high-tech. it's wednesday, march 29, 2015, and "squawk box" begins right now. ♪ 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 andrew ross sorkin. let's look at the u.s. equity futures. yesterday a big day of gains for the markets. dow up by 150 points. this morning you are seeing giveback in the early hours. futures indicated down by 20 points. nasdaq is up by a half point. look at what happened overnight in asia. the nikkei ended flat, the hang seng was up by 0.2%. shanghai was down by a third of a percentage point. in europe, some of the early

trading, you're already going to see that things are fixed there as well. the dax is higher as well as the cac. ftse relatively flat. the ten-year note. yesterday the yield was settled in, back above 2.4%. this morning still sitting at 2.416. if you check out crude oil prices, which were slightly higher yesterday, this morning wti is up 28 cents to 4.65. couple big stories to watch this morning. british prime minister theresa may triggering a brexit. signing a letter to invoke article 50. the letter with be land delivered to the european council president in one hour from now. today's actions mark the start of official divorce talks between the eu and the uk. wilfred frost will join us at the bottom of the hour to talk to us more about brexit. fed impending home sales

come out at 10:00 a.m. charlie evans, eric rosengren and john williams will start to speak later today. we'll watch for that. in an interview on cnbc yesterday, which hopefully you did not miss, because we told you not to miss it, steve liesman -- >> asked you not to miss it. told nicely. suggested. >> we suggested. he spoke with fed vice chairman stanley fischer and asked if the average fomc member forecast for two additional rate hikes this year is about right or if the markets had to prepare for something else. >> that seems about right. that is to say that's my forecast as well. yes, you have to be -- you know for sure that you don't get everything right, particularly about the future. and you need to think about what happens if the economy is growing more slowly or if the economy is growing faster. >> fischer said the fed's current outlook la nhas not cha

much from the march meeting. also a bit of corporate news. joe mentioned at the top of the hour, i mentioned it briefly in the prior show, blackrock announcing plans to overall its actively managed equities business. this time cue the terminator music. the world's largest asset manager will cut jobs, drop fees and rely more on computers, ai to pick stocks. planned fee cuts will cut roughly a 30 million hit to revenue and the company will take a $25 million charge this quarter reflecting severance and otherexpenses. at a time when everyone says we have to get away from actively managed and go towards these funds, now we're letting the robots do it. what does warren buffett say about that? >> we were talking about it yesterday. it's sad to see anybody lose

their job. this is not automation. these are guys whether we always wonder if the emperor has clothes. if you're no good, if the computer can do better than you -- >> the computer can only do as well as programmed by people to do. i don't understand how the computers work. >> when you're trying to do your emotion -- like selling losers. you wanted a quick profit. a lot of things human nature causes you to screw up. i would feel better if there was a completely -- >> i wouldn't mind a screen that ran it on something. maybe that's what they're doing. they still have people making final calls. >> the most successful hedge funds have been doing this for how long? >> decades. but a lot of those guys were picking up pennies, half a penny here and. there. >> i understand this is different. this is using input to decide

what's a good long-term buy, i guess. >> right. they must have -- >> doing research. >> it's gigo, garbage in, garbage out, but when we do screens, earnings per share, sales growth. >> with you i would still rather have a human looking at the screen things at the end of the day. >> yesterday, i don't know if we have an intraday chart. it was weird. the eight-day selloff sort of coincided with the obamacare failure, and what it meant for tax reform. yesterday in the middle of the day, suddenly paul ryan and others said, you know, some of these freedom caucus guys -- >> may come back. >> have come back to us and said we wanted ideas on how to get this done. >> the president said it could be back on the table. >> suddenly it's back on the table. i was watching. it was up 20 points, 30 points,

suddenly 80, 90, 130, 140. >> it's a reflection of how effective this administration is going to be or no, i didn't going to be. >> it's tax reform. at 28 -- i don't want your 28. keep your 28 and your stupid column. >> 28% for the corporate tax rate. >> we were supposed to go to 15. >> i know. >> i will take 20. i'll settle with you at 20%. at 15% -- we'll compromise. >> look, if you can pay for it 20, god bless. >> get your magic wand. >> we are will grow so fast. >> i'll hire david blaine. >> we'll have money left over. we will have money left over. >> i do think what you watch with the market is the market gauging, is this administration able to get things passed or not. when it looks more likely, the market takes off and runs with it. >> between the big economic bounce back from coal, you just

watch. >> you did see what mitch mcconnell said? >> i did. >> he said the whole thing is a nonstarter. >> he goes this is the law of the land. we have to live with it for a while. you never know when these guys are posturing. he has the senate. >> we haven't gotten into the senate yet. that's where it becomes a real fight. for more on the top political stories, which we have been talking about, a guy who has real insight on it, eamon javers is in washington. >> speak for yourself. >> i will speak for yourself. >> they haven't figured out how to have robots operate washington, d.c., so we'll muddle through with the human beings. for now this administration is struggling to find a way to recover from the defeat of the healthcare bill last week. whether they move on to tax reform, take another bite at that healthcare reform apple. the president hosted a reception last night for senators and

their spouses at the white house. sort of a social gathering but also with political overtones. he made some remarks there. >> i have some special friends up in this room especially, i must tell you, we have the republicans, but even a couple of democrats. a lot of people showed up that people weren't expecting, which is a very, very good thing. and i know we're all going to make a deal on healthcare. that's such an easy one. >> the president suggesting there that healthcare is back on the table. he said it's an easy one. you got a sense he's extending an olive branch to democrats saying it's a good thing that some democrats came to the white house. this is an administration and president who called some democratic leaders losers and clowns over the past several months. he will have to do more olive branch extending. but that kind of reception is the kind of thing that barack obama was criticized in

washington for for years of not doing enough of. lock look at the president's schedule today. 11:00, he will host an opioid and drug listening session, at 3:45, he does a drop by by the women's empowerment panel. not a lot on the schedule. that suggests that the president is taking time behind the scenes to meet with staff, make phone calls, find out where they'll go on healthcare, if there's an opportunity to revive that or what to do in terms of tax reform. they have not said what this administration would like to do on tax reform. sean spicer did say this white house is driving the train on that bill. >> eamon, thank you, sir. >> all right. eamon. >> he's not like a robot. >> not at all. >> he knows stuff. >> he's a long way. >> 0011, that's all you have to do if you're a robot.

>> i don't envy robots, i envy sigh borg cyborgs. >> they get all the benefits of being human. >> i would like certain things -- >> indecembstructibleindestruct? >> yeah. >> wow. >> a day after the dow snapped an eight-session losing streak, joining sus mius is michael tyl. and michael farr, ceo after founder of farr, miller in washington, also a cnbc contributor. i don't think michael farr, i never called you mike. have you? no one does, do they? >> for all of the other things you called me, joe, mike is fine. >> he called you mr. vice president when we were going to run. >> and mr. president, yes. >> i was going to pick you. look who we got, we got pence.

you guys were separated at birth. it's like i had the right idea there. with the gray hair. >> it's still about the hair, joe. >> can i call you mike? you're michael, and i'll call michael tyler mike. does that work, mike tyler? >> that's fine with me, thanks. >> okay. >> michael farr, i actually saw you on one of the other shows eventually. you didn't sound really that bullish. are you bullish now or are you worried about being able to effect all of these things that the market already expects will happen? >> you know, i think the uptrends in place and people keep trying to call a top that won't happen. it hasn't happened for years. so, yeah, i'm worried about the level of prices. i think things are expensive. i think that we've been going up on stimulus for years on the fed. praying we'll get stimulus now from the congress. can it come? will it come? i guess at some point 2018 we'll

see real benefits from tax reform in the economy. but until then i keep waiting for the market to get inpatient and saying we're sick of it and we're going back tofu fundamental level. it's not happening. so i continue to be cautiously optimistic. but a correction would not bother me at all. >> i tell you, watching the last eight days, you can watch these different financial websites. i saw this slump is likely to continue. why it is best to fade the trump trade. they were wrong for 14%. from november 8th, totally wrong, fighting it the whole way, they got less than a 2% selloff, they're ready to call that -- they were calling that the top. just like you said. which makes me think we're not there yet. >> i don't think you're ever there as long as people are still calling for it. we always seem to get blind-sided by these things.

i continue to think this is no time to go out and be too aggressive and too speculative. you have to make sure you own companies with real balance sheets and earnings. it will happen sooner wraor lat. maybe we're beginning to see it but i think you have to be cautious still. >> mike tyler, this was -- we probably pre-interviewed you before all the events of yesterday. in your notes you say growth expectations were moderated after the failure of obama repeal because of what it could mean for tax reform you also think, i guess, staying bullish, right? >> absolutely. you know, it seems to me that most -- if you look at the dollar, if you look at currency markets, bond markets, they retreated substantially back to the levels where they were around the election.

that tells us the markets have pretty much discounted any meaningful action out of washington. when you see the stock market still holding itself together really well, that's because corporate earnings are strong. we'll have a good earnings season now. we're shaping up for a good rest of the year in terms of corporate profits. that's driving the stock market. i don't see reason to back away from that now. if we get a correction, it will be a shallow one, not difficult for us to get through. we'll ride through it. rnlgt we ha >> we have a lot of stuff to think about. mike tyler, around the world you think the growth story or the improved growth story is still intact? >> we have seen earnings beginning to pick up. as the ecb begins to back away from long-term quantitative easing, it starts helping the european banks, that helps the rest of the european economy. we are seeing demand pick up there as well.

of its own volition. as that happens, i think you will start seeing better returns coming out of europe than you've seen in quite some time. they're still cheaper than the u.s. in terms of pe ratios. we think europe does have some life to it. it is beginning to revive. that's a story that also benefits u.s. exporters as well. >> joe, just quickly. i have to feel more cautious than this. prices are still near all-time highs. there's a lot of air under the market. when it goes down from any unforeseen event, there could be a 20% drop out there, no question about it. iny nthink investors have to b careful. >> you seem like you're looking at it since 2009. go back to 1999, took 18 years to double. >> it felt like this, didn't it? >> i don't know if there's a

huge air pocket like that. you have low interest rates, fath fairly moderate inflation, stimulus on the horizon. >> but we couldn't quite understand why it was going up as much as it was. what was driving it? >> because of the fed. now the fed is actually going to get bailed out hopefully by where the economy actually does take the baton finally. you're a nervous nelly, worry wart, that's why you have white hair. 40 years old. you went gray at 28, didn't you? >> i have been gray a long time. but it's not in this business. >> i know. we think you're wise. >> joe, one other thing to think about. >> we have to go. that was a wrap up. i shouldn't have started talking about his hair. usually they play the music over me. they didn't this time. >> keep talking, they will.

>> they will. thank you mike and michael. >> thank you. >> you bet. let's talk about stocks to watch. shares of vertex pharmaceuticals are soaring. its cystic fibrosis combination therapy improved lung function in late stage trials. the stock is up 17. sanofi and regeneron scoring a win as the fda approved a new drug to treat eczema. the therapy could bring in more than $3 billion in annual sales. the fda also approving roche's multiple sclerosis drug. the green light puts the drug back on track after a three-month delay by regulators over manufacturing issues. meg tirrell has more on the pharma news at the bottom of the hour. new economic data out from chi china paints a more worrying picture out of bay sing.

