nasdaq by 16. europe is under pressure today as well. keep an eye on the ten year today because that yield has been one to watch. yield on the ten year still sitting at 2.36%. >> it's time now to turn it over to the boys on "squawk on the street." we'll see you tomorrow. ♪ >> good morning, welcome to "squawk on the street." i'm david faber with jim cramer. we have live from the new york stock exchange. karl quint anil low is off today. 30 seconds later we are looking for the lower open and the european markets have been in the red all morning. you can see that germany's vax is the biggest loser. as for the ten year note we are 2359. the bonds have been rallying

since the aca was not repealed. let's get to the road map and now it starts with tackling taxes, the president is looking to rally republicans on a tax reform strategy. and plus the global markets are down on signs of a stalled trump agenda. it is on track for the lowest losing streak since 2011. and premarket, after five top analysts issued bullish ratings on snapchat's parent. global markets are moving lower on the pulling of the health reform bill and how it can impa impact president trump's pro growth agenda. yesterday on nbc's "meet the press" the president's budget director mulvaney described why there was a rush to pass health reform legislation. >> here's the hurry. there's a lot to be done. we needed to get rid of

obamacare. we needed to fix the system so we could help folks back home and then move on to tax reform so that we could help people get back to work. the president wants to do a lot of things and is not willing to do what other politicians would do. >> and here we sit of course today, jim, with the markets first real opportunity to digest the failure. to repeal and/or replace in some fashion the aca and the focus is going to be as we heard there too on the tax reform agenda. >> right. >> i think it's important to say reform versus cut because we're not going down the reform route it would seem. >> no. this is about the border tax or whatever kind of readjustment. in other words, not made it so it's more difficult. you have to make this revenue neutral. if you try to cut taxes you have to win over some change -- change in the way congress works. so that you can blow out the

budget or you're going to do the same thing we have with health care which is we'll debate, debate, debate. i don't think that's an easy solution to therd boer t border >> you raise health care and they said many needed to do it first. why? it represented a $20 trillion in savings over ten years to your point that any tax reform deal would be done under reconciliation as part of a budget measure, these arcane rules of the senate. >> right. >> but you only need 51 vote. but you have done away with the trillion dollars revenue savings making the border adjustment tax which is the key revenue raiser of any tax reform agenda even important. but it seems to be dead on arrival given how many republican senators we think would line up against it and a democratic block that seems unmoved and unwilling to engage, given their success in having done the same thing with the aca repeal. >> 34% of retailers make direct imports, okay, so that is going

to go up. and they often say, look, some of them say that's about it. but remember indirectly through vendors, now you're talking about 90% of retail will go up. i think that what you're looking at, at the ceo of pvh, they make calvin klein and tommy hilfiger, you'll deal with a lot of layoffs that will occur at retail. you can regard that as being a canard. we heard that from jcpenney and you'll have layoffs. to y you won't bring back the jobs. it's not -- very unlikely. you can't compete with vietnam. can't really compete with hon dur as. so what will happen, this gets bogged down in the speaker's office again and we're going to see another leg down. this right now it's very interesting, david. on friday at 3:00, we knew that

this legislation for health care was not going to get through. but the interest rates -- the bonds had done nothing. this morning, interest rates are lower. we take our cue from interest rates and we're obviously having a sell-off here. i still think that trump with gary cohn and a different team working to try to get this through will have some luck. >> well, let me share a quote or at least some thoughts from steve mnuchin, of course the treasury secretary on friday. he thought a tax bill would be simpler than health care. i know many people who disagree with that. how you can say that that's any less complex than overturning the aca and replacing it is not clear to me. and certainly amongst the people i have spoken to, given so many parts of reform that have so many different constituencies associated with them or against them. particularly when again you're just dealing with what it would be republican majority that you need there.

because you can't expect that any democrats would play. maybe you get a manchin or a thune in montana, maybe get them to come your way. but jim, let me put the scene yes out there. >> sure. >> no reform, just some cuts. we just get corporate tax cuts. later this year a repatriation deal. much easier to do and maybe we get something on the individual front. that seems more likely. >> but that's a win. that's a win that is presumed to not occur with this decline. i mean, decline today is really interesting, david. we have had declines for literally a couple of weeks now. now, there were a cohort of stocks, some health care medical device stocks, some of the industrials hadn't come down. they'll come down today. but a lot of stocks have been -- goldman sachs has been going down every day. i think your scenario that you just laid out is the right one. >> is it positive or negative

where we are on the stock market? >> i think you have to settle down. i think there are a lot of people that are saying it's so confusing. it's back to the old days. trump doesn't have any power. they can't really do anything. i think that's false. i think that health care is the naughtie naught -- knottiest of everything. it took a year to get through. >> it took a long longer than with the repeal and the replace bill. >> yes. >> but come on, the lack of the interest deduction, the ability to expense capital expenditures immediately. so many different provisions of tax reform that by the way will have as we said from day one, far reaching implications from business in america. by the way, many people think we need reform. so you're telling me when you think we won't get it, at least many of the people on the outside believe will be the case. that we won't get it. unless you want to just blow the deficit out. >> small cuts. >> that's the question. >> small cuts and repatriation

will be big wins. >> what does it do? you won't stop companies -- i mean, 25, get down to that, i don't see how you do that unless you blow the deficit out. >> and the hard core republicans will not do this. >> so then -- >> small cuts we go. repatriation will win. but the big win, for every one law that obama put in, there were 25 rules from agencies. and what you're going to -- from agencies. what you're seeing very rapidly is the roll back of the rules and that's what's impacting the psyche of business. that's very important. i think we always get lost. when we did a very good day of deregulation around here, we have to do endless deregulation. dave, you have the fcc. i'm told major roll backs. of ferc, major roll backs. epa, tough to talk about, but major roll backs. >> they may issue an executive order saying no more doing anything on climate change. >> that's right.

>> or -- >> now, whether you're for it or against it you have to understand a lot of businesses are very welcoming of that kind of -- agency reform. 25 rules per one law, geez. there was just -- i mean, you're talking about promulgating something literally every month. that is what people should be focused on. but it's behind the scenes. so much easier to see a speaker versus a president. i do think repatriation is what they should pull right now. that's what they should put in. you're right, tax reform is too hard. because there are major corporations that are in favor of the v.a.t. geez, they should be about defending -- >> far reaching in its implications and a lot more -- perhaps something much more needed than simple tax cuts for corporate america that may not move the needle that much in terms of addressing the overall problem of getting us out of this system. >> right. but we have to come back to the fact that there were so many

companies doing well. that the world is growing better. most of the markets factored in the weaker dollar. every market in europe is stronger than us. even after the decline today. don't smirk. asia has gotten much stronger. you're smirking at wwe? >> yeah. they're opening an umbrella behind you. >> it's bad luck. >> yeah. >> bad luck inside. >> something. >> but i think we have to emphasize that other than retail i have seen quarter after quarter -- you missed the quarter last week. they'll come back to micronmicr >> right. >> i'm over here -- >> i got distracted by the wwe -- >> i'm for real. >> you're for real. >> the semiconductors they led the rally, came down hard and they bounce. >> okay. >> the industrials come down hard and they bounce. watch united technologies. that to me is a core doing better than it was industrial.

