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tv   Squawk Box  CNBC  March 24, 2017 6:00am-9:01am EDT

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arizona. the hair is up on the back of my neck. i can't believe it. ♪ live from new york where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becker along with joe kernen and melissa lee. andrew is off today. watching the u.s. equity futures this hour. things are relatively calm ahead of what seems like chaotic maneuverings in washington. dow futured are indicated up by 25 points. the s&p down by 1. the nasdaq down by 3. the d the dow and s&p 500 are on pace for the worst week since the election. the nasdaq is on pace for the
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worst week of the year. you have to put that in context and realize these are very mild losses at this point. look at what's happening overnight in asia. the markets there finished higher. the nikkei was up by 1 %. shanghai was down by 0.6%. in europe, the early trading, you'll see at this point it looks like things are relatively flat. the cac is the biggest loser, down by 0.33. the yield on the ten-year is sitting at 2.427. everybody on wall street watching what's happening on wall street and taking it in stride at this point. >> our top story, the house vote on healthcare expected statement today. president trump saying vote for the bill or live with obamacare. kayla tausche has more. >> that vote is scheduled for this afternoon with debate
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beginning around 2:00 p.m., and votes cast closer to 5:00 today after republicans sought to sure up the bill. the president saying the vote happens today regardless of the count so they can move on. white house advisers were dispatched to capitol hill, they were scrambling around to work with house speaker paul ryan on changes resulting from meetings. the budget director late in the night said the president is done negotiating, and the speaker emerged at the end of the day to say just this -- >> we'll pass the best possible legislation we can. we got it there. the president helped negotiate the changes, send it over to the senate, and then the senate can make improve tments to the bill but if we do it here, we will jeopardize the entire bill. >> the bill carries a four-page amendment that gives states new
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help over state benefits. the bill doesn't have a current cbo score. the nonpartisan agency last night scoring a now outdated version of the bill finding the deficit would be cut by half the previous estimate but are expected to have a fresh score by the time this bill reaches the senate, if it passes the house today. the timing of the vote this afternoon leaves a few hours of persuasion for the hold outs and gives members enough time to get home and face constituents over the weekend, and the stock market will be closed when the result hits. so whether it's a good result as digested by the market or bad, we won't see that until monday. >> i'm starting to think people want to do tax reform, too. these guys in the house, god bless them, but they all think
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they're patrick henry. i'm hearing these speeches, they're going back making speeches from the 18th sentry about freedom. all this. some of them have delugs of grander. in 2018 they might be back in the family business, the hardware store, wherever they came from. this is their day in the sun. they can have that. but i don't know. let me ask you one question. i saw this yesterday. i heard ryan was using the byrd thing saying we can't give you what you want, we can't get rid of all these things, whatever they want to take out. we can't do it because it won't pass the byrd rule. cruz said i can do it. that removed ryan's argument that he couldn't do it. then he didn't have a good answer to tell the conservatives. >> he said we can't do it here. do it in the senate. >> but they got something. he did give them something. did they remove all of it? it's not strictly removed? it's the potential to remove it?
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>> it's the potential to remove and it sends the power to do that to the states. i think that will further complicate the idea of selling insurance across state lines. if you have these differentiated products, it will be hard for people to find an apples to apples comparison of a product they want to perhaps that's not today's problem. the white house is leading all of the negotiating on this bill. pete sessions yesterday said they know the art of the deal. i don't. i don't know how to do that. they are doing this. they are playing their cards. this is where they want to go with it. so, it is very clear the president's fingerprints are all over this strategy. he thinks and perhaps rightly so that when faced with a decision, whether to go back to their members and say they voted no on an option to repeal obamacare, even partially, that members won't do that. >> and frankly, it's a really smart move. the idea that, look, there are
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not 535 people in a board room, you can take this or leave it apparently he's tired of the negotiation on this front. in the art of the deal it says the worst thing you can do when making a deal is let them think you're desperate to get that deal. >> not be willing to walk away. like buying a house. if you're not willing to walk away. >> right. >> that's right. now we're like tweet buddies, kayla. so you said there will be food -- >> you tweeted at me a lot. did i respond? >> you said there will be food. >> that's the definition of buddy. >> you said there will be food. i thought you meant the movie will there will be blood. >> then the reporting got into will it be pizza, chick-fil-a what will they be eating? i left it there. there will be food. they were going to be there for a while. not all that long. not all night, but they got dinner. >> i can tell you like this new
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gig. you're enjoying t it, am i righ? >> i like reporting. i like being where the action is and knowing the story. >> it's exciting. >> there's a lot going on here, joe. >> i -- we've been following this so closely, i realized there's a basketball game on saturday night that i care about. i think i might -- we need a diversion. >> you're admitting your attention will be turned? >> there is a basketball game tonight when butler plays unc at 7:00 p.m. >> are. but i'm talking about xavier/gonzaga. j jesuit slugfest. who do you have left? you have unc left? >> unc for me every year. i'm a loyalist through and through. >> i have you winning. >> that's good. >> i don't have xavier. >> oh, no. >> i took them all the way to the last game. last year i took them all the way, look what happened.
