♪ >> live from new york where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and melissa lee never leaves times squarement. >> at this very desk all the time. >> she sits right here. >> are you sitting on my pillow? >> this is your -- >> it helps with my asteroids. i don't know if you will cuddle up to it -- >> melissa may find a way to make her way home tonight. we are 90 minutes away from david tepper who will be joining us. he is the founder of appalossa management. has a great track record. since 1993 when that fund was first founded, has been up 25% annually over that time. u.s. equity futures two days of

declines. that's the first back-to-back losses you've seen for the dow and s&p 500 since late january. futured are muted this morning. dow up by 2 points. nasdaq up by less than a point. a lot of things happening, we're waiting on adp numbers this morning. that may give us insight on what to expect friday from the jobs market. that can het let us figure out the federal reserve will do. in asia, the nikkei down by a half percent. the hang seng up, and in europe, a similar story to what we're seeing here. muted moves one direction ortd othe or the other. the dax up by %. and a look at currencies. the dollar is up across the board. euro at 1.056. dollar/yen at 114.05.

>> here are the storying we're watching. china posting a trade deficit of 60 yuan. exports dominated in yuan, they rose 4.2% in february, imports jumped more than 44%. that import growth driven by a construction boom. analysts say the data may have been distorted eby the long lunr new year sell breaks. during the sell breaks,celebrat businesses shut down for a week. to commodity prices. u.s. crude stocks rose more than five times forecast last week. industry group api reporting gasoline inventories fell more than expected. this morning we will get the official data from the u.s. energy department. >> investor jeffrey gundlach says we are entering an old school hiking cycle. he expects a series of hikes from the central bank suggesting

the fed will not stop until something breaks. those are his words, such as a u.s. recession. he thinks rates could move as early as next week's fomc meeting. >> commodities have been strong. is gartman going to be here? >> he's in the wing. >> looks like he's in the penalty box. >> china importing commodities -- so dollar denominated, they're up, is that -- would that cause a deficit in china if they're importing commodities to build thing? >> that's exactly what is going on. it shall continue. >> why are they building when they try to cut back on some of the bad -- aren't they trying to close down business that are not doing well? >> maybe the economy is doing much better than the government is able to stop. i think that's what is happening. >> can anybody else hear that? >> is his mike on? >> this is the big secret, big

diseas tease. >> it's almost like one of those shows where there's a mystery guest coming up. he's in the dark. you can't see him. >> they told me his microphone is on. we just can't hear it back in our ear. >> you're a good looking man, but you don't look bad in the dark either. >> i look much better in the dark. >> mysterious. >> on my twitter, people are saying there are some chart things that look topetoppy. i'm getting nervous because of the healthcare thing. if they don't do this, they can't do tack reforx reform. >> with the vix at 12, if you see pullbacks, maybe you will see heightened activity at the vix. >> they're requesting we have

katie stockson on. >> they are, as in you? >> no. >> oh, the people. >> i think this is going -- >> we'll call her for tomorrow. >> watching the two sides, i don't mean republicans and democrats, republicans and republicans watching them bicker about this yesterday. >> bicker is a nice word. >> i kept going back and forth trying to figure out what i believe. the "journal" had a nice piece yesterday. >> terms of all the legislation? >> no, you can't take the entitlement away. conservatives that think we're going back to pre-obamacare where you just take it away. >> people have been saying for seven years, the congressional members have been saying for seven years that they're going to repeal it -- >> they knew they weren't going to. >> that's why they're calling it obamacare light. >> if you actually pull the rug out, you might be committing political suicide in 2018.

you can't take -- i feel tricked. you can't take entitlements away. once you do it. all along, i think they knew they would get it through reconciliation. >> the other argument is that this is just a tax cut plan. >> i saw people go back to fdr and all the social network that he put in back then. eisenhower came in and didn't do anything. you have a republican in, you couldn't take back any of the great society things. gartman may have -- we can't take it back, can we, gartman? >> he says no. >> it's as good as they get, now these hard core guys should get on. that's what the "journal" says. >> the other hard core guys have to get on board. >> will they? >> yes, they will. >> they're just whining -- >> whining and moaning. >> dennis, do you want to come over to the table and join us.

>> my goodness, they killed my read. it said three big stories, if they were big -- >> you talked through them. you used up your time. your time is rescinded. gentleman from new jersey. >> i said asteroids, i took this show into the toilet. i looked over, it was six minutes -- 6:26. >> this squawkard moment has been brought to you by joe kernenment. >> >> i think you have done it, in the cold open before. >> for more, let's get to eamon javers in washington. good luck. wrap it up for us. >> to the discussion you were having there on obamacare, goldman sachs has a cheeky note out this morning that they put out overnight. goldman saying obamacare repeal, who knew it could be so complicated. that's a play off the president's quote from the other day they're saying it's far from

clear that the current proposal has the support to pass and it looks likely to go through additional changes before it becomes law and is the first of several steps. the other thing we got cleared up yesterday was this idea on whether or not the white house would have its own proposal or not. the white house had been subjecting by mid-march they would put out their proposal for obamacare repeal an replace. we saw house republicans move ahead with paul ryan's plan. there was a question yesterday on whether we would see a plan from president trump himself. clearly the white house gave a full bear hug to paul ryan's plan. kevin brady was at the white house yesterday, he is the chairman of the house weighs and means committee, a player in this. he met with the president and other deputy whips from the house of representatives on the republican side, they have to count the votes and push this through, he said the same thing in the driveway, this paul ryan

plan is president trump's plan. >> the president made it clear this is his bill. there are no excuses. it's time to act now. it's clear, too, that he is putting his presidential weight behind this legislation. republicans are unified behind repealing this terrible healthcare, but more importantly beginning important steps of restoring state control. >> not clear where this goes from here. as you were talking about, there are conservatives who are upset about this bill. i asked at the event yesterday in the white house driveway whether or not they thought they had the votes to get it through the senate. he said wait on the senate, let's focus on getting this thing through the house. we have a lot of work to do to pass this through the house. some say there are not 218 votes, that's the magic number you need to get this vote through the house. we'll see.

they'll rush this up on capitol hill. we should also talk about this wikileaks dump yesterday. a massive dump of what wikileaks said are cia documents detailing the cia's ability to hack into smartphones, smart tvs, all kinds of trojan horses, viruses, all kinds of technical details. that's embarrassing to the cia, could be dangerous for the cia if those are real documents. the white house is not commenting on that. >> i'm not going to comment on that. i think obviously that's something that has not been fully evaluated. if it was, i would not comment from here on that. >> so we'll wait and see where we go on that today. a potentially damaging story still developing. if the white house and the cia are able to confirm that today, we'll see where that story goes. this white house is led by a man who embraced wikileaks during

the campaign trail, but they see a big difference of hacking political e-mails and hacking the cia's most treasured secrets. >> eamon, you're lucky the lights are off. >> yeah, we were laughing. we have a great year-end reel every year. >> yeah. >> massive dump might show up on that. >> you started by talking about asteroids. >> can you say a massive release of documents or something? it's a family show. >> i have a clean mind. >> you do. you're cute that way. you didn't hear that at all. >> no. >> five people started to define -- i figure people at home, too. but you're cute. >> my first boss in journalism, the first newspaper i worked at, said the editors with the dirty minds write the cleanest copy because they see that stuff. >> yeah. yeah. >> i told you about the "journal" headline that ran one

time, get your boss a hummer? a journal story -- >> they're talking about a car? >> yeah, the humvee. >> i don't see why that's funny. what's funny about a big gas guzzling car. >> never mind. >> i looked up gundlach. he's smart about certain things. people can be wrong at times. december 2nd. >> yeah. >> went totally bearish. way too late to buy the trump trade at this point. we were quoting something he said earlier. i guess people can be wrong. definitively turned bearish. too late to -- you know what? i kind of like this zero hedge. they take shots at cnbc a lot. >> do you know this guy? >> they take shots at me like you cannot believe. >> he has a fake name. i think he's got a checkered past or something. he has brad pitt's name -- >> from "fight club." >> yeah. but i like some of the

conspiracy stuff on here, and i believe it all. >> joining us is phillip orland. he has 3$365 billion -- >> my fund as a whole. >> dennis gartman, publisher, editor of the gartman leader, also a cnbc contributor. he was our mystery guest that we now have. it's hard to time things. should we be thinking if there's some bumps in the road on tax reform or healthcare, the markets have ran a long way. are you adding to positions still? >> we're sitting 3.5% overweight for equities. we had a 15% run in the last four months. we got a bit of an overbought spike after the state of the union address. drifting back a bit here. we thought maybe we would see a

3%, 5% correction, we're in the middle of that now. we're sitting to see how the fed shakes out next week. wafrnl . >> what do you think, gartman? there's a piece about meaning markets and countries building up foreign reserves. i had to read through that to figure out why that's significant. >> it's not significant. >> it's not? >> no, it's too ter ply es ribl esoteric. i am interested on what's dpg on with going on in japan. something has to happen over there. what is taking place is the replacement of robotics, computerization. it will believe price to earnings multiples in japan dramatically higher for the first time in a long while. i'm bullish on japan. robots don't go on strike. robots don't ask for healthcare. robots don't take days off.

>> you have to take them, bill gates thinks. >> you have to take them? >> yeah. >> we'll see. we'll see. >> the difference between using robots there versus using robots here, over there they don't displace workers because the demographics are so terrible. >> they are and will be the future worker in japan. people don't talk about the fact that the japanese population is going down. it's not going up any time soon. the only way to get production done is with robotics. it will drive pe multiples much higher in japan. >> i was going to ask you on whether or not stocks will go down in the last week because of being overbought. will the robots need humans? >> it may not happen in the united states, but they have no choice in japan. the demographics mandate that. >> and the lack of immigration. >> people never talk about that. but japan never allowed

immigration, never shall. >> everything is three steps forward, two steps back. theenvironment is more pro business, less regulation. but the sausage making will be horrific if we watch it every day. >> you're right. we're excited about the next year or two, getting to 2018 with deregulation, lower taxes, more defense spending, truc infrastructure, but it will be an ugly process in the interim. we already rallied in anticipation of what next year's growth and earnings will look like. >> so we played it forward or we deserve what we got based on animal spirits. >> you're right. so the transition from obama-nomics to trumponomics has gotten us to where we are now. we have taken that on faith. as we look out a couple years, we could be looking at $150 in

corporate earnings. we'll probably do 130 or so this year. inflation will go up. treasury yields will grind higher. >> does 130 inclues corporate tax reform? >> no. as we talk about 150 number, that bill has some expectation for deregulation and corporate tax reform. as we look at treasury yields working their way up to 4%, 5%, we so see multiples. they could go to 20 times earnings. we could be looking at a 3,000 s&p three or four years from now. that's what the market is trying to get its hands around now. we had this huge move, we'll probably consolidate here. the bigger picture looks good. >> don't wait for a pull back. >> we'll get a little correction here. we're sitting 3.5% overweight in equities. we get a correction, we'll put

some more money to work. >> 3% to 5% won't get us back to where all these people that we see -- >> we're not going back to 2000 in our view. >> if it's three or four years from 2368 to 3,000, that's not even that much. >> you're talking about 10%, 11% the most. >> yeah. >> that's a long time without a big pull back. >> 3,000 sounds like a big number, if you look at it, it's a normal progression. >> you will probably do that with rising interest rates at the same time. absolutely. the multiples will expand as treasury yields get up to that level. >> people should not be afraid of 4%, 5% securities. they'll get there. when i first started trading in the 1970s, the long bond had a 14% coupon. wasn't the best of times, but we survived. >> there have been 21 instances where treasury yields have moved up, as we think will happen now.