>> yeah, i know. >> just a curious back drop -- >> we don't have full control of what's going on here. let's have chuck schumer have his say. he was on "meet the press" and then move back on to the broader markets. this is what the senate minority leader had to say about the push on tax reform. >> it has been captured by the hard right special interests na.na. that's who loved his proposal on the trumpcare because it gave huge tax cuts to the rich. if they do the same thing on tax reform and the overwhelming majority of the cuts go to the very wealthy, the special interests, corporate america and the middle class and the poor people are left out, they'll lose again. >> of course that was on "this week," not "meet the press." >> does trump go to democrats, try to -- i mean, fashion something? gary cohn, mnuchin they're used to speaking the language of the

democrats if they have to. >> will they be listen, will they be interested in helping this president? >> no. >> i mean, you had the -- >> we like -- we like tax cuts. >> the republican -- >> who's going to fight tax cuts? >> -- achieve any victories after the aca. >> david, if you come -- you know, i fight tax cuts, american people don't like that. >> no. i don't know. >> they don't like that. >> it seems as though paralysis is more of the issue. >> so we'll be talking about -- >> -- issues as a country -- >> we can't have paralysis. paralysis is you go back to the banks, stocks which have been leaders giving up a lot. you go back to the fed only being able to raise once rather than twice. the yield curve is certainly saying that. and that bores people to death but you have to mention it. two or three on the ten year. everybody was thinking it would be 2.8. >> yeah. 3%. >> i went to the conference that

cnbc threw weeks ago and the average is we'll be at 2.8. we're not even supposed to be talking about 2.3. we should be talking about the united airlines and leggings. >> we'll talk about leggings. we'll talk about commodities and oil and next when we come back we'll talk about snap. as you can see it's getting a lift. a number of bullish -- >> 20 times -- that's just the kind of thing you right here. >> 20 times sales. sales. later, one of the analysts we're talking about, mark mahaney -- >> whoa, 31 target. >> a serious guy. he does a lot of due diligence. we'll talk to him lafrt -- later. we are set up to -- for a lower open. we'll be right back. l be right . at fidelity, trades are now just $4.95.

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snap is rising in the premarket. getting a lift of a number of upbeat calls from wall street analysts including goldman sachs. and morgan stanley with an overweight. they're the underwriters for the ipo and not unusual to have them come back positively when they're allowed to do so. it's much more rare when they come out on a company they underwrote negatively. you mention this prior to the break. we're talking some of the price targets over 20 times the sales. does that get a bit high for a company that's at 12 times sales?

>> i think people are using -- go to 2 billion sales number they're basing this on. so it doesn't seem completely absurd. the issue here, david, they have a lot of buys from advertisers as you always get when you start. so we're only in the beginning phase. and no one who is advertising is saying, i'm not getting any results here. they're starting the advertising buys because they're trying to reach that younger audience. you will see good numbers out of the chute. i thought the goldman piece was very interesting because it talks about this is a venture stage investment. and that's kind of the way they can get away with using this 20 times, 18 times sales. it's venture stage. that's okay. so if you're a venture capitalist, you would say i have to be in this thing. soon it will be down to nine times sales. i would caution people that -- >> thinking, right. highly engaged user base. a lot of high value inventory to

get to mobile modernization. jeffrey here is saying that mobile add sales will be as large as tv ad budgets today. as long as the guys can keep sort of a nice share will -- it would seem if they're right, have a lot more to -- >> that's really kind of the essence of this, is to say that tv is going away. david, tv is not going away and people who say that are wrong when we see the aggregate numbers. i like the web too, but i'm saying that tv -- if you talk to some of the local -- you know, look at cbs. that stock has held up almost more than any stock in this market. pure play. >> it is amongst the purer plays. although advertising even less and less of their overall. but a larger part of it as opposed to fees. >> when you look at what the guys are saying, they're betting it's a big three. it will be facebook. it's going to be google and there are many issues about advertising. it's going to be snap and my

problem with it, david, what happens if facebook decides to evi eviscerate -- >> jpmorgan which is one of the negatives here. neutrals let's call it or less positive and increasingly competitive social media landscape including snap. they raise as one of the key concerns which is why they have a $24 price tag. >> remember this quarter is a good one. this is a quarter that you are going to be surprised on the upside when the numbers report. at the same time, this is a market where everything is getting clobbered. so you sit there and say, wow, i want to hide in snap? no. i want to hide in -- i don't know, how about dominion or duke? real estate investment trust that are not related to retail. that's what you buy. that's what they buy. i'm not saying buy that, but i'm saying that this is not that high yielding safe play that --

no. anything but. >> it is anything but. it's anything but. there's a look at snap. we'll be following as we get closer to the opening bell. we'll have jim's mad dash as we count you down to the opening bell. this is the futures, this is a lower opening. used to be 135 dow points. let's not forget where we are. percentage wise that's still not too much. we have a lot more "squawk on the street" straight ahead. hello, my name is watson. i am helping 8 million taxpayers get the largest refund they deserve. one million people can benefit from precision cancer care. 197 million passengers can fly with less turbulence. i am on my way to working with one billion people. i look forward to working with you. i am on my way to working with one billion people. ♪ i am on my way to working with one billion people. guyhey nicole, happening here?

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here we go, seven minutes before we get to the opening bell. the market's first opportunity to react to the failure to pass repeal and replace of the aca. but we'll talk about some deals here. one in particular that got a very important approval today. >> yes. your world, okay, we're talking about dow dupont. you told me this could probably get european conditional approval. it got it today. what's important is that they had to give up some crop protection from dupont. ellen coleman who used to run dupont talked about crop protection, how important it is. there's a nuance here, david. if you have late staged crop protection and crop protection that's in the market, it's fine. it's early stage that goes away and that little bit of nuance means $20 billion more to this merger than people may realize if they just read the release out of europe. >> they're still waiting for hart scott -- on the antitrust final approval here in the united states. this was the big one.

they're still waiting on sen general that and then you have the monsanto deal. >> right. >> those are still in the hopper, soon to come, i'm not sure where monsanto stands, frankly. >> this is dupont merging with dow to form three companies and the three companies are very attractive. you have to get there. but you're talking about some point, we were thinking this would have happened already. but they were patient. they stuck with it. and i think more andrew -- ed reed is able to bring more value as he did with tyco. look, he's a water man. stick with it. dow, not getting rid of it. >> you like it once the deal is actually completed and today it is much closer to being. >> right. i circled this. this is where people felt it would fail. >> a lot of concerns and it was focused on the eu but they got it. they move ahead. >> and crop protection, again, it not sweating it. but the eu made it seem like

they're going to lose that business. that would be critical. because crop protection is the major growth engine of dupont. i would argue. because it's noncyclical. >> right. well, we have that opening bell coming up five minutes from now of course. wwe superstars are getting ready to ring it. they have been the ones behind us, opening up that thing with farley doing some stuff. i'm not sure what's goganing on. but i know wrestlemania on sunday. >> subscription business is going to turn up there. >> wwe is the symbol for the worldwide wrestling federation. we're back after this.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the bell will ring in a minute and a half or so. when it's just the two of us without our colleague, carl, i always like to ask you what the key to this market is. i'm going to guess in my own mind i want to see if i'm right. >> actually, the key -- it's it's not bristol-myers. micron. >> i didn't get that. >> i'll tell you why. because they reported a blowout quarter. literally just last week on thursday. the stock was gaining a lot of

