street." let's send it back downtown for the start of "squawk alley." >> thank you for that. good morning, 8:00 a.m. at alphabet headquarters in mountain view, california. 11:00 a.m. on wall street and "squawk alley" is live. ♪ good thursday morning. welcome to "squawk alley." post 9 as we watch the markets here. the dow going a little bit into the red. it's been a bit of a seesaw action today. dow on track for the best week of the year. the dow, s&p, and nasdaq if they

hold onto gains today have the third positive day in about four sessions as we look at some big gainers on earnings front. under armour we talked about. that's the biggest gainer on the s&p. >> that quarter came in better than what was feared even with a one cent loss. analysts looked for four cent loss revenue. also better. stock down 30% so far this year. a bit of a correction higher this morning. also what stands out to me on earning front is tech outperforms. paypal earnings out last night. that's a big part of the story. >> wait until tonight. >> it's like playoffs. i mean, it's one particular big night. microsoft, amazon, big for seattle. intel coming out. we expect to hear from the new cfo for the first time. look for that on "closing bell." google. >> i don't know if i have ever seen a thursday night quite like this one. >> it's going to be big if you look at the ad market which everyone is.

people will watch alphabet. also looking at alphabet's smaller business, other bets including devices, but then amazon and retail as you were trying to read into a little bit earlier get a sense of exactly what the shipments look like on e-commerce. >> the macro continues to be a tad uninspiring. durables were a miss. the atlanta fed downgraded estimate for tomorrow's q1 gdp number. they are down to .2. jpmorgan went to .4. so whether it was weather related or tax refund related, the consumer -- we'll see what the number is. the expectation is they didn't help the quarter at all. >> very low. we might see a sub 1% number for economic growth. the economy is how strongly will it rebound? we've seen this pattern before. the fed thinks that it's going to rebound a lot of the mainstream wall street economists think the economy will rebound. that's why the market doesn't

seem particularly p lly upset b. the number is important and we'll go through and see components like consumer spending to see where the weakness is. >> the consumer is standing at home ordering in apparently. that's why they're not going. grub hub up 19% on earnings this morning. revenue and earnings beat outlook higher. that stock is up 56% over the past 12 months. >> along with domino's at 187. used to be a $10 stock. now 187. may be one of the best stocks ever as their comps come in. three-year stat, 31%. ordering a third more pizza than they were three years ago. >> envy of the restaurant industry right now for how fast they launched onto technology and mobile payments.

if you look at pizza hut, really lagging behind. it's not just pizza. it's the technology that domino's put in place. another theme we'll be watching in earnings today especially from the big cap tech names like microsoft and alphabet and amazon is repatriation. we got in the tax plan from the white house team yesterday that they want to allow this one-time tax for overseas earnings to bring it back. that will help pay for some of this. we don't know the rate and the company's plans. will that actually create real economic growth is one of the biggest debates out there right now. >> lots of different angles to explore on this tax thing. i mean, i was asking some frustrated questions yesterday about what happened to conservative economic principles. this whole idea of dynamic scoring coming from the highest point in the executive branch certainly interesting. interesting twist. i know we'll explore that with many guests today. >> we'll talk to jeb in a few moments. chairman of the house financial

services committee not just about dodd/frank but also the tax rollout yesterday, whether or not you were satisfied with the degree of detail. it's still early days. we'll be talking about this for literally months as the market tries to parse what elements of the proposals are deficit helpful, deficit hurtful, along with the political calculations of how this fits into health care and a bunch of other things. >> hard to tell just what's realistic. muted market reaction to the announcement yesterday notable in the fact that maybe investors saw it as an opening bid. an opening bid in the art of trump's deal. >> indeed. for more on markets, joining us now, chief investment officer of global credit and exclusively from morning star investment conference in chicago, claire hart. welcome to both of you. mark, i want to start with you. you are looking at a number of areas including housing, banks and financials that you see as