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. welcome back. important data from china later this week, while our next guest expecting a strong read he's worrying about how big a price beijing is paying by projecting a stable growth.

we're joined by leland miller. let's talk about the official numbers that have been reported. they've been pretty good. >> they have been doing good. when you see manufacturing doing well, people will be bullish on china. gdp is good. manufacturing looking good. a few bits and pieces housing data looking good. so china is looking good for us. that's not what we're seeing in the data. >> what are you seeing? >> they have been doing everything they can to get this level of stability. what we saw this quarter is manufacturing and commodities cranked up. but -- we saw a really strongie but it's unsustainable. >> what shows you that? >> if you look at the sales prices, you're seeing firm metrics go through the roof. we have done a phenomenal performance in goal, steel.

commodities have done fantastic. the balance sheets of firms have not gotten better because cash flows have deteriorated. >> you're saying this is faux demand created by the government? >> it's a faux demand. we're seeing the same things in property. property may have peaked. commodities may have peaked. a poor performance in the retail sector in q1. there's a lot to be worried about, particularly with the credit environment unsustainable at these low rates. >> you say things like that, if that is true, it's bad news not only for china but the rest of the world. they're a big part of the global gdp. >> it's a major problem for that. and people have gotten complacent on the yuthe yuan. if you have the fed hiking, if you have global inflation

looming overhead, the chinese will not keep their rates and not just their normal low rates, but the lowest rates in years this last quarter. >> what is the tipping point? where does this become more clear publicly rather than through your numbers? >> they'll have a hard time keeping up -- they can also push the stimulus button. the reason people are worried is that they'll just do something to make this go away. she have to do that in the fall. they won't deal with chaos. you have a weird doughnut hole in the spring. in the months coming up, in which the labor market is good enough so they can't stimulate. they probably won't stimulate. at the same time you will see falling growth in some key sectors. flgs there's a weird potential doughnut hole in the year. >> if they are thinking about stimulus, are you talking about something that will be a year before we see any real cracks?

>> that's what they want. they want to put this off until 2018, have the new team in place and deal with this front and center, not before the party congress. >> who is buying up these commodities? if you say there's a boom going on, is it the empty cities all over again? >> it's party that, but it's the money ball. we're focusing on this captive ball of capital within china. we've watched it go to properties, equities bonds. we're seeing it's been in property for a long thyme but widespread sales falls. it is moving out of property, should move out of commodities soon. so we'll see a new destination soon, but that means some of these sectors will fall. >> it reminds me of a snake -- >> it's a snake ball thing. >> did you see drudge? >> no.

>> a snake hate a human. >> no. >> a man was swallowed by a python. >> right now? big headline? >> it's not the headline, it's in there. don't look at it now. you're in the middle of an interview. >> i sort of want to see this thing. >> what what happ what happens ? will we see these problems beyond, is it things that shows up in the global markets, putting increasing pressure on commodities? >> it should. we're not looking at this saying the economy will fall off a cliff this year. it won't happen. people have become so complacent because they believe china cannot have anything other than an uber stable 2017. when you see weakness and pressure on outflows, china not announcing immediate stimulus,

people will think what's wrong here? people will question their assumptions. you are already seeing shops call for an acceleration of growth into the party congress. we're certainly not seeing that. >> thank you very much for joining us. >> thank you. >> says graphic content. don't look. >> don't look? >> indonesia. >> the guy was missing. >> okay. during the commercial break, go to drudge, check it out. >> is it work safe? >> it's horrible. the guy was 25 years old, he vanished from work. they saw this big snake, they got pictures. >> hope you're not eating breakfast. coming up, new work being done on alzheimer's and it's radically changing the treatment options. a new start up using gene therapy to fix the disease at the dna level. meg tirrell has a special report next. as we go to break a look at the s&p 500 winners and losers.

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all while reducing america's emissions. energy lives here. ♪ welcome back. you're watching "squawk box," live from the nasdaq market site there times square. just wait until you see what we have coming up. good morning. let's look at the u.s. equity futures. looks like things are weaker. a big up day for the markets yesterday. the dow up by 158 points.

right now dow futures down by 38 points. s&p down by 3. the nasdaq off by a half point. on the watch list, samsung is set to unveil the galaxy s8. the company holding an event in new york today. it is expected to feature design changes and a voice assistant named bixby. no word yet on the price. >> good name, bixby. more than 5 million americans at this point have alzheimer's disease. that number is expected to triple by 2050 if there is not some type of effective intervention. the failure rate in alzheimer's drug development has been 99.6%. meg tirrell is here with a look at new ways that researchers attacking disease in our series

mo modern medicine. i heard there's a polygenomic way to test for it. but then what do you do? >> we don't have any drugs that can help you even if you are predisposed. >> just things that improve cognition a bit? >> there are a few drugs on the market that work on the symptoms and maybe temporarily improve thinking but they don't change the course of the underlying disease. that's why the drug industry is working hard. but the failure rate on alzheimer's is terrible. in the last decade eight drug trials have failed. merck in february and lily in november. those trials tested analoid beta. this is one of the biggest controversies in medicine what is driving alzheimer's? with each failure you hear whether this is the right thing to be pursuing. it's still the prevailing

sentibility in the space. we talked to researchers in the past week. listen to the different of opinions. >> all the genes have one thing in common? excess analodi pop signadeposite brain. >> none of the pathways have improved patients cognition. >> clearly amaloid is a player, is it the only player? is it the best player for us to target for therapeutics? >> so the director of the nih there summing up is it the best target? we decided to look at what else is going on on in the field. voyager therapeutics in boston, they are working on a gene therapy approach to tackling alzheimer's. they are a small cap company, before 3$300 million market cap. we wouldn't normally mention

such a small company, but this is early investing in new ways of treating alzheimer's. they are using viruses to get into the brain and deliver therapies. >> the cool thing about this approach is that because the vector gets into brain cells, neurons or glea, it sets up shop, with a single injection we can produce antibody for many years. >> to the protein? >> they're focusing on tau, another important -- they tau gets implicated in later forms of the disease. first you get the plaque build ups and then the tau tangles, and looking at other jegenes. >> tau is not something that results from the protein being broken down? >> i'm not sure how the cascade works, they think there is a cascade. >> someone could win a nobel prize for this. if you could definitively prove

amaloy is the cause rather than the result of the underlying disease what if it's the leftover alzheimer's, you would see it all the time but it wouldn't have -- >> it's an amazing debate going on in medicine. something people have been pursuing in decades. we've had no successful trials. every time there's a failure they say should we step back? we need to treat earlier in the course of disease. you have biogen, roche, ely legally and merck going at it earlier. >> is it a question of when you know it's there? >> it builds up years before the onset of alzheimer's. dr. perry in san antonio says he thinks it might be protective, and by removing it it could be dangerous. bam but if you go after amyloid, you should be able to go after the

disease. >> what fizz the underlyin abou? >> shares are up this morning. they are data that came out on the combination pill for cystic fibrosis. they already had two drugs on the market. shares are up 18%. this combination looked good. even better than a single drug alone on improving drug function but also on safety. this also sets the stage towards getting a triple combination for cystic fibrosis where you could extend treatment to a majority of treatment to patients with cf. half the patients now don't have a real good treatment. >> this is not just treating the symptoms -- >> going after the underlying genetic causes of what's going on. >> meg, thank you. >> thank you. when we return, the biggest challenges ahead for the next generation of business leaders. we'll talk to the dean of duke university business school.

tax reform is in the news. we'll talk about that and the implication of repeal or not of obamaca obamacare. and later, senator rob portman will tell us whether there will be a bipartisan tax bill that could get through the senate.

time for the executive edge. the uk will invoke article 50 today and start the brexit process. wilfred frost has more on what this exactly means. >> a signed letter from theresa may invoking article 50 will be handed to donald tusk, the president of the european council by sir tim barron, the british ambassador to the eu at 7:20 a.m. eastern time today. the key provision is in the absence of a unanimous agreement to extend negotiations by all 28 eu members, a country activating

the clause will leave the block two years after notification, that means britain will be out of the european union by april 2019. a two-year period to settle divorce terms may seem like term but the deal will require a super qualified majority of the 27 remaining eu countries and of the eu parliament or a 72% vote of the states representing 65% of the population. and any new comprehensive forward looking trade deal would have to be separate and require unanimous votes. what to look for? financial onably cases. number two, changes to freedom of movement laws. number three, with that, rights for expatriate citizens, whether in the uk or in the eu. number four, trade terms. in particular for the

all-important financial sector. number five, time frame for the new agreement after april 2019, will the uk fall off the cliff or an extended period of time. most of today's ceremonial actions may have already been priced in. guys? >> thank you for that. thank you for helping us understand what it means. >> pleasure as always. coming up, the biggest challenges ahead for the next generation of business leaders might not be the same challenges as have been in the past. and got a special guest, bill boulding joining us next. he's the dean -- whoa, really? of duke university? of duke? i wonder if he brought me any generic early admission letters? we will talk to him. see if he has pull at the undergraduate school as well. and as we head to break, a quick check on what's happening in the european markets right now.

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♪ it is prom season. many viewers know my daughter from when she was this big. it's gotten to the point now where people get something called a prom poposal? >> i did not know about this. >> i didn't hear about it. i didn't. >> i knew about it. >> you knew about it. >> yeah. >> people do a big thing. like they surprise the person they're going to ask with -- well, check this out. this kid, he's a great kid, paul, came over in the back of his suv, has a disco ball, has a prom question mark, flowers involved, steamers coming down. really -- i would have failed miserably. ♪ >> if i had -- >> well done. >> this would add so much extra

anxiety. >> blake looks beautiful. i want to see the other picture. >> can we see the last picture? she looks gorgeous. you're right, seeing her for the first time as a teeny baby, there she is. >> you know, it was very weird. i have not cleaned my gun, seriously, in months. the kid shows up, there i am. >> what timing. >> yeah. >> coincidence. who would have thought. you actually contributed to this. there are some guidelines. >> a friend sent me this picture, now that i have a daughter. these are important rules for dating my daughter. >> got to have a job. >> got to have a job. >> understand -- i do like paul. that didn't -- he's a good kid. you hurt her, i will hurt you. be home 30 minutes early. get a lawyer. she's my princess -- let's skip the last few.

i think i will do you what you do to her. you make her cry, i make you cry. this is not long. this seems last week, we were holding up a 3-month-old -- >> she was here. >> then a promposal. >> you never heard of that? >> no. i had such a hard time picking up the telephone to get the date. what happens if they say no? i would have to prewire the whole thing. >> you know what happens at the same time the prom goes on? you're looking at colleges. one of the best colleges around? >> yeah. >> to look at? duke! >> wow. >> duke! >> this is a segue. >> this is a segue. >> this is a business school. got to have some pull at the undergrad -- >> he probably does. >> our next guest says the intersection of business and politics is the next biggest challenge for executives. bill boulding is dean of the

business school. good morning. >> good morning. >> did you know about a promposal? >> i did not. but congratulations to your daughter. >> you mean you'll do something? oh, congratulations on the tal just business leadership and particularly activism. we can get some stuff that's going on in north carolina and the politics of that. which i want to talk to you about, as well. but in terms of what you're seeing in terms of how ceos are reacting to the sort of wave of activism, has it changed over the past year or two? >> i think it has changed. and, you're seeing this collision between the worlds of politics and business. part of it is that business has been in the crosshairs. i'm sure it has not gone unnoticed that business has been demonized in the political world. but at the same time, there are political actions that have been taken that have caused khosts to jump in ways they have not done in the past. it used to be the reason why you would get involved in a political issue was it had a

district impact on your business so we call that lobbying. >> right. >> but now there are things that are happening because the political world is so divided, that divisiveness is carrying over into areas that affect businesses in terms of what i call the indirect impacts on employee morale and so on. >> let me ask you about that. there seems to be oftentimes two different constituencies. which is that the ceo has to look out for the customers on one end, by the way, which have oftentimes have very different politics. and then employees, which sometimes, the politics may be more similar. i'm thinking of tech companies. a tech company might feel they have to say something on behalf of their employees, but then the ramifications may be different for the customers. >> yes. >> or vice versa. >> yes. >> so the question of do you weigh in on an issue is very complicated. because there are these different stake holders where you kind of have to make judgments about how people react.