strength. this would be the one theoretically you'd come back to in the middle of a broad sell-off because you know that they just reported a great quarter. there's no guess work. so i would watch -- >> the market did not respond appropriately -- >> no. went up 10%. but i'm saying if they roll back that gain, that would be where people will go to. and now, there are other people who would say goldman sachs is the key because goldman sachs is down so big. people are like wake me up right now, wow, that goldman, that is really a big decline. >> down big after an incredible run and on the back of expectations that interest rates would be moving up. and obviously a lot of activity would also follow. >> well, i mean, they're factoring in that interest rates might go to 2.1. is that what people are saying? then you have a flat yield curve. [ applause ] >> you hear the applause build here, jim. interest rates would be another key i would assume. >> yes. and i've got to tell you that

the orthodoxy always says a flat yield curve means recession. i question all of the bond orthodoxy. on the -- [ bell rings ] >> closing in on 2.6. i heard 2.8. some of my colleagues are saying 2.6. but that's a far cry from 2.3. >> right. there's the opening bell for this monday. you can see as we expect to see a lot more red on the board. world wrestling entertainment highlighting wrestal mania 33 this sunday in orlando. i have been watching a lot of wrestling lately and those three gentlemen are part of a team. they're competing over at the nasdaq which is discovery communications. sixth series premiere of "yukon men." >> and there was a monster move

in the stock, always, always, always suddenly upgrades me for not -- upbraids me for not knowing how big wwe. is i know idolatry, but i don't know the wwe. if they can get the subscription business, the churn down -- >> they deliver it to you directly. you subscribe it. >> they have brilliant people who work there. it would not surprise they can get that churn down and i like it. >> like it. i like it. let's go to a commodity first that being crude oil. start with wti. brent right around $50. $47.18. give me a quick take here. the commodities are coming down of course as there seems to be a bit of a pull back on the idea of faster than expected growth because we may not get the growth initiatives that you thought at least legislatively. >> interesting, there's a fascinating weatherford

schlumberger deal that was announced while you were away. i'll get to why this is important. well, weatherford gets $535 million cash payment and schlumberger wants to be bigger in the permanent. the united states has created a real problem for world oil crisis. texas, 100,000 barrels more a month. you're talk about the united states being the swing producer that no one counted on. why? because the cost for the permian is around $20 or $25. at 47 bucks they're making a lot of money. i was using the downside target of $47 initially and then $45 when things go wrong. $45 is more in play. >> $45 is more in play. >> yeah. >> and what is the play at $45 -- is in play? >> the saudis have to say, you know what? we've got a very big ipo coming up.

we can control this market. there are a lot of countries iraq and iran to speak of, that really don't see anyone playing ball. but the united states that is producing far more oil. we were not supposed to be producing this much oil at these prices. everyone thought particularly -- everyone in opec, the big swing in opec said the united states is going to get shut down at $50 to $45. >> not the case. >> they lowered the cost due to american ingenuity. and in many cases by 50, 60%. and the permian, they just had a problem with the pipe. the more pipe -- four new pipes coming in. slipping into the south to the southeast. >> they're big. >> natural gas. we're the number one. >> and we export now too. american ingenuity. the saudis they have a -- it's not going to be a problem for a long time. >> i know that i was -- i deal with a lot of the oil companies. and they themselves were shocked. by the way, they are maybe

sewing -- there's a supply destruction going on here. a lot of the people i deal with in oil, including rbn energy saying if you deregulate even more, they'll produce even more. then we'll have oil prices going down even more. so remember, the regulations have really kind of hurt a lot of the oil companies. this is what they would say. i think obama administration would say are you kidding me? look at how much they've produced during our period of where we were tough on -- >> speaking of things other than stocks we started with oil. let's quickly hit currencies too because the dollar has been weakening against both the pound and the euro. >> boy, no one thought that was going to happen either. i thought that there was -- the consensus had been -- the consensus was the dollar had to get stronger. the euro seems to be in the -- i believe that the netherlands election was the high water mark against the eu. now, the election this weekend

in the -- thank you, wilfred for going over this and sara. and i think what really matters here is that people felt that the netherlands election was a bridge too far. >> right. don't forget of course part of the key thinking behind the border adjustment tax is you have an adjustment in the dollar far higher would off set a lot of the costs. if you're unlikely to see a border a adjustment tax or tax reform, you won't get that up higher. >> and they don't fix or float, so let's be careful there. david, the decline in stocks like morgan stanley is a little breathtaking. i mean, these are stocks that have been going down down down. >> yeah. >> they were going up up up up. i mean, i'll give you ten ups to your three downs, come on. >> probably 25 regulation versus the one law. >> that's still the case. >> jpmorgan, good number there. >> they'll still benefit from

deregulation, although dodd/frank is not going to be overturned. >> i need this. the stocks that are suddenly in vogue are up to two fold. it's the consumer products, they have a 3% yield. people have not stopped talking about kraft hines. you put the gun to their head, that stock is doing well. because unilever is switching to the more aggressive way to budget. david, there's a draft hines bid, a bid underneath and no one wants to sell the companies for fear that they're going to be the one that kraft-heinz goes after next. >> i know. there's a belief that kraft-heinz needs to do another deal. look at what happened when they went after unilever for the brief period. you could have blinked an missed up, but the stock went up

dramatically because investors believe in delivering when they do a transaction. they may not do one tomorrow or next week but they're going to do another deal. it's the way these companies are built, jim. the question is unilever is off the table. as i reported the high likelihood is they will not pursue anything that will have a hint of being hostile or unsolicited. what does that leave you with? >> a lot of the companies that want to remain independent, whether it's kellogg, general mills does not want to fold. they do not want to do anything. you're so right. by the way what had happened kraft-heinz reported the day before the unileaver and it dropped from 90 to 86, 87. >> did not report a particularly good quarter and then it shot up on the news -- >> by the way. the supreme court not going to review the visa/master card. they have been the outstanding

thin tech plays as the banks rolled over. masterca mastercard, higher and higher. this is certainly when you ask me key to the market. do you see money reveshrt to the again? they've been getting that money in for ages. this is actually a recidivist move right here. you have had the trades. you have had the trades and i like the regional banks. >> it was a -- i was away for a bank. goldman is down 7% year to date. there you go, i'll take back my up up up comment. >> they did lose a lot of good people to the administration. some people are saying -- some guys just had a cup of coffee while they were at goldman and others spent a lot of time. >> steve bannon was not a goldman sachs guy. he was -- this was many, many years ago before he cashed in on those "seinfeld" reruns. >> here's an interesting note while you were away, david -- >> gary coen was -- >> he was number two.

but hh gregg bankruptcy, david, while you were away, sears going -- i wanted to get your opinion. a lot of people feel when you're going there it's kind of done. opine, because you know more about what the going concern is a formality or -- >> it was a formality, but does it scare your vendors. >> right. that's really the issue. >> those who are factoring and therefore providing the financing that allows forress f the vendors to sell to you. that's a key question. can you make it through -- >> right. people forget. now -- >> they have a lot of sales but not much market cap at this point. 900 million bucks left. >> you have sarah tahj, difficult to unwind real estate trust. and that's i think not -- pvh is saying -- go on the website. 250 items, tommy hilfiger and

calvin klein on the sears website. the ceo reminded me the website is different. e commerce, you order and then they ship. i want to -- what a wind fall for stanley, black & decker. i think it's worth following if only because best buy is up on the strength of a call which says don't forget, with hh gregg out and with sears out, you do have a place to go, piper mutual to buy of the hard goods. >> well, the story of the morning, jim, once again the financials. bank of america is down 3%. citi down almost 2. and goldman sachs is down 2.5%. it's having an impact on the dow. not that i care about the dow. morgan stanley off 5%. >> james korman he's doing a remarkable job. it's frustrating. >> listen, i'm telling you those guys when it was 45, 46 they were like really. come on. >> the pricing did not go up.