positive. based on what we're hearing out of d.c. about the need to spark economic growth, how does your being positive on areas like that square with the dire circumstances that we're hearing out of washington that call for these massive tax cuts? >> well, that's interesting because we really -- i don't think -- need too much tax cuts. the economy is doing well. there are parts of the economy that are doing excellent and the consumer is as healthy as they've been in ten years. you look at gaming companies. you're seeing las vegas up 10%. housing companies earnings up 15%. look at the banks and financials and they just reported the big six earnings up 25%. we're really in this midst of a global earnings recovery and the fundamentals are still very healthy particularly for the consumer and housing. these sectors, housing in particular, are still mid cycle so we still have several more years of, i think, 10% growth

ahead. so there are good investments out there. you have to pick the areas where you still have growth ahead and so tax cuts will help but the consumer is very healthy. that's what earnings number show. >> do you see it the same way and what do you think should come out of d.c. that would be positive for the markets? >> i think what we've seen come out of d.c. so far is actually quite helpful in that i feel like the market is discounting tax reform. obviously we don't have a lot of details yet as to what it might look like. we're moving in the direction which the market is happy about. obviously maybe a muted response, but i think, again, corporations are excited and expected in the markets to have a lower tax rate, and so far we're moving in that direction. we'll get more details which would be helpful. i would agree on the point around the consumer. i know this quarter and in recent months some of the news about the consumer on the retail front is deemed wobbly. i would say overall i agree with

that point. consumer is actually healthy, and i think the consumer is being choosey about how they spend their money which is to me the consumer sort of being responsible about how they spend their money and so i would agree with both points i believe. >> mark, how seriously should investors take the trump proposal, the 15% corporate tax rate? what's your working number? >> so i think it's probably going to be closer to 20%, 25%. if you look at trump's numbers, the 15% corporate tax rate, that could lead to inkrecrement eeall growth. nevertheless, we're going to get tax reform, and what this means for the market is you're going to have more deficit spending. under reagan you had federal debt basically 20% of gdp under bush it was 35%. it's now 77% federal debt as a percent of gdp.

it could go to a hundred over the next decade. it will need to be financed with new bonds and fed could taper the balance sheet so all things equal what does it mean for markets? it means term premium is going to rise over time and see higher rates even if a more modest package goes through and finally in terms of the overall growth impact, i think it's going to be relatively modest. i think you're looking at maybe 0.2, 0.3 contribution of growth so don't have such high expectations for how this is going to influence the economy. however, be wary of what this means for the markets in terms of treasury rates. more supply in the context of the fed tapering should lead to higher yields particularly higher risk premium in the long end of the curve. >> are the stock market i,

particularly paul ryan have proposals that are budget neutral and be the focus for trump administration doesn't seem to be toeing that line at all. markets going to care ever? >> i don't honestly think they will. i think what the markets like and as investors we all agree on this point, the markets like to know certainty of what's going on, so when people talk about the budget and the deficit and sort of planning over ten years and what could impact be, i think most investors realize that is a long time period to forecast, and so again i think what investors really care about is getting facts and details instead of worrying about 1,000 things that could be, look at what we get and discount that into the market. i think it's sort of -- i'm a long-term investor. i think it will be more short-term. >> all right. the party with the credit card likes to spend. thank you. we'll continue to track the

story. >> still ahead on "squawk alley," exclusive with keith meister live from the active passive investor summit and busy week in washington. we'll hear from house speaker paul ryan on tax reform and nafta and health care and larry summers, why he calls the president's tax reform plan extraordinary ill-advised when "squawk alley" comes back. ing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

house financial services pushing forward with a new plan. financial choice act. the proposed plan calls to replace dodd/frank easing financial regulations on bank. joining us, jeb henserling of texas. good morning. >> good morning. >> has a lot of things you've been calling for. repeal of the volcker rule. repealamendment. does congress have the band width to take this up? >> yes. this is clearly a this year priority. unfortunately dodd/frank represents a greater burden on american business than all of the other obama era regulations combined. it's dragging down our economy. it's run of the reasons that we've had the slowest, weakest, most tepid recovery in postwar era and why paychecks stagnated