18 of those 21 interests, stocks did well over the course of the next year. the only three where they didn't is the economy rolled into recession. we're not forecasting a recession. if we can manage that, we'll be in decent shapement. >> is this really an eight-year bull market? it's long in the tooth. it's had periods where it worked off. it shouldn't count -- what's the bull market? 20%? we're almost at 20% since -- >> if you look at global stocks, they've been in a bear market. >> all right. we got you in the light of day, phil, thanks. coming up f you're worried about sharing the road with self-driving vehicles, you're not alone. results from a new survey from aaa coming up next. and at 7:30 a.m., david tepper

will be our guest.

welcome back. a new study by aaa finds drivers

feel unsafe sharing the road with self-driving vehicles. the majority of driver's seek autonomous driving technology in their next vehicle but fear the fully self-driving car. 10% report they would actually feel safer sharing the road with driverless vehicles. aaa says it is urging -- >> oh, god. >> -- a gradual introduction -- >> that person right there much more dangerous. >> i was going to say i feel uncomfortable sharing the road with half the people on the highway. >> most of the people running red lights are probably more dangerous with -- >> a fan almost hit me this morning because he was coming over into my lane. >> i saw a guy yesterday, both

sides of the highway are going like this and he was facing the opposite way on the shoulder of the road. how did you get there? i understand the feeling of -- >> irobot? >> no, you remember dennis weaver in "duel?" if you have a driverless truck chasing you -- >> so you're worried about it being hacked and taken over by an evil force? >> or just some -- i don't know if someone took it over. >> wipe out the machine. >> why aren't you more afraid of somebody hacking in a traffic light and making it green when it should have been red? >> yesterday we were talking about people hacking into the pacemaker. ands a the massive dump showed -- >> the big release of information that came from the cia?

>> that's what i said. >> i stopped listening to what you were saying because i was thinking about massive dump again. >> good, you side tracked him. . i want this guy to be governor of california. peter thiel speaking at the cera week energy conference in houston last night. thiel said he believes the era of global saization is over. >> i think the tide on globalization is just going out. going out on all these different dimensions. if you have movement of people, immigration is getting more restrictive, not just in the u.s., but throughout the western world. movement of trade. i think that's -- i think there's big headwinds there, through goods, movement through people, movement through goods. movement through capital. banks will get more regulated. even movement through

information where there may be headwinds. the internet was designed to survive a nuclear war, but even so, i think there are a lot of regulatory challenges that the silicon valley will be facing from western europe an elsewhere in the years ahead. i think the tide on globalization was just going out in a pretty big way. >> he is a nonconventional thinker. the conclusions he comes to, he's not afraid. >> monopolies are good. >> yeah. silicon valley guy that when to the rnc, a gay silicon valley guy goes to a trump rnc -- so nonconventional guy. he also brought up cramer. >> did he? >> yeah. he said that guy on cnbc -- >> turrets guy. the audience laughs.

>> he called him -- >> he said he always says there is a bull market somewhere. >> that's great. when we come back, producing energy in america. we will get an update on the trump administration's movement in the sector. right now, as we go to break, a look a the winat the winners an losers. safety isn't a list of boxes to check. it's taking the best technologies out there and adapting them to work for you. the ultrasound that can see inside patients, can also detect early signs of corrosion at our refineries. high-tech military cameras that see through walls,

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♪ welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning. we are less than an hour away from our news maker of the morning. david tepper will be our guest host starting at 7:30 eastern time this morning. let's check out the u.s. equity futures. right now it looks like dow futures are down by 15 points. s&p off by 3. the nasdaq off by 5. this is the first time we've seen back-to-back declines for the s&p and the dow since late january. we'll keep an eye on it today. at this point the losses look muted. >> big moves being made in the energy sector with the cera week conference happening in houston. joining us now to talk more

about energy is jack girard. great to see you. >> good to see you. good morning. >> where are we in terms of the price of oil in your view? haas year oil companies cut capex deeply, by 40%, and now big companies like exxonmobil announce increases and expansions. where do you see the price of oil by the end of the year? >> as you mentioned, we're down at cera conference in houston, the energy capital 069d worlof . we have all the energy leaders from around the world gathered here. i would describe it as thoughtful optimism. as you know, exxon made a big announcement talking about the creation of 45,000 additional jobs along the gulf coast. iny most people believe we're at a point of stability. the cost cutting is taking place. they're managing in such a way that we can be competitive

globally even at lower prices. i think a lot of people believe that things are beginning to stabilize. hopefully move forward with more upside opportunity as demand comes back globally. >> have oil companies learned their lessons? the rap against the oil industry, it's a boom or bust thing. when you hear about companies expanding capacity, you worry that companies have forgotten that discipline and go the other way once again and we'll be oversupplied in the market, particularly when it comes to shale. >> in talking to major leaders, they're very disciplined, mindful of the cycles in the industry. they're still focused on costs, controls, management, making sure they're competitive, our costs have come down significantly in the united states. s no lying a down cycle to force you to focus on what your cost structure is. they will also manage costs

moving forward. hopefully there is upside as prices stabilize and as we move forward. >> jack, saudi arabia's energy minister making comments about how opec is not the only one stepping in to make sure it saves the market. what do you take away from that? >> i was fascinated by his comments as we look at it in the global sense. knowing here in the united states with a free market, when there's opportunity you'll get somebody down here in texas, colorado, pennsylvania with natural gas, they'll go back into the marketplace, put people to work, bring more rig counts up. it's fas macinating to watch ho this is balancing out and how we're finding a new equilibrium around the globe, but a lot of that focus has moved to the united states, particularly with those shale plays. a lot of people wonder what is the next step. i believe our guys in the u.s. are well positioned, costs under

control to take advantage of potential upside. does it sound to you like saudi arabia and the rest of the opec nations may get tired of doing what they're doing to prop up prices? maybe they will not be as disciplined moving forward. ch >> that's the big question. i'm not sure i know the answer to that. i describe it as thoughtful optimism, particularly from the u.s. perspective as we look floebl globally, watch other players around the world. there was talk about demand coming back, the increase in demand as economies recover. as emerging nations get become to higher growth rates. all in all there was the talk about the need to continue to invest more because they see that demand continuing to grow over time over the next three to five years. >> jack, great speaking with i. thanks for your time. >> thank you. good to visit with you. coming up, the gop

healthcare plan is in focus. we'll ask republican congressman sean duffy what it will take to pass the new ledge laying our newsmaker of the morning, billionary hedge fund manager david tepper will be our guest. and later, wilfred frost will bring us an exclusive interview with jes staley. you're watching "squawk box" on cnbc.

welcome back to "squawk box." time for the executive edge. president trump will meet with conservative leaders to talk about healthcare today. this comes a day after house republicans released a proposed bill that would replace obama care. paul ryan heralding the legislation late yesterday. >> this is the american healthcare act. it's been a long time in coming. this bill, the american healthcare act, keeps our promise to repeal and replace obama care. it delivers relief to americans fed up with skyrocketing premiums and fewer choices.

>> also on the president's ag t agen agenda, president trump will hold a meeting on the country's infrastructure today. ila nsh ilanmui has more. >> the meeting is closed to the press, we are hoping to get some comment afterwards, still working to confirm who is coming. the president assigned richard lefrak and steven roth to lead a new infrastructure council back in january. the administration has been working a plan to make good on trump's promise to spur $1 trillion in infrastructure spending. dparry r rr rry on the campaignt was to combine tax credits with federal spending to finance the trillion dollars in

infrastructure spending. that would have also used repatriated earnings for new roads and bridges going forward. there are now 69 infrastructure funds. the two biggest are run by global infrastructure partners, one that 15$15. billio8 billion other has 8$8.3 billion. republicans on capitol hill are openly skeptical. john barrasso is worried rules committees will be left out of this, and marco rubio doesn't want to explode the debt. we'll keep you posted. back to you guys. >> ylan thank you. now we will take on another topic. two schools in the d.c. area closed because of the day without a woman protest which we've talked about that a little bit here. i was worried. glad to see you two guys -- two

ladies are in today. >> yeah. >> president trump actually tweeted about international women's day, about 20 minutes ago. ylan, you saw some stuff in alexandria, virginia, some school closures. >> my kid's day care is closed today. it's ironic. you have the teachers staying home from school, totally understand their perspective on that, but a lot of moms and dads now have to stay home to take care of those kids who are not in school. are you working at work or working at home? is work at work valued more than work at home? all worth debating. >> yes. >> i guess they made their point though. >> yeah. >> there's always unintended consequences. i saw some organizers of the event saying, look, implied in this is if it's going to screw

things up, you -- >> nurses and doctors show up. >> yeah. use good judgment. ylan mui, thank you. >> by the way, who is staying with your kids now. >> grandma. >> yea for grandma. >> love grandparents. very, very important. >> thank you. coming up, a new read on jobs. a first look at linkedin's work force report for february. and a quick check on what's going on in the european markets now. fairly quiet picture as u.s. stocks are at flat line when it comings to futures. marginal moves in europe. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every

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welcome back to "squawk box." in global news, china is calling on north korea to suspend tests of missile and nuclear

technology. the ch china is like -- it's sort of there -- they're a bad acting child. you want do do the best you can for your children. >> there's a point where you're a grown up, take care of yourself. >> at some point, you need to put your foot down. >> yeah. >> you can't always -- they're afraid of north korea as we are. russia's oleg deripaska says vladimir putin and donald trump will not live happily ever after. >> we all like to believe in fairytale, but there's a reality. trump and his administration need to prove their capable to

change economic reality in the u.s. new adidas ceo, kasper rorsted is raising the company's targets for sales and profits. the executive also pledging to increase e-commerce sales, simplify business processes and keep investing in the u.s. market. h & r block reporting a narrower than ek pektded loss for t expected loss for the third quarter. the big quarter is the quarter we're in now. that's when they make all of their money during tax season. you can see that stock up by 8.5%. urban outfitters missing earnings by a penny. revenue came in line. the company also anounouncing plans to increase investment on ron line sales. uber ceo, travis kalanick announcing he's searching for chief of rating officer to help him run the company.

re/code says he has hired a search firm and he would like sd cvs exec. >> they need a grown-up is the bottom line. it's time. somebody with gravitas, somebody with experience. >> i didn't watch the youtube video. >> oh, i did. >> how bad was it? >> well, he was dancing in part of it in the beginning. then they get into the fight and the yelling. not exactly what you want to have happen a week after all the issues with the former female engineer who wrote that big blog post. >> i now assume i'm always being recorded and always on film. >> and you still say everything you say. >> i do, but -- >> how about when you're at home in front of a tv? >> that's what i'm alluding to. >> turned off in fake off mode. >> it's listening. it's metadata.