which meant they weren't banking on this. i have been -- jersey shore pricing is coming back really well. >> is it really? why? >> convenience. i think that the traffic is really mattered. far east guy. >> not anymore. not anymore. >> what? >> you know that. >> no, i'm saying you go to -- >> you don't have to stay out -- >> travel. >> i used to go to amagansett. you get -- you leave friday and get there saturday afternoon and leave sunday morning and get there sunday evening. i want's crazy. the traffic is crazy unless you take a helicopter to show friends how rich you are. >> speaking of traffic, jpmorgan lowers the ads on verizon. they don't change their opinion, i think they're neutral on it. this is not a strong performer this year either. but it's got about the same amount as goldman sachs. >> well, you have yield protection. >> but they do point out, there

wasn't much going on in terms of being able to survive in the competitive landscape until they went to unlimited. that will of course have a significant impact on on their post -- net ad estimates. >> let me give you one. here's an example of the fcc. what happens if the fcc says these isps -- >> internet service providers. >> they haven't gotten the information that a google would have gotten. what happens if fcc deregulates and verizon gets the same information as google gets that will happy sources tell me. >> you have a much more hands off fcc and you have legislation overturning title 2 of broadband is unlikely. but the fcc is saying we don't see it that way which is positive for verizon. at&t, our parent company of course comcast. charter which had that job

announcement i think it had been made a long time ago. but got nice press out of it last week i saw. >> which makes me feel beater about at&t. aol and yahoo! that was not a factor. at&t i think has made a lot of bright moves here and it's a good deal. >> you think it's a good deal? >> you think they got out too high? >> i think it's great deal. i think at&t has been running away from the core business for a long time. >> because the core business has conceivably being eroding. >> the question is what are verizon do? run away from their core business? >> i don't know. i see a gfios ad every 30 seconds. i have omni -- >> lights off the whole thing. put a dimmer on the box. >> i'm telling you, those green lights keeps you from sleeping. i'm giving you a heads up there. >> need another night light.

bob pisani has more on what's moving. >> good morning. the trump agenda a little under assault right now. look at the sectors not surprisingly financials of course lower yields impacting, we have industrials, materials. there's the trump play right there. utilities on the upside on the lower yields. i think the senior economist this is what they said the risk that the markets are confronted with is one of trump's deal making claims. you can see that in the way that the markets are reacting today. big beneficiary banks, lower taxes and less regulation. higher rates potentially. all the big names down about 3%. all of them are down 10, 11, 12% this month alone. infrastructure of course another part of the trump agenda. most of the big names that are in the industrial area of the --

like martin marietta and the big engineering companies all down 8, 9, 10, 11, 12% so far this month. also down about 3% or more today. so the big question is how much is this going to impact the market and the multiples overall? the stock market is really expensive, we are trading 18 times 2017 earnings. that's historically high. bringing it down to the closer to normal level, would the s&p have to go about at 2310, and that's a hundred points the -- that's about 1,000 points in the dow. to go back to the more normal level. people are saying what's the right multiple? but everybody agrees with this kind of uncertainty we may be high priced. the great hope is that the earnings numbers are going to impress people and sort of change the conversation a little bit and the numbers so far are good. right now, we have got hopes for first quarter earnings to be up 10% for the s&p 500. is that good? this would be -- if we got that number, it would be the best quarter since the third quarter

of 2011 in nearly six years. the best quarter. so far the numbers are coming in pretty good. we have had a dozen companies reporting. jimmy mentioned micron and oracle had great numbers. lennar had great numbers and nike had some disappointment on the guidance and the stock went down, but if numbers were good on the reported numbers. we see revenue gains of 6, 7, 8% on average. there's only a dozen but the early signs at least are pretty decent for earnings. the hope is that once the market understands it's not just the trump agenda we're high priced because the numbers are going up even independent of tax cuts adding to things the market hope here among the bulls is that that will stabilize things. can better earnings commentary help move the market? we'll find out in the next couple of weeks. there's a lot of damage to the market. look at your etf leaders. some of this is fundamental. you know about the problems with retailers. the retailers had highs in november and december and straight down ever since then.

the exploration companies moving towards a 55 to $60 oil if not $54 oil. another fundamental problem there. regional banks we were supposed to be moving up on interest rates, that's not happening. the s&p only 3% from the highs but still notable damage in some important sectors particularly those regional banks. david, right now the dow is near the lows, down 150 points. back to you. >> thank you very much, mr. pisani. well, still to come, mark mahaney why he has an outperform rating on snap. look at the movement in treasuries this morning. see the yields are down. prices are up. and we are talking about a ten year note that's yielding 2.35%. a far cry as jim had pointed out from what many had been expected would be the case at least as we come to the end of march. we're back after this. ♪

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welcome back. of course you can see we're down on the s&p. we're off the lows about 0.7%. had been down as much as 0.85. one winner we haven't gotten to the hospitals, the obvious beneficiaries of the aca remaining in place. >> the hca was up 3 on friday. this group was under pressure. people felt that this was the group that will be crushed by repeal and replace. instead, it's the one that benefits the most. hcaer ha hca very good company. but they're moving rather amazing. didn't think we'd be here with those stocks flying. >> and although worth mentioning the pharmaceutical and drug stocks largely in the green. >> bristol-myers -- >> and glaxo and bristol-myers all up. >> you have yield protection on

glaxo. you have the flight to safety/recession proof. david, do not think there will be a recession. but it's tiresome. but people will say. >> we haven't had one in a very long time. >> geez, you're going there? >> no. jut raising the point. >> the economy is better. >> it is. >> it's better. >> orders are coming through. herman miller had a great quarter this week. >> herman miller, really? >> yeah. that's the chair. small businesses -- >> i love those chairs. "squawk on the street" will be right back.

it is that time. time for qustop trading with ji >> by the way, dollar tree up today. jpmorgan not as worried -- >> influential analyst with jpmorgan. >> right. talk about a major increase in the new its so let's watch that -- units so let's watch that stock to see if the market will come back. that had a major push from a major house. >> had some news on apple, didn't they, involving the

positive ruling in the court victory in china. >> remember when that dropped the stock almost 10%. tim cook, a commission to streamline. mark bennyoff, he was in there with merkel. >> yeah. he's starting to get some face time with the pres. >> you know what? you and i are the only two who haven't. >> it's highly doubtful. >> what do we have on "mad money" tonight? >> end game is nate fick. for anyone who's read the books "one bullet away" he created a cyber security, a private company. when you look at companies that are on fire, cyber security -- >> private or public you need to understand it in the broader sense and i'm sure guys like this can help you do that. >> yes. i have to tell you, david, that goes on a pace. that doesn't slow down. that's probably the most unfortunate secular growth trend

i know other than the humanization of pets as you know from your dog. >> yes, i do. he's coming back today, actually. >> there you go. we were away. so he went away. >> so watch out for glaxo. gets stronger and stronger. i'd throw it out to you. >> i don't know what that's about. jim, see you tomorrow. >> absolutely. >> right back here. coming up, we'll have more on the rough starts for the markets and we're coming back in a bit. and where the trump agenda fits into the big picture. keep it right here.