and savings yet to recover. we absolutely have the band width and now the opportunity. >> we're beginning to see a lot of charts that look at consumer credit, look at bank loans, cni loans, real estate loans and they are all rolling over. i wonder how much blame you put on dodd/frank for the way those charts look. >> well, again, dodd/frank has been a huge drag on the economy. it's one of the reasons we suffered through 1.5% to 2% gdp growth throughout the entire obama era. i believe that we have a lot of capital that is poised to come out of the sidelines. optimism. business optimism is up. consumer optimism is up. they need something to come out of washington. that's why it's important to get fundamental tax reform done. it's why it's important that we have economic growth for all bank bailouts at the core of the financial choice act, that we have regulatory relief for our community banks and our credit

unions that help fund a lot of our entrepreneurial ventures and small businesses. entrepreneurship is at a generational low under the burdens of dodd/frank. it's incredible. that's the feeder stock of jobs and business and future and we've got too many garages in america that are full of old cars and they need to be full of new startups. >> congressman, i know this regulatory relief theme is very in right now. we talked last week to one bank regulat regulator, vice chairman of the federal reserve, listen to what he said about rolling back dodd/frank. listen to this. >> we seem to have forgotten that we had a financial crisis, which was caused by behavior in the banking and other parts of the financial system, and it did enormous damage to this economy. millions of people lost their jobs. millions of people lost their houses. taking actions which remove the

changes that were made to strengthen the structure of the financial system is very dangerous. >> it's very dangerous. how do you respond to that? >> well, number one, what mr. fisher ought to know is that what caused the cries nis tsis first place was federal regulators and federal policy and sending financial institutions to loan money to people for homes they couldn't keep in the first place. of all of the subprime loans that were backstopped by franni a -- fannie and freddie. you can't make a case there was a lack of regulatory authority to stop the financial crisis. so unfortunately what washington did was engage in activities of washington greed, the greed to have power and control over the entire economy. the bottom line is dodd/frank failed. it promised it would lift the economy and it hadn't. it promised it would end too big

to fail. >> it promised it would safeguard the economy. it promised it would safeguard the economy and not necessarily lift it. there are still loans happening. >> you go back and read president obama's quotes. he said that dodd/frank would "lift" the economy. go back and check. they also said it would end too big to fail. it codified it into law. it said it would help consumers. bank fees are up. ranks have increased. here's what we want. we want to better capitalize banking system. we have said that for banks that choose a 10% simple leverage ratio, that they can opt out of most of the dodd/frank regime. it's an option. 98% of all banks, 98% of all banks -- let me finish this one point. 98% of all banks that had 10% simple leverage ratio survived the second worst crisis. it's about capital and not federal control. >> i think one could argue that consumers have born the brunt of

some bad actions from some financial institutions. you've been critical of the consumer financial protection bureau. the bureau said nine months ago that $11.7 billion of relief had been provided to consumers through their actions. $3.6 billion in monetary compensation to consumers as a result of enforcement activity. they point out $700 million of compensation a couple years ago after citibank was found to mislead consumers about some actions that they had taken, which of that is bad? when you say that the cfpb is a rogue agency. would you roll back those actions? >> what we do in financial choice act is we create an agency that is a law enforcement agency pure and simple. the constitution says congress is to make the law. the executive branch is to enforce the law.

we have an agency, i think the only second government agency since the deal, which has been found unconstitutional by a three judge panel by second highest court in the land found structure unconstitutional. we have two dozen major federal consumer protection laws on the books. we want an agency to enforce it. we also want there to be due process. we want there to be checks and balances. we want to ensure that they actually help consumers. the number one consumer protection is competitive, innovative, transparent markets. too often cfpb has hurt markets. again, it's one of the reasons that we have 15% fewer credit cards and they're costing 200 basis points more. it's one of the reasons that free checking has been cut in half. it's one of the reasons that for many good credit worthy borrowers, auto loans can go up as much as $500. this is an agency that, number one, has hurt marketplaces with

