caps. >> 25 is toward the higher end of the range. our sweet spot is usually in the 2 billion, 3 billion market cap range. we'll go wherever we find dysfunction. >> have you been successful shorting in japan in particular? because the government interference in the equity markets, you're fighting the tape, so to speak. >> i'm 0 for 1 so far. >> what about china? talk about opacity, do you trust the financial statements you're looking at? >> no, of course not. do you? >> no. >> is that why you were focused on ones that traded in the united states? you feel like you get more information? >> well, yeah. the s.e.c. requires more disclosure than any other regulator in the world. that's helpful. if you want to find

dysfunctional chinese companies now, you go to hong kong. the problem is that the floats are so small. they're only about 25%. that's the minimum. effectively the chairman often control another 5% to 10% secretly. so they're manipulated stocks. >> interesting. good to have you. >> thank you. >> come on again. when we return, a soda tax in philadelphia getting national attention as other cities get ready to implement a similar program. beverage makers say it's hurting sales and jobs. cities say it's raising revenue. we're going to look at both sides of the argument in a moment.

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when we return, much more from our guest host, barry sternlicht. "squawk box" will be right back.

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replacement revealed. house republicans roll out a revamped health care plan. we'll talk to congressman larry buchon about the road to reform and what it means for insurers. snap, crackle, drop. shares of the snapchat parent company under pressure. tech investor alan patricof weighs in straight ahead. plus, alexa is headed to court. amazon abandons its fight to keep recordings from police. we'll tell you why as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." good morning. welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times

square. i'm joe kernen along with becky quick. there's a lot of competition in business shows in the morning. barry sternlicht is here. so we're like putting a win in the column right now. chairman and ceo of starwood capital group. if you were like surfing around and you saw sternlicht, you leave it on the channel. >> absolutely. you've got to listen closely because he says a lot of things. >> i'm confident about today. although, you never know. anyway, the futures right now are indicated a little bit lower. i really mean a little. down four points on the dow. down two points on the s&p. down seven on the nasdaq. the ten-year was back above 2.50 earlier. we'll take a quick look at treasury yields, see if it's still there now. 2.50 again. barry, when we were talking about this earlier, and you amazed at how well behaved the bond market had been, we may

have this global environment that we're in. we may juice things here and prime the pump. we still might benefit from being global, where people come here and buy our bonds because they're safe and higher yield than everywhere else. we may benefit from that eastbound though we're going some inflationary things. >> feels a little like brexit. we haven't seen the implications. it's staggering that the ten-year is 13 basis points higher than it was january 1st of 2016. >> i kept saying that. >> this massive fiscal stimulus. something is coming and interest rates are sitting here. our theory is there are two outcomes. the u.s. economy begins to accelerate and rates move up, wages go up. that's the nirvana scenario for the u.s. economy. then you wondered how far rates could go here with european rates down here. wouldn't they just -- or will european rates go up. that's a problem for the global

economy because of the central banks. you have a situation where it looks like the u.s. rates are being suppressed because foreign capital is chasing yield still. the u.s. is the best place to invest. actually, it's become even more of the best place to invest. the emerging markets like brazil, they've had a hell of a run. there's been some really wild things going on. places like florida, we're long florida. both in the apartment market and the retail market and in the hotel market. you've had a great depression in brazil. the currency has already rallied like th25%. i expect these people to start coming back into southern florida. argentina is doing better. >> even if the dollar rallies? >> the brazilian rial has the highest rates in the world. it's been strengthening against the dollar. they have like 6% rating or even higher.