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we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential ♪ good morning. welcome back to "squawk on the street." i'm sara eisen with david faber and mike santoli. carl has the day off. looking at the markets we're continuing to follow this stock sell-off for you. the dow is down now about 126 points. s&p 500 down more than half a percent. the nasdaq getting hit the hardest of if bunch almost down 0.75 and crude oil is not helping. the dollar is weak and the

market is focused on washington, david. >> yeah, it is. of course our road map begins with those stocks selling off as sara just said. the dollar on track for the longest losing streak since 2011. optimism over the president's agenda beginning to fade following the failure of the health care bill late last week. >> plus, president trump approving the keystone xl pipeline. we'll break down the prices at the pump and go live to the pipeline pumping station in steel city, nebraska. >> and snap's shares are rising. we'll discuss the calls with two of the analysts coming up. and days after pulling the health care reform bill the trump administration is on the defensive here. kayla tausche has a look at how that may affect other priorities like tax reform. >> reporter: gam. with the failure of the american health care act the administration has pivoted to tax reform. so it's a familiar topic and something it's been toutsing as a couple of weeks away for months.

>> we're going to be announcing something i would say over the next two or three weeks that will be phenomenal in terms of tax. >> before we do the tax we is -- which is actually very well finalized. my economic team is developing historic tax reform. >> the white house is expected to put forth a plan and the leader of the freedom caucus over the weekend said he'd support one that increased the deficit which is a positive development. but the more near term is how they continue to fund the government a month away. only 12 of the days is the house in session. by comparison it took 17 days for the ahca to be released and then pulled. the question is how quickly can republicans settle their civil war? the freedom caucus' david

shwyche art -- >> we now know where everyone's key buttons are. >> speaker ryan said friday republicans need time to reflect and regroup. the issue, guys, is time is in short supply and to do list for the trump white house is very long. >> certainly for now. investors aren't expressing a lot of optimism. thank you. we'll focus on the market angle the dow is down 135 pulling back on the optimism of the trump agenda. joining us is the chief equity strategist and isabelle lago from blackrock. welcome. >> good morning. >> so isabelle, do you change your view on the market now that what many investors saw as the first test of the trump agenda has failed? >> well, look, our view has been for some time now that we believe there's a global inflation going on in the world

frid economy and that's true of the u.s. as well and that reflation trade will continue to play out. what we were skeptical about or at least wanted to see conf confirmation of was the trump trade and that's to say it's more in doubt. but the idea that the u.s. economy is on the growth trend and that's going to lift cyclical values, that's going to take interest rates on an upward path that remains true. and what happened on friday doesn't challenge that view. >> so you think this whole reflation trade we have been seeing in the markets doesn't have to do with the election and will therefore continue? i mean, look at the dollar, isabelle. it's erased all of the post election gauges and is now at a four month low. >> precisely. so we saw this reflation trade start around july of last year and that you -- that's the turn around point in the u.s. rates. the turn around point in the stock market as well.

and also the dollar to some extent. so you're right. the dollar has erased moe st of the gains since the election and is probably a little challenged until it becomes clear that the fed remains on the normalization path. but we had always been pretty i would say modest in terms of the path of the dollar going forward. and we did think the initial rise was going too far. as i said, the reflation trade look definitely more challenged now. that's what everything has to do with significantly higher or real rates with additional stimulus put into this economy because of a tax reform. but the u.s. economy is still growing, still on a very good path and we're seeing this reflation train absolutely continue today. >> what about you, bob? do you see this sell-off on the idea that the first health care bill failed and therefore puts in jeopardy pro growth policies

like tax reform and infrastructure spending? do you buy that idea and if so, do you sell this market? >> i think that there is a question mark now. can the republicans get their act together? we think the market was up for two reasons. one, as isabelle pointed out the economy has done both here and abroad noticeably better and the second reason is hope around fiscal policy and it's the second piece that's coming out of the market now. underneath the economy is still doing okay. so we think earnings will continue to advance. but kind of the icing on the cake may be deferred or diminished somewhat. >> well, bob, just to follow along on that. where do we sit with regard to the markets as reflecting the current economic and earnings path. because it seems like we're looking at the 5% earnings gain. if we exclude energy last year when it was crashing and we have another one of the first quarter potential kind of soft patches in the u.s. economy. did we kind of put off what

would have been a little pull back? >> yeah, i think so. the market believed everything, that the economy was going to be great. and go straight up. and that trump was going to get through the agenda. 2400, i think you have to ask some of the questions. of course we're only off 3% from the highs. so there could be more to come out here to get back to the reality of the economy's fine, but we've got to question d.c.'s contribution to all of this. >> isabelle we're talking about tax reform now. that gheez to the front of -- that goes to the front of the agenda. that could be bullish for stocks and that's what investors wanted anyway. they didn't care about reforming and replacing obamacare. now that goes to the top of the agenda, is that a positive? >> well, i suppose getting to tax reform faster than would have the case otherwise is a positive. but as your commentator said previously there are now question markets over the ability over the republican majority to deliver the tax

reform that had been talked about. so we may well end up with a fairly minor tax reform and that could be a disappointment in terms of its ability to move short term growth and the growth potential. >> bob, final word on that note. i have been hearing a lot more about this. the sort of diminished tax reform just to get it done. what do you think is priced into the market right now in terms of where the corporate tax rate will go, repatriation and some of the other sort of market impact events in the tax reform like the border adjustment tax? >> i think a more watered bill is beginning to be assumed by the market. look, the republicans have been put on their back foot here. they're maybe going to do something that has a much higher probability of getting done which could be a less controversial, more watered down bill. for the long term growth of the economy let's hope they stay bold but we'll have to watch and see. >> yes, we will. guys, thank you for joining us

today. bob dal and isabelle lago from blackrock. >> when we come back, the keystone xl pipeline is getting the green light. what it means for oil prices and exports. we'll go live to the pipe's pumping station next. and shares of snap are on the rise, a lot of analysts came out with the recommendations many of the recommendations were positive and the stock is up. we're going to discuss that. "squawk on the street" will be right back after this quick update. yes? please repeat the objective. ♪ thrivent mutual funds. managed by humans, not robots. before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds.com.

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president trump setting the stage for speedier pipeline approvals after granting one for the keystone xl pipeline. our jackie deangelos is at a pipeline pumping station. good morning. >> good morning to you. that's right. at this pumping station actually it's sort of the keystone for the keystone if you will. it's where this recently trump approved part of the pipeline will come down from canada, connect to the lower leg and take the heavy crude oil down to the gulf coast to be refined. what's ironic here is the fact that when the keystone conversation first came up years ago, we actually needed the canadian crude. arguably right now because of the shale rev neolution we don'. there's a supply and demand imbalance. we do this every week and we're seeing u.s. production go up taking advantage of those higher prices right now.