respect to fines i assume some of these people are guilty. some of these people may be innocent because they didn't have their day in court, and so we just don't know. we also know this was an agency that was asleep at the wheel at wells fargo. that had to be "the l.a. times" to break the story and l.a. city attorney's office to pursue that. this was an agency that was asleep at the wheel. the major problem is too often they hurt consumers and are not subject to checks and balances and due processes. we want them to enforce the law and not make up the law. >> mr. chairman, we'll watch the choice act. wish we had time to talk taxes today. maybe next time. good to see you. >> i look forward to it. thank you. >> jeb hensarling. >> still to come on the show, we have keith meister live from the hedge fund event where david faber is reporting today and awaiting comments from house speaker paul ryan. check out the nasdaq hitting the

third straight all-time high ahead of the mother lode of tech earnings. "squawk alley" back in a moment. in an accident. s when i call usaa it was that voice asking me, "is your daughter ok?" that's where i felt relief. we're the rivera family, and we will be with usaa for life.

we take you to the white house. the president and first lady welcoming the president of argentina and his wife to the white house. the two will conduct a working lunch later on this morning. this was sort of a pattern we had seen in recent weeks. today it's been overshadowed by a lot of domestic policy but the president making time for at least one foreign dignitary. >> some point to the fact that this is the second latin american president to visit the white house. the first was the peruvian president. it's not one of our closest allies and friends south which would be mexico. that trip was canceled over tensions amid nafta which are still going on right now. interesting relationship between the two. they were somewhat business partners in the real estate world. goes back about three decades but during the campaign for president, hillary clinton was more popular within argentina.

many people watching this to see the friendship these two had from back in the day will be sort of reignited. >> reuters going with headline that trudeau of canada told the president that nafta withdraw would cause job losses and instability on both sides of the border. we're watching that. let's get to david faber. hey, david. >> hey, carl. we are here again and joined now by keith meister. makes the decisions in terms of what they're investing in and when they get active. nice to see you. thanks for joining us. you're going to be presenting later although no new ideas. some people are doing new ideas. you've got some coming is my understanding. we may hear from you in the not too distant future i guess. >> we'll be presenting an idea we've been working on for the past year today just to work through a case study of successful activist investing. the company we invested in over

a year ago we'll walk through positive changes the company has made. they improved governance and put out growth targets and focused on margins and we were hopeful partners and we'll walk through that case study and we're finding new opportunities. we haven't filed 13d in over a year. i don't know why, but we're seeing a lot of new opportunities in the $5 billion to $12 billion range. we'll talk about an idea that will be a new idea. >> that you will file? >> it very well may be. we'll go to specifics then on that. >> when do you make a decision? when does it become a decision that either you're going to -- obviously it's stock picking. i understand that. what you see is valued. what else figures into sort of the dynamic in terms of when you do come with a filing position? >> i think about the active investing business. how can we share good idea with management team or board and make our idea theirs and let

them implement the idea. one of the cootools one can use get a management team or board to implement an idea is highlighting the idea and getting other constituents to buy into it. that's one variable. does public knowledge help or hurt? many situations where we work privately because it's more effective. i think the other challenge is if we're going to get public, we're going to reduce our liquidity. we tend to be in things from post to post. do we get compensated for that? does the tradeoff between reduced liquidity and less flexibility -- >> everyone else wants to run -- not everybody but a lot of people want to run away. we're not activists anymore. we're constructivist. whatever that means. >> we'll make zero excuse for engaging actively with a management team. we almost always engage actively with management to drive better

outcomes. we do that all the time. we better be right about the company we invest, why we invest and then hopefully we can make a lot of good investments better by being actively engaged but activism is a tool and not a strategy. >> you own 10% of pandora. i haven't actually reported on air in quite some time. >> by the way, thank you. >> you're welcome. so mu so many different things going on. i don't know if they'll raise money with private equity or do nothing. as a 10% holder, what would you like to see? >> this is one of those situations that is better dealt with privately opposed to publicly. we're not in a position to comment on this publicly. we've been engaged with the company. a couple things i can say. the company did move the nomination date several times. it's now may 8th. so shareholders, us included, have the right and ability to