but i think if you ask a question, when do people weigh in, it is because fundamentally they believe that there is a threat to their long-term business model. so the tech companies weighed in on executive order, immigration, why? because they understand that innovation is the key to the long-term success, and the key to innovation is to bring people together with different backgrounds. and so, they're thinking about, we need to be able to protect the idea of having access to the best and brightest talent from wherever we are, wherever they come from in the world. so you're thinking about the long-term implications of talent. because over the long term, talent is -- >> even if you say anything political these days, i'm thinking of the ceo of under armour just a couple weeks ago made a comment and steph curry who was one of his sponsors then came out on the other side, i mean, so it's -- it's very dangerous to some degree. but at the same time there's an authenticity thing, and everybody wants -- >> so, i mean, going from steph

curry to the nba. >> right. >> one of the things that has been very prominent in my home state is house bill 2, and i'm sure it has not escaped anyone's notice that the nba pulled their all-star game from north carolina. >> yeah. >> so in talking to adam silver about that. why did you do that? he essentially said, look, if you ask the question, is house bill two consistent with our values, is it consistent with the values that we promote within the nba, within our employees, is it consistent with the values of our customer base, his answer was no. and as a consequence, they took this action, because the feeling is, if you are leading the company and you're talking about the importance of diversity and inclusion but then you say i'm on the sidelines on this issue then the question is, well how many -- how many times will you onnen the sidelines and how genuine are these values that you're espousing. >> complicated. very complicated.

are there times when you would actually tell somebody like an adam silver, don't speak up? >> there are times. i mean, so i'll give an example of where we saw this very interesting phenomenon where the thing that i think is critical that the business community brings that's lost in the political world is the business community knows how to bring people together with common purpose. and we seem to have lost that on the political side of things, where there's so much divisiveness. so how do we bring people together? how do we work with the same common purpose? and so, we saw this example, this is more of a political example, where you get yourself in trouble. but the most respected institution that we have in this country is actually the military. right? why is it the most respected institution? no one questions their purpose. that they represent all of us. and so what we saw was different generals getting involved in the political conventions.

and we saw the former chairman of the joint chiefs of staff, who happened to be now and he weighed in and said, don't do this. you're undermining the ability of our military to retain respect and sense of independence, and so, don't weigh in to these issues. stay out of the political arena, because if you -- if you do jump in, then you're going to harm your long-term success. >> what about supporting a political candidate? so one of the things that happened this time around was you had people more vocal than normal. >> yes. supporting a political candidate, i think, is really complicated. which is, in my opinion, and this is just an opinion, it's fine to do that personally, and all of us should weigh in in the political world with your own beliefs. but to -- but to represent your company, understand that you will represent your company in whatever you say personally, and publicly, and that's where things get complicated. because reality is, your company

is going to have democrats, it's going to have prurepublicans, i going to have people of all different religions, race, genders, sexual identities and if you take actions that make people feel like you're ignoring some of us. >> right. >> or you're diminishing some of us then that's when you lose the ability to have people -- >> -- make a donation, it becomes public, complicated issue. >> appreciate it. come back. >> okay. >> you're in new york a lot. >> i'm here all the time. >> we'd love to see you. >> thank you. >> we need to talk to you as it gets closer. >> look it up -- >> we're going to step off the set right now and have a little talk. >> yeah. >> thank you for joining us. >> thanks. >> appreciate it. >> when we come back, the prospects for tax reform and what it means for the markets. we're going to talk to texas congressman roger williams about his tax plan which is called jump-start america. also later senator rob portman will tell us what it will take to get a bipartisan tax bill through the senate. stick around, "squawk box" will be right back. ack.

markets snap back. the dow breaks its eight-day losing streak and financials lead the way. what you should be watching in today's trading session is straight ahead. the rise of the machine. blackrock overhauls itzhakively managed equities business, cutting employees. they go high tech. more on this story in just a few minutes. and jump-starting america. congressman roger williams joins us with his plan on tax reform for small business. the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box."

good morning, welcome back to "squawk box" right here on cnbc. we're live at the nasdaq marketsite in times square. i'm andrew ross sorkin along with becky quick and joe kernen. dow off about 25 points, s&p off about 2.5 points and nasdaq looks like it would open up slightly to the upset. let's get you caught up with some of the mornings headlines. the brexit process officially has begun. prime minister theresa may has signed article 50 formally triggering the process of britain's departure from the european union. the official letter will be delivered to the european council just a couple of minutes from now. also black rock has announced a significant revamp of its equities business. it will slash fees, cut some jobs, and this is probably the most interesting part of it, they're going to start using computers to pick stocks. blackrock is trying to boost the performance of itzhakive management business and is looking to ai and robots to help them.

and president trump thinks a deal on health care reform can now be reached. despite last week's events which resulted in that proposed bill being pulled. he told a group of senators that he thinks a deal will happen, quote, very quickly. he did not give specifics on how he thought differences within the republican party might be ironed out. but that clearly moved the market yesterday on expectations that maybe the deal was back on the table. >> on today's economic agenda, the february pending home sales are out at 10:00 a.m. eastern. chicago fed president charles evans, boston fed president eric rosengren and john williams will all be speaking today. in an interview on cnbc yesterday steve liesman asked if the predicted 2% hikes this year is about right or if the market should prepare for something else. >> that seems to me about right, that is to say, as well. but yes you have to be -- you know for sure that you don't get everything right, particularly

about the future. and you need to think about what happens if the economy is growing more slowly, the economy is growing faster. >> fischer said the fed's current outlook has not changed very much from the march meeting. over the course of march we've seen a lot of favorable stock sectors and industry groups show signs of weakness, and one of them is potentially could be trump rally related. by the dip shopping list. dom? >> andrew a lot of the sectors, the transportation stocks and infrastructure plays have taken a big beating as we've seen markets take a little bit of a rollover. but, are there people stepping up to buy some of these beaten down sectors? you can see here with the s&p 500, since trump got elected up about 10%, but then kind of maybe flattening out over towards the last month or so here. so we decided to take a look at the s&p 500 and look for the stock that perhaps shows signs of at least strength on some of

this recent weakness. we looked at the s&p 500, we looked at which stocks of those had negative month-to-date performance so far in march and then which ones just over the past week since the whole turmoil happened last tuesday have shown some signs of relative strength. about 50 stocks passed the screens. but there are some real themes that have developed here. i'll bring in a couple of these stocks to give you an idea of what's going on. first of all, you've got some big names out there in terms of the overall schemes of transportation, norfolk southern, some rail companies. that might be shortcoming. but it could be fundamental buying. keybank, regional bank and other financials showing signs of strength over the last week or so. keybank up about 3%. retail, maybe trump, maybe not trump related but some beaten down retailers like gap stores up 3.5%, as well. and then, three of the best performing stocks in the s&p over the past week are airlines related. united, continental leading that list up by nearly 8%.

joe, as we talk about the trump train and whether or not it is still intact some of these sectors may be key barometers for whether the markets will be going higher, especially if some of these sectors continue to do well. >> it's got to be, you know, the eight session losing streak it's going to take more than that to derail the notion of a trump train. dom came right back yesterday. do you -- just real quick. we don't want to dwell on march madness anymore. obviously. but you had kentucky didn't you? so you need nobody's got south carolina i don't think. >> or oregon. >> so you could still win if there -- if one of them win. >> no. >> you have north carolina. >> i can still -- i think brian steele has more points, so even if north carolina wins i think he'd be first, maybe i'd be second. >> i think what it comes down to is if north carolina wins, somebody in the nbc universal family is going to win that tv newsers pool. >> that's good. >> most likely going to be a

cnbc person. >> i think it will be brian steele. >> but if south carolina wins you still can't win. >> i don't think i can win. i have no more ability to garner any kind of points whatsoever. north carolina guys still do. i don't know about myself. >> well, not that it will completely make up for that but you do have a new daughter. a baby. so that cushions the blow of not winning. >> it does make up for it. and yes, i say a small way to be facetious, but it consumes me right now, my daughter. >> unbelievable, isn't it? >> it's fantastic. you've got to give me parenting tips. i know you've got a daughter. tell me how to do this thing. >> you'll be, you know, interviewing possible prom dates some day, as well. it will come before you know it. you know what? >> you do diapers, joe? >> did i? i did -- you mean -- oh, with the -- i'm fine. at this point. you know, whatever that stuff is called. >> depends? >> it's not easy to make it three hours here. that would help. no i did those.

i changed a couple of poopy diapers, did you? >> yeah, that's what's going on in my house. >> do you change any? >> are you kidding? i changed 40 a day. >> i know, i know, i know. on the baby. >> yes. >> okay. it's always something, isn't it? sam? i know, joining us to put the market in perspective sam stovall chief investment chat gist at cfra. sam, as of yesterday, the day before, we thought health care was done and you said you were glad because it was quicksand. someone talking and trying to do that and people really want tax reform so we're actually happy that -- maybe it's back on the table now. would that be a negative for you? >> it's back on the table? >> well i think really that the market wants to look if something is going to stimulate the economy, there it's infrastructure spending, tax reform, repatriation of foreign earnings, et cetera, that's what the markets are really looking for and are building into valuations, equity price movements, et cetera.

so my feeling is, let's really give reasons to support these valuations. if you look forward, you look backwards, you look at operating results, we are trading at very expensive levels. and unfortunately, all we've been seeing so far this year is earnings estimates come down for 2017 and 2018. so, i really think we need to see some sort of justification for the hype. >> i almost wonder, look, it's maybe read into it too much when we're looking at day-to-day moves. talking about 150 points or something. to me it's almost a gauge of how effective this administration is going to be in being able to get anything through the congress. and i guess my question is, is that what the market wants at this point? just something to pass through. for years and years we've talked about how a do-nothing congress was a good thing, the market sees it in a good way. are we past that? >> no i don't think so. first of all historically a do-nothing congress has been good for bonds but bad for

stocks. traditionally before the obama administration the average price gain was only 3.5% whenever we had a split congress. which was the worst performing scenario of executive and legislative branches. mainly because nothing gets done, there's no leadership whatsoever. the opposite of pro is con, the opposite of progress is congress, that's what always comes up. >> i like that. i hadn't heard that. the opposite of progress was congress. >> yes. >> so that's the worry right now. is that because they still have a sequestration mind-set, that the possibility is that they're not going to allow for any additional expenditures unless you have cuts along the way, and what legislator wants to go back to their constituents to say, good news, i just lost you some jobs. >> is there anything that -- if i say true or false, this statement, we're in a goldilocks environment right now in terms of interest rates, and the dollar, and inflation, and increasing global growth, is

there something wrong with that statement? >> no. nothing wrong with that statement. >> it's like goldilocks, not too hot, not too cold. >> right, right. and it's usually that you then start to say to yourself, well what can go wrong? because goldilocks can't stay forever. >> that was the next question. do you have anything? is it -- >> well, i -- >> is it brexit, or italeave, or grexit or something like that? >> right, or whether greece is a fait accompli. so, yeah, i think you do have to worry about europe. but i think that we've been worrying about europe for more than a year at this point, and so, that's pretty much built into the markets. maybe we're embracing a scarlet o'hara mind-set where we're saying fidelitydy i'll worry about that tomorrow. so it's the unanticipated events -- >> europe has another leg to go down? who did we have on yesterday saying if you have any money on the sideline, wouldn't invest in the united states, would invest in europe. >> i'm actually saying it from a worry perspective we've got a lot with europe in particular,

and internationally in general. but i think that's where most of the attractiveness is. you look to earnings growth, you look to valuations, dividend yield, things look so much more attractive internationally on a rolling ten-year basis, the mscie is rivalling its all-time low of february 2009. and on a rolling five-year relative strength basis, the efa and emerging markets are trading at excessive lows relative to the u.s. >> that's where you're looking? >> yes. at cfra research we have an overweight recommendation internationally. mainly because of that we think that the dollar appreciated well too much in the fourth quarter up more than 25%. our expectations, we've already been seeing a decline in the first quarter, that's going to continue in the second quarter. >> you are a -- i like the tie. >> yep. nehlenburg college. >> alumni but not the most distinguished and most famous and most successful graduate.