they're not listening to me specifically. i'm not surprised. i now think maybe i'll hook up alexa. what the hell. i was worried about alexa because i thought she'd listen. >> turns out everything is listening in to you anyway. >> my samsung is listening. i have like ten of those. i can't go in any room. remember in 2001, they had to go into the pod and turn it around. then he read their lips. >> what about the bathroom? you can go in the bathroom and close the door. en this you can have a private family meeting. >> we have tvs in the bathroom. >> you do not. >> no. >> i'm in there for so long -- as we move on, linkedin is out with its monthly work force report. according to the findings, january and february were among the strongest consecutive months for hiring since late 2015. the trends are based on 133 million people in the united states with linkedin profiles and 20,000 companies posting jobs. let's bring in dan roth, executive editor of linkedin. dan, this is only the second

month that we're sitting down with you to talk about these numbers. it is kind of phenomenal when you consider 133 million americans have these. what kind of information are you culling? >> for this particular part, we're looking to see who's changing their jobs, when they change the name of their employer, and each month when they do that, we're counting up who's doing it, divided by the total number of users in the u.s. we find information like 1.4% increase in hiring in february. that's on top of january's increase. as you said, we have not seen this since late 2015 or since the summer of 2015. basically right before the election season started. now you're seeing really high levels of hiring. it's happening in particular cities. it's not spread across the u.s. you're looking at places like the sun belt. again, keeps growing. austin, atlanta, houston, dallas. then also what our chief economist is calling the rain belt. seattle and portland also big

gainers. seattle has been the biggest gainer in terms of total number of professionals coming in. it's really -- some of the data is really fascinating. you look at where there's really crazy skills gaps in some of these cities as well, where there are -- you have people who are -- a lot of people working and a lot of employers who are desperate for workers in areas where they just cannot hire. we've talked a lot about skills gap. you hear people talk about the skills gap all the time. it's not the traditional skills gap. it's not s.t.e.m. jobs they're talking about. >> what kind of gaps? >> health care. nine of the ten cities we measure, health care and health care management are the biggest gaps. things like billing, primary care doctors. they cannot get people to fill these health care jobs. >> those particular cities with the dearth of workers, do you find people are willing to move? is the pay higher? >> the question is if you have these skills and you -- there are certain cities that have too many people with these skills. if you live in a city where the skills are in abundance, you

should really think about going to one of these cities where they are in high demand. the problem is these are also really expensive cities. so if you look at what the skills are in demand, again, health care but also teaching, retail management, restaurants. these are not super high paying jobs. the places where the biggest skills gaps are, are the places that are most expensive. >> so it's the fault of the employers. you're not paying enough of a premium to make it worth moving into these expensive areas. >> san francisco has the largest skills gap. used to be houston. we're now seeing san francisco is the largest skills gap in the country. it's all of these low to mid paying jobs in areas that are incredibly expensive. >> you mentioned that this is the biggest jump we've seen in hiring since the end of 2015. >> since summer of 2015. >> so how long back to your numbers go? >> to the beginning of 2015 is when we started. >> what i will say is we had

marty on yesterday from paychecks, the ceo. he's seeing the same trends geographically. so it does match up with other data points that we reference. >> and the question is how much of this is politically motivated. are our employers feeling like they understand what's going on, that they can start hiring again. were there some uncertainties they were holding back on hiring. it's unclear what's going on, but it matches up against the political calendar. >> how many more months of data do you need to be convinced it is politics and businesses are, in fact, feeling better? >> i think we -- my guess is the more we see every month, we'll get a better sense of exactly why this hiring is going on. it's not just politics. some of the biggest areas in hiring are oil and gas. if you look at the rising crude prices, it matches it pretty perfectly. there was a 50% increase in hiring in oil and gas in january. a 24% increase in oil and gas in february. >> that is exactly what we've seen with oil prices too. >> exactly. >> dan, thank you very much. great to see you. >> thank you. all right.

coming up, billionaire hedge fund manager david tepper will be our guest host in a little over 30 minutes. we're going to get his take on the markets, his fund's biggest investments, and anything else he's willing to talk to us about. and don't forget, it's jobs week in america. we'll get the adp private payroll report at 8:15 eastern. that's a pretty good data point for what happens, sometimes, on friday. we'll be back. ( ♪ ) upstate new york is a good place to pursue your dreams. at vicarious visions, i get to be creative, work with awesome people, and we get to make great games. ( ♪ ) what i like about the area, feels like everybody knows each other. and i can go to my local coffee shop and they know who i am. it's really cool. new york state is filled with bright minds like lisa's. to find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. search for our page, what's critical thinking like?

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woman: on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. and each job created by the energy industry supports two others in the community. altogether, the industry supports over 9 million jobs nationwide. these are jobs that natural gas is helping make happen, all while reducing america's emissions. energy lives here.

it is another "squawk box" exclusive. billionaire hedge fund manager david tepper joins us this hour, and there is a lot to talk about. we'll find out why he trimmed his stake in apple and if he's still long stocks after this record run. plus, we'll get his take on

president trump's economic plan, the fed, the ecb, and much more. we'll also be hearing from congressman sean duffy on the republicans' plan to repeal and replace obamacare. the second hour of "squawk box" begins right now. ♪ live from new york, where business never sleeps, 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 and melissa lee. we're less than 30 minutes away now from -- oh, we do have the clock. we have the tepper clock. we need more decimal places. what part of a second are we waiting? >> hundredths of a second. >> we need hundredths. why do just seconds when you can do hundredths of a second? we have an interview with david tepper, founder of appaloosa

management. we're going to talk politics, investment, and much more. futures at this hour have worsened a little bit. would that be three straight days? >> it would be. >> i read the journal -- just totally talked me into this. "wall street journal," editorial. >> talked you into health care? >> not going to get any better than this. i was resisting because i hate getting tricked into a huge new entitlement, which is what happened. but that's the truest thing ever said. there's no way to take it back. you can't. you can't take it back. the things it fixes and changes and restructures. the journal points out it's the biggest improvement on the way medicaid is administered. medicaid is supposed to be for poor people. instead, it's turned into, you know, everybody's getting it. it's almost like -- >> look, the problem that

obamacare did not fix and that this doesn't necessarily fix either is bending the health care cost curve. you've got to make health care cheaper. >> you do that in the second rerun and third rerun. >> the big problem you have with health care is trying to find a way to make it more affordable. >> you can't do it with 51 votes. do this first. get rid of the mandate and a lot of the worst things about the law that's causing it to implode. >> health care far outpaces inflation. it has for decades and decades. that's why we're in the problem we're in now. donald trump's tweet yesterday talks about finding ways to negotiate on some of these drug prices or gives us a hint there will be differences coming from that. >> i thought he said he was behind it 100%. but the journal points out that it was kind of a tepid -- he said, yeah, but i'm leafing vin up to you guys. >> congressman brady came out and said this is the president's plan yesterday. said he's behind all of this. but yes, you're right.

it was not donald trump himself saying that. >> all right. melissa? >> here's what's making headlines at this hour. caterpillar shares are lower by about 3%. according to a "new york times" report, a government report accuses caterpillar of deliberately committing tax fraud to prop up its stock price. no charges have been filed against caterpillar. it told the times it had not seen the report and could not comment. we are a little over an hour away from the february adp report on private sector payrolls. economists think the u.s. economy added 188,000 new private sector jobs last month. that compares to 246,000 in january. china posted its first trade deficit in three years. it came to about $9.2 billion thanks in large part to a 38% jump anymoimports. now to politics and today's washington agenda. the president plans to meet with a group of business leaders at the white house to discuss infrastructure. those in attendance will include

some leaders in real estate, management consulting, private equity, and other sectors. during his campaign, president trump said he would push for a $1 trillion infrastructure program to rebuild airports, bridges, and contribute to other public projects. the president will also meet with conservative leaders to talk about health care. this comes just a day after house republicans released their proposed bill that would replace obamacare. house speaker paul ryan heralding the legislation late yesterday. >> this is the american health care act. it's been a long time coming. this bill, the american health care act, it keeps our promise to repeal and replace obamacare. it delivers relief to americans fed up with skyrocketing premiums and fewer choices. it moves us away from the broken status quo. >> we will be hearing more on this topic in just a few minutes when congressman sean duffy joins us. the markets pulling back

once again yesterday. joining us now is the chief investment strategist for the americas, a deutsch asset management. and keith banks from merrill lynch. he's responsible for more than $2.5 trillion in assets. guys, good to see you. i want to start off with health care. that's a sector you both like. certainly it's in the news between repeal and replace as well as the tweets on drug pricing. so why would you recommend a sector that has already run this year, second best performing sector on the s&p year to date. it's got all these political headwinds right now. >> 2016 wasn't such a great year for health care. but yes, 2017 started off well. we've been advising to own it. when we look at the health care sector, the demographics are still there pointing toward demand growth. importantly, there's been supply. there's been channellillenges o pipelines pipelines, but this is an industry that innovates.

it plays a big role in bringing down costs by being more efficient. this is all part of delivering health care in a more efficient way. >> what areas of health care are you seeing value? >> well, we like the sector generally. i agree with some of david's points. there's just a very powerful demographic trend with the ageing baby boomers globally that's going to drive the demand in this industry, not to mention the fact the biotech area, which has done quite well this area and has been one of the drivers of the health care performance, a lot of innovation, a lot of new drug discovery. that's going to continue to be a very positive dynamic as well. >> it's interesting because the action in biotech yesterday, it was down well more than 1%. 1.5% or so. still, it was just $6 or $7 off the 52-week high. at this point, what draws that higher, especially when you have donald trump just, you know, one tweet takes it down 1.5%? >> the health care sector has become a big part of the economy. it's going to stay involved in politics for some time.

i think this is part of the opportunity. this is why the valuations are demanding relative to interest rates and growth potential. look, one of the things i think is interesting it we're talking about the fed likely hiking next week. some people are fearful about inflation. i don't think the fed is too far behind the curve. i don't think they need to hike more than two or three times. what causes inflation is when governments interfere with markets. i think health care is one of the only areas where we see some inflation. and as long as we let markets get more involved in that space and companies innovate, i think that's an area where some of the inflation pressure comes back, even on the pricing we see with drugs. >> you guys both mentioned innovation. the question becomes if we do find ways to tackle the cost curve, it's probably going to be allowing the government to negotiate drug prices or to get involved and set more prices. does that, to you, run the risk of killing innovation? >> look, it depends at what level and to what extreme. if it swings too far in that

direction, i do think it could pose a risk. but we got to just kind of let it play out. again, there's such a powerful underlying dynamic in my mind that's going to drive demand for health care products across the whole sector. we'll keep an eye on that. there's always things we got to be watchful for. that would be one. right now we're not overly concerned. >> what would t.o.r.t. reform do? because that's down the road. what would interstate -- you know, opening states so there's more competition. the first thing you got to do is just -- that's what they were elected for, to get this thing off the books as much as you possibly can. but not to leave people hanging in the lurch, right. initially, do you think this gets done the way it is? you think it goes through? if you're going to invest in health care stocks, you have to have an opinion, probably. >> look, it just is being roll the out. we're trying to sort through the details of what's being proposed. it's going to be important

overlay on what's happening in the industry, obviously, so we have to keep a close eye on it. i think it's early. >> it doesn't go, no tax reform, and in 2018 the republicans got nothing done and are losers. >> i think they're going to get something done. with all big policy, it's an evolution, not a revolution. i think the providers are probably not going to be subject to dramatic overnight change. also -- look, on the topic of drug pricing, i think if they get heavy handed on that, even with using the bully pulpit, all you're going to do is cause these companies to pull back on r&d. if you tell companies they're charging too much, the first thing they do is pull back on investments, not profit. >> you're overweight u.s. equities right now? still don't like bonds at this point. >> yes. >> this first back-to-back loss yesterday and the day before, since january, is it because of the fed meeting? is it because of what's going on with policy and health care? what's your feeling of where we are in the markets?