nominate directors and affect change up until may. so my hope and my expectation is that the board and by moving that date, the board, management, advisers, can work constructively on all of the various things you mentioned and other things and not commenting on validity of any of what you said. we always said that we think great company, great product, real change is needed. i think they get that message. my hope is stay tuned until may 8th and we'll be able to make a more informed decision and best chance to get to a really good answer is letting everyone do it privately. >> you don't have that much time. you can't be happy with the performance of the stock though and/or the ability of management to deliver on value creation there. that stock has not been a good performer. >> the past is the past. it's not been a successful company as a security. the product is great. consumers love it. >> i love the product too. so what. you're in business to make

money. >> 100%. and my hope is that everyone gets this. we're not the only shareholder who is frustrated. i think we'll get positive change but my point to you today is that change is going to happen best if we let them deal with it over the next few weeks. there will be time to talk about what next at that point. >> you won't talk to me about what your expectations are in terms of the sale and/or significant equity. you recently stepped off the board of remyum brands. why did you telephone off the board? >> professionally and personally my experience in yum was fantastic. we never told them how to run restaurants but we had great idea how to transition business model and become asset light and change capital structure and change business miss and accelerate growth. we shared an idea similar to their idea. they bought in and executed and together we can do that better than apart.

the situation worked. in october we spun out yum china. we brought a strategic partner in. that's been successful. >> it's how it's supposed to go. >> if it was always that easy, it would be great. i will say that if we look at the williams situation, both big, high quality companies. one we're able to be more effective than the other. why? and i would say in the case of yum, we had a world class management team and a world class board comprised of ex-ceos and business leaders. this concept that an active investors goes after bad companies is a mistake. we should go after good companies. better chance to get them to buy into our ideas and get it done. >> what is the lesson learned from williams? >> you know, lots of lessons learned from williams. i think we invested in a great

company and good space and looking back we tried to get a deal done that was a great deal that created a lot of value. if you look at where the consideration of that deal is today, it's still 35% higher than where williams trade stand alone. plus a lot of industrial logic combining the companies. we were unable to get the deal done. in hindsight the business ran too tightly wound. i commend the williams board. i think they've taken a lot of the right steps. they've derisked. they've slowed down some growth. williams is great campaiompany. it's great asset. i'm really proud of what we did at williams. we helped them enter into a deal we thought would add a lot of value. that deal couldn't close for a variety of reasons. we helped leave the board a lot stronger. the day we left the williams board was one of the weakest boards in the energy space and today one of the strongest boards. we're not going to win everything we do as an active investor. we'll make mistakes. hopefully good process bad outcomes.

that's what williams was. we'll leave companies better than what we found them. >> in terms of the evolution of activism, we have seen in our marketplace of course the growing influence so to speak of etfs passive. this is active passive. the passive part is getting bigger and bigger and bigger. what role does that play in terms of governance of these companies when you've got the blackrocks of the world and so many others trying to bring fees down dramatically. how can they play a positive role in governance when they deal with thousands of proxies? >> you ask the exact right question. we could discuss this for hours. it's something we should spend time on in the future. simply put, roughly high teens percent of the average s&p companies are owned by index funds. great way to invest capital. low cost alternatives and do what they are entitled to do and combine that with capital flows and monetary policy over fiscal policy and indexes have

outperformed fundamentals so lots of capital has flown into index funds. the challenge is no matter how good an index fund wants to be at overseeing voting decisions, they don't have experts on the individual companies. so they can make policy related decisions and blackrock and vanguard do a great job of thinking about the wholistic policy issues but they are not equipped to keep and hold individual companies, management teams accountable. with 16% of the market held by index funds, no problem. the other 84% who are all active and trying to outperform against the index funds can work together. the activist can work with the traditional loan only and make sure to hold management teams accountable. i think that's really helped swing the pendulum in the last decade back toward equity. the worry is if you go to 30%, making up the number, at what point is too much held by passive and the pendulum swings too far and you may not have as much accountability for equity. if blackstone owns a company, the board or ceo has no