as opec is trying to stabilize the market but not really doing a great job. you can see oil prices are under $50 and moving lower today. the question of course is what we're going to do with the around 800,000 barrels that are coming down from canada every day. are we going to turn that into product and store it here? probably not. we have a storage issue with our own oil. we'll probably export that product to asia or other places in europe potentially. but at the same time, we're not seeing demand forecasts increase to really kind of absorb the shipments that we're sending over. if you look at the data from the eia, you can see that exports are ramping out of the united states. our imports are moving higher but dropping as well. right now when it comes to the project overall the keystone in general, we're dealing with a long term/short term perspective here. the administration is taking the long term perspective, we want to see north american

independence and america firstenergy plan. short term, analysts are concerned that it will depress prices even further. maybe low 40s, maybe 30s. i will say this. one caveat. it's probably going to take a year for the pipes to go into the ground. now that we have the overall approval the states have to work through some approvals as well. back to you. >> thank you very much. well, for more on the energy trade, we are seeing in this market right now, we are joined by rbc capital markets global managing director and patrick da than, gas buddy.com. colima, so jackie set this up. what does it mean, where are we at with global supply and demand and market share? what does this do to influence its? >> the thing about the keystone xl debate this is important for canada's outlook to move their barrels. does it impact the markets tomorrow? no because it's not operational

until 2020. this is not an issue we'll be dealing with tomorrow or next year. we still have to see what happens in nebraska with the pipeline approval there. but again, everyone is watching as jackie talked about the inventory numbers. and opec sort of struggling was production coming back. the inventories are remaining elevated. does opec extend their cuts? so that's what the market is focused on right now. >> what's the answer to that question? >> i think opec rolls over this cut because again what are they going to do? if they basically throw in the towel you're looking at another sell-off. and the decision to cut production initially came from heads of state saying we don't want to be in the sub 30 price environment. we're willing to take on some u.s. production coming back. >> patrick, not necessarily affecting gasoline prices for consumers this driving season, but what does it mean longer term for gas self-sufficiency in the united states? >> there's two ways this could go. number one, oil could stay in

the united states and be refined and added to product inventories which at least right now are still very healthy. the other distinct possibility this oil eventually will be exported from the united states which will cause some gas prices to see some upward pressure. this is a story of an early christmas for canada. it will certainly help nar row the gap and could cause motorists to pay more, depending on which way this goes in the next few years. >> yes, brings up an interesting point about the u.s. politics of this decision. the white house says that this helps toward the u.s. goal of making us energy independent and creates u.s. jobs. >> yeah. in the construction industry initially it will create several thousand jobs but the question is once the pipeline is build, what does that do in terms of employment generation? there was an issue about how much steel should come from the u.s. it's not going to be an issue for this pipeline but for other pipe lealines going forward.

it will be a short term boost. >> what about the energy indpen dense point if it's all exported? >> i think one of the initial arguments we're getting more crude from canada we're not getting it from other countries in the middle east so it's basically increasing our supply security through giving us relations with friendly producers as only -- opposed to being dependent on producers we sometimes have problems with. >> patrick, to add a layer of complexity on the whole question, oil refining is one of the big areas that could be impacted by a border adjustment tax. how would this play in if at all to domestic crude prices and gasoline prices? >> another complexity added into it. it could make u.s. refineries even stronger in their profitability and to add something to it right now, mexico going through deregulation of their refining sector. right now, u.s. exports to mexico are certainly surging with a lot of the gas price

deregulation. so that's another complex issue that could go one of two ways just depending on how trump's administration ultimately decides to move on the play. >> only finally on the broader issue of oil prices. while we'll continue to hear amongst those of us who don't follow it closely day to day, how cheap the permian has gotten. does that continue to be the case or are we at a level that you can't get any more in terms of cheaper in getting it out of the ground? >> the permian is economic in the price environment but one thing that opec has to worry about if they don't extend the cuts, a lot of the permian was produced when it was in the 50s. that production is coming on. >> energy is actually the worst performing sector in the s&p this year, down about 10%. you might think given the deregulation push from the new administration that would impact the companies positively. is the focus now on price? >> i think that the focus for us right now, we still are constructive on the back half of this year.

it's very tough right now because we're in seasonal refinery maintenance. we have the big inventory builds. we expect to see the draws in the next couple of weeks and we expect the market to clean up in the back half of the year. >> four month low for crude right now. thank you guys. when we come back, bullish calls from the street giving snap a boost this morning. up 3%. we'll talk to two of the analysts that initiated coverage today. and taking a look at the broader market at this hour, all 11 industry groups in the industry lower adding up to 0.6% decline. this is coming off the worst week for the stocks of the year. "squawk on the street" will be back after this quick break. bre.

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whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you. snap is on the move this morning after wall street's big firms initiated what was broadly positive coverage for the newly public company. joining us now are mark mace from citi and the internet analyst over at oppenheimer. jason, let me start with you. i mean, a lot of the coverage this morning is positive. but you come back to the idea that this the a company that trades 12 times revenues

obviously with a strong growth rate. how do you justify those kinds of numbers and the expectations in fact that some of these price targets take into account multiples even higher than that 12 times revenues? >> sure, so we went out with a perform rating which is the equivalent of a wall street neutral without a price target. we saw fair value at 21 to 26 which would be between a 30 to 65% premium on facebook on 2019. so the reality here is to justify valuation you have to go up pretty far. so you can do it on kind of a 2019. you can have a discounted model and go out to 2022, 2023 but clearly that's the challenge. we acknowledge this is a good company. we're very positive. but we couldn't get much higher than $26 and we just didn't feel like that warranted an outperform at this point right now. >> mark, i think you differ to a certain extent. you have a buy on the company.

i'm reading here of course. you're looking for what $13 billion worth of revenue in 2024. how do you get there? >> sure. we get there by assuming fairly modest user growth from here. but for the company which is only in the last two years begun to build out its advertising technology staff to close the gap with facebook and twitter to its closest two comparables to close the gap from the monetization standpoint. even that $13 million number assumes that facebook and twitter are still monetizing their users at three times that which we're assuming of snapchat. so we think we're using fairly conservative assumptions to get to that $13 billion number. >> mark, obviously, the chief appeal here and the thing you focus on is just the traction that they have as a product with this hard to reach demographic. you say 13 to 24. well, in seven years when a lot of the revenue estimates are

coming in those people are going to be 20 to 31. the question is are you going to replace those people with the next group of youngsters coming up? >> it's a great question. it's a bit of an unknown obviously. our assumptions are us based on that being the case. but today if you look at the 50 some odd million people in the u.s. that are between 13 and 24, 70% of them use snapchat 20 times a day for 30 minutes a day. it's obviously caught lightning in a bottle with that demographic. our assumption is based on them continuing to be able to attract that kind of usage for that demo going forward. could something else come up over the next few years and replace it, it's a risk. it's a risk that we highlight. i think it is baked into our valuation framework. by using a 15% discount rate to try to bake in that risk that you talk about. >> jason, it's interesting, a lot of the early notes came out

on snap. they were bearish and today it's come out with a whole different tone. the early narrative here was that snap was looking a lot more like twitter from a profit picture than a facebook. why do you not buy into that? >> i mean, first of all, the point that mark made. you have 75% of the younger demo 18 to 24 amongst 25 to 44-year-olds that may be 39%. but we did some survey work and what we found is that the older people are willing to use it. specifically they're interested in the publisher content. so if snapchat can make it easier to find the publisher content, we think they'll be more -- there will be more appeal. in addition, older people said if my friends go on i'll go on. so when you put the two factors together that's nothing that says that this company can't scale to older people. >> and other notes focused on the increased competition from

the likes of facebook. the impledgeatimentation of sim services. how does snap protect the environment -- the ecosystem it's creating? >> you can't ignore facebook as a competitor. a lot of financial resources, a lot of talented engineers, what they may not have is evan spiegel and the founder of snapchat who's been a product visionary and has been able to continually innovate the snapchat product to, you know, keep user growth continuing and keep the engagement quite high. even in the face of facebook and instagram replicating some of the most popular features of snapchat, we have continued to see snap's user growth continue. i think ultimately the numbers, you know, prove out the competitive dynamic there. but i make one important point. user growth only represents about 20% of our total growth outlook for snap.