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two years ago, i took villanova all the way. >> wrong year. >> that's the best thing that could happen to xavier. look what happened to the bengals since you were on the bandwagon. >> we have to figure out what to do one way or another. this next person will tell us. >> at least we won't be talking about this for another week. we should get a conclusion today. >> for sure, i hope. animal spirits, now making sausage. if i say that again. what would we do without these idioms. you said ball in the court. >> yeah. and i was just going to say i had an opportunity in the 5:00 a.m. hour to use the opportunity
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shodden freud. which i think was a first. >> we may see this, nancy pelosi, she hasn't been this happy -- they're thinking about passing a bill without knowing what's in it. who wo uld do that? without a hint of irony. let's talk about healthcare stocks in the middle of this joining us is anna gupta, senior research analyst covering healthcare services. we'll get to what you think about the individual issues, because i think some of your names either way are going to -- because of -- dispensing healthcare. they'll do well. we need to keep doing that. how do you handicap what will happen today? you must think about it. >> i'm still handicapping they'll get the vote through the floor. there was so much drama in march of 2010 as well with obamacare. hopefully they get some of these freedom caucus reps on board.
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and they can talk about which stocks to buy or not once they do that. but i think they're kind of there. the essential health benefits, the senate parliamentarian remains a bit of an open-ended issue. they did get quite a bit. if they can get that through the byrd rule in the senate, the conservatives should be quite happy. the senate will probably walk it a little bit more to the middle. it's a fairly conservative bill in my view. >> so, could you -- do you have names that you feel are going to be win-wins no matter what? the same ones that we've talked about in the past? >> the large cap three, and the pharma industry came out well in this bill. they didn't have drug pricing legislation built into this. they got a tax break. maybe they can give some of that
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back to consumers in the form of copay assistance that may get the government get off their back and the president's populist agenda gets served as well. i think they would come out okay. that lobby has endorsed the bill. i would be buyers certainly of the large cap mcos with united, anthem and humana. >> which device makers do you think would benefit from this in particular? >> all of them. the device stocks on the ortho side and the cardio. there's a number of names we have, strikers, medtronic, all of those. all of them will see a reduction in tax repeal permanently. they got a holiday for a short period of time with the debt ceiling bill that was passed a
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couple years ago. but this gives them a lot more upsi upside going forward, and from the manufacturing point of view in the pharma industry, it's the pricing equation that drives it. coverage expansion must have played a role in increasing the volume, but it's really about margins and pricing. >> a couple days ado when i asked the question should i look at a basket of medicaid exposed stocks as sort of a barometer as to whether this thing is going to pass, you said yeah. in the last couple of days these stocks have been doing well. what are the push/pulls in terms of they'll be hurt by pulling back on medicaid funding, but what is the benefit, the upside eventually of this -- of the bill in its urnt current form? >> the medicaid hmos, one basket, and the hospital stocks is another basket. the medicaid hmos, yesterday
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they were probably quite noticeably off. they were selling off. there was a downgrade that reminded everybody about the down side of the bill. they have generally been growth stocks. under the democrats, healthcare entitlement, growing entitlement, the consensus is these are mid teens eps growers. post the election there was a huge selloff, then the trade into maybe mid-march or so that the outcome is not as bad as feared. so we saw multiple compression and the stocks rallied some. we were seeing in 2020 medicaid expansion grows. the generous premium and cost sharing subsidies are moving to less jepious wagenerous watered credits, but it's happening in
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20 20. y 2020. you don't have that happening next year in 2018, we have no new expansions now with this amendment that went through last night. so the growth story has been dented. i think we're seeing a rotation into some value money. the rallies from time to time, it's not looking as bad as we thought it could be. but they don't strike me as being growth stories anymore. so you'll probably see a continuing turnover. >> someone -- there will be finger pointing if it doesn't go. some are pointing that it's ryancare not trumpcare and they make the point because he's having a hard time getting traction with entitlement reform in medicare and medicaid, that this was his way of putting some entitlement reform in this bill. does this reform to some extent
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the growth in medicare and medicaid? i guess it does. that's one of his pet -- you think paul ryan, that's what you think about. doesn't seem to be on the front burner for president trump. but it's a back doorway of getting that done. >> yeah. yeah. absolutely. he was on tv or tweeting he's been dreaming about cutting medicaid. so he hey not get his wish on medicare. that is more controversial with the senior lobby, but in this bill he's clearly cutting medicaid. >> yep. i was thinking about that. in the past, you can't take back entitlements. we think that's okay. social security, they want -- that was controversial. great society, you never walk any of those things back. i was thinking but we need those. they have done a lot of good. what have they done to generations down the road? they're just as big a problem
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now as the naysayers were saying back then if we don't reform those things, right? they could bankrupt the country. when you talk about 100 trillion in unfunded liabilities, that's what we're talking about, medicare, right? they put that in. it does about, seniors love it, but how will we get out from under that? i don't know. do you know? >> agreed. agreed. i think he's trying. but premium support which he's put on the table is probably too controversial. if they can't get this repeal go through, that's a task too far. >> yep. you look at europe, the entitlement state there. the last 50 years, it's been 60% of the growth here. part of that is way too much -- any way, ana, thank you. >> thanks, joe. now to sports. something we've eluded to. a big upset in the ncaa tournament last night. thank god i didn't stay up for
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this. three minutes to go, e. xavier went down by 8. 69-61 . >> you would have shut it off. >> i would have turned it off there. but they came back. trayvon -- they are 6-1 in must-win games. bluitt had 25 points last night. arizona, i didn't take them that far. a lot of times they disappoint. amazing. as you saw, arizona tried and missed a desperation shot. i couldn't have sat through that. last year it was wisconsin with the desperation shot at the end. xavier lost. they held on to win, 73-71. bill murray probably was crying. >> i bet. >> his son is one of the assistant coaches. >> the musketeers advance to the elite eight for the third time in school history. they will play top seed gonzaga tomorrow night. i'll be watching that. in other action, oregon edged out michigan.