confusion as to who they work for and what the goal is to drive value for equity owners. as you go to other stakeholder voices, i worry could drive out equity and not good for the competitiveness of our businesses. >> we have to leave it there. that's a topic worthy of a lot longer discussion. i appreciate your willingness to engage on it a bit. thank you. keith meister. back to you. >> david, thank you. right now house speaker paul ryan is holding his weekly press briefing. he's taking questions from reporters. let's listen. >> federal and state support to people who are sick. support that catastrophic illness with greater subsidies so everyone else doesn't bear those costs. 1% of the people in individual market drive 23% of the cost. so if we directly support that catastrophic coverage, it sort of reinsurance on top of insurance, you are lowering everyone else's prices making it easier for people to afford

quality health insurance and you're guaranteeing that that person who has catastrophic health care costs and that person who has a pre-existing condition or gets sick gets the coverage that they need. we think it's a really good step in the right direction. we're having preproductioductiv discussions with our members. >> is there pressure to vote by the president? >> we want to go when we're ready to go. this has been an organic bottom up process. it takes time to do that. we're doing big things. i talked about 200 days because i thought the kind of agenda that we're attempting to put together here overhauling health care, overhauling the tax system, rebuilding our military, securing the border, they take more than a few months. they take a long time. at least a year. that's why we're working on the path to get it right and not constrain it to an artificial deadline. >> in wisconsin, it's still

unaffordable for a lot. >> it was actually darn good. this will add federal funding to it now. high-risk pools. states had high-risk pools and reinsurance mechanisms or risk sharing like the main plan. none had any federal funding. none had federal resources. this takes that idea and adds federal resources to it to make sure that it works better and hhs will coordinate with those states to make sure they have good mechanisms in place. utah had a good one, washington state had a good one, maine had a good one, we had a good one. they work. and now that we're going to be adding federal funding to it they'll work even better and you'll be able to lower prices even more. >> can you reassure people with pre-existing conditions they won't be worse off? >> people will be better off with competepre-existing condit under our plan. people get one choice at best in a third of all of the counties in america. five states you got one plan to

choose from. that's not very good to have just a monopoly giving you health insurance. our job here is to make sure that people get more choices and by getting more choices, you can get better quality health insurance and lower prices and we preserve those protections for people with pre-existing conditions. that's the goal of this bill. that's what this bill achieves. we think it will be a big improvement on status quo which is collapsing before us. >> democrats say that they will -- >> i was just repeating what she was saying. not what you said. >> democrats are saying that they -- >> she said something to me about that. [ inaudible question ] >> what's your reaction to that and can you pass a funding bill -- >> i would be shocked they want to see a government shutdown that democrats would want to do that. let's just take a step back. the reason this government funding bill is not ready is because democrats have been

dragging their feet. periodically they haven't even shown up from negotiations. so the reason we need an extension in the first place is because democrats are dragging their feet. even if we get an agreement in ten minutes, we simply can't process the paperwork that long and we have a three-day rule. people need to be able to read the bill. so under any scenario or circumstance requires a short-term extension and i'm confident we'll be able to pass a short-term extension. i would be shocked that democrats would want to create a government shutdown because they have been dragging their feet. [ inaudible question ] >> tom mccka is leading moderat congress. it's his amendment. i don't know if that's the case. i would say that tom actually

has an entire career working in insurance understanding the math and mechanics and science of insurance has come up with a very innovative amendment we think works really well and gets to where we all want to go. we want to bring down costs. preserve protections for people with pre-existing conditions and that states have different health care issues and different marketplaces and give them flexibility to give them maximum reduction in policies and premiums to get the best possible health care system. a cookie cutter one size fits all system doesn't work for america. it's a diverse country. different states have different rules and systems. we need to respect that. he's one of the leading -- sorry. it was a good shot. one of the leading members of the tuesday group. this is a coalescing thing.

no. i think people's seats are at risk if we don't do what we said we would do. we all campaigned on repealing and replacing this law that is collapsing. the american health care system in the individual market is in peril. we have a moral obligation to prevent people from getting hurt to stop damage from being continued. and we promise that we would do this. if you violate your promise, if you commit the sin of hypocrisy in politics, that's the greater risk to a person's seat. >> on insurance subsidies, you said that the administration should continue those payments. you sued the obama administration for the exact thing. you said you don't want to deal with in the spending bill. what's the future of these? it seems like the white house and republicans are on different pages on how funding will work. >> we're in litigation so i won't go into details of that. only that it's a difference between separation of powers.