inflation is falling rapidly in brazil. that's an interesting country that we've been watching. we have a few investments there. we're also watching india. it's big enough to matter in the global economy. but i think it is interesting. i'm surprised, very surprised rates are sitting here, staying here. most of my friends thought rates would go up. we were worried about the pace of the increase in rates. >> murphy's law, you'd worry about rates going up. that could really hurt and would take away from what you'd be using it for. it hasn't. maybe it just goes up all the sudden. that's the fear. >> she raises rates next week. >> is it she anymore? or it just the market itself? they're just following now. >> she's on the short end. the market is the long end. we'll see. i'm surprised. i'm surprised that you would

think -- i thought we were going to go higher faster. the market is reacting to what looks like gridlock in washington. we've not -- while he's only been in office 47 days -- >> who? >> donald trump. >> who else would we be talking about? >> i think people -- at least i thought they'd have more sort of drafted before they got to this point. they know they have to get it done. >> two months ago we were going to do all this stuff, and it was like 10% chance. weren't you looking at that going, what the hell, why are fed funds at 10% a month and a half ago when we knew march should have been a no brainer? >> i think people believed her. >> because we've been conditioned. >> i think she's reading the handwriting on the wall. she knows something is going to happen. >> it's this big, the handwriting. you can see it from a mile away. you don't even need glasses.

>> but the economy is slow. we look at hotels, trfor exampl. >> we have had guests come on and say the economy can't withstand a rate hike. >> it's not bad. it's just not roaring. it's motte showing anot showing trump economics yet. the credit markets are telling you that. they're telling you this is not quite 2.5%, 3% gdp growth. >> although we had a good jobs number last time. marty was saying the job picture has picked up. >> you're converting part-time workers into full-time workers. we're going to need them. i don't know who's going to pick the strawberries. and your avocados. >> love my avocados.

>> you're putting up a your money in florida, you're going to lose it all when it's covered with water. >> it's going to be beach front. orlando is going to be beach front. >> barry sternlicht is our guest host. we'll have more with him in a moment. in the meantime, let's get to today's top political story. house republicans releasing an obamacare replacement. >> we'll start with the highlights from that long-awaited health care draft from house republicans that hit last night. first, it repeals the consumer and drug taxes from obamacare, as well as the individual medicine date. it lets customers buy their own plans using tax credits based on age, income, and family size and also lets them use expanded health savings accounts. the expansion of medicaid from the previous law, that will be frozen in 2020. customers with pre-existing conditions will still have access to coverage through a separate fund for the states and

also dependents until age 26 already able to stay on their parents' plans. we don't really know how much this will cost yet. the cbo hasn't scored it, but it is expected to before the draft goes to the budget committee. the president, though, had dinner last night with the secretary of health and human services, tom price, as well as the budget director to discuss the proposal. this morning following a tweet from the @potus account, the president tweeted, quote, our wonderful new health care bill is now out for review and negotiation. obamacare is a complete and total disaster, is imploding fast. a lot of senators share that view about obamacare. senators rabd paul, ted krcruz, and mike lee previously criticized the plan, saying a full-scale repeal was necessary. there is a question of whether these critical republicans will remain so with the threat that

the president calls them out or goes to drum up support for the law in their own districts, given how high it is on the administration's ajagenda and hw quickly they want to get this done. it's unclear who's going to be willing to stand in between this bill and the president. >> we got the senate. then we got some of those guys in the house too. there's definitely a dichotomy in both bodies, kayla, versus the people that want no new entitlements and the people that are petrified that someone's going to lose coverage. like the entitlement is already there. it's going to be interesting to watch. someone is going to have to swallow their pride a little bit. >> joe, the house seems to have gotten mostly everybody on board. the caucus and the conference have been meeting night and day to figure this out. the republican study committee is meeting this evening to figure out how to move forward and whether they're okay with

where the bill has come so far. it's really the senate that feels like they haven't been brought into the fold, haven't been brought into the process to actually draft this. now that they're seeing it for the first time, we'll see exactly where they stand. the reason they're doing this through reconciliation is they need to just get a simple majority to pass it. that's why dow don't see the fact that the president and vice president wanted insurance to be sold across state lines. that's not included in this because they have to be able to pass this through reconciliation. it's not really a whole scale loss. we'll see where this goes. >> in the house, you got mulvaney, who was part of the freedom caucus. those guys might be easier to bring along, signing on for an entitlement, than the guys in the senate that are worried about losing any medicaid or -- you know, it's almost like the center of the republican party or even the left of the republican party and the senate are the ones that are going to be problematic because you can only lose one or two of those guys. >> right. well, we're waiting to see exactly what the pay fors in this will be, exactly what will