>> someone related to you, i'm sure. >> nick yogan. our boss. >> cool, all right. >> you are -- you're like second, a distant second. >> i'll just try harder, that's all. >> you just have to try a little bit harder. >> thanks, joe. >> like that tie. >> yeah. >> coming up, financial services committee member, congressman roger williams. that was roger miller. i was going to play that song. ♪ ain't got no- that's not roger williams. that's a different guy. anyway, roger -- not roger miller. roger williams joins us after the break to talk taxes and small business. then later, rise of the atms. not just at blackrock. ebold owns nearly 40% of the atm market globally. these are what you think of with atms. companies looking to build on that market share. banking and security with the company's ceo in just a moment. stay tuned you're watching "squawk box" on cnbc direct from squawk square here in new york.

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welcome back, everybody. investors staying optimistic about some of president trump's key proposals that won him the white house. particularly, tax reform. our next guest has been working on a plan to try and save small

business. his jump-start america plan would lower the corporate income tax by 20%. bring down capital gains and dividends rates to 15%. and allow companies to repatriate cash with a tax of 5%. he also wants to allow 100% depreciation of fixed assets and preserve last in first out accounting. all of which he says will benefit small businesses. joining us right now is congressman roger williams a member of the house financial services committee. sir, thank you for joining us this morning. >> thank you. good to be on the show. >> why don't we talk about your experience, your background, and why that brought you to this tax plan. you are somebody who is a small business owner himself. >> i am a small business owner in texas. i've been in business almost 45 years. been through a lot of things from dollar gasoline to 20% interest and i can tell you, since september of '08 with the obama economy, it's been really hard for main street. and we've got to send main street a message that allows them to begin to make money, take risk, get reward. and the government needs to

understand main street america can cash flow our country. the government needs to make government smaller, less to pay for as opposed to continuing to take taxes away, raise taxes. that's not a good message to spend small business. >> we have seen small business optimism rise pretty significantly since the election and i think you can probably tie that back to the idea that many in the marketplace think that tax reform is going to get pushed through this congress. however, we've seen how difficult that can be with health care. with the policy bill that came through, and i guess i wonder what makes you optimistic that you can find more common ground on the tax bill than was found in the health care bill? >> well i think when you talk about tax reform it's a little bit easier for people to understand than health care and i think we see that the main street america is ready to go. i mean half the payroll, half the workforce is generated by small businesses. this promise president trump wants to deliver on, it's a promise i want to deliver on and we need to get it going now, because the economy is frankly ready to explode.

if we get real tax reform, that lets small businesses take risk, and get rewards, look if small businesses make money, they hire people, they buy equipment, they generate income. we put more people in the market. we create more taxpayers and that's what we need to do and that's what we do with my program jump-start america. >> that's certainly something that would find a welcome audience to a lot of our viewers. many of whom are entrepreneurs and small business owners. however, you're going to have a hard time, i think, selling this to some not just on the other side of the aisle but some in our own party when you start looking at ways to pay for this. we had grover norquist who joined us earlier this week and said because health care reform got shot down that means a trillion dollars of potential savings that would have gone into tax reform, by his estimate, that took us from a 20% potential rate on businesses to 28% just by not having those savings. how do you prepare to pay for these? >> well, i will say, first of all, grover has blessed this plan, so he's a good friend of mine.

but look, to pay for necessary doesn't come from ideas like a border tax. the pay for needs to come via small businesses hiring people, creating more taxpayers, and then all of us out there getting serious about cutting expenses and making government smaller. we just -- sometimes people don't realize the nower that small business has to create jobs, and to create income, and create taxpayers, by turning them loose. so when you talk about pay-fors, it's not necessarily border tax or an idea like that. it's getting government smaller, and letting small business cash flow america. >> again, what you're talking about is dynamic scoring and there are certainly people within the administration, too, including the treasury secretary, who have told us that they have a lot of people working on their own ideas about dynamic scoring. have you talked to other people within your party, though, and is there a agreement within republicans to do something like dynamic scoring to get you there? >> i think when you start scoring, dynamic scoring is the

way to go. but i must tell you being a small business person they use terms up here that we don't use in business. nobody uses revenue neutral in business. they don't say we're going to be revenue neutral to their shareholders. they don't say we're going to be revenue neutral to their employees. they say we're going to grow and we grow this economy by not worrying about terms like static and dynamic and revenue neutral. let's turn the greatest asset that we have, main street america, loose and let all of us in government make government smaller. >> sir, let's talk a little bit more about your own history. i mean the reason you feel so strongly about tax reform is when you came in to being a small business owner it was because your father has passed away. the irs showed up pretty quickly at your doorstep, right? >> they did. we have a family owned business, operated by three generations. when my father passed away, in 1990, i was one of those that we had some assets he left me, i was the only child, but we had no cash. the irs was in the office three days later wanting their taxes and back then, a $600,000

threshold, 55% tax, i didn't have the money. so we were able to make a deal with the irs to pay them out over about 20 years. which is just wrong. so part of our plan is to do away with inheritance tax and let people pass net worth onto their families, rather than lose the family business, and continue to create more taxpayers and more job opportunity. >> we've had judd gregg, the former senator who joined us earlier this week and talked a little bit about it, he said the only way he thinks that you actually get things through is by basically stepping on everybody's toes like was done back in 1986 which there are no sacred cows. seriously looking at cutting back there would be no more things like charitable deductions, mortgage interest deductions, in the tax bill. do you agree with a plan like that that would basically inflict pain on everybody all the way around? >> well we talk about loopholes. but i think we need to talk about cash flow before we talk about loopholes. when you start talking about doing away with charitable giving, and home mortgage deductions, that goes to the very heart of main street america. >> yeah.

>> and small business owners and people. so, i think there's other ways to do it. like cutting the size of government. and, quit spending and addressing what nobody wants to talk to, about the entitlements. >> the entitlements themselves, though, that is obviously a huge issue. and you're right, nobody wants to talk about them, including the president, who has said he is not going to cut some of these issues. is that a place you see eye-to-eye with him or sounds like you have a slightly different perspective on that. >> i aagree with president trump on everything. he's a businessman, too. but nobody really wants to address that. i mean i'm one of those that wants to do away with the department of education and other areas and drive it down to the states. but at the same time that doesn't get us to the number of the debt. so we've got to begin the cash flow. who do we ask to cash flow our country? small business owners. let's get them hiring people. let's get them taking risk. and then let's get serious up here about cutting expenses. >> congressman, quick question about the irs, given your interaction with them years ago. the trump budget calls for

reducing the budget of the irs. it was a fascinating piece in the paper yesterday that talked about for every additional dollar that's spent at the irs, this is something steve mnuchin talked about, there's actually $4 of additional revenue that's brought in and on the enforcement side, up to $10 of additional revenue. would you in favor of more funding for the irs, or less? >> well, no, i'm one of those that would love to do away with the irs. it's a rogue agency that is -- deals, scares the heck out of the people. people are scared to death of the irs. so that's the whole thing from the government, i'm here to help you. the fact of the matter is the irs along with some other agencies should be downsized and basically made a collection agency. >> but there's typically something like $450 billion in terms of a gap that people don't -- that is not captured by the government, even though we should be getting that. what do you do about that part of it? >> well, i mean, look, we need to capture what's needed. but we don't need to capture

what's not needed. the irs does a pretty good job of going after people that really have done nothing wrong, and so forth. so they need to have the rules rewritten, they need to be smaller, they need to be a agency that people don't fear, and just like i said, be a collection agency and collect what we're due and not what we're not due. >> congressman, great to have you on the program. hope to see you again soon. when we return, blackrock is putting machines before people. we're going to take a closer look at that move straight ahead. and then president trump promising to slash any job-killing regulation from the obama administration. we're going to talk to the founder of economic consulting firm money strong. danielle demartino booth is going to join us. ( ♪ ) at corning, i test smart glass that goes all over the world. but there's no place like home. there's always something different to do like skiing in the winter, jet skiing in the summer. we can do everything. new york state is filled

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it is official. british ambassador tim barrow has delivered a signed letter from uk prime minister theresa may to the president of the european council. that letter and the acceptance of it actually triggers article 50 and officially launches a brexit.

the talks between the uk and the eu will now begin. they can take as long as two years. right now in london prime minister may is making a statement to parliament. a bit later this hour we'll have the european council president donald tusk making a statement in brussels. among the other stories front and center this morning, mortgage applications falling 0.8% last week despite a drop in mortgage rates. new purchase applications did rise but refinancing activity fell. the average 30 year mortgage rate declined to 4.33%. buzzfeed is reportedly making plans to go public in 2018. that's according to ax yoes quoting industry sources that comes in contrast to competitors like vice which want to sell themselves. we should mention that our parent company comcast is an investor in buzzfeed. and a proposed merger between germany's deutsche bourse and the london stock exchange has been rejected. they say the combination would create a monopoly in fixed income clearing and the two exchanges did not offer

sufficient concessions to resolve those concerns. andrew. >> and blackrock laying off 13% of its portfolio managers. more expected to exit as the investment manager turns toward low fee computer generated portfolio management. leslie pickard joins us with that. >> gone are the days of old-fashioned stock pickers and enter the machines that may be the takeaway from blackrock's plan to overhaul a big part of its asset management strategy. blackrock is taking traditional investing methods, but fusing them with technology, and data science, and in doing so the firm will be cutting its fees in half. it's perhaps the most aggressive repudiation of the traditional stock picking by a major asset manager to date. and a direct response to criticism from clients across the industry about high fees, and underperformance among fundamental stock pickers. u.s.-based actively managed equity funds experienced record withdrawals last year, with much of that capital flowing into passive investments such as etfs

and index funds. blackrock is known for their etfs with more than $1 trillion in assets. but active equity investing still contributes 16% of the firm's revenue. the new strategy impacts about $3 billion worth of blackrock assets and as part of the revamp, blackrock is introducing what they call advantage products which gives retail investors access to their quantitative investment team. now seven out of 53 active fund managers will be leaving their posts as a result according to a person with knowledge of the matter. with dozens more employees expected to depart. guys? >> so, but how are -- what -- when we talk about the computers taking over, are we talking about some of the stuff that you talk about renaissance technologies earlier. which i was always under the impression, basically a big firm trying to pick a penny here, a penny there. is that what we're talking about? >> that's exactly what we're talking about. we're talking about a mixture of quantitative. a mixture of data science. a mixture of fundamental stock

picking. now the difference here is that they will be in mutual funds. retail investors will get access to this where at a renaissance technology it's more on the highly qualified investor side of things. >> becky made the point you still need somebody to tell the computer what to do. >> exactly. >> somebody's got to build the algorithm to make this happen. >> are there other people being employed? >> are they hiring new people? >> they have not said they're going to hire new people to employ these strategies. they did say they would invest in technology but i think their plan as of now, at least what's stated, is to redeploy the people that are currently there, toward this new strategy of utilizing the technology. >> okay. >> thank you. >> thank you. >> so, yoegen didn't go to moulinberg. >> that is kind of fake news. >> kind of fake news. >> he went to muskingom. which is in a better state, in ohio. they had another hero other than