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69-68. that must have been a great game. gonzaga beat west virginia, 61-58. purdue was good. people say kansas is no good. i took kansas all the way. kansas won by 32 points over purdue. purdue went -- >> purdue did well for the season. >> yeah. coming up, markets waiting to see how the house votes on the healthcare plan today. u.s. equity futures trying to figure out where they stand. right now the dow indicating to open up by 17 points. s&p looking to be down by 2. the dow is down for six straight sessions, still up 1.2.5% since the election. kevin, meet your father.
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stolfus. interesting market reaction yesterday, guys, late in the session when we got news that the vote would be delayed. we saw the downturn in the market. here today we have the vote. what are you expecting in terms of market reaction? >> if the vote comes out positive, we get a yes vote, i think the market will likely rally tomorrow. >> that would be weird. if we get a no vote -- if it rallies on saturday -- >> on monday. it's been a long series of 15-hour days, joe. we are in a bull market. we have to think that what will likely happen is the market will respond positively if we move ahead. >> it's nice that you weren't sure tomorrow is a weekend to your clients. that means you're so focussed on working. >> none of us would say that. >> i know tomorrow is saturday. i heard that immediately, i know today is friday. >> at 9:00 a.m. it's saturday. >> i'm so aware tomorrow is
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saturday. >> tomorrow is barron's and a bagel and coffee. >> no, it's not. it's not barron's. may be a bagel and coffee. stick needles in my eye. >> in terms of the comments that you vote for this or we move on, we move on to other things that the markets want, he doesn't say that, that's what the markets interpret it as, to tax reform, infrastructure, doesn't that give markets cover if the vote is a no, it donesn't pass, this could be a big day. >> this is a time when we see up from putting a strong hand on congress and what if they say no? you have that many different people. it's not like he's sitting down one-on-one with someone saying you have to do this. he's telling hundreds of representatives you better vote today and the right way. >> i think 37 republicans he's focused on. you could get to the point where he's individually calling them out in tweets. >> i think so. in is an unconventional
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presidency. he'll shame somebody with a tweet or at least bring them in to chat. that's an ice breaker. he's like a coast guard ice breaker. it's loud, it's noisy. it gets a lot of things done. it has the potential to move gridlock out of the store -- >> you think about the presidents who were great at kicking shins. going back to president johnson, he was effective at that. my guess is that if donald trump chooses to be, he can be much stronger in that because he's -- he doesn't care to do it behind closed doors. >> this will be interesting. do they cave? do they cave and get the votes? obviously right now in a normal process they wouldn't have the votes. >> does the ultimatum make the market reaction stronger? do odds get higher or do we have a put because he's saying we'll move on to tax reform? isn't that good for the markets any way? >> i look at these markets, the
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big thing i look at, the total return -- not the total return, just the price return of the markets in the last 12 months, the s&p up 10.7 -- 6.47%. the year to date basis, up 4.79. the mid caps up 2.16. the smalls are down, just fractionally. but when you look at the double digit returns you have on a 12 month basis in the major indices, and positive returns outside of the u.s. particularly in the emerging markets, it tells you that the markets are looking at other things. it's sustainable economic expansion in the u.s. recovery that's becoming undeniable in europe and asia w that the markets are resilient while things get worked out. we have a huge transition, major change in tone. it will be a bit bumpy in here, but i think the market is telling us -- very modest losses
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in the afternoon when you looked at where the indices ended the day. the market still looikes this. >> i wonder if this doesn't go, does that make the prospect to be successful with tax reform, does it increase it or does it mean these guys can't govern? if these guys can't govern, they get thrown out in 