cover from the revenue side, how this actually gets paid for. and we're waiting to hear from the governors. they were very vocal about making sure there was coverage for the states that had expanded medicaid so that people weren't left in the lurch. we haven't heard from the governors yet. i expect we will soon. >> so you decided to go cover washington during the trump administration. what gave you -- that's a pretty good idea, i think. we talk about this a little. >> busy. >> how smart is she? >> joe, it's a good idea. it's generally a good idea as a journalist to go where the action is. that's what i'm trying to do here. >> yeah, exactly. very savvy. already, kayla. thanks. joipi joining us now, a member of the energy and commerce committee and the subcommittee on health. you got a thing in your ear. you heard all that stuff. does that incapsulate sort of

the issues? you got the freedom guys on one side that don't want any new entitlements, then some moderate senators that want a larger entitlement. how do you bring it all together? >> yeah, i think it's a work in progress. we campaigned on this last year in the better way plan that was crafted over the course of the year with a lot of input, at least on the house side. you know, i'm pretty confident that our policy prescriptions that were in the better way plan that now are transitioning over into legislative text will get the support in the house and the senate. it's a reconciliation bill, so we'll need 51 votes in the senate. i'm pretty confident we'll get that. we'll need to go through the process this week, marking up our legislation, both in energy and commerce and the house ways and means committee, and then move forward. >> you think you get a single democrat on either side? >> i don't think we will. i think that's unfortunate. you know, i think going forward, later on when we have to do

other things with the health care law that does not go through reconciliation, i'm pretty confident we'll get bipartisan support. >> it would be almost fitting, karma, because there wasn't a single republican when it passed. >> yeah, they didn't get any republican votes. i think that was unfortunate. that was because of the process that they went through. we've been open and transparent. you know, our legislation, i think, is 190 pages versus over 2,000 pages. that was in the affordable care act. i talked to some doctors in the doctors caucus when i came here to washington in 2011. they said they asked for input but were told it wasn't wanted or needed for the health care law. we want bipartisan support. we know this health care law isn't working for the american people. premiums are up. deductibles are up. the exchanges are in trouble across the country. 18 of 23 co-ops have failed.

we're almost on a rescue mission here. i think it would be irresponsible not to act. i think we'll get some bipartisan support later on. >> so they got a guy called the whip in the house. that's who does that. who's going to be the whip in the senate? you think it would be mcconnell? you think it would be the president himself? do you think the president will need to twist some arms of moderate senators? >> well, i don't want to speak for the senate. i'll speak on the house side. again, over the last year, everyone has had input with the better way plan. we all campaigned on it. we had a positive election outcome. the president campaigned on essentially our health care prescription in the house. so i think it's important to have the president on board. i think if the president's on board and we get this through the house in a way that the senators can accept, i think we'll get senate support. i'll leave that to senator mcconnell and others over on the senate side to decide how they come up with the votes. >> what is the bigger risk, do you think, if you test the

political winds? is it not going far enough with entitlements, or is it going too far with the entitlement side? how many times did you vote on pure repeal? that couldn't possibly happen now. that would be like political suicide if all you did was pull the rug out. i don't know if republicans really knew that two years ago. they timely caught the bus. they get the dog that catches the bus. it's like, oh, my god, we got the bus. >> i think the bottom line is what's going to happen in the insurance marketplace and in the states as it results in more coverage for the american people at a lower cost. i think, you know, that's the end result i'm looking for. i was a heart surgeon before i was in congress. i want everyone to have access to quality, affordable health care. i think the ultimate result is going to be how the american people react and how the american people see that their costs are going to come down,

that we're not pulling the rug out from under anyone who's currently covered under the affordable care act. i think we're in pretty good shape here. >> you know, somebody has to lose. the reason the health care plan is such a mess is because you've had adverse selection, right. the republicans are denying what they need to do. they have to lower the cost of the program. the costs are driven by the aged on the program and people who had prior conditions and all the people we all feel for. but it's sort of -- we're kidding ourselves, right. unless we can lower the cost of health care across the board and get a fairer representation, let the free market take care of itself, somebody's going to lose. to say we're going to expand it and lower the cost, is it possible? is that even really possible? >> well, i think there's other issues involved here. i'm working on price transparency, quality transparency. you know, this doesn't address broader entitlement reform. so there's a lot of other issues involved. we're focusing on just the