the real driver of growth here over 80% is coming just simply from advertiser demand. and then building the technologies to fulfill it which to us has nothing to do with facebook and the competitive landscape. it's one of the reasons why we feel comfortable with our estimates and with our buy rating. >> got it. since it's gone public at 17 it's done quite well. if you're lucky enough at least to get it on the offering. thanks to you both. >> thank you. >> all right. thanks for having me. when we come back, the failure of the gop health care bill weighing on markets this morning. the dow is down 133 points right now. we are going to talk about the impact and what it means for the likelihood of tax reform. we'll speak to usa ceo judy marks on trade, tax reform and much more. "squawk on the street" will be right back. g tools, g tools, give you access to in-depth analysis, and a team of experienced traders ready to help if you need it. it's like having the power of a trading floor,

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i'm sue herera. here's your news update this hour. nbc news confirming that the senate intelligence committee is planning to interview president trump's son-in-law, jared kushner. they want to ask kushner about meetings he arranged with the russian ambassador. the committee has been investigating russian interference in the 2016 election. syrian state tv said more than 400 opposition fighters and faallies are being -- families are being evacuated today in the central syria city of homs. it's expected to last weeks and when completed the government can claim control over the entire city for the first time in years. eight high school students are presumed dead at an avalanche about two hours north of tokyo. authorities say it happened this morning while the students were mounta mountain climbing. there's word that 40 others were injured in the avalanche. and texas and oklahoma surveying the damage from the hailstorm.

it pounded the cars and shattered windshields. luckily, no reports of any injuries. look at that. wow. you are up to date. that's the news update. david, back down to you. >> thank you very much, sue herera. well, republicans are moving on to tax reform after the initial failure to repeal and replace obamacare. so how will the markets react to the president's next move? well, for more we're joined by senior policy analyst edward mills and the chief investment office of merlin as set management. a lot of people who follow this closely from the outside to be fair believe the likelihood of tax reform is small. the likelihood of tax cut in some fashion for corporate america and a repatriation deal, they believe remains certainly possible if not likely. what's your take? >> yeah, i think when you look at d.c. there's a couple of truisms i follow. one is that congress usually doesn't act unless there's a crisis or a deadline. and one of the things about a

comprehensive tax reform bill is that takes a long time and there's no real crisis or deadline that is driving that. beyond a desire to get it done. with the failure of the health care bill not getting done last week, we might have a new political crisis on our hands. which makes them more likely to get a bill done and a tax cut done to show they have a win. but that doesn't mean it's comprehensive. but it could be very much fiscally stimulative in whatever bill they do produce. >> but a tax reform at least the current plan that we have which is the blueprint from the house ways and means committee, you know, you had stephen mnuchin, the treasury secretary saying it was less complex than health care. the border adjustment tax needed for revenue raising and significant opposition to that, and not to mention the lack of a trillion dollars in benefit from the -- from the aca appeal that will no longer be part of this

and so many other constituents that may be aligned on different sides. ed, do you think it's possible to get tax reform done when you don't have the democrats playing at all here? >> yeah, i absolutely do. i think one of the questions i look at is can -- what is the likely bill? that's the main thrust of your question and what i see congress do time and time again is take the path of least resistance. the path of least resistance is doing on fy 18 reconciliation no filibuster in the senate and not doing this as a comprehensive package but in something that's not budget neutral. you have seen the freedom caucus indicate they're willing to do a bill that's not budget neutral. there's been too much focus on that and if it's not budget neutral it's no longer a zero sum gain. we talk about what does the v.a.t. look like if it's not in there or not. the bad thing about not doing something that is budget neutral is that it would sunset after

ten years but the flip side is if you sunset it after ten years you try to front load it and get a lot of the good stuff started now and so that would be looked at instead of a tax reform bill, more so as a tax stimulus bill that this congress will be trying to pass. that's absolutely possible. >> and mike, where does that leave us when its comes to the markets in terms of just exactly how much let's say 2017 and 2018 earnings estimates were baked in with some kind of tax help or for that matter if the multiple on those earnings has been inflated for that reason? >> i think a lot of that depends on what our expectations were before. i think i never expected the health care bill to actually pass. i expected it to be more tax cuts plus repatriation. so when you look at that now the probabilities of a tax cut, whether it's as a stimulus or not that's very comprehensive. and the repatriation of assets

from off shore assets you can depending on the companies you look at it, it can be beneficial to the earnings. a smaller u.s. focused companies are probably paying taxes in the 30 -- upper 30% range. multinationals probably teens or 20s but they can bring a lot of assets that they could reinvest in their growth in the u.s. the last time we tried the repatriation, a lot of the companies just bought back their shares. i think right now -- if you allow the companies to bring the assets back to the u.s. they would invest it. so i can see some increased company investing and also benefit from lower tax rates to many of the companies that are more u.s. focussed. >> ed, i was thinking about what you said earlier about how change happens in washington. whether it's a crisis or some sort of impetus. this is a president and a treasury secretary that has said that the stock market is their report card and, yes, 126 points on the dow is certainly not what

it used to be. but we're coming off a 1% decline of the year. i wonder how much of the market is going to factor into what happens and what the white house le leads on when it comes to policy. >> i have never seen a president who has used the stock market as much as president trump as a gauge. we debate if that's a trump put on the market. does that create that crisis moment, does that get trump to turn to his advisers and say, how do i get that back up because that's the independent validater for him of his success. and so if you can't get the freedom caucus members on board you're go having to move towards democrats. so then we start looking what gets democrats on board and that might be some infrastructure spending, paired with the repatriation that we're just talking about here. and that certainly probably gets the market moving in the direction he'd like to see again. so the market reaction here is really important, at least for

the administration in terms of how they will react to this. >> and mike, when it comes to the market overall, in certain sectors that you believe will benefit from the position that you laid out earlier what are they? >> well, i think when you look at the health care and it's just after the failure of the health care bill, you can look at that. the -- certainly the companies in the health care overall will be benefiting those who rely on the number of insured people. i think many of the multinationals whether health care or technology are the ones that are most exposed to the assets overseas. they have been borrowing money to pay the dividends. they will be able to bring a lot of the assets and invest so it's a broad range of companies. i think agree, i think -- i agree, look at what's easier to do in terms of what's easier to do and that's maybe some moderate corporate tax cuts and

repatriation, that can bring in some of the democrats and probably the freedom caucus. when you look at the numbers, the average company is paying only about 20% in their effective tax rates so you can lower the tax rate to 20%. and to show to the freedom caucus it can be budget neutral. that is an advantage of the scoring. i see those two things happening and possibly very quickly. >> yeah. ed, does that make sense to you? can you get to 20% with dynamic scoring and make the budget -- the deficit hawks feel better about things? >> yeah, i think that the -- you know, very hard to get to 20% under dynamic scoring and not have people kind of have to pay more. it's going to be a zero sum gain that you get budget neutral. i'm raising somebody's taxes, you can't grow enough of it.

that's where i go boack to the path of least resistance that we have a tax bill that's in ott budget neutral because you can get much more political support. republicans generally care about the score. but when it's taxes that's money they didn't think the federal government should have collected in the first place. they're more willing to have deficits related to that. and the budget hawks usually give on that more so than on the spending side. >> a subject we will be revisiting many times. guys, thanks to you both. >> thank you. >> thank you. and health care going positive here on the session. when we come back, the ceo of siemens usa will be joining us first on cnbc to talk about the company's outlook under the trump administration. but first, take a look at shares of cal maines foods, they're unchanged. the largest egg producer missing earnings and revenue estimates by a wide margin. shares are down 25% over the past year. more "squawk on the street" coming up with the s&p down half a percent.