>> it's all of the above. the u.s. -- the s&p is up over 6% already this year, total return. what we feel good about, there's a lot of focus on president trump's initiatives, and they're important. but what people have to remember, we have a u.s. economy that's going to grow, in our minds, about 2.5% real, 4.5% nominal. global growth is accelerating. inflation is in check. david mentioned it before. one thing we watch is average hourly earnings because wages drive inflation, ultimately. it's a bit of a goldilocks in that you've got growth in jobs but not too accelerating. >> doesn't that frighten you to say we're goldilocks? doesn't this complacency, this willing to say it is goldilocks concern you? >> complacency concerns me, but what makes me feel good, makes us feel good, are the underlying fundamentals. we think earnings this year for

the s&p could be $134. that's a double-digit growth rate, which in our minds keeps valuation neutral. there's a global acceleration of growth. there are things we got to keep an eye on. complacency is one of them. there are other risks that can come. we have important elections in europe that can matter. having said that, we think the underlying fundamentals are still positive. as a result, we're still overweight equities, underweight fixed income, but still own fixed income as a diversifier. >> you look at that vix chart, do you see glass half full or glass half empty? meaning, it's great people can protect at a low cost, so they're more likely to stay long, or does it mean markets are too complacent? >> i think later in the year, in the summer and autumn, we'll have more challenging moments. i think the vix will go higher from here a thet a monthly basi. i think we're on the right track earnings growth wise. to get to mid-130s, 140, we'll need the tax benefit. when i look at the market, i

think that there are parts that still make sense. there's cyclical recovery, interest rate normalization. we like the growth prospects and valuation in health care and tech. one area where there may be too much complacency is probably the whole energy, industrial, materials space. i don't think there's inflation coming. i don't think growth is going to be booming. what we would do is stick with more of the growth stocks and u.s. financials. >> whoa, whoa. >> what are you freaking out about? >> 25 seconds ago. president trump tweeted. the linkedin work force report -- >> which we just talked about. >> cutting edge. >> january and february were the strongest consecutive months for hiring since august and september of 2015. >> think he's watching? >> i don't know. where'd that guy go after us? did that linkedin guy go somewhere else? >> he's probably down in the lobby. >> he's still here.

>> that's a "squawk" exclusive? >> it's our thing we just created a month ago with him. >> well, well, well. there was an article. more "squawk," less "morning joe." it's really more the original "morning joe." >> meaning you. >> less the faux "morning joe." that other guy whose name is charles. but he couldn't take charles because of chuck scarborough. >> oh, really? i had no idea. >> he had to take my name. anyway, there it is. the president is on the right track now. >> someone's watching. on the right track. if we're doing business, might as well be watching business news, not them arguing over there with a bunch of liberals. >> it's arguing over here. >> we're not arguing. we're on the same page. i'm going to read that again. anyway, coming up, congressman sean duffy talks jobs, tax rc

reform and obamacare. and then it's tepper time. the billionaire hedge fund investor joins us for a "squawk box" exclusive. stay tuned. you're watching "squawk box" on cnbc.

welcome back, everybody. president trump formally backing the house republicans' health care plan, but some conservatives are concerned the obamacare replacement comes at too great a cost. joining us to share his thoughts on the republicans' american health care act is congressman sean duffy. he sits on the house financial services committee. sir, thank you for joining us this morning. >> thanks for having me on. good to be with you. >> it's only a day that this has been out and been bounced around, but there have been some conservatives that have come out and have been staunchly opposed to this, saying this is obamacare-light. what do you tell them? >> when you put any plan out, you're going to have people on the left and right who complain because they didn't write it. no product is perfect for everybody. but what we're doing is not the philosophy that says we're going to pass this bill so you can find out what's in it. it's been introduced. you're going to see a lot of km chatter on both sides of the aisle. we'll take the best ideas from both sides and get a product where think can make markets

work again. you have a government that's set up these exchanges with heavy mandates, heavy taxes. we want to move to a system where actually we can let a market work where we give people an opportunity to choose health care plans that meet the risks in their lives and the price points they can afford. we know that markets actually work to provide better services, but also to reduce prices. that's the plan here. again, you have some on the right who will chirp at us and complain about the product, but in the end, i think we're pretty close to where we need to be. we're going to hear their opinions and views. we'll tweak the bill. this isn't the final product. >> it sounds like a very reasonable approach that you're going to take the best ideas from both sides of the aisle, but when it comes to health care, there has been no sort of agreement on any way shape or form over the last eight years or so. this has been a highly charged environment with people kind of digging in their heels saying on the far right, no, we shouldn't have any sort of health care plan, that we should repeal the

entire thing. on the left, saying forget it, we're not going to negotiate in any way shape or form with the republicans that are there. where is that common ground? >> so first offer, i think there's wide agreement that obamacare is in a death spiral. on average, we've seen health care premiums go up 25% alone this year. we've seen deductibles incredibly high. we have a product that's unaffordable for so many people. so in the end, conservatives or those opposed to the bill will be confronted with the idea that either i'm going to vote for a plan that most everyone agrees on, or i'm going to vote no, and if i vote no, i'm voting to keep obamacare in place, which is in this death spiral. i think as people analyze, you know, what product we have today and how they can improve it, they can get on board and be supportive. health care is like an aircraft carrier.

it takes a long time to shift and have a transition period to get from obamacare to this new plan is going to take a few years. to think that you can snap your fingers and absolutely repeal obamacare tomorrow and not massively disrupt the health care markets is insane. you need a bridge to get to the new plan. even obamacare took several years to implement. insurance companies are writing plans under current law. you can't just automatically shift it and expect them in five days to come up with a new plan to offer to citizens. >> congressman, eight years ago when we were all trying to grapple with what to do with health care, the democrats came up with their plan -- republicans are trying to figure it out too. i don't know. maybe they want health savings, maybe they want pre-existing. maybe they want a lot of the same thing, but they didn't get to be part of that process. but they did want to try to do

something. you've got to convince maybe some of the far right guys. and i understand what they're saying. once you do an entitlement, you can't take it back. they feel like they were tricked into this big new entitlement program and this is just going to extend it. but back then, if the republicans had done it, they probably would have come up with something then, some kind of tax credits. you had to, to cover people who can't afford it. they're in this ideological -- painted into this corner where they aren't going to do anything that costs anything. they want to go back to where either you got health insurance or you go to the emergency room. that's not an option now. do you think they'll eventually see this? some of these guys sound like they're totally in concrete on moving on this. they're angry. are they just blah, blah, blah? will they do it eventually? >> we're in a unique situation right now that we haven't been in for the last eight years. we have a president who in a lot of these members of congress'

districts is very popular. when donald trump starts to weigh in with different members of congress or different senators and their constituents start to move -- and i think they'll move toward where mr. trump is, i think those who are in opposition will soon come over to be supportive. trump can come at you with a hammer or a tweet that can be pretty powerful with your own constituents. >> in terms of support within your own party, congressman, i appreciate you being optimistic about finding that support within your party for this bill, but already there are a number of groups that have come out against this. conservative groups. the cato institute, heritage action, americans for prosperity and the aarp. in your view, are they just exacting their political leverage in order to get certain things into or out of the bill, or is this a source of concern for you, that there isn't that

support amongst conservative groups for this plan? >> listen, i think they're voicing some concerns they have with the current package. we have an opportunity to hear their concerns and to make the product better. that's what the legtdiislative process is about. actually, i think this is a really healthy process. you want people to come out with points of disagreement. when you have that tension in congress, the sausage making factory that goes on here, you end up with a better product. so this is a good thing. i'll tell you this, i would hope the democrats come to the table and have a conversation with us about how they want to improve this bill as well instead of being just the hashtag resistance. say, no matter what you do, we're not going to participate because we think we can extract political leverage. >> they're not coming. work on your own people. get your own guys. >> be hopeful this morning. >> don't even waste your breath. >> you've said already this was a process that took a very long time to put obamacare into effect. it's going to be a situation where you're probably going to have to go to reconciliation.

you're looking at a ten-year plan you put in effect that's going to take years to implement. are we ever going to get any certainty into what to expect in our health care market? >> i think we are, yes. you know what we're trying to do here. you've heard the three buckets. this is reconciliation, which we're dealing with budget and taxes. this is phase one. dr. tom price, with the regulatory front he can deal with at health and human services, he's bucket two. we'll have to come back with a third bill, hopefully this summer or fall that will do the rest of it with t.o.r.t. reform and competition across state lines. we're going to give credit to the market. >> congressman, thank you very much for your time. we're just minutes away from another "squawk box" exclusive interview. david tepper of appaloosa management. lots to cover in just a few minutes. stay tuned. time now for today's aflac trivia question. who founded snapchat? the answer when cnbc "squawk box" continues. leg. yeah looks like a real nasty moving back in with his parents. what? no. i just broke my leg.

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the answer, evan spiegel and bobby murphy. up next on "squawk box," appaloosa management founder david tepper on the trump presidency and the market rally. find out where he's putting money to work and how high stocks can go despite this record run. his exclusive interview is next right here on "squawk box." 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.

♪ good morning and welcome back to "squawk box" here on cnbc. we're live from the nasdaq market site in the heart of new york city's times square. among the stories front and center, the february adp report is coming up. forecasts call for 188,000 new private sector jobs compared to 246,000 in january. mortgage applications rose 3.3% last week according to the mortgage bankers association, both refinancing activity and new purchase applications increased even as average 30-year mortgage rates increased slightly to 4.36%.

shares of retailer children's place are on the rise this morning. it reported quarterly profit of $1.88 a share, well above consens consens consensus estimates. it also reported better than expected same-store sales and doubled its dividend. legendary investor david tepper is our guest anchor this morning. you come with high praise from most of the legendary guys in the field who say you're like in the zone or have been in the zone. well, you have been. 25% a year or whatever it is. i know you don't release that. previously when you've been on, we've had like a tepper tantrum and a tepper taper. do you have anything today that's going to be easy to put on cnbc.com that begins with "t"? your overall theme, like a tepper, i don't know. >> tepper something. >> if we think of it as we go along, it would be good if it began with a "t."

overall in a very broad sense, can you just wax eloquent about where you think we are right now in terms of -- >> the economy, market, what are you asking? >> let's start with the stock market. if it's lower today, it's three straight days after a huge run, which has faced skepticism the entire time. it's gone too far. has it played forward? has it paid forward at this point, in your view? >> first thing, i have to say congratulations to becky for her baby. >> thank you, david. >> how old? >> 5 months yesterday. >> what's your baby's name? >> hailey. >> second, i have to recognize it's international women's day. probably why melissa's on the set. >> i fit both international and women. >> two buckets. have to say hi to mom because she always likes that. >> hi, mom. >> are you stalling? >> i'm trying to think of what i'm going to say to him,

exactly. well, listen. the market -- you know, it's on a multiple basis, it's kind of full. on the other hand, every region of the world is growing. china is growing. it's synchronized growth around the world, which is pretty unusual in the last ten years. actually, since before the crisis. china, europe, japan, and us are growing. the day with he three republican houses, that was the day there wasn't going to be another regulation put on the economy. that alone releases animal spirits. nothing else happens, that releases animal spirits and upticks where earnings and other things should be. so listen, i don't think the market is cheap by any stretch of a multiple. you can't say that. on the other hand, with that backdrop of growth around the world, with the potential that we'll do other things here, with

the -- you know, with the sugar that is still being put on by the ecb, boj, and let's face it, the fed is way low where they should be by old tailor rules or any kind of conventional monetary policy, still incredibly easy with full employment and inflation that's getting to their target. i don't know. you can't be short in that kind of setup. i'm not suggesting the market is really cheap, but listen, it's hard to go short when you still have the, you would say, drugs being given. i think that's what you would say. the punch bowl is still full. whether different people are heroin addicts at different feds around the world or cocaine users, i can't tell you the story. maybe they're just drunk. >> you watch us, i know. >> sometimes i watch you.

when cnn doesn't have anything interesting. i'm kidding, joe. i watch you every day. >> if you do, i was just gratified to hear you say that some of this move we've seen so far could be justified just from not adding more regulation, much less getting rid of some. case in point was in telecom. there were like six or seven things that were going to happen that now just have been shelved. if you start getting rid of some of them, even if the tax reform, even if obamacare, even if there is some hesitation, we may already -- >> say you're a small business guy in the united states of america, or any business guy. you had regulation under bush. there was a bunch. i can't remember the number. then obama doubled those regulations. the day you had the three houses, that was a day there was not going to be another regulation. people say people are holding back because of uncertainty.