specifics that we can do here in reconciliation and move forward. but you're right. there's a lot of other issues in america. we have a demographic issue with older, sicker patients. the numbers are there. so we need to look more broadly in the future to address those issues. i don't disagree with that. >> doctor, thank you. >> you're welcome. >> we're watching, watching closely. it will be interesting. thanks. >> thank you. whether we return, amazon backs down. the tech giant hands over recordings from an echo device to police. we have the details next. plus, why oil industry leaders and policymakers are feeling good at this year's energy conference. we're going to talk to dan yergin. and later, has the snapchat euphoria come to an end. shares are under pressure. we have tech investor alan patricof. stay tuned. you're watching "squawk box" here on cnbc. ♪

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when we return, soda tax spillover. philadelphia slaps a tax on sugary drinks and beverage companies are seeing sales decline, job loss, and consumer cost hikes. we have the details right after this quick break. (alarms)

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philadelphia's first of its kind sugary drink tax is gaining nationwide attention. beverage companies say it's hurting sales and leading to job cuts. sarah eisen has more on the story. >> hey, joe. this is going to be a big test. philly is the first major city to tax sweetened drinks. 1.5 cents per ounce.

that includes diet sodas, teas, juices, and more. so once the distributor tax is passed on to the consumer, it doubles the cost of a two-liter bottle of soda, for instance. two months in and so far it's led to a disastrous decline in sales. 40% drop in beverage sales for pepsi. only a 10% to 15% bump in sales outside the city. not enough of an offset there. pepsi is cutting jobs in the metro area. now we can report fresh numbers out of coca-cola. supermarkets from seen a fall of 30% to 50% in volumes of beverages sold. many are cutting shelf space for beverages as a result. that includes soft drinks, taea, and juices. no layoffs for coke at this point. it has more than 700 people working in the metro area. if you talk to the mayor's office, you'll hear a different story. the city has raised $5.7 million

in january. that's more than double what was projected. it's expected to bring in $91 million for the fiscal year. that helps fund schools and community programs. the city says it's a big success, even with falling sales, and it is skeptical of those job losses at pepsi co. and elsewhere. it's working to fact check those claims. other major cities are watching. a much bigger mark, cook county, which is chicago, has passed a similar tax. that goes into effect in july. boulder and san francisco and others have also voted on similar measures, despite what has been heavy lobbying dollars from the industry. one to watch going forward would be santa fe, which has a hearing on the issue this week. as to whether this is a material impact for, say, coke and pepsi, not yet, says brett cooper, an analyst at consumer edge. you'd have to get to the state

level for that to be an inflection point. the headline risk is certainly one these companies are watching, and there's a lot at stake. >> you know, sara, you start thinking about that, the city of philadelphia can be excited about the $5.7 million it's raised, but if it continues to affect sales, you start to think about killing the goose that laid the golden egg. >> absolutely, but they can say declining consumption may not be a bad thing in terms of health and financial benefits in the long run. >> so the city it going to claim a win/win. >> correct. you could say that as well. i asked, how are you seeing such a big jump in revenues if sales are down so much? they said, we were just very conservative in our estimates to begin with. >> sounds like it's straight math. if you thought you were going to have a higher -- or have a uh lore number coming in, you didn't think you were going to be cutting the sales quickly. it seems like it's a straight forward math problem. they underestimated how much this would cut into sales? >> that and maybe they underestimated how much actually gets sold for beverages across

the board. so those numbers came in above. i think the biggest question politically in this environment is going to be those job losses. >> you have no idea. it's good we're doing these experiments. we'll see a couple years out what happens. all cities would like taxes. they're all cash strapped. >> everybody's got budget holes. >> everybody needs tax. if they had done it with red meat, when we used to think it definitely caused heart disease. suddenly new findings come out. it doesn't cause heart disease. the health thing du jour is not something you should have tax policy on. today it happens to be sugar.