nick yogen grat outed. john glenn. john glenn. so it's actually better. i wouldn't have been able to bring it up and suck up to yogen if i didn't make the mistake with moulinberg. >> although it's still, you know, yogen getting his name out there. >> exactly. and now we got the right college and i think it's all good. >> alumni hall of fame. >> the trump administration's committed to reshaping america's business environment with pro-growth policies. joining us now to discuss the deregulation effort danielle dimartino booth, founder, money strong founder, author, and former adviser to richard fischer at the dallas fed and we think of you and your book, mainly concerning the fed. we'll talk deregulation. but just one initial point on the fed. on monday, we said that we've got ten fed heads speaking this week. and i was like, will there come a day where i don't have to say that? where we're talking about underlying business

fundamentals. and they're there. they're there watching price stability. whether they need to do something occasionally. to get back, you know, to get the balance back. >> yep. >> but they're not every part of our life they're involved with. >> no. >> is the day coming? >> one of the favorite things i've heard in the last few years came out of portfolio manager who said i wish we could go back to the days that i didn't have the names of all the central bankers memorized. >> i know. >> and where they could just go back into the background. it creates so much noise, and confusion for the markets. is it going to be two? is it going to be three? it really -- i think the fed has come to a point that they could use a spokesperson. one person. and that that would help them be a lot less confusing for investors. >> it's a weird sort of a, i guess it's a sort of a -- it's not a democracy. we know that the chairwoman or chairman is the person that decides. and yet they all get to, sometimes i think they're working this, too. they're good cop/bad cop and i'm

going to say this. >> because we're partly responsible. >> i know. >> because we say please tell us what you're thinking so we can try and divine what's being thought around the table. >> and it's so compelling that our ratings just surge whenever we take one of those guys speaking. it does so well for us. >> we claim we want the transparency and then we claim we don't. >> well, it was interesting, because bernanke came in saying that he was going to increase transparency, and you ended up with the exact opposite of that during his reign. he actually became, as a factor of time, more iron fisted than allen green fan himself if you go back and read the transcri transcripts. he was very much opposed to defense. >> any insight into when or who or will trump make an imprint on the federal reserve? >> you know, look, i think one of the most disturbing things about the beginning of this administration is how very little we've heard about how trump and his administration may or may not reshape the fed. >> but don't you think, i mean, during the campaign he made

certain comments about janet yellen, and -- >> toward the end. towards the beginning he made opposite types of comments. >> i think somebody has whispered in his ear to say ixnay, don't talk about the fed. >> mnuchin was very balanced in his comments about yellen in his most recent interview. i found that to be telling. >> if there were comments it would just upset the markets? >> look, i think after the failed legislation from last week, that there's bound to be some element of paranoia in the administration. that they're going to have to pick and choose their battles. and if they're not going to be able to push through whatever legislation they choose to push through, then they're going to have to have an eye on what the borrowing costs of the country are. it's just a matter of reality. >> you really think someone could ask president trump, would you just cool it -- >> he's never tweeted a word about the fed. it's like somebody took his index finger away from him. >> i think -- >> also the other -- >> he wants lower rates. >> right. >> he said it. i'm a debt guy.

>> but he's saying he wants higher rates but he hasn't worried about ruffling feathers in other -- >> well he's been very quiet about this. >> he has. but who knows why. okay, so as far as deregulation goes. >> yes, we do need it. yes. >> and your view is that -- that has been a one of the reasons that job growth even though we're at 4% and change, maybe the wage growth -- >> look at self-employment. it's literally crashed over the past decade. we just had the congressman from texas speaking a few minutes ago, i really appreciated a lot of the things that he had to say about the need for small business owners to feel like they can grow and expand their payrolls again. it's needed. >> the problem is, when you start looking at that, look, there are so many -- if we had all 535 congress people on our air, they'd probably give us 535 different tax plans. are they going to be able to get things together and actually agree on one? and that's what the market is kind of waiting to see. >> i think that's a fair question. it was interesting that he said

that health care legislation was complicated. this is pretty complicated, too. you're talking about one large group of lobbyists when it comes to health care regulation. when you're talking about tax reform you're talking about everybody. that's a lot of special interest groups. >> given its value of a trillion dollars over ten years? >> you know in texas where i live it's not very popular. i mean the amount of commerce that goes on across the border, there was a really interesting picture out recently of what the supply chain that compromised a boeing 787 and all the different places in the world that sourced this one product. so i think they need to be really careful about it. especially given how much more rapidly retail is in the decline than had been anticipated. you had a guest on a few mornings ago that basically said this is going to happen a lot more quickly than people realize. this is a day that not one, not two, but three companies basically raised the red flag about potentially bankruptcy. >> so the promise of trump, the

deregulation promise, what's still left, what has he done that's good so far? >> well, there's a lot more red tape yet to be cut. and again, you know, i wrote about this last week for cnbc. it's not just a matter of executive orders. i think he's going to have to stand and deliver when it comes to also proving that he can push legislation -- >> but dodd-frank he's got to do something with? >> well, look, the number of -- the number of banks has decreased by about 15%. since dodd-frank. and the accessibility to small banks to community banks has decreased for 40% of americans. it's a big number. and clearly there's too much regulation out there for your small, midsize banks. and that's really impinged access to credit. >> so he can't -- the -- there's a lot of regulation that was put on the last eight years. can he use -- can he just reverse it with economic -- or with executive -- with a pen? or does he have to -- he can't do it? >> look at the newspapers.

they're already saying oh, the lawyers don't know how elegantly and simply, you can't just flip a switch and make it all go away. >> questioned. that's going to be probably challenged. some of the environmental stuff from yesterday will be challenged in court. >> that's the thing. you get all the lawyers involved. >> right. all right. thank you. >> thanks. >> good to see you. >> all right coming up, the atm experience is about to get even easier. a new feature to help you stay connected to your cash. i thought even these were going away, what do you us -- >> benmo. >> the ceo of diebold is here to explain. "squawk box" will be right back.

welcome back to "squawk box," everybody. this is cnbc. and we are live from the nasdaq marketsite in times square. let's take a look at the futures this morning after a rally day for the markets yesterday, some givebacks this morning. dow futures down about 24 points below value. s&p futures just over 2.5 points and the nasdaq down by half a point right now. >> okay, diebold is pushing the boundaries for connecting commerce. with more on the extreme atm, a new machine and other automation initiatives, andy mattes, the ceo. good morning. >> good morning. >> so what is the extreme atm. >> it's a combination of digital, with physical, in a

very small -- >> what do you mean? >> you combine your cash. >> right. >> with your mobile phones. >> right. >> with your mobile apps and you do that in a footprint that's as small as 1.5 times the size -- >> we're showing one of these machines here. so you would go up to this machine here, you would, what? you wouldn't use a card? there's no card. there's no card reader in this thing. >> correct. >> and it's going to use my fingerprint, it's going to use my phone or how does it work? >> you identify yourself with your smartphone. you can swipe your phone. you can identify yourself with a biometric, a fingerprint. it recognizes you. it has a personalized interface that's special to you and then you can perform any transaction that you prestaged on your phone or you want to do there right on the screen. >> okay. what about what we were talking about before the break, joe was making a joke about venmo but it's not a joke, i carry, i will tell people this in case they want to mug me on the street. i carry no cash.

zero cash. nothing to get. i don't have a dollar. >> there are other reasons that you do that. >> because i'm cheap. >> right. >> i don't have any -- >> but -- no but these days, in a taxi you can use the atm. >> let me get the check, like an alligator. >> but what do you do -- what does a company like yours does in a cashless world? >> well, a lot of people saying that death of cash is imminent. but it sure is not happening any time soon. if you take a look at the number of u.s. dollars still in circulation, they're actually up 60% over the last 13 years. we track the number of atm withdrawals. we correlated the curve, 15 over 16 and it spikes every other week. when people get their paychecks. and there's no change in the amount the average u.s. household goes to the machine every other week to pick up money. >> is there any demographic number on that, i'm curious,

dare i say the milan yams. do millennials use the atm machine as much or more than their parents? >> interesting enough, they have a higher likelihood of using cash than any other age group. >> really? >> but it has a lot to do with the fact that they don't get credit and they don't carry credit cards. >> all of us probably went through that at that age, too. >> and the other question i was going to ask, what -- are these machines going to start doing more and more? not just about getting cash but getting other things? i know there's some machines now you get stamps and things like that, at what point does it explode into other items? >> we can automate just about everything in a retail bank but a note rised signature. you can do loan, you can do inquiries, you can do stock picking, you can connect the machine to any channel there is. >> how much does it cost to buy one of these machines? >> it's about 20, 30 grand. >> 20, 30 grand, and using it -- it replaces how many people in a bank? >> it can easily replace the work that the teller does, and

there's around about 500,000 tellers in our country. and there's around about 3 or 4 million cashier clerks in our country. >> do you expect them, not all of them to lose their jobs, you look out five years and what do you think happens? >> i think that the teller in a branch is going to go the same way that the ticket agents went at an airline. >> and what's going to happen to the branch itself? because i know you look around new york city real estate and there's a bank virtually on every corner. >> the banks are getting smaller. the interesting thing is you ask people why they bank with the institute that they're with, it's always proximity to their home or proximity to the office. so the banks cannot leave the neighborhood. but they want to do that at a very small, very efficient foot print, ideally you do a branch in a box, in a machine, and the machine in a retail outlet in a store. >> what do you think? >> i like using atms. i was actually thinking, are you -- you've seen the guys tie the rope around and pull the whole machine out and steal that. have you seen -- >> you have the strangest mind.

>> have you seen -- you know, you can't do that with a diebold machine, can you? >> no, they've got pole set about a foot long into the ground. we've -- it's a constant race against the bad guys. >> it's amazing. >> in brazil they like to put a stick of dynamite into the dispense slot because it's so easy to get to. we developed a machine where the upper part would explode, but the safe would stay intact. >> so you guys -- >> you're kidding me. >> you're staying one step ahead of the bad guys. >> that's exactly the race we're in every day. >> what about the security, though? did we ever talk about this. someone had skimmed my card. you know about skimming? >> oh, yes. a $2 billion problem. >> they put a thing inside -- where you put your card in. >> oh, and it steals your number. >> they steal the number and they took out money, in israel they were taking out money from my account every week. just little bits. and i wasn't really paying attention to be honest -- >> must have been very little. >> all right. but -- but how big an issue is

that for you? is there a liability for you or a liability on the bank? >> the liability is on the bank. we're here to help the bank. so here you go back. the minute that you use biometrics, you can't skim your fingerprint. >> right. >> the minute you use your mobile phone -- >> there will be a day where people can figure out the fingerprint. >> even on the fingerprint we actually check whether there's blood in the veins so the people won't cut off your finger and take your fingertip to the machine. >> ah! >> wow. >> you've got to think through that. >> last question, would you use a machine that's not in a bank, meaning there's all of these sort of off-piece atm machines, right? whether they're at a deli or in vegas where they like to charge you ransom for every dollar you try to take out. would you use those machines or not? >> if they're from diebold i definitely would. >> what do you do to make sure my eye is still in my socket before you get into optical -- >> it reads the eye. >> nobody's taking that either, right? >> nope.