bull shih tzu. when you think about small business, what's the downside? what's the downside here? i'm not talking about the market. from a business standpoint, not one more regulation is happening. and potentially you have tax cuts coming your way. so unless there's an upset, you know, in the administration, something really bad happens there and that's not smooth, sort of passing on the baton, which i don't i had think is go happen, unless that happens, there's nothing to get in the

way until potentially inflation starts picking up and people start getting worried about that. which, by the way, can happen a little bit if the fed doesn't respond to some of the tax things that may happen. the fed has to respond. hopefully the ecb turns the corner a little bit. you're going to need some balanced increases to keep this economy from getting out of hand on the inflation side, i think, at some point. i know people don't think there's going to be inflation and all this stuff again because everybody remembers the last ten years like they did, you know, from investing back in 2012. they were afraid to do anything. but the market, you know -- sometimes you have to go against that curve. so i'm not -- listen, i haven't been negative about the stock markets. i was guarded about the stock markets. i was a little nervous about potentially earlier this year about trade friction with china. i think they've gone past that in this administration. so that big risk is off the table. hopefully they'll get some kind of settlement with mexico, which

concerns me from other standpoints. they watered down this immigrant stuff, which i thought was really dangerous a little bit from a business standpoint. from other standpoints, we can talk, but we're talking business and markets. but that's been watered down enough to make it, you know -- from a business standpoint, i would say palatable. from a personal standpoint, that may be different. i don't want to speak from my personal standpoint. >> are you short bonds right now, david? >> you bet your hiney. >> i asked you that because when you say valuations are kind of full on equities, some might argue that valuations aren't so full because interest rates are so low. but here you are, you're betting that interest rates are going to go higher. at the same time, you're saying they're fully valued right now. when does this turn happen? >> listen, you are so far behind, in my mind, the curve now for the potential upside, downside. we can talk about the fed. we can talk about the ecb. everybody still looks on the

negative side of life on everything for some reason. almost ten years, nine years after the downfall. it's not just a negative side of life. you have to be on the positive side of life. for instance -- and i'll answer your question about interest rates and stuff. let me just answer that first one. if you have interest rates go higher here, where does it matter? i don't know where we are as we sit here. let's say we're 2.5% on the ten-year. you're sitting with an 18 multiple. wake me up at 4%, okay. just wake me up. you can call my number. i'll give it to you. you can wake me up. we got a lot of room until we have to worry. if they do the tax stuff and you get a lot of things and inflation looks like it's picking up, it's one of those things. i think this fed has to get really nervous at some point if

you have some of the fiscal stimulus you're going to get. yellen the other day, i think it was on friday in chicago, she gave a speech where she says in a few years we have to, you know, the real fed funds rate has to be 100 basis points. that would be on top of inflation. that's not going to happen in a few years if you get this kind of stimulus. that's the fallacy. so that's the one thing the market has to get ready for. you could have -- doesn't mean the market won't go down, you won't have a correction or something like that. i can't see it really falling in the backdrop of growth and still very easy monetary policy and such. >> you think that the fed is going to raise much more quickly than they have been? >> i personally think the fed should -- i think they will raise more quickly and for sure i'll bet if you get some of the stimulus, they have to raise more quickly. they have to raise more quickly. so it's a question -- then it's the probability if you believe they'll get this stuff through or not. i think this whole tax stuff

should get through. we can talk about some of the stuff people say is harder. i think that's also a bunch of bull yorkie. >> i'm getting a lot of tweets saying let david swear. i'm not going to stop you. it's cable. i think we can get away with it. >> my kids will say, why did you swear on tv? >> can he -- how far can we take it in terms of swear words? >> not as far as you. >> okay. they draw the line there. >> what i was going to say about the negative stuff that's interesting, you see a lot of stuff. we're concerned about the french election. think about the french election. everybody is scared to death about the french election. so there's odds out there and because of brexit, trump, et cetera, and they mention italy for some reason. i don't know why they mention italy when italy went

anti-nationalist. let's look at that french election. so people are so nervous about this french election affecting markets, particularly in the euro stocks, particularly in the european curves and how people are positioned. well, yeah, le pen is at 26%. by most polls, she's way behind, she's going to lose. 15, 20 points behind on the polls, depending what poll you want to look at. but people are focused on that. what happens if it goes the way it's supposed to go? who was there before and what will you have? you had hollande there before. hollande was a real socialist. like you would say obama on steroids. now you're going to get reforms

there. you can have a surge forward in france, but you don't have this -- the ecb is like, i don't know, he's deaf to that stuff. i brought the ecb's last statement. they said something like, the risks remain tilted to the downside and relate predominantly to global factors. that means factors outside of europe. everything outside of europe is freaking doing well. japan is doing well. europe is doing great. i don't know what draghi is going to say. alternative news? what is that stuff people say now? >> fake news. >> yeah, fake news. fake ecb news. fake facts, whatever it is. he has to make something up if he doesn't want to change his statement a little bit.

there should also be in his statement, which i guarantee he's not going to do because of the way they are. at least i don't think they'll do it tomorrow. he should also say the upside and the downside. if you get this french election going the right way, already you have good growth. you're at minus 40 basis points. >> sounds like you're long european equities. >> i am. i could lose my time, but that's life. there are upsides people aren't recognizing that i don't know why they're not recognizing. not in bonds, not in euro stocks, not anything in europe. it's a probability game to me. you have to be where the right probabilities are. >> valuations are much lower compared to the united states. >> much lower. much, much lower. it's kind of an interesting thing. >> barry sternlich was here yesterday and said he likes the european equities. >> i love barry. not in a real love sort of way.

>> he talked about you yesterday. >> man love. platonic man love. >> you know what? it's all about money. normally i would say we're not going to do any commercials because we have you. but i think we can really charge a lot because you're here. >> what commercial are you doing? what's it for? >> you want to give us money instead? if you pay for the commercial. >> take it easy. calm down. >> we're going to take a quick commercial break. then i think somebody else is going to get to -- i'm going to switch seats. you're going to come over here. >> no, no. we're going to do it from here. >> okay. when we return, stick around, because we have much more from our special guest, david tepper of appaloosa management. a programming note, tomorrow on "squawk box," epa administrator scott pruitt will join us for a first on cnbc interview. "squawk box" will be right back.

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welcome back, everybody. we're speaking this morning with david tepper, the founder and president of appaloosa management. $7 billion under management and a very strong track record. david, thanks for being here today. we've been talking broad markets. we want to hear more on that. we'd also like to hear specific picks from you as well. just according to some of the most recent s.e.c. filings, you

have some large bets in the pharmaceutical space, companies like allergen, pfizer, and mylan. why these stocks and what happens now that we have this new health care plan that was just released yesterday by the republicans? >> well, the health care plan doesn't really touch pharmaceuticals yet. >> we did see a tweet from the president yesterday suggesting we're going to see lower drug price. what does that do? >> is that the first time he tweeted? >> no, but it was enough to take down some of these stocks by over 1%. >> listen, we've been through what can be done. there's actually a fair amount -- there is some competition there already. there's this patent law, but not to get into that. i think we thought in the fall the pharmaceuticals went down way too much. so that's why we made the bet. the bet was predominantly -- was probably leaning allergan. the reason why is i was watching "squawk box" and saw the botox job that happened on joe and thought it was really good. i thought i should buy the

stock. >> don't make me laugh. my forehead will rip right down the center. >> anyways, no, listen, these stocks got fairly cheap, particularly allergan. we had owned a large amount of a company. we've known that space for a long time. i think it's like 40% of their business that's not affected by regulation, that part of the busine business. we thought that part of the business, taken down with everything was, was just absolutely crazy. that was the bulk of our position. the multiples were too low. for some reason, because it was tied in somehow with the valeant, the nonsense there, i'll say it that way, it always gets kind of fallen when those

stocks get hit. i don't know why. we bought that. the stock is up a bit here. we still own quite a bit of it. >> i was going to say, have you changed your position? because you were talking about some of it in the past tense. have you sold some of that position? >> we have probably 80% of our position still. we won't own -- >> allergan? >> 80% of the position we had. >> so you've sold off some of it. >> yeah, not to have -- i think we bought it at like 190, got up to the 240s. not to sell some of it, just managing our books. if it went up higher, we'd sell more. it's just a way you manage a book. whatever it is, you're not supposed to own the same amount. so it's actually interesting. i don't know, we may own the same dollar amount as we did before. >> just a smaller number of shares. >> because the stock is up 20%. we probably own pretty close to the same dollar amount. so it's actually kind of

interesting in that respect. >> some interesting turn of events maybe since your position was taken. the ceo is gone. patent ruling against them, the ms drug. >> can you say screwed the pooch? >> you just did. >> teva was not the best position when we took it. some of that may be linked to border adjustment and how that company may be perceived affected. some of it may be execution. teva looks pretty cheap right now. i go back and forth on teva. some days i say it's really cheap, i should buy more. some days i don't know why the look at it on my book, to be quite honest. listen, it was note the best position we took. >> do you remember one of the last times you were on, you had

this major macro all about china, how the flows were getting likely to reverse. did we see that? is it still something that affects your overall outlook? what did you say back then and how did it -- >> it was just how the reserves were coming down. i think there's been a stabilization of those reserves to a certain extent. they always have reserves come down around the new year. i think you're having a stabilization of those reserves. you saw the trade deficit went the other way. i don't know if they played with it a little bit. >> futz is good. >> it's actually so good in china it's moving that way. it's one of those two reasons. >> is there any other major seat change, other than going from regulation to deregulation? is there anything else that looks that macro for you? >> like i said, the big event that will be coming up is the french elections. >> you don't they le pen wins? >> i don't think she wins, but

listen, i can't go -- as you like the phrase, balls to the walls. >> that phrase is fine. >> i know you like that. >> blow your wad is fine. >> i'm not saying that. >> that's a musket. that's with a gun. >> i'm not saying anything like that. i'll stay with the first one. >> you're allowed to say that. >> what is your dollar amount long european versus dollar amount long u.s. stocks? are you more long european versus u.s.? no? >> we're more long u.s. stocks. but the bigger bet is on -- listen, it's all kind of the same sort of bet. if we're short u.s. bonds, we're betting on a stronger economy here. >> right. >> okay, that's the bet. so we're betting on strength one way or another. strength here and around the world, one way or another. the only thing on the horizon -- different things can happen in france. once you get through there, there's nothing else in the year. you have smooth sailing. the chairman election is just upside to me.

schultz, there's probably more european integration. he's leading merkel right now. he may actually spend physical money, which will push it even more. all these things -- those things would be all negative bonds if you want to be negative bonds. listen, bonds are really hard to own. the yields are really low. in europe, the german five-year was like minus 45, which is just insanity in some sense. but it's not insanity because they're buying bonds, there's technicals in the market. there's all kinds of other things in the market. it's insanity on any kind of economic basis. part of that is caused by draghi and his gang over there. whether they want to keep causing it, keep siiaying thing are negative. maybe these feds should be leaning to the positive side. that may help the economy, mr.

draghi. so that's an idea. >> we're going to continue this conversation. >> which is good. into the 8:00. >> david is our special guest, the head of appaloosa management. in the meantime, check out the futures very quickly. you can see they're flat. >> but they've come back quite a bit. >> they have come back from being down about 20 points, i think. 8:15, we get the adp payroll report. market reaction straight ahead. uh, yeah. it's over, larry. what is?