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welcome back to "squawk box." breaking news. our january read on the trade balance, which most likely is going to be a deficit, rose from 44.3 billion in december to 48.5 billion in january. of course, that's a minus. it's in the red. it is a deficit. and sequentially, it's a bit worse. it is about in line with expectations. if we alolook at what's going on the marketplace, it doesn't seem to have changed the landscape much, although i do see preopening equities having a smaller loss.

dow futures now under minus 30. still hovering around 2.50 for the ten-year. the dollar index, even though it's up on the session, still down about half a cent on the career. of course, we're all going to be trying to handicap what's going on with the new health care plan presented. that, of course, is most likely going to have an impact at some point on the market. becky, back to you. >> all right, rick. thank you. we are watching that. again, rick santelli. right now steve liesman joins us. he's coming in from washington this morning. what do you think about the trade deficit number? >> i think rick is exactly right. they're going to reduce growth, but it's better than perhaps was originally reported in the advanced one. speaking of growth, the oecd out with its interim outlook for global growth, including the major countries in the world. i want to show you these numbers, guys. 3.3% in 2017 for the globe, going up to 3.6. what's important about that is it doesn't get to the average of the last 20 years, which is 4%. we'll talk about why that matters. but there's the u.s., going from

2.4 to 2.8, a little less than the prior forecast. you can see it rising near that 3% level. euro area, we'll take it. uk coming down from 1.6 to 1 and china still above 6 but not the healthy 6s we've seen. down to 6.3%. what are the risks as far as the oecd is concerned? that low growth number is a risk. if you're growing at a lower level, you're more vulnerable to shocks. they're worried about trade protectionism. they're worried about the rising interest rate differentials between the u.s. and euro area. they're worried about the volatility that could be in the exchange rates along with high debt in emerging markets. i want to show you this other risk that they're worried about, which is pretty interesting when it comes to market valuations. you're seeing the positive assessment reflected in market valuations appears disconnected from real economy prospects. so that's their take, that this market is running ahead of what's actually going to happen. they're positive on fiscal changes in the u.s.

they just think the market is overpriced. and joe, one of the things they point out is they have yet to see corporate profit valuations go up as much as the market has risen. >> did you really say scla rottic? >> i did. >> i got grief for kwquiescent. >> i thought you were going to give him a high five for using big words. >> i thought you said erotic. >> i knew you'd hear that, joe. isn't that a good word to describe europe? >> becoming ringid and unresponsive. losing the ability to adapt. >> isn't that a good word? >> i'm going to start using it. love it. >> 1.6% for europe given their demographics is not horrific. it's not so bad.

>> this idea did brexit hurt, did it not, they see the uk going down to 1%. they notice despite the stimulus coming from the bank of epg lng. >> in january, 96% of all the trades in real estate were for the chinese. 96%. >> that's a big deal. >> commercial assets. with the shape of the curve, actually, the chinese -- they love the currency. they're all long england. they're getting in. across the retail sector and across the travel sector, england is suffering right now. it is slowing down. whether it's a third of the jobs will leave in the financial sector, the trickledown effect in central london, i said that and then there was a huge trade of a major office tower in january in london.

that's maybe the scariest market in the world right now to invest in commercial property because if the banks leave, there's nobody to fill up canary whatevewharf. they're all looking. >> hey, barry. >> yeah? >> i've heard that the efforts by the chinese to crack down on, you know, currency flight is actually have been an effect in the u.s. market. >> it is. >> are you seeing that now? >> yeah, there's a lot of interest, but the companies are nervous about all of the pushback from the federal government, from the chinese government. they are clamping down. the official policy is a billion dollars of investment. you saw the theater deal that didn't make the other day. they definitely raise the bar. they're very tight on chinese capital, leaving china to buy u.s. assets. seems they're a little more -- they're easier on european assets and other asian properties, but the u.s. --