so we're in existing litigation -- >> we'll continue to monitor that for you. that is house speaker paul ryan taking questions mostly on obamacare and also facing potential spending bill to keep the government open before the friday deadline. we want to talk taxes and washington policy and how it relates to the markets and the economy right now. we've got larry summers with us, mr. secretary, welcome. nice to speak with you. >> glad to be with you. >> you come down on the other side of this economically. you call what we learned from the president's economic team on taxes yesterday ill-advised and that it could undermine the secretary of treasury's credibility. i guess you're not buying 3% economic growth pays for all of it, huh? >> i haven't seen any analysis. most presidential campaigns during the primaries when they put out a tax plan they put out

more than one page and they put out some analysis and some model and some careful articulation of the proposal and estimate its effects. there is none of that coming from the administration, and yet there's this confident statement that it will pay for itself. i don't know how they could possibly know without having done any economic work and this is a subject that's been enormously studied by economists of both sides of the aisle. we've got lots of experience with broad based tax cuts. the bush tax cuts at the beginning of the last decade. reagan tax cuts in the 1980s. and you can argue about whether on balance they were good things or whether they were bad things, but there is no, no serious reading of the evidence that suggests that they came close to paying for themselves by stimulating economic growth. i just don't understand what

could cause an administration to put its secretary of the treasury in a position of asserting something and asserting it repeatedly that is generally regarded by economists is absurd. >> mr. secretary, as you know from personal experience, you serve at the pleasure of the president and in some cases are asked to carry out his agenda. is that not what mnuchin is trying to do? >> i was treasury secretary. i worked closely during their times as secretary of the treasury. of course anyone in administration owes a duty of loyalty to the president.

certainly in the administrations of which i was a part, the president never asked the treasury secretary to put the pri pri prestige of the department behind all experts as absurd. he never -- presidents never asked the department to take a planning effort planned to go on for several months and condense it to a new days and presidents never asked when a major policy statement was made by the secretary of the treasury for it to be completely contradicted. those things didn't happen. in my experience and certainly speaking for myself, if i had been asked by the white house to assert a proposition as false as

the claim that this plan would produce revenue, i would have resigned rather than put credibility of the department behind a proposition that no one with real expertise would believe is true. >> mr. secretary, one of the parts that's gaining a lot of attention is pass through. married couples with incomes as low as $75,000 might benefit from declaring themselves corporations. do you think that's likely? what would the impact of that be? >> look, one of the things that i do in addition to being a professor is i engage in consulting of various kinds to companies. it would be an incredible windfall for me if i could call myself limited liability corporation of some kind and have a 15% tax rate rather than

the top individual tax rate. as a policy matter, it would be an absurdity in terms of unfairness that it would generate. i can't imagine that will get to the end. perhaps some way we'll be found distinguishing different kinds of passthrough entities. more likely congress will have a broader perspective and we'll find a way, whatever happens, not to pass something. i'm not assuming the tax cut will come for me. i don't think it's at all appropriate. >> we could debate provision by provision with you. let's just keep it broad and focus on markets. it's stunning to see most of the major averages at record highs. the obama presidential years were marked by a recovery but a

subpar recovery. slow and frustrating growth. and hope now is that with some corporate tax cuts, maybe individual tax cuts, spending package on infrastructure and deregulation of a lot of industries in this economy, we break out of that. does the market have it wrong? >> i'm not somebody who could presume to judge particular market movements over short intervals. >> economic growth idea. >> i think it does bear emphasis that during the obama administration the dow jones average substantially more than doubled. it's not that there's something new about a strong stock market. i think it's also important to note that stock markets in europe and japan where there's much less effect of trump policies have been extremely strong particularly in europe in

recent months. i think it's important and perhaps more subtle point but certainly analysts particularly goldman sachs track the performance of high tax companies versus low tax companies. it's very interesting. in the first couple of months after the election, the high tax companies went way up relative to the low tax companies, perhaps in anticipation of tax cuts. that is entirely reversed itself in the last several months suggesting that whatever is driving the market probably does not have a great deal to do with tax policy. but, look, i have said this on cnbc many times before, and i said it all the time when i was in the administration, it's the cheapest form of stimulus. i do think that doing more to address the question of business