>> okay, thank you. >> so if you ever -- if you know they're going to charge you $2. >> yes. >> you take the maximum amount? >> yes. >> always, i do. >> everybody does that? >> is that what you do? >> if they're going to take $2. you take the maximum amount. >> so it's only a percentage. you have to. >> but you go to those ones, you know what i'm talking about in vegas. >> like five bucks. >> what's the highest charge you've seen? >> probably eight bucks. >> $8. and how much can you take out? >> it depends on what the bank or the institute allows you to do. we can set up the machine any way you want it to. but the machines for instance, we've got machines that can spit out $20,000, $30,000 at a time. >> oh, wow. >> these machines carry a quarter of a million dollars at any given point in time. >> which is why you have to think so much about the security. >> right. >> you probably don't even go to a machine. >> i try to find a machine of my bank. >> i try to find one that's free. >> right, right. but you'll drive -- i mean you'll --

>> the benefit, i don't like -- i'm a chase. and they have free ones at duane reed and there's a lot of duane reeds in new york city. so that's a big benefit. >> all our software sites. >> diebold, these machines? >> different hardware but our software. >> okay, great. that was interesting, thanks. >> all right, thank you. >> we all want to talk about money for some reason. cnbc. coming up stocks to watch ahead of the opening on wall street then at the top of the hour, the trump snapback. david wu of bank of america david lynch and ubs will join us to talk investor optimism and how that affects the markets next move. "squawk box" will be right back.

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take a look at a couple of stocks to watch this morning.

integrated circuit maker xr has agreed to be acquired by max linear in a deal that values that company at $13 a share. better than 22% premium over exar's closing price on tuesday. morgan stanley was upgraded by deutsche bank to buy from hold. deutsche bank says morgan stanley is a good value following a recent 10% drop in the stock, as well as faster than expected improvement in the company's fixed income business. >> okay. coming up, we will return in just a moment on "squawk" to talk about the trump trade. is it back? we'll be back in just a moment. yes?

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fund objectives, risks, charges and expenses in the prospectus at thriventfunds.com. we're on the move. hey rick, all good?

oh yeah, we're good. we're good. terminix. defenders of home. new this morning, it is official, british prime minister theresa may triggers a brexit. the first step in the uk's divorce from the european union. the market impact straight ahead. high tech stock picking. blackrock bets on robots over humans as the world's largest asset manager revamps its equity business. plus a house flip-flops. >> screaming won't get this job finished. what i am going to do is take action. >> real estate mogul sean conlynn is pulling properties out of the red. an indeed look at cnbc's new prime-time show as the final hour of "squawk box" begins

right now. >> live from the most powerful city in the world, new york, this is "squawk box." >> good morning and welcome back to "squawk box" here on cnbc. live from the nasdaq marketsite. which is in the center of manhattan. >> squawk square. >> squawk square. >> times square. >> the squawk roads of the universe. and "the wall street journal" editorial board square -- >> times square. >> i'm joe kernen. >> name for that for a reason. >> "time" magazine? >> newspaper called "the new york times." >> timex watch? futures right now will take a quick -- if i had known that i wouldn't even have let us move here. down 21 dow jones. we love the nasdaq though. did i mention -- >> you did. >> all right. we're down 21 on the dow jones.

haven't seen any bacon in awhile. down 21, down 2.5 on the s&p. the ten-year -- >> oh, back under 2.4. >> 2.398%. >> british prime minister theresa may officially triggering a brexit delivering a letter to the european council in the last hour. wilford frost joins us right now with more on what this all means. >> becky, yes, indeed, so the uk has invoked article 50 of the eu's lisbon treaty. here's prime minister theresa may moments ago. >> a few minutes ago, in brussels, the united kingdom's permanent representative to the eu handed a letter to the president of the european council on my behalf confirming the government's decision to invoke article 50 of the treaty on european union. the article 50 process is now under way. and in accordance with the wishes of the british people, the united kingdom is leaving the european union. this is an historic moment from

which there can be no turning back. >> may delivered an optimistic and forward-looking speech, saying that she approached the talks constructively, and optimistically, saying she believed britain's best days were ahead. meantime, the president of the european council, donald tusk who received that letter about an hour or so ago is delivering his response as we speak. check in on the market reaction, and the intraday chart of the pound shows quite clearly initial fall about 0.3% at the open today and then it rallied as the news of the delivering of that letter was delivered and theresa may finished her speech. to finish the day or at the moment up at 1.2457. >> proud of you, wil. proud of you. >> i was going to sayic bin ayn britainers now. we're all -- we're all -- we're all great britain types now. we're all from the uk. but then i said it would be wrong to use german because you're kind of getting out from

underneath german rule. >> and be careful you might call yourself a jelly doughnut. >> yeah, i might. >> you're shaking off the unelected yo eed eurocrats from countries away trying to tell you what to do. i'm surprised you're not in a much better mood today, wil. >> joe, i don't deserve the congratulations. and of course many people aren't in a congratulatory mood. it's still a divided tone. >> oh, be happy. >> historic day for the uk. serious big news, and still two years of negotiations. >> they don't call -- >> call us in a decade. >> they don't call it great britain -- you know what? they don't call it great britain anymore. it's just britain now. but now there's a chance it can be -- >> they do call it great britain. the name of the country is -- >> you've got a chance to be great again. >> it's great britain or the united kingdom. >> got your sovereignty back. how can you not want to do that? >> andrew, to your point, it could be two years. it's meant to be two years.

it could be longer. either way we'll still be here. >> no i said a decade we'll know whether this was a good idea or bad. when will we know it's a good idea or bad idea? >> if we look at the market reaction, the ftse is clearly up about 15%, 16% since the day of the vote so a significant bounce back there. >> joe is smiling, gloating. >> the pound -- the pound though has delivered most of that. falling a similar amount. >> okay. joe, let me get to it -- >> i've got all the data. >> what everyone does -- >> i've got all the data. >> go ahead, wil. >> most of the rally in the ftse coming from a translation effect of international companies. we look at the gdp figures, joe, yes they are a lot better than people expected. but 1.6% growth here. forecast for 1% for 2018. >> not the same as the 15% ftse return. >> beautiful. >> and to answer your question, andrew, we will know if this is a success or not not on these growth numbers, but in the future once that uk is out. the trade deals it strikes moving forward.

if they deliver growth better than the 1% numbers. and in the short term just very quickly even those one percentish growth forecasts, the thing to watch is inflation which just last month went above the bank of england's 2% forecast to 2.3% because of that falling pound so those forecasts for the next couple of years in growth are slightly reliant on loose monetary policy from the bank of england. if we saw inflation picking up, maybe the uk has to face tighter policy as well. >> let's have this conversation in 2020. >> i look forward to it. >> always something bad's going to happen down the road. you know, global -- >> everyone's -- >> globalism is so yesterday. >> we're just looking -- >> kind of being embraced by america. i think he looks like captain america today. >> why? what is captain america? >> i don't know you do, just with your hair. >> oh, well. >> i think you're being absorbed by america. >> i think that's a great thing. i will always be british. but i love being absorbed by america. >> he doesn't want to be captain

america. >> thank you, wil. we're going to talk more about the markets and what's going on. david wu head of global rates and currencies research at bank of america. david leff cowit is also with us. let me go to you on equities first, briefly, which is to say, we had the pullback. >> right. >> then we watched yesterday as the market moved effectively on the news that maybe health care was back on the table, which meant maybe taxes were back on the table. how do you view it? >> yeah, i mean, i think there's these competing narratives in the market right now. you've got the cyclical recovery. the ism has been rising for over a year. earnings growth in the first quarter is likely going to be the best in six years. growth in the u.s. is also picking up. so i think that's also an important factor that's been driving markets since the election. obviously you have the trump reflationary policy. so i think what our takeaway is that the cyclical is what people are focusing on a little bit more right now and that's why

the sell-off was not so extreme or very modest. >> what kind of premium do you think is built in or not into the market on what might be described as trump policies? >> i don't think it's that much to be honest. high tax companies have performed in line with the rest of the market since the election. so they came out of the gate very strong and they've given up all of their relative gains over the last four plus months. expectations are not as high as some people think about tax reform. >> dr. wu we need to talk because you told us, repeatedly that the republicans owned washington, everything was going to happen, boom, boom, boom, boom, boom, now it hasn't happened. >> i put out a big report yesterday called new lease on life on trump trades. i think the failure to push through health care reform last week was about the best news you could possibly have for trump trades because we save ourselves

having to spend another five more weeks doing the impossible, trying to push through health care reform. some actually believe we're not from the very beginning he has been very skeptical about doing health care reform without having supermajority in the senate. so i think he has emerged as the biggest winner of last week's basically failure. i would argue if anything he's gained some leeway in how to drive tax reform going forward. >> are you happy, unhappy that this may be back on the table? >> no, i'm not happy. i don't think back on the table -- let's put it this way it's always on the table. the only issue is are you going to do health care before you do tax reform. i think if you actually listen to trump's interview on you know, bloomberg, bloomberg on fox on super bowl day he said he was confident we're going to do tax reform this year. he was less confident he was going to do health care reform this year. so i think that he was sort of dragged into doing health care reform first. i think he put an end to it by basically declaring ultimatum. that in some sense forced the party to focus on tax reform. he gave the party a way out. that has to be seen in a very

positive light. >> so confused. because i thought the last time you were here you thought that health care was going to happen. >> no. i didn't say that. i wasn't sure. i thought that health care was actually a bad thing. i much -- like the president i've always had very, very basically reservation about whether you can do health care. you think about this trump ran on basically tort reform. he wanted to basically allow insurance companies to sell policy across state lines none of which you can do without 60 seats in the senate. >> what's your math on what corporate tax policy and rate could be in this country? arguing that the health care issue is off the table at the moment and let's recognize maybe it's always on the table but not on the front burner. >> i think first of all, timing for the market times everything, because majority of our clients not believe that tax reform can be done this year. certainly nobody this it can be done before you know august recess. and yet ironically you think about this, the failure of tax -- health care reform last week makes august deadline much more realistic. because for one thing, we know that you know what? the debt ceiling is going to be binding by august. you know that the tea party

hates the idea of raising the debt ceiling and then there's no way trump is going to allow the debt, basically tea party to hold him hostage over the debt ceiling which i think they're going to have to basically do a real full-court press. i mean a full-court press on basically tax reform. i think next four weeks is going to be very crucial. they're going to start big, and then you know, see what happens. but also another thing, remember, another thing that's on the table now that wasn't the case a week ago is the possible bipartisan deal. that's what reince priebus said on sunday on chris wallace show. you know what? i'm saying because trump wants to do a middle-class tax cut. remember trump says he wants to do a middle-class tax cut. he doesn't want to give tax cut to anybody in this room. he says he's going to get rid of deductibles -- >> do you believe -- >> i don't -- >> no -- put the fox farther aside. when they say these things you're taking them all at face value. >> that bipartisan -- >> that's impossible. it's impossible. >> listen, i'm not saying it's

impossible or possible. i'm just saying at this point all the pieces now on the table. because at this point, to doing a bipartisan -- if trump would reach out to democrats you know what he's not going to be called by the tea party as a traitor. because what happened last week. >> yeah, but i saw schumer say yeah we're willing to compromise. you hear what his compromises were? public option. caps on drug prices. everything he said was not a compromise. it was all further left and more government and it was obamacare on steroids. almost another step to single payer. they're not going to compromise. look at the gorsuch thing. take them at their word. >> it's possible. i'm just seeing you know they do have two major things in common between trump and the democrats. one is they only want to do -- because remember the ryan brady plan wanted to give most of the tax cuts to the rich. trump said over my dead body. mnuchin said this he only wants to give tax cuts for basically middle class. number two, infrastructure spending. you want to do the dean repatriation to fund

infrastructure spending. so already a very big part of the entire tax reform there's more agreement between trump and the democrats than he does with the tea party. >> i've got to give a word or at least the final word to david. let's put aside all of what happens in trumpland, and just given that you think the markets are just what they are, where would you put your money right now? >> well, i think equities will be higher over the next twelve months. >> in the u.s.? >> in the u.s. but also outside the u.s. too. things are definitely picking up in europe. obviously you have the french elections which is a binary event to be mindful of. but we're seeing a globally synchronized recovery. that's one of the key drivers of why markets have been up since the election. within the u.s., energy looks incredibly attractive at this point. oil prices have sold off. i think a lot of this is because what people don't understand is that refinery maintenance has been higher than expected. that's lead being to less demand from refiners. once those refineries come back online we're going to see the demand come back. >> dr. woo thank you, sir.