maybe because of the flow of the reserves. they're definitely cracking down. you're seeing them drop deals, both here and in europe. >> because of that pressure. >> it will be interesting to see the trickledown effect on pricing of commercial assets in the united states if the chinese leave the market. but they're also in search of -- >> are they the biggest here too? >> no. they have been on the margin in markets like new york city, critically important. they're less so -- they don't play as much in atlanta, nashville, and portland. but it is one of the great flow of funds. somebody mentioned tap of the hour earlier this morning about credit spreads. that's really interesting. credit spreads are really coming in. in real estate too. the yields are tightening, which is showing a sedarch for yield. the chinese are key players in the market. i think with the turmoil in places like korea with the government, i think even the koreans are slowing down. >> we're moving on.

we're going to oil. thanks, steve. the super bowl of the oil industry is back. the world's biggest names in energy brought together to discuss what's on the horizon for the industry. joining us now from the conference in houston is daniel yergin, vice chairman of ihs market. you know what, i saw you at that meeting of big time ceos with the president. >> that's true. >> there was daniel yergin. you're important, man. your input is important. >> i was there, that's true. very interesting discussion. >> i saw welch afterwards said that was like the greatest meeting he ever had with a politician. did you think you were heard and ideas were considered and people were listening closely and it was productive? >> yeah, i think it was a very interactive discussion. others comments that it was -- they hadn't really been in a meeting like that. it's a lot of views, i think.

a lot of discussion with regulation and the burdens of regulation, pervasiveness of it. now here we are in the world of oil. >> i know. and there's so many, as you point out, you've written a few times, rarely has there been so many different forces converging. is it safe to say that what's good for the industry in the u.s. isn't necessarily good for the industry in the u.s.? that's a weird contradiction. >> i think i understand what you're saying. >> is it true? >> no, i don't think so. i think what you're getting at is how fast the shale oil is going to come back, and clearly it's a much more efficient industry. that's one of the big topics here. i'll tell you, this year we're calling it permania. i think that recognition that at $55 a barrel, we'll have probably more than half a million barrels in addition

here. it's very interesting. we have a number of the ministers from various oil exports countries, and they're all trying to understand how did the dynamics of shale actually work. this gives them the opportunity to see it up close. >> if we were -- i mean, i can make -- there are ways to do it, i think. we can have this boom here with shale. what if we did a border adjustment tax that makes our domestic stuff worth even more because it costs more to bring it in? can't we have a boom here without necessarily having global prices go down? is it possible to do that? >> well, i think the border adjustment tax is something that's really divided the energy industry itself. even probably would have a lot of other consequences that would come into it. but i think the tax reform is something that's going to be very complicated before we see the whole thing. but i think that one of the things that will happen from a

recovery of the u.s. oil industry is that, that will feed into the supply chains that will affect industry and jobs across the country. yesterday exxonmobil made that announcement about those $20 billion investment they're making in manufacturing along the gulf coast. i think one of the themes here is the effects, the ongoing effects of the development of shale in the united states. >> what if we -- what if technologically we get better and better to lower the cost of production so that producers can make money, and that's a way that a boom in the united states -- you know, where we produce a lot more but 50 or 55 is still a great price, where it's not all about price, it's about how much it costs to get out. i'm trying to figure out a way that it's going to be negative for oil. i can't really come up with one. it just seems all positive to me. net/net, is it negative?

>> i think the difference between last year and this year is the prices today, this year, are 75% higher than they were this time last year. so there's a general kind of -- i wouldn't say exuberance, but an optimism. i think it is a recognition that a year ago even people would have said you need $60 a barrel to make money. now many will say 50 and in some cases lower than that. what is striking is that the tech no lodge kl advances have continued in the industry that have brought down costs and increased output. that's what we're going to see now as a result of prices being where they are. the question that's running throughout this conference -- because in a little while, we're going to hear from the saudi oil minister, is how does that fit into the overall opec, non-opec deal, and that's only a six-month agreement and we're almost halfway through it. they're going to meet on may 25th, and that's not far away. so i think that's what's really