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a "squawk box" news maker. billionaire hedge fund manager david tepper on the markets, president trump, and his top stock picks. only on cnbc. >> listen, i don't think the market is cheap by any stretch of a multi. and you can't be short in that kind of a setup. breaking jobs news. the adp employment report just minutes away. we'll bring you the numbers. plus, barclays ceo ceo jes staley straight ahead. live from the most powerful city in the world, new york, this is "squawk box."

good morning and welcome back to "squawk box" here on cnbc. i say that with confidence because i think you were probably watching before the break. the nasdaq market site is where we are. that's the setting. i'm joe kernen along with becky quick and melissa lee. what do you think of this place? >> it's much nicer than the other set in jersey. and the green room, which is great. >> green room is great, isn't it? >> it's great. it's a great color. >> it's almost like we're a real tv show. >> joe, don't get crazy. >> pseudo professional. >> professional joe kernen. >> stfu. we're up now. we're up on the -- two can play that game. >> go ahead. i don't care. >> now we're up three on the dow. i'm not saying it's definitely because of you, but you made me feel a little better. i have actually made that case,

that just deregulation can get us where we are. if we get anything else, it could almost be icing on the cake. >> i told you, you seem smarter this year for some reason. i gave you a compliment the other day. >> i turned 40. >> 40? you say 40, i am. >> more from david in a minute. first to this morning's top stories. the february adp employment report due in about 15 minutes. private sector payroll forecast to rise 188,000. we're also watching oil prices. crude dropping on new api data that showed u.s. crude stocks rose more than five times forecast last week. later this morning, we'll get official inventory data from the u.s. energy department. let's get back to our special guest this morning, legendary investor david tepper. david, we've been talking some individual names. just based on the s.e.c. filings, it looked like you

trimmed your position in shares of apple. fair to say? >> i think that's right. >> we saw this at the same time warren buffett announced he tripled his position. are you seeing something that you think he's missing? >> he made a better trade than me. the stock is up since we sold -- trimmed it. i think when we trimmed it, we were probably -- like i said, we were concerned about what china policy might be in the beginning of the year. there was a lot of rhetoric and things that were -- it was the only thing specifically -- well, i don't know what will happen with border tax. it wasn't exactly as trump said. we're waiting for that shoe to drop with china, which it never did for different reasons, which is probably good over time because it's complicated. unfortunately, it probably trimmed a little bit, worrying about that because of apple's exposure in china. listen, it's fine. i don't know where the stock is

now. >> 139.05 this morning. >> i won't be adding at 139. i probably should have added -- we sold at better levels than i guess he added the last quarter or whatever. >> how much now? >> i don't know the exact position. >> 139 is a little too rich. >> it's not something -- i won't be adding at 139. i can tell you that. >> are there certain policies or proposals out there that you say, you know, this creates a short opportunity or long opportunity, for instance border adjustment tax. we see headlines about that. the retailers have had a really hard time. do you look at that sort of political force when it comes to putting on new positions? why are you smiling? >> we look at everything. >> so how do you look at border adjustment? >> i look at the aca. i know all this stuff. i don't know know it, know it. >> let's choose, then, border

adjustment tax. what's your position that you put on because of it? >> let's look at the -- if you look from a trump perspective, it's probably a very elegant way to do some of the trade stuff that he might want to do, even though the net/net at the end of the day may not be that much of an action. let's talk about border adjustment. if they do it in an intelligent way, they'll spread it out over five years. so i listen to some of the people talking about the winners, the losers, and let's think about if you spread it out over time, and you can spread it out over time by different mechanisms. if you do it that way -- let's say there's 20%, right. let's say the currency adjusts 12%. fair?

let's say you do it over five years. well, the markets don't wait for the actual thing to happen. so maybe, if it is a 12% adjustment, it probably does adjust over the five years 12%, but most of that adjustment will happen in the first year. let's say it happens in the first year, right. let's say you get an 8% adjustment in the first year of that. so who's a winner and who's a loser? guess what, the winner is the loser, the loser is the winner. if you spread it out and the net/net effect is very small. these people, the retailers complaining, the koch brothers complaining, this guy complaining, it's all ridiculous to me if you spread it out. i think these guys in washington are smart enough to spread this thing out. if you're me looking at the market, i can't make a bet on this because it doesn't make any sense if they spread it out. it's hard to know who the winner it, who the loser is. by the way, if you do that by

the fifth year, don't you think the economy may adjust other ways? don't you think there will be more capacity in this country or other things may happen? so that net negative that people talk about is such an exaggeration. and i don't know which direction it is. >> but are the retail stocks already reflecting that? >> the retail stocks, what are they reflecting? as i said, are they totally wrong in how they're reflecting it? i don't know why -- >> that's what i mean. are they reflecting that already? >> i don't know if they're reflecting that the border tax is going to happen. i think a lot of talk about this border adjustment, to me, it's just a mechanism to raise revenues over time. it's somewhat effective doing that, raising revenues. i think it's a lot of noise about it. it shouldn't be a negative. it's not a negative if they spread it out.

at the end of the day, they will spread it out. i was going to say they're not that stupid not to spread it out. paul ryan and his friends. i think they will do that. stop the nonsense about this thing. it is what it is. it's a revenue raiser. >> what about the consumer? are they the ones who end up being the losers? it's a mechanism for raising revenue. >> if you go it the way i'm saying and you have a market adjustment, the consumers are a winner in the first year. >> even if the dollar doesn't adjust as much? >> because i'm only doing a 12% adjustment. i know i'll go get a lot of than the first year. i'm not going to get to 12%. maybe it's 7%. they could be a winner in the first year. if you give time over five years for other things to happen, competition to happen, other businesses. maybe there will be more things done in the united states.

>> and you pay for some of the tax reform that could be stimulative. >> the key is people are thinking this is going to happen. if they do the year one altogether, i agree, that's going to be negative a little for the consumer. it will be hurting the retailers in that year one. it's not the smart way to do it. >> the border tax is supposed to raise revenue and make it better for american exporters. if the dollar adjusts as a result, that kind of washes out the advantage. >> don't expect a full adjustment, right. i don't think there will be. i think those guys will say that. that's kind of interesting to me. i don't believe that. could be true. to me, i live in a world of probabilities. i just picked 12% because i

think that's where we'll settling in. that's just me thinking that on probabilities. you get these guys say it's going to be this way, it's going to be that way, stop. there's probabilities along that whole stretch. it's going to be somewhere in the middle. it. may be the middle at 18, may be the middle at 10. >> is the bottom line that you're not positioned on an equity position based on any sort of outcome of border adjustment? >> if they do border adjustment, it will be a smart policy where they'll do it over a number of years. it may when a little complicated for companies, but it's not that complicated. i think you'll get not that big a deal. i don't think it's that big a deal, that anti-competitive for people, and it doesn't necessarily mean americans will pay more. let me tell you something. not usually 100% in this world. it won't work like that because

there's different trade relationships with different people and it won't move that. there's a whole world of currencies going on. it might be more of a move by some countries, less of a move than other countries. overall, it's kind of -- if you spread it out, it's just logical it won't have that big of an effect. by the way, if it does look negative if you spread it out, you can change it. so it's just so much more sense to do it that way. i hope they do it that way. i hope they're logical. i believe logic wins at the end of the day. >> all right. we're winding this down here. so you came on the day before the election, talked a little bit about trump. are you glad he was elected at this point? >> i think that there's -- it's interesting that there's three republican houses, okay. listen, i would be very, very, very happy if trump would tighten it up a little bit at this point.

motte so ma not so many tweets. it's like my position. there's a lot of stuff. there's missiles in korea. there's missiles in iran. >> you'll stay a little longer? >> yeah, i'm here. >> oekay, good. >> we have to take a break here. a adt employment just minutes away. stay tuned. manage my portfolio.de and since i added futures, 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.

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breaking economic news. the adp employment report about to hit. steve liesman is here. go. >> we have a blowout number here. 298,000 is the estimate of adp for what private payrolls will show on friday by the government. that is against an estimate for the adp of 188 and an estimate for the friday number of 197. so any way you look at it, adp is about 100,000 higher than whether the street thinks this number will be. they revised up january by 15,000. amazing balance here. the good sector up by 106,000. the service sector up by 193. i don't remember a triple-digit goods number in a while. let's look more closely by industry here. construction up 66,000.

some weather in there. don't get too excited. it was a warmer than normal february here. also professional business services up by 66. look at the breadth of the job creation. hos hos hospit hospitality up by 40. manufacturing up 32. when we look at it by company size, small powering ahead by 104,000. large business, 72,000. an absolute blowout. guys, i looked at when there are blowouts like this, when adp is more than 75,000 bigger than the consensus, the left is the adp estimate. the right number there is the actual number given by the bls. it's not too shabby. they're not necessarily out of sample.

these are the instances in 2012. a couple times they were too heavy. my point is when they blow out like this, it doesn't mean it's wrong. in fact, they do better than the consensus on these incidents. you're smirking. >> because i can't wait until friday if it's a really huge number because i'm going to be watching the trump tweets. if it's some huge number, you know you're going to hear from the president. >> you're right. can i bring in mark zandy? >> of course. >> unless that's yours. >> it's yours. >> i've said a lot here, more than usual, because it's a really big number. i'm a little breathless. what do you think? >> it's a big number. it's three times the rate of job growth necessary to absorb the growth in the working age population. so you know, any slack in the labor market is being absorbed rap rapidly. you pointed out weather. obviously that played a role here. construction is not adding 66k.

that's going to steal away from future job growth. underlying job growth is very, very good. >> do you worry when you come out with a number like this? i checked the blowout situation, when you're much higher than the consensus. do you get nervous with a number like this? >> i get very nervous, especially when i go on the set with joe. he's not going to cut me any slack. >> i'm just waiting for you to say it was the obama administration. this actual number was an obama number. >> can i ask a question? i think that's an interesting point. do you think there is confidence that has risen so much in the confidence surveys that's leading to hiring right now? >> hey, joe, the answer is yes, i do. i see confidence. >> cue the star spangled banner. >> i think businesses are anticipating a lot of good stuff, tax cuts, less regulation. vacci having said that -- i'm in the done.

>> just that is major for mark. >> i tell it like it is. the bottom line is the economy is fundamentally strong. it was fundamentally strong before the election. it's fundamentally strong after the election. david, you were talking about this. there's a lift in global growth. it's more than just the u.s. i was in asia last week, china two weeks ago. they're feeling pretty sanguine about things. we're seeing a global economic rebound that's also playing a role. that's not trump. >> dave tepper this morning gave my theory for why the market is up. >> how convenient. tepper agrees with you. >> hillary clinton did more for t this rally than donald trump in that the loss of hillary clinton led to the demise of a certain tax increase that was going to happen. >> that's interesting. >> right? and you rolled your eyes when i said that. >> no, i didn't. i like the way you said it, that her not getting elected was a very positive thing for the world. >> it delivered something immediately to the markets. >> ten-year yields, highest level. >> where are they? >> 2.542. >> that didn't change though.

>> no, it didn't. >> when we return, we have a lot more with appaloosa management's david tepper. still looking for something with a "t" to describe his musings today. i think tepper trump trade. later, don't miss a cnbc exclusive interview with barclays ceo jes staley at 8:40 a.m. eastern time. you're watching "squawk box" on cnbc, the real "morning joe." ( ♪ ) i moved upstate because i was interested in building a career. i came to ibm to manage global clients and big data. but i found so much more. ( ♪ ) it's really a melting pot of activities and people. (applause, cheering) new york state is filled with bright minds like victoria's.