confidence is a good idea. it's just you have to be thoughtful about it. and i don't think the ultimate impact of $5 trillion tax cut is likely over time to be favorabl business confidence. i think some of the regulatory changes that have been proposed may have some short run benefits, but if we turn coal back on full throttle, i think that's going to do real environmental damage over time that's going to hurt all of us, including our businesses, and i think that cooler heads in the political process will prevail. but if we were to do what the administration sometimes talks about and repeal dodd-frank, we would put ourselves at risk of another 2008. >> larry summers, always good to get your thoughts, especially on the topic of the day. thanks for sharing your opinions.

never enough time. that is the former treasury secretary of the united states, larry summers. >> flames coming out of our screens right now. markets close to session lows, dow is down 35 and oil is down almost 1.25. and the wolf huffed and puffed... like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes.

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president trump sitting down with argentinian president make comments on nafta moments ago. take a listen. >> i was going to terminate nafta as of two or three days

from now. the president of mexico, who i have a very, very good relationship, called me and also the prime minister of canada, who i have a very good relationship, and i like both of these gentlemen very much, they called me and they said rather than terminating nafta, could you please renegotiate. i take them very much, i respect their countries very much. the relationship is very special. and i said i will hold on the termination, let's see if we can make it a fair deal, because nafta has been a horrible deal for the united states. it's been very good for canada, it's been very good for mexico, but it's been horrible for the united states. and if you check my campaign, any of my speeches, i said i'll either renegotiate or i'll terminate. so they asked me to renegotiate. i will, and i think we'll be successful in the renegotiation, which frankly would be good, because it would be simpler, but we have to make a deal that's fair for the united states. they understand that.

and so i decided rather than terminating nafta, which would be a pretty big shock to the system, we will renegotiate. now, if i'm unable to make a fair deal, if i'm unable to make a fair deal for the united states, meaning for our workers and for our companies, i will terminate nafta, but we're going to give renegotiation a good, strong shot. thank you very much, everybody. >> all right. the president clarifying some of those reports on nafta yesterday, calling -- saying if he were to withdraw, it would be a shock to the system. we saw peso action even on the rumor this could be reviewed. >> u.s., canada, mexico trade has tripled since nafta. a lot of people say there is room for improvement and modernization. the president taking a much more moderate tone than simply withdrawing. so yes, it could be a shock to the system if we go back to tariffs with our closest trading partners.

welcome back. we've got some breaking news, some headlines out of facebook from reuters. facebook outlines new measures to combat nation state efforts to sway public opinion.

this continuing facebook's addressing of fake news controversy that's been in the conversation since the election. facebook saying nation states have been conducting well-funded information operations on the service. it sounds to me, guys, like a bit of a departure from what mark zuckerberg was saying around the time of the election, saying that by and large things had gone well, people are using facebook to share legitimate stories. in that case facebook seems to be focusing in on not just random hackers, individual efforts to try to make money off of spreading perhaps disinformation, but nation states doing the same. the game intensifies. >> we know what almost an existential issue it is for the company. it continues to be seen as a powerful source of news and does lead us into an afternoon, john, where tech earnings will be coming at us in ways we haven't seen before. >> big day for the pc which has

seen a bit of a resurgence. we've got intel and microsoft reporting and then of course in the cloud amazon and google, both important players. >> with the nasdaq at a record high. you just wonder how high the expectations are going in with these stocks trading so high. i'll be here at the closing bell. will you be with me? >> in spirit. >> let's get over to headquarters and "the half." thanks, carl. welcome to "the halftime report." i am brian sullivan in for scott wapner. on this busiest day of earnings season, we are going to drill down on the biggest winners in the last two months. that is two sectors, tech and health care. your traders today, joe, jim, john and pete. also co-founder of dialectic capital and joining us from the conference in chicago, josh brown. all right, guys, let's focus in on alphabet, formerly known as go