kind of -- in terms of what's going to happen with oil, that's what people are looking at. >> and the pendulum, unfortunately for barry, it's swung back from leave it in the ground. we got to leave it in the ground. so that's kind of swinging back, dan. >> i think one of the big discussions here was about infrastructure, about building pipelines, and what needs to be done so that there's a kind of predictability. >> all right. sorry, dan. we do this to each other. thank you. usually off camera. dan, thank you. we're going to cover you. we'll see you again. he's a big shot. >> i felt really bad for him in davos. he was down the hall from me, heard the baby crying. >> oh, my god. >> if he was that the hotel, he's not that big a deal. and cnbc's coverage of ceraweek

continues. just part of the huge guest list all day on cnbc. >> that's quite a lineup. >> it is. when we return, snap facing some mixed reaction from wall street. we'll talk to alan patricof about the future of the company next. finally. hey ron! they're finally taking down that schwab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's 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 they're calling about the schwab news. schwab. a modern approach to wealth management.

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welcome back, everybody. an update on a story we've been following. amazon agreeing to share data from an echo device that could be key evidence in a murder case after the defendant said he didn't care if the recordings were released. the tech giant initially fought a subpoena to hand over the recordings. law officials wanted amazon to provide audio from the echo that may have been listening in when a murder was committed. snap shares down once again this morning after closing the regular session yesterday below the company's first day opening price of $24. you can see it's down once again this morning. down another 4.3% to 22.73. alan patricof is here this morning. thanks for being here. >> thanks for inviting me. we're caught up in snap fever. we've been watching closely as the ipo took off and seems to be coming back to earth. what do you think to this point?

>> first of all, we're not an investor in snap. to a certain extent, there's jealousy involved. i wish i was there at 94 cents or whatever it was a share. what we're seeing is really public venture capital. that's what it really amounts to. this is a venture capital company. under most circumstances, it would not be public when you have revenues of 400 million and lose 500 million. clearly people are betting on the future. they are assuming a growth rate that some people would say is unsustainable. i think you have to grow 50% a year for the next ten years to grow into the valuation. if you make any kind of comparison -- i don't want to cite all the figures related to the industry, but they're going to be compared against google and facebook every day of the week. through facebook, you're going to be compared with instagram. instagram's got 300 million daily users. they have 158 million. the monetization is not there.

on the other hand, people are excited. social media is the thing today. it's hard to take away what they've accomplished. what i'm most upset about is the no vote. >> donald trump tweeting, i'm working on a new system where there will be competition in the drug industry, pricing for the american people will come way down. >> is that coordinated with the release of the new american health care act? >> that's part of it. >> he's going to let you buy in canada. that's one of the logical things to do. >> let's go back to snap for a second. facebook -- what you've seen in the consumer industry or retail industry is there's a winner. in home furnishings, bed, bath & beyond. you have a category killer in

facebook. 1.6 billion. >> it's approaching 2 billion now. >> 2 billion. you have this little squirt, which is a good squirt, but it's a little squirrel. you mentioned instagram, which i actually use. it's kind of fascinating that a company with -- nobody talks about the financials. these companies are losing hundreds of millions of dollars. it's not amazon. amazon is the category killer in its business. anybody like sears who tries to think they can out-amazon amazon doesn't have the resources because of their market cap. you have facebook. it seems to me -- i don't use snapchat, so i'm kind of -- but my sons do. my daughter does. i think they use less of it. i wonder if there's room. you think there's room for all these players? >> listen, there's a new one emerging every day. i was on this program whenever facebook went public. i said at that time, i think facebook is a forever company. it's going to be here. it's going to be here 10, 20

years from now. >> so you're not a constant skeptic. >> no, i'm just concerned from the metrics standpoint. the other thing is, once you're public, you have the scrutiny of the public every quarter. just the variation, miss your mark by, you know, 2% or -- >> that's what happens to twitter, right? >> of course. >> twitter is down half. >> a tap of $15.7 billion. if you look at the -- >> doesn't sound right. >> that's too low. it is higher. >> 24. you may not have the whole float. >> you're right. this is the partial float for the whole thing. >> remember, everybody who bought in the opening is now a loser, has a loss. >> if you got it at $17, priced the night before -- >> institution. >> i said in the opening -- >> employees haven't been able to sell yet. >> you see the turnover every day. average turnover of $185 million a day.