>> you're welcome. >> that was fun. >> when we come back, washington watch. ohio senator rob portman will join us. we have a lot to talk to him about including tax reform and trade obviously. that's what the markets are watching. we want to know what that impact will be. plus why one analyst says the snapchat parent company has nothing to fear, not even facebook. and sean conlin tackles house flip-flops in cnbc's new prime time series "the deed" chicago. he's going to be joining us ahead of tonight's show to talk housing at 8:40 eastern time. stay tuned. you are watching "squawk box" on cnbc. cnbc.

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president trump's tax agenda is taking center stage on wall street. joining us now ohio senator rob portman. and another -- how you doing, senator? >> good, joe, doing well. how are you? >> about skyline chili and i never heard back from you about it. i've seen some crazy stuff about that.

but -- >> you dm'd -- >> because we follow each other. >> senator probably has his own -- senator do you do your own tweets or do you have staff for that? >> when i'm at skyline i do my own tweets. i'm such a big spender every valentine's day there. but we've got one in the neighborhood and joe you're welcome any time. >> thank you, thank you. so i just read the possibility of another freedom caucus member exiting that group. and just off camera we were talking about who won last week, whether trump actually is maybe trump is in a better position because maybe there's some recrimination with those guys. what are you feeling just the zeitgeist around both houses right now with what happened last week? where are we? we doing it again? or really doing tax reform now? >> well i think probably tax reform is now the higher priority. but i do think, you know, we kind of touched gloves you know. republicans and some democrats as well on health care and you

know, it's a complicated issue, obviously. and we can't give it up. because right now the satous quo is not acceptable to everybody. even to democrats by the way. they can't just have higher premiums, higher deductibles and lack of choice. but i think health care is the thing people are more focused on for after a tax reform discussion. and tax reform is going to be tied up into other things now, including i believe infrastructure, but also getting through the debt limit, and so i think we're more on the fiscal side of the house now. >> you need -- it would be better to have the trillion because then you're going to, 28%, you don't want -- 28 is not enough is it? that's obama. president obama was ready to use 28% supposedly. although he never pushed it. you know, he focused on the other issues. >> joe, he never pushed it, and he also did 28% on the business side which coupled with a $2 trillion tax increase. >> right. >> on the individual side. >> and climate change i think was in there, too.

>> yeah. >> it's all we talked about. so many times on the show, such a great potential here to improve the tax code to make it more competitive and to help u.s. workers increase salaries, which is, you know, the big issue now is how do we actually get this economy moving in a way that actually gets salaries up. all the studies show that our tax code has become so antiquated and out of date with what the rest of the world is doing and just make some changes to lower the rate, broaden the base, do the repatriation that we talked about earlier in the show, send some of this $2.5 trillion back you could improve the economy. i think there's more consensus around that than there was around health care. >> you said something weird though, senator, that is you touched gloves with the democrats. i thought a different way. i thought the freedom caucus came back and said look, maybe we can get the yes somehow, and -- are you saying that center of gravity moved even further towards the democrats with health care reform?

or do you think it's now possible to do something to get the freedom caucus to say yes, and then keep moderates on board? >> yeah, when i said we touched gloves with some democrats, not a lot of democrats, but some democrats were interested toward the end there saying maybe we could work with you on something. but no i think you're right. i think if we're going to do health care probably it will involve the freedom caucus. >> yeah. >> and the tuesday group and all these groups coming to the. i think that's going to take some time, joe, as you know i always believe this needed more time. just because it's not only incredibly complicated, it's so important to the lives of all of our constituents. the medicaid issue is really a separate issue in my view from the affordable care act issues. if you look at exchanges and mandates and so on in the private sector. these are complicated issues and i think we've got to keep working through it. the status quo doesn't work. in the meantime we've got a looming fiscal issue here. how do we deal with the budget, the debt limit, and the urgent need for us to change our tax codes. >> your prediction on gorsuch

whether it goes nuclear or not? i think half have said no. there's still a possibility of getting eight or nine. or is there? i don't know. of democrats for gorsuch. what do you think right now and do you think the nuclear thing is the only way to go? >> well, i don't know because it depends, obviously on the democrats. the sense is that senator schumer may have done his vote count and decided that he has the votes to be able to block this nomination. that would be a shame. because this is not the way the senate traditionally over 200 years have dealt with supreme court nominations. you have to look back to abe fordice the last time that a supreme court nomination was successfully blocked on a partisan basis by filibuster and that was bipartisan with abe fordice. hasn't been the tradition around here. probably most controversial one recently was clarence thomas. he was voted in without a filibuster. so i would hope we would avoid the filibuster. have an up or down vote. he's incredibly qualified. across the spectrum in the judicial world. people respect him and like him.

so let's let this guy have an up or down vote and get him on the court. >> senator real quick, have you called for a formal position yet on the border adjustment tax? >> well, my feeling is that we have to do what we can to get tax reform done and the border adjustment tax, although i understand some of the economic reasons for it, and the fact that it does bring in more revenue, because of the tax that importers would be paying, so let's go for more traditional approach this point and build consensus around that. that would be lowering rates, broadening the base, doing the stuff we've talked about for a long time to get a territorial system internationally. let's simplify the darn thing on the individual side there's a great opportunity to get down to three rates. and to actually get rid of some of the code. and so the point of distribution, who's going to pay and who's not going to pay, you know, i think your previous person we talked about that is probably right. probably at the end of the day the distribution on the individual side is not going to favor the wealthy. >> it's not very bold. it's not very bold.

you know what? i think it's impossible to do anything bold anymore. you can't even do anything plain vanilla in that place. >> it's pretty bold if it ends up stopping american companies from taking their jobs overseas. >> pretty smart people saying it's worth a lot of money and it actually would transform a lot -- and other people do it anyway. you kind of -- you know, you're timid on that. bold, think bold. bold. >> it's -- it's bold to get those rates down, and to get rid of the preferences in the code that shouldn't be there. and to go to a territorial system. let's get on with it. >> senator i'm with you on this one. >> yeah, see. >> that's -- >> andrew is with you. how do you feel now, senator? >> where's becky is what i want to know? >> i'm -- i'm very hesitant about the border tax. i am. >> do it. >> sorry, joe. >> be bold. be bold. >> senator, thanks -- >> great to see you as always.

>> we can be bold. >> bold. >> guys. we'll be back in a sec. ♪ ♪ wanna get away? now you can with southwest fares as low as 59 dollars one-way. yes to low fares with nothing to hide. that's transfarency. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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still to come this morning, facebook launching new features that might look a little similar to what snapchat users are used to. we'll talk about the facebook threat. threat.

♪ good morning again, everybody. welcome back to "squawk box"

here on cnbc. we are live from the nasdaq marketsite in times square. among the stories front and center this morning wells fargo has reached a tentative $110 million settlement related to last year's sales practices scandal. the class action settlement would cover customers affected by those practices. starting at the beginning of 2009. the settlement still needs court approval. the s.e.c. has rejected the idea of a bitcoin based etf for a second time. it turned down a proposal for a bitcoin etf. earlier this month the commission rejected a similar application from the winkle voss brothers. one economic report due today with the national association of realtors set to report february pending home sales at 10:00 a.m. eastern time. still looking for a 28.1% increase which would reverse the 2.8% decline we saw from january. pending home sales as a measure of home contracts signed but not yet closed. >> home prices in denver are at

an all-time high. builders are facing new hurdles for labor and materials, and i don't know why it took so long. people figure out 300 days of sunshine every year. what a great -- andrew has called -- has said denver is not a real city. >> that's not true. >> you said that. >> i love denver. >> your sister is there. >> my sister lives in denver. >> can you confirm -- >> brother-in-law. >> it is a real city, people. it is a real city with demand. it's a real city with real demand and as you can see outside in the dark you would see a sprawling residential home construction site just barely 15 minutes from downtown denver. there are a lot of different builders here, both public and private, and they all say they have the same problem. not nearly enough labor. they all thought that the labor crisis would get a lot better this year. it's gotten worse. builders here tell me they could be putting up 50% more homes if

they just had the hands to do it. and competition here is so fierce that there are higher wage offers on scrap lumber and some are poaching workers off each other. wage growth and residential construction is twice the national average but americans do not want this job anymore. the vast majority of workers here are mexican. some documented, some not. and a lot of them are worried about new policies under the prumz. so much so that some are actually buying property back in mexico and getting ready to leave. which would make things even worse. more than half the housing labor force left during the recession. the expectation was that they would return when the business recovered. but they did not. >> i've never seen anything like this. especially the fact that it seems like we're at capacity at such a low level of actual absorption in previous recessions when we've recovered we tend to see prices go up, labor start to get tight, after

we've recovered to at least an average absorption. >> now builders here are building just barely half of what they would in a normal production level. they don't have the labor to do it. the demand is so high as you guys were saying that home prices are up over 10% in denver. that's second only to seattle and portland for price growth jump. and gene myers tells me that he's starting to hear that some companies are looking to leave denver because they can't find enough housing for their workers. a severe shortage here and spreading around the country, as well. >> okay, thank you diana. i want to pledge my allegiance and love to denver, by the way. >> and you're actually going to start -- you're going to say you never said that. >> i didn't say -- >> you said that. >> didn't you say it's okay now because -- >> you said denver -- >> i am from cincinnati. do you really see me saying

denver is not a city. >> it's a wonderful city. >> you said it's not a city. >> not a city like new york. >> don't double down on it. >> let's move on. >> we'll move on. we've got some headlines to bring you this morning. buzz feed reportedly making plans to go public in 2018 the company began as a viral content sign. we should mention come cast our parent company is an investor in buzzfeed. that means brought to you by axios today. but i should say our next guest, this company also by the way has a stake or our parent company has a stake and this is vox. we're going to talk about snapchat for a second. snap we have a copycat, facebook unveiling new features that may look familiar to snapchat users for the fourth time this year. putting pressure on shares of snapchat parent company joining us right now is james, and he

has a buy rating on snap and ed lee managing editor and contributor or at least you told me earlier, reported months ago. >> months ago. >> that buzzfeed was looking at 2018 ipo. >> all right. >> so it's been out there. we were -- and nbc and comcast has a stake in vox. >> also in buzz feed. >> and in snap. >> and in snap. so basically nbc just is taking over comcast nbc is taking over all of media. >> let's talk specifically about snap. which is to say, how much of a threat do you think that facebook, all of the features in facebook are? >> so it's a definite threat. if you're evan spiegel, head of snap, you're nervous, and you should be. i think at the same time snap is still a unique social network in the sense that the people who are on it love being on it. they're not necessarily on facebook. even if there's a lot of overlap

sometimes, and so social networks are live and die by their character, right? by the other people that are on them. and so despite facebook's massive size, the one thing for snap right now is that they've got, you know, a nice user rate. people have their friends and family on it. they like to communicate that way and i think that's sort of the thing they can grow from. >> you liken it, is snap a messenger -- do you think of snap as a true social platform in the way that facebook is? or do you think of it as a mess edging service? people message one to one, one to two or three? >> think of it as more of a portal. >> yeah. >> first of all, it's a camera company in the sense that that's the hook to get people on there. but it's a portal to decide what am i going to do with the images that i take. do i share them. do i send them to friends, do i post them. at the same time it's a portal to content. i think that's really going to be the holy grail for the company when it comes to monetizing it, because when you think about mobile today, a lot of it is mobile content that you see, just tv content plug and play it's mobile.