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let's get back to david tepper, appaloosa management. i watched you when the adp number was said. you had no reaction. almost as if you were expecting a number like that. now it turns out maybe you had -- >> listen, we talk to different people in the market. we have -- one of our partners is a private company. i think it's the second or first biggest background check. i'll talk to him about how his

business is going. it's a private business. >> that's amazing. people getting hired need background checks. >> a week before the jobs numbers. his numbers were running really well, really upticked this past month. they were running great all the way through the end of the month. if momentum continues, you know, maybe we'll have another. if you get these numbers to continue, this is going to be the first good quarter in forever. >> right. >> i'll tell you something. as i said before, take away the punch bowl, take away the cocaine, take away the heroin, put the marijuana in the drawer. the fed has to get serious now. they have to start thinking about getting serious. by the way, i'll say that to mr. draghi again overseas.

this stuff is really going on. it's a worldwide growth, as zandy said he recognized that too. you have to recognize another uptick, besides a downtick that can happen. it can happen down. it's a probability game. if france goes the right way. >> david, with what you have said about the power of not adding more regulations, do you think that has something to do with this hiring stuff? >> as i said before, before this segment, i said if you're a small business, there's nothing negative on the horizon, nothing. what's negative? they're going to give you less regulations for obamacare. they're going to give you a tax cut. everything is neutral to positive that can come their way versus an atmosphere for the last 16 years, let's call it, that's been regulation, regulation, regulation. >> can we break out of the gdp doldrums? people think it's population and productivity. >> i think these guys are too negative. they're not going to get to 4%

growth in the long-term. >> get to three? >> if it was 2.25, maybe pick up half a percent. >> for '17? >> no, i'm saying i think the long run, could be a quarter, half a point higher. if you talk about '17 or '18, you could be much higher in the near term. >> we could do it again. >> you're saying do it again and get to a higher growth track. the other side is if we don't do anything stupid on trade. don't forget that. hopefully we do smart trade policies here and don't get crazy on trade policies. do things that are mutually beneficial for your partner to do a good deal. >> we were talking before about the fed being behind the eightball in terms of raising interest rates. there's a risk here the fed has to catch up so much that it's a shock to the markets. i know you say waking me up when it's 4%, but traders could

easily freak out in advance if you see a sharp move higher in rates. >> listen, they're so far behind the curve. they may have -- if you get after the french elections and you get these tax cuts, they're going to have to move incredibly fast. janet yellen was saying three years for 1% real. that's just wrong. it's wrong if you get the good things happening. it's not wrong if there's no tax cuts necessarily, certainly if the french election goes the wrong way, it's not wrong. but it's going to be dead freaking wrong, wrong. let me not pull a punch here. wrong, if you get the good things to happen, which is a distinct possibility. you going to bet against these tax things? you going to bet against the french electioning? you better be ready. the market has to get ready for a june increase, september increase, december increase, and maybe more than that. this is fallacy that says the fed won't go in nonpress

conference. no, they'll go a lot because they're so far behind. if you have all these things happen, i think the real rate should be higher sooner. she's not going to be 3.25 at the end of the year. if she just does 91 -- if they do the 25, which is 100% chance, you're 91 basis points. >> if they raise more rapidly than anyone is expecting, more than three rate hikes this year, are stocks then going to look more expensive? just relatively speaking. >> well, again, look at the multiple. the multiples aren't -- you had people on the other day talking about 20 multiples. the ten year just not that high a yield. if they go four times this year, they'll be at 191. still fairly low versus where they should be. >> but moving faster than people expected. >> but it's relatively easy

money out there. the question is, they have to go at a pretty good pace not to get further behind. the question is how many times do they have to go this year. i'm sure the fed funds odds are going up as we're speaking. the question is, should they be pricing in a fourth time. only a fourth time because it's not necessarily bad if they do the fourth time. you don't them to go eight times next year. you want them to have some sort of pace. they're going to talk next week. they got to recognize this. they should talk about potentially the upside of international factors. forget about this draghi fantasy nonsense stuff he put out. heroin-induced sort of stuff he put out. you have to talk about the upside to things. enough about this downside. we've had eight years of downside. why do we got to be negative?

let's be positive. i love this song accentuate the positive, eliminate the negative. bing crosby. he was in your time period. >> if things went right, which republicans. >>ing happe >>i >> could happen. >> you can see the stock market go higher. >> the stock market will do okay. you're going to be facing a head wind of higher rates, but it will not be enough necessarily to take you down. the question is how much are you going up. i'm not sitting there -- listen, i didn't say unequivocally go crazy on equities. i said i'm long equities. you asked me another question about bonds. i was a little more enthusiastic about that position. >> you bet your hiney. >> i didn't say i'm balls to the wall sure, but i am short.

i didn't pull any punches on that. so the question is, you know, listen when you're really short and you can ask my friend, you just bet the ranch long. i can't bet the ranch because i still got the french election. i got liquidity issues. i can't get out. >> your heart of hearts, you would be short bonds, unequivocally, and long equities. longer than you are currently. >> i don't know if i'd be longer than i am. if i knew the french election was going to go the right way, 100%, i'd be much longer europe. but there's a downside there. you have to recognize. >> you know what growth does to wage gains and being able to

pay -- maintain our debt and entitlements. 3.5%. if we had that for a few years, wouldn't a lot of these nagging -- >> they need you to score these different plans in washington so they can get -- >> i thought you said 3.5, we can get there. >> i think you could get much higher. listen, if it all stacks up the right way, europe goes the right way, france goes the right way, we get the tax cuts the right way -- >> would you be worried about deficits? >> i'm going to say it. i'll say it out of my mouth. i think we can get into the threes. i don't want to say no doubt about it, but i think there's a high probability we'll be in the threes if -- and by the way, all the probabilities stacked, you have to bet against these republicans screwing it up. they should be able to get it. >> with three comes a lot of good things. >> why these guys, you know, talking about the republicans again, this probably looks to me like it was an improvement in

obamacare. whether it's obamacare 2.0, who cares. it may be an improvement of what's there. we couldn't pay for it before. it was going to go bankrupt. it was ridiculous that you were subsidizing to people our age, making younger people -- a tax on younger people to pay for us. that's crazy. that's what effectively we were doing to our children. >> you're being generous saying we're the same age. >> i'm trying to be nice. it's a new leaf i'm turning, joe. >> a lot of good things come with 3%. we've forgotten what comes with 3%. >> joe, we forgot about a lot of things. we haven't been there since '06, '07. that's ten years. there's traders that are 40 years old that are betting, not thinking the fed is going to go at a normal pace because they're 40 years old and last time was a normal pace, the position they were in, they were barely out of grad school. you can't be 40. that's the advantage about being a little older than 40.

you don't remember. it's been so long since it's been good. hey, guess what, it can be good. it can be good. i've seen it good. you've seen it good. you've seen it really good. >> people don't listen to me. >> it's been that way. it's not going to necessarily be bad. maybe these guys, like i said before, these feeds can be a cheer leader instead of dragging this thing down. negative rates and all this other nonsense that they do over there. it's just nonsense. they don't consider that it could be a negative signal that they're sending out. how about sending out some positive signals. >> i don't think they know how. you may need new people. >> there was an old cartoon that said we saw the enemy and it's us. that could be the case over there. something different. maybe the germans are right for a change. >> speaking of which, in terms of enemies and so on, seeing the positives and not the negatives, is it -- do you think it's hard in this sort of market environment to be a short seller? do you have any major or notable short positions against particular equities right now?

or is the market force so strong -- we were just talking about -- i don't want to pick on caterpillar. you don't necessarily have a position. caterpillar has had this revelation of a potential accounting problem. because it's an infrastructure play, it's actually doing decently, even since this news broke. >> when you break a little bit of -- you're changing regimes in a sense. i'm going to call it a change in regime. the regime changes from an easy money, everything goes up market. listen, i probably was the biggest cheerleader for the feds around the world in 2000. i was. i came in here, said these guys are doing the right thing. i thought it was good for the economy. i really do think it was good. but you're potentially changing regimes. potentially, because we still don't know some things could happen. if you go from an easy money regime around the world to now a growth regime around the world with higher interest rates, it's going to be winners and losers. there will be some guys that

won't do went ll in that regime. guys that are great short sellers, they will pick the spots and this change in regime will come for them. while the general levels will go up, it will be a more interesting market than it was in the past. you won't have this rising tide. it will be for different reasons, which are good reasons. >> sounds like a jumbo shrimp sort of. >> what's like a jumbo shrimp? >> a great short seller. it's been tough to be a short seller as the market's gone from 1,000 to 21,000. how can a shrimp be jumbo? >> oh, i get it now. >> you're really smart, but -- >> yeah, no, sometimes i can be stupid. >> i see that a lot. >> it happens. >> david, have you taken a look at shares of snap? we've been watching it so closely. >> yeah, you know --

>> you in it? you flipped it? >> we bought it on the new deal. i like the company and the story. i think it's going to force me eventually -- my youngest daughter loves the thing. anybody between 12 and 25 loves it. when she eventually has a family, i will be forced to use it. i don't really use it myself now. i will be forced to use it because it is really interesting how stories are told and the story of the day is told. i believe that eventually the demographics -- and this is kind of anti-facebook. snap right now is kind of interesting from that perspective. >> what price did you pay for it? >> we bought it on the new issue. >> do you own every share you bought at that price? >> no, i don't own ever share we bought. when i bought it, i talked to the guys, the underwriters. i said if the thing gets into the high 20s, i'm going to have to sell it. same thing as allergan.

we still own some shares. if it gets back down to where we bought the original stuff or close to it, i'll buy more. >> but not at 21.80. >> at 21.80, listen, i'm not jumping through the hoop to buy it. but should it go down closer to the original offer price, i would love to buy the stock there. i'm a believer in the company. it's a valuation question to me. to me, i'm in the nowhere land of valuation. you can call that 19 to 23 or whatever, 24. you don't touch your position. up near 30, it's too high for right now. one day it may be 30, one day it may be 100. but today it's too high at 30. my opinion, if it went back to the offering price, it would be a place where i would probably add. the thing is, i can't love stocks at every price, you know. it's a valuation game to me.

but i think the prospects -- i believe in the company to a certain extent. i couldn't get enough shares on the offering. i'm looking for if it wants to go back down, if it has disappointment, if i believe it's the same prospects, i'll buy more. you're supposed to buy low, sell high. >> of course. makes perfect sense. >> gets you good prmperformance over time. >> what about facebook and google? >> facebook and google are two of our bigger positions. we like places in tech where we think the competition is not as high. we thought snap should be one of those type of companies potentially. that's why we have an interest in snap. and something that could be -- we can see the monetization of it. if facebook doesn't seem to be getting any traction, attack it for a lot of different reasons. if it continues on and can have big revenue growth, it's going to be an interesting company at

some point. it's an interesting company now. it's just a matter of price to us. it's all price. like i said, we still own a little bit. if it would have gone to -- i would guarantee you if it went to 30 or 31, i would own nothing now. on the other hand, you want to take it back under 20, i don't want to tell you exactly where it would be, but at the offering price of 17, we would certainly be there. >> what are the valuations like in the financials? at what point would a bank of america, which you hold, does that get expensive? >> listen, it's a question of growth. it's growth and margins. >> but you're looking on the bright side of things. you see the fed raising much faster. >> it's still a decent position. we like the banks. listen, the banks with the biggest upside, if the policy changes, it's europe. you're minus 40 basis points. it's killing them. killing pensions, killing

insurance companies. but again, there's problems here if it goes the other way. big problems. we own bank. listen, we have a decent position with financials. it really gets into interest rates and growth and how that goes. the stock is not as cheap as it has been. it's had a nice move. i'm not going to pound the table and say we're adding a lot, which we're not. we're holding what we have. we can see the upside. bank of america is the bank of america. we're a little bullish on america right now, okay. on america, on the economy. we're bullish on the economy. hopefully nothing gets in the way of that. i hope that different things -- you know, if we can just tighten up some of the stuff in d.c. right now, you know, that would make me really happy. tighten it up. like a portfolio. everything is like a portfolio. it's a portfolio of different things down there.