>> right. >> i'm not against snapchat, snap. i'm a little confused by them now calling themselves a camera company with the spectacle device, which is another business as far as i'm concerned, which relates to video. >> didn't work for go pro. >> right. >> let's take a quick look. i guess we have to go. 30 seconds. here's a look at the drug stocks which we built a board to look at them quickly. they're all down over 1%. if we look at an intraday chart, you can see it mostly happened after -- >> within the moments of the tweet coming. >> from two minutes ago. i actually haven't seen it. be nice to see an intraday chart, to see if it sold off right after that. but this is part of the risk inherent in having a public -- having a public company. it's part of the risk. you don't know when you'll be hit by a tweet. >> right. >> comes out like that. >> al, thank you very much for being here. we hope to see you again soon. >> any time.

>> appreciate it. when we return, jim cramer live from the new york stock exchange. had some similar comments on snap but i want to get it straight from jim's mouth. we'll get his take on the day's top stories when we return. during the lexus command performance sales event, experience our most refined models ever. including the ls, lx and es. experience amazing.

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let's get down to the new york stock exchange. jim cramer joins us now. just had al talking about snap. jim, you had some comments yesterday. you're wondering about valuation at 24/25, as well? >> yeah, i said it'd go to $40 billion, $28.25. it went there. i said it'd make no sense. that's because of the mechanics of ipos don't work. 200 million shares is what is traded. the institutions aren't supposed to be able to flip. maybe some are released. but this is a company that won't make money until 2020. the daily average users are slowing. it has to reinvent itself as some sort of mtv network. people got excited because there were premium investors. in the end, i mean, snap is not a quality place to advertise. no more than twitter is. different from being able to advertise in instagram, facebook or google, which have terrific places for ads. the idea behind snap is to look at it for a second. that's not exactly conducive to

advertisers. look, al was right. it is a venture stage company. people bought it. a lot of millenials loved it and that is terrific. but not how you make money. >> i like the name. the american health care plan. it is a good name. then we have the tweet about the drugs, drug prices. >> competition. who is he going to pit? what will you pit against each other? i try to figure that out. there are drugs that do the same things. maybe pit against them and drive them down. it'll be interesting to see. because there's not a lot of -- what is really -- if you want to drive prices down, become a negotiator in chief, like what the va does. >> right. >> it'll be interesting. some of the companies are doing very well. >> maybe do the medicare, you know, got buying power like that, you ought to get a deal. >> you know that would destroy a lot of the innovation. just saying. it just would. >> you think if medicare negotiates, it would destroy innovation?

you don't want that. >> no, we don't. this is our best industry. it is the best industry we have. >> right. jim, see you in a couple minutes. "squawk box," don't miss -- someone told me we wouldn't worry about innovation. that doesn't happen much. david tepper. bp engineered a fleet of 32 brand new ships with advanced technology, so we can make sure oil and gas get where they need to go safely. because safety is never being satisfied. and always working to be better.

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i think it's over there. that way? yeah, a little further up. what year was that quarter? what year is that one? '98 that's the one. you got it! nothing stops us from doing right by our customers. ally. do it right. let's get out of that water.

we want to thank our guest-host. barry, you're right, we didn't have a million things we didn't get to. >> a million. >> will you come back soon so we can talk more about it? >> we should talk about the retail landscape and what's happening. my dad ran a manufacturing company. his biggest client was walmart. he had to drive his manufacturing offshore. never had a chance to talk about it. next time. >> we'll have you back soon. thank you very much. >> join us tomorrow. "squawk on the street" with -- tomorrow's david tepper. now is time for "squawk on the street." good tuesday morning. welcome to "squawk on the street." i'm karl quintanilla with jim cramer and david faber at the new york stock exchange. the premarket. the tension is squarely on the new draft bill called the american health care act. we're going to w