nothing is produced specifically for mobile. so what snapchat is doing is really going back in time to a more tv type of model, content producers, letting them do what they do best and aligning those interests with the user experience. >> reflective of the idea that people are going to use it for that purpose as opposed to the messengering purpose? >> well i think in order to justify the valuation and justify the financials you have to assume -- >> the content -- >> the content is going to be there. but to your point, on the competitive side it's funny, i was joking, you know, facebook motto be move fast and break things now it's more like move fast and borrow things because what you're seeing is taking every element of snapchat and integrating it. the question you have to ask is which hope has a better hold on what the customer wants before they know that they want it. i think what you're seeing from snap or from facebook is validation that snap may very well have a better sense of

that. >> i think, you know, in the perspective snapchat we're a camera company. i mean, the editor in me loves picking at the shortness of it but it's inaccurate. it's a social network. the reason why they're focusing on camera is that's the medium through which people are communicating on social networks. it takes pictures. the most interesting opportunity is for them to chapt your reality, people that are going to be in times square and take a picture. >> i think it's also, the money is in reaching the audience. so having sort of a gadget aspect of augmented reality is a cool thing. >> really keep those people and draw them in. >> i think what people are really missing on snap is look at it, time spent on digital is now 50% of time spent but tv

dollars, offline dollars are still very much overindexed to time. why is that? the reason is because the marketing product, the products that you see today are not aligned with the marketing goals because everything is about clicks and conversions. nothing is about brand, building affini affinity, building awareness. i think snap understands that and by moving more toward a type of fully immersive mobile video experience i think they can crack that. >> thank you. appreciate it. >> yep. >> when we return, what happens when a house flip face? we'll talk to a man helping put property projects back on track. >> loving this. >> real estate mogul and host of cnbc's new prime-time show sean conlon will join us. did you know slow internet can actually hold your business back? say goodbye to slow downloads, slow backups, slow everything. comcast business offers blazing fast and reliable internet

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fortunately the only company that could do the design i wanted manufactures in guatemala. >> where? >> guatemala. >> and what does it cost, the door? >> a little over $11,000. >> and then you add the shipping onto it. >> wow. i suspect this is [ bleep ] spectacular. >> when it gets here it's going to be the wow statement for the house. >> that was a clip from cnbc's new prime-time series "the deed:

chicago" which premieres tonight. the host is near at the nasdaq. he's going to be ringing the opening bell. sean conlon is the founder of real estate merchant bank conlon and company, also the host of "the deed: chicago" and you're already getting bleeped out on this? >> i was on my way here this morning and you know the way everybody says break a leg. so, this chopper who knows you, jim says break a leg, of course i think he may mean it literally. because when he gives you his business card he's like i'll call you, and got three exclamation marks on it. he said to say hello to you. and be nice to becky. >> yeah. >> and you, too, obviously. >> thank you. >> we are thrilled to have you here today. i guess your point in the whole series is that it's not that easy to be doing this. all these shows make it look like it's so easy to flip your own home. but there's some real education this takes before you can do this. >> yes. it's quite a mine field. it's still the quickest way for an average person in america to make a fortune. the odds of me being mark

zuckerberg, i could get hit by a meteorite quicker. so you can still do it in home flipping. most shows show the pretty couches and the wallpaper. sort of the collapsing wall, the ceiling that falls on top of you prior to getting to that stage. so there are a lot of issues. >> particular episode. how long does it take to actually do it for real? >> like for real? >> yeah. >> so obviously give a lot of credit to the team at cnbc, because i think this part of it is new. because there are projects, they have to keep coming back in, because murphy's law tends to dictate home rehabbing. if it can go wrong, it will. and it generally does. but we did four deals, and i funded four deals, and two of them were successful already. and i suspect the other two will also. >> you come by this through pretty hard work yourself. you emigrated here from ireland. what year was that? >> yes, i come to america in 1990. and i used to say on my resume, i was a janitor. but actually i was an assistant

to the janitor. so i didn't want that to come out under scrutiny. and i was an awful janitor. so then i start selling real estate part time in '93. >> what's the biggest mistake that flippers make? >> so, it's a good expression, i think it came from one of your american presidents, trust but verify. there's a tendency for contractors, which might shock you, to take advantage of people who are new to the game quite regularly. and that is where you get burned. you really have to double-check everything anybody tells you. >> what types of things? making sure that this is how much it's going to cost and we can tell you that because of this plan -- >> yeah. of course you should have a cost estimate. but better still, you know, i need 50 glass hammers. you find out after the fact that probably could need any glass hammer. >> would you play any market or certain markets you would say in this environment are off limits because you think there are too hot or other markets that you think will just opportunistic

right now? >> oh, absolutely. and the old adage that all real estate is local. it is. i mean, i have done business all over the country. north carolina, california, florida. but i would be scared to jump in to miami right now. >> really? >> yeah. it would be scary. that's a personal opinion. you know are california is still, like new york, it will always be okay. the other mistake people make, and you have been flipping a short time window but in investing in property, if you think outside of ten-year window, you rarely go wrong. and you should always buy your home to be your home. the upside of the investment, that's the little extra bonus. that's another thing you have to pay attention to. >> well that seems like it's the opposite of flipping though -- >> it is. it is. but we just crossed lines there. we're talking about real estate. flipping is a business. buying your home isn't. >> so you want to know if it's going to flood, i guess you want

to know if planes are going to fly over the house. you want to know if you're next to love canal or a waste site? what else can someone not tell you and all of a sudden you find out oh, my god? and you already closed. can they do that without disclosing it? >> listen, again, that goes back to the trust but verify. there's a lot of things people can't disclose. are you going to go back and sue them? >> that's hard, too. >> it's expensive. >> and two years -- >> lots of things people won't tell you. things that are really important in america right now. school districts. >> school districts. >> yeah, that's right. >> very important. >> biggest investment distake you ever made. >> biggest investment mistake i ever made. oh, my god, there's too many of them. that's why i'm good at teaching people what not to do. i've made every mistake they shouldn't make. so got it all done. >> what did you used to screw up as a janitor? would you cut corners or something? >> oh, no. >> oh, yeah, i did that. >> no. >> you just were bad? >> no, i was just so damn nice.

i would see the tenants and say how is everything? is everything okay? and my boss would slap me and say don't ask a tenant if everything is okay. no, they're not. oh, i've got a little leaky faucet. i run up, break the pipe, flood four units. and the first minute i knew you were upstairs was when the ceiling collapsed on me in my office. >> oh, no. >> that was not the business- >> we're glad you're in a better business for you and glad we're going to get to see other people learn from all of this. sean, thank you so much. come back and we'll be watching at 9:30 when you ring the bell, too. >> thank you very much, guys. >> don't miss the premiere of "the deed: chicago" at 10:00 p.m. eastern right here on cnbc. >> don't miss it. when we return, jim cramer is going to join us from the new york stock exchange live. we'll get his take on the day's top stories. top stories. just imagine if all the machines at work

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crude is on track to close out the month down over 10% after a move of that magnitude the slide

let's get down to the new york stock exchange, jim cramer joins us yesterday. yesterday we talked about how the nasdaq had done well. the nasdaq and the market is strong again. but it seemed like some of the policy stuff seeped back in yesterday with the notion that -- i don't know, maybe the repeal is back on the table. maybe tax reform is going

better. i don't know what yesterday was. do you? >> look, i think that when -- these days when interest rates go down there's a cohort of stocks going up. which is the bond market equivalents and the high growth stocks. i guess the algorithm has found something to buy. it went up and then the banks went up a little bit. then rates were kind of flat, the banks gave up a little bit. look, we're trading on nothing. we don't know what's a going to happen in washington. i can continue on the to believe that deregulation is the huge story out there. there was a huge deregulation story about environment and climate change. watch reef single oil company go up. it was not related to the turn in the crude price. 's related to the ability to be able to drill without the epa coming down on your head and saying you have too high methane levels. so this was an important deregulation for those who like the oil stocks. >> very good. so we can't take our eye totally off of washington. but maybe less legislation and more -- >> dereg.

dereg, 25 regulations for every one law in the last year since obama. so i think that's what you have to stay focused on. >> hey, jim, did your daughters get prom proposals, do you remembmber? >> get -- >> promposals. a proposal to go to the prom. >> my daughter was homecoming queen. >> that's pretty good. >> we didn't do this, jim. we were -- >> this is a brand-new thing, i think. >> yeah. that's where you show up and it's a surprise and you've got to come equipped and they might say yes. >> if they don't say yes -- think about that. think about it. showing up -- >> i ran the preprom party. thank you, dave, for letting me have a big bash -- and yeah, there were a lot of people who were kind of there, kind of somewhat together. >> jim, look at the monitor. this is -- there's a disco ball. there's a prom question mark. there's flowers involved. i mean, what if they say -- really -- what if they said no. >> i think snapchat should

sponsor in. >> this was snapped out. you know what? when i tweeted it, there's a promposal 2017, i think it's a trending thing. >> i think we missed out. ic we missed out although the pressure -- >> i wouldn't have wanted the prompos promposal. >> learn something every day. >> jim, see you -- homecoming queen, pretty cool. see you in a few minutes. coming up we'll have stocks to watch before we go. we go.

♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average? ♪ ♪ wanna get away? now you can with southwest fares as low as 59 dollars one-way. yes to low fares with nothing to hide. that's transfarency.

stocks to watch this morning check out the shares of sonic. we have had sonic delivering food -- we haven't had sonic delivering food. >> there is one right in new jersey. >> the drive-in restaurant chains falling sort -- those are the two dorks that are constantly talking. >> i think wed so sonic in here a while ago. >> they blamed the sluggish consumer environment and weather head winds and lack of gratuitous advertising on "squawk box." and shares of dave & busters are

under pressure. >> i'm going to a birthday party at dave & busters to help out the guys. >> yeah. >> the arcade -- laser tag. >> laser tag. >> topped estimates. but same store sales -- they're protecting the weaker growth. >> not after the sorkin family shows up. >> then shares of vertex jumping after a combination therapy for cystic fibrosis significantly improved lung functions in late trials. we have been watching the futures. yesterday, it was an up day for the markets. dow was up i 150 points. that broke an eight day losing streak. this morning a relatively mixed morning with the dow futures down 24 points. the nasdaq up by four. we have been watching the ten year and earlier this morning the yield fell back below 2.4%. you can see it's still there at this point.

2.396% after finally pushing back above 2.4% yesterday. see how that continues out throughout the rest of the morning. >> on brexit day -- is that what we'll call it? is this go down in history as the day that happened. join us tomorrow, everybody. "squawk on the street" begins right now. ♪ good morning. welcome to "squawk on the street." i'm david faber with jim cramer. we are live from the new york stock exchange. carl quintanilla is off. look at that, it's a mixed open this morning as we look at futures. european markets you ask. we answer by giving you the numbers. there they are. largely in the green this morning. this after a rally yesterday both over there and in our markets here. the ten year note yield remaining though right around that 2 o r