tighten it up. if you tighten it up, it will be a lot better situation for everything. like i said, i'm bullish. i'm bullish on the administration. i hope everything works out there. i wish everybody well in d.c. like i said, there's some personal things i don't love, but i don't want to get into that. >> when you hear the president say i got jamie dimon here, who better to talk to about fixing dodd-frank. that would have never been said. another change in the view of having all those ceos not being vilified but getting information. the cabinet, the guys in the cabinet, wilbur ross, all that's got to be gratifying. >> from a business perspective, it's very gratifying. i said the only thing is the -- >> you said tighten it up. >> that other stuff can screw up the business perspective. >> i got it. >> you know exactly what i'm talking about. tighten it up. >> tighten it up. you know that accentuate the positive, that was bing crosby. you think he's my contemporary?

that's low. that's low. maybe bob dylan. maybe big bopper even. '60s. >> big bopper, is he still alive? >> dave, just so you know people are listening. take a look at shares of snap quickly. the stock was down about 2% before you started talking about it. you said it's a valuation call for you. if we can take a look at the chart right now, you'll see this morning after being down 2% before david's comments, you can see this morning it is trading up another 35 cents. yeah, 36 cents to 21.80. a gain. >> just be careful. it's in my nowhere zone. it's a valuation thing. it's not where i'm adding stock, but it's a valuation thing. >> awesome. great having you. you got to come back. >> was i nice today, joe? >> you were nice. i'm reading stuff. this guy says, listening to tepper is like opening a window on a spring day for beautiful fresh air.

>> wow. that's so nice. >> you should put that on a sampler. >> just my presence is like a beautiful spring day. >> letting the sun shine. it's beautiful. great having you. >> all right. i'll see you guys later. >> let's get to wilfred frost. he joins us with a special guest. >> hi, melissa. thank you very much. i'm joined now by the ceo of barclays, jes staley. >> good to be here. >> you've been in the hot seat a little over a year and made some pretty big strategic calls during that time, most notably pulling out of regions like asia and africa and doubling down on the investment bank, which of course has its biggest presence here stateside. are you now feeling vindicated with some of those big calls? >> let me say first, if we can run barclays bank half as well as david tepper runs money, we'll be doing fine. it was quite a change in bank strategy to basically become a

transatlantic consumer corporate and investment bank. i think it's way too early to pass judgment. i think we like the momentum we have. getting out of africa is a very, very difficult decision. we do hope to retain an important investment in barclays africa but not a controlling stake. i think, you know, to a certain extent, our strategy is a belief that the global capital markets will be the dominating vehicle to fund global economic growth as opposed to bank balance sheets. barclays here in new york, for instance, has got a great position in the capital markets with its investment bank. we have a juggernaut retail business in the uk. we've got a great consumer business here in the u.s. this transatlantic strategy, i think, is one that we feel good about. i think the early signs are encouraging, but we've got a long ways to go. >> on that transatlantic point of view, do you really believe the u.s. and uk can get to a

trade deal pretty quickly? is the u.s. a better trading partner for the uk than the european union? >> you know, there's been a lot of talk about trade, for sure, but i still believe that the global economy has benefitted from the economic integration that has been managed, led by the united states, but also clearly the european union, the uk. i think the g20 has been quite effective in reaffirming the value of not creating barriers to the free flow of capital and the free flow of goods and services. the partnership with the u.s. is extremely important to us in the united kingdom. we think the united states' economy, much like david's been talking about, has got a lot of runway in front of it. i think the dialogue between the u.s. and the uk is quite constructive. both countries, i think, seeking to keep the channels of commerce own and the flow of capital open between the two countries. >> one of the overhangs after your recent earnings was legal costs because of the ongoing

debate you're having with the department of justice. of course, you've decided not to settle your case with them in terms of mortgage backed securities dating back to the financial crisis, whereas the vast majority of other banks have settled. why haven't you settled? >> you know, we're knot going to talk too much about our position with the department of justice. one thing we've said publicly is what we're looking for is a treatment that was commensurate with how the u.s. banks were treated by the department of justice. there were transgressions. i think everyone has acknowledged that. as an american, i think what was important is let us be treated fairly with how the u.s. banks were treated. if we're treated on that basis, we hope to settle with the department of justice. >> what's the ambition for the investment bank, particularly here in the u.s.? can you be as storied as lehman brothers once was at its peak in american investment banking

history? >> you know, we want to be one of the most well-regarded financial institutions in the world. i think our reputation for conduct and how the type of business we do is what's most important to us. 2016 was a good year for barclays investment bank in the americas. if you take m&a fees, debt capital market fees, equity capital market fees, we actually grew '16 versus '15 and are ranked fifth in the u.s. we like our position in the united states. lehman does have a storied history, but barclays is 327 years old. that's got probably the longest history of all the banks that are resident here in the states for sure. >> in terms of boosting the investment bank, you've done a lot of hiring. so much so that, in fact, half the executive board, i think, is now former jpmorgan executives. what was your proposition to those guys? how did you make them leave jpmorgan, come to barclays? >> first of all, jpmorgan is an extraordinary financial institution, the largest bank in the world today. it's got an exceptional

management team. i think the idea of bringing back to a place of high regard one of the oldest and most storied financial institutions in the world is something that's quite compelling for those that believe in the profession of banking and believe that we can bring barclays back to this position. it's also a number of people i worked with quite closely at jpmorgan. it's a great team. i think we relied on each other in the past, and i think we look forward to dealing with this challenge collectively with our friends and people who have been at barclays for a long time. i think it's a great management team. i look forward to delivering what barclays is capable of delivering. >> did it ruffle some feathers at jpmorgan? is it true jamie dimon rang your chairman to try and get him to stop hiring former executives? >> i think jpmorgan has one of the best management teams out there. jamie is arguably the best ceo of our generation in banking. i think they'll be fine. >> what did you learn from jamie d dimon? as you said, he was your ceo for

nearly ten years. what did he teach you? >> that's a good question, wilf. one, lock down your strategy and believe in it. then execute on it. the importance of a management team. the a management team, the importance of a ceo dealing with all the important constituencies, from shareholders to board members to the press to analysts, to bankers, to clients, to customers, the obligation to reach as many people as you can that influence ultimately the success or failure of the bank. but, you know, jamie and i are very different managers. he does his thing and i wholly do my thing. >> if we come back to this sort of position on brexit, of course there's lots of other european elections coming up this year, would it in fact benefit barclays if one of those went to the anti-eu direction and it would take away the pressure of whether london can remain the biggest financial center in europe? >> no.

i think a unified is important for all of us. i hope it continues to be a success. i think all of us whether it's in new york or london benefit from political stability. i think the important thing is uk, u.s. and european union recommit themselves as they did through the g20 to the free flow of capital and free flow of goods and services in a stable european union engaging with the united states and the uk for the benefit of the global economy and the geopolitics overall is very important for all of us. so, no, more political instability is not a benefit to anybody. >> so in that sense president trump's lack of support for the european project is a mistake? >> i'm not going to comment on the position obviously of the president of the united states, but i think the united states is committed to a global community

that is collaborative and integrated. and the u.s. benefits so much from being connected the way it is to asia, to europe, to africa, to latin america, and i think that we continue to manage the global economy as a global community as opposed to putting up walls. >> in terms of the trump administration, clearly there's been a huge bounce in optimism shown in the stock market, shown in various indicators since he's taken office. does that match up with what you're seeing in terms of activity, particularly on the u.s. side of barclays? >> i think the economy was on a trajectory of growth to begin with. you know, the fed had already started to move interest rates. i think getting back to a more normalized monetary policy with interest rates that are more reflective of sort of long term rates is healthy for the economy. i think there's a general consensus that infrastructure spend needs to go up on both sides of the aisle. i think that will add a fiscal stimulus, i think, with this new administration. and so i think it's helpful that

the economy has got this momentum. we just hope that the political leadership of the united states uses this opportunity for the benefit of all parts of society. >> of course one of the areas he's talked about a lot is deregulation of financials. what's your view on that? do you expect it to come soon? and if it does come, does it spark a race around the rest of the world to deregulate quicker than whoever else is? >> that's a great question. my view, our view, is that it would be a good thing for dodd/frank to stay in place and not to repeal it. but dodd/frank's a very complicated piece of legislation which requires a lot of interpretation by the regulators. i think what you will see is more of a volume control. you know, is the volcker rule a little too tight for the benefit of liquidity in the capital markets? are they operating capital risk levels of the u.s. banks a little too high if you want more liquidity into the system? this is a volume control and a

complicated piece of legislation. and you never get it right the first time. so we look forward to that. but i go back to this point, you know, when the g20 met post the financial crisis, they did two things. they said, one, we have to re-regulate banks all around the world. they've done that quite effectively from brussels to london to washington and new york. but at the same time they committed themselves not to use re-regulation as a way to create an unlevel playing field that might inhibit the free flow of capital. we hope the g20 continues to believe that such that whether it's the uk or european union negotiating or the uk and the u.s., we keep the free flow of capital open across national borders which benefits everybody. >> and just to round things off, i know you're very happy at barclays and you foresee a long tenure in terms of your time at barclays ahead of you. one day would you like to come back and lead one of the u.s. headquartered investment banks? >> no. i am thrilled and honored to be

asked to lead an institution that has such great importance to great britain and to the united kingdom. this is the last gig. >> and a job that allows you to spend time between the two best countries in the world, i quite agree, why wouldn't you sit there and enjoy it? thank you so much for your time. we appreciate it. jess staley, barclays ceo. >> 10-2. >> i knew you were going to bring it up. >> pick a new team. >> arsenal lost 10-2. he's the worst. >> you may need a whole new sport. you didn't say new team, you said whole new sport. >> i do. i think i'm going to change focus for a bit. >> curling. thanks, wilf. when we return, this morning's big movers, tomorrow on "squawk box" don't miss a first on cnbc interview, really? epa chief scott pruitt? he's my idol. he'll join us 8:40 a.m. eastern time tomorrow. we'll be right back.

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>> right. >> so we're betting on strength one way or another here and strength around the world, in one way or another. and like i said, the only thing that's on the horizon, different things can happen, hopefully nothing happens political, but different things can happen. you know, in france. but once you get through there, there's nothing else in the year. you kind of have smooth sailing. the german election is just upside to me. >> that was appaloosa management founder and trending on twitter david tepper. we should mention as i said in the united states he's like number five or -- >> number five in new york, eight in the united states. >> we didn't have time for me to toss to jim. i think, jim, listening to that i was going to ask him did you disagree with anything, and i would say that the amount of agreement was much greater than the amount of disagreement. >> jim was tweeting through some of it. >> yeah. anyway, futures have turned around, but maybe that's on adp. that was a really strong number from adp. almost 300,000.

>> 298 versus -- >> we don't drudge. >> yeah. >> one of our stories. >> got to wonder what it means for friday's jobs number. >> i always look forward to friday, but i'm absolutely looking forward to the jobs report. >> the jobs report this time around. melissa, thank you for being here. >> my pleasure. it was fun. >> great to see you. see you all back here tomorrow. right now it's time for "squawk on the street." ♪ good wednesday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. a solid premarket to start the morning, but the real stories are one, a blowout adp number, 298,000, the third best month of the expansion. and two, david tepper on squawk this morning talking global growth at central banks he says need to start taking seriously. europe is relatively flat. the two-year, five-year yields