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and hiring jobs in the u.s. >> well, sara, we have been in the united states for 160 years. we have got 50,000 employees located in every state and puerto rico. we have 60 manufacturing plants and we're actually a net exporter. so even though we're a foreign company we're proud to say we're u.s. local. >> how did the meeting go down with your boss? and the german chancellor and president trump. what was his main message? was it some of those points that you just went through in terms of siemens contribution in the united states to jobs and the economy? >> it was contribution but even more so it was how do we advance vocational training and use some of the apprentice models that have so successful in germany. we implemented them here in the united states and i think we were invited to be able to show that bridge between german and u.s. companies. and to figure out how we can upskill and reskill for the advanced manufacturing of the future so we can have more

manufacturing jobs and export more from the u.s. we're a net exporter here. i don't know that most people know that. we export ed over $5 billion of goods to the other countries using u.s. manufacturing talent. >> what was the reception from the white house from the white house that hasn't caught on much to create higher skilled manufacturing jobs? >> well, the reaction was positive. but i will tell you we think that this skill approach needs to be local. and each community deals with it a little differently. we partnered with community colleges in multiple states to advance this with alcoa and dow. we have authored a playbook that we have given to the department of labor. so other companies can use it. we're happy to share best practices. the white house liked it. there were three u.s. companies present. three german companies present. we all got action items to figure out how we can scale this together. >> judy, i wonder how you would 6 -- i guess characterize the

urgency of this issue with regard to displacement of labor with automated manufacturing and other things. we had the treasury secretary saying this is a 50 or a 100 year problem. not something so immediate. what about in your business or over the time horizon you're planning for? >> well, we see it as a collaboration. you will see a couple of german kuka robots coming to you from the future flexible lab here in princeton or the research facility. we think that's a critical role for robots, when decision making is needed. when agile skills are needed there's a clear role for humans. when you need quantity or speed that humans can't do, there's a place for robots. we think we bridge both by having the german roots where a lot of the robotic technology comes from. but also having that u.s. 160 year base. so we think they both can exist together. but we do think the skills

needed for advanced manufacturing need more than a high school education and that's why we partnered with community colleges and certificate programs to try and drive more locally and then we need those certificates. those journeyman certificates those welding certificates to be basically accepted across the country so people will have mobility if they want to move. >> when people talk about employment being replaced by robotics they speak of one of the positives, well, people are building the robotics but interesting "the wall street journal" has a story indicating of course that companies like yours, european and japanese manufacturers are the quirkey r suppliers when it comes to the manufacturing, that the u.s. doesn't have much in the game is that the case and is there a way to get the u.s. in the game of producing the robots for manufacturers? >> well, i'm glad that you asked because that's primarily the history and where the investment has been to date in germany and

japan. but one of the technologies we're showing today is something we call a spider bot. and what it is is it's anned 3- robot about this large with legs and we believe we can pull the spider bots in a way and in the future we can create large 3-d printing of a hull of a ship or a fuselage of an aircraft. you know, we recently tested a gas turbine blade that we 3-d manufactured. we put it in at 13,000 rpm and it held up wonderfully. so that future is here in the united states and we're looking forward to it. >> so judy, just set the record straight. is automation hurting more manufacturing jobs than trade? >> automation is growing manufacturing jobs. if you look at the manufacturing jobs that are open right now, we need more skills, we need more talent in those manufacturing jobs. siemens alone i have 2,000

openings currently in manufacturing at all skills on any given day. we're looking for that skilled workforce right here in the u.s. >> if 2,000 job openings, you can't fill them? >> we're trying every day. it's. so they're not always the same jobs, obviously, as we have somewhat of a fluid workforce, but it ranges from software engineers of which we have about 7,500 in the united states right now. i need more of those. and i need more technicians. i need more welders. i need more field service technicians for our wind farms. goes across the board. >> it is a timely discussion, judy. thank you for joining us on the new plant opening today. ju di -- judy marks. >> let's send it across the floor to jon fortt. >> snap up more than 20% off its lows just 4% just today. we're going to talk to two analysts, one that says it's going much higher and another that says not so much. also, uber, more woes, and a

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stocks continuing to selloff this morning. s&p down a little over 11 points. mike, for your column today you've been looking at the comeback of stock picking in this environment. >> and how difficult that's going to be. so essentially i'm talking about more traditional kind of fundamental based stock picking. everyone's been talking about this huge rush of money into index funds. we've been talking about it a lot obviously. a billion dollars a day going into vanguard right now. there's been about half a trillion out of actively managed funds in the last year, about same amount into index. this has accelerated, but not just that. the ones that aren't indexing, the big institutional money is quantitating and moving faster and big data and crunching all this kind of numbers that basically keep the old time stock picker at a disadvantage. here's another thing, there's also this focus on the reduced number of public companies, right? in the last 20 years about half of listing companies. what does that mean? mean left picking stocks are

more skilled on average than they used to be, there's fewer stocks to go around and the stocks in the indexes and in the market in general are more mature, more profitable, harder to get an edge on. all this stuff mashed together and i think you see a lot of wall street banks and firms trying to figure out what this is going to mean for their business model. i don't think it's a doomsday thing. it's hard. it's not impossible. i do think maybe you want to orient yourself toward the smaller end of the spectrum if you're going to look at individual stocks. >> if you're going to pick stocks. companies that may be somewhat undiscovered but particularly smaller caps. if you're a fairly large institution, you're not going to be investing in small cap stock. >> no, exactly. big institutions i think have this big challenge, especially if they're a mid size one. if they're enormous, you have economies of scale, if tiny, can be focused and concentrated. i think this is the struggle that's been going on right now for awhile. interestingly there was a little bit of a tit-for-tat, there's

more cfas, more financial analysts per stock listed in the world than there's ever been too. in other words, it's only getting harder. i think that's why the market trades the way it does. it kind of works in these quantitative kind of bursts. everything kind of gets priced in and we sit around for a while. >> it was a good chart. the flows going in completely different directions. >> exactly. >> for more on mike's column, you can always check it out on cnbc.com/pro. as we head to break, quick programming note, don't miss our exclusive interview tomorrow, yum grand ceo greg creed, 9:00 a.m. eastern. much more ahead here on "squawk on the street" and "squawk alley." stay with us. stay with us. ( ♪ ) upstate new york is a good place to pursue your dreams.

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i'm dominic chu, stocks in sell mark. s&p 500 down for the seventh time in eight sessions. nearly all 11 s&p groups are lower today, the exception though is health care. this as hospital stocks extend gains following a withdrawal of the gop health care reform bill. you got universal health, also community health and tenet

health care up as much as 6%. hca holdings a new multi-year hi about 5% away from all-time highs. looking at a one-year chart of some of these names down as much as 40%, to 18%. rock ri ride for some of these stocks as gop set to repeal obamacare. let's send it to the "squawk alley" crew. back to you. >> thank you, dom. good morning. it is 8:00 a.m., 9:00 had had quarters, 11:00 a.m. here on wall street and "squawk alley" is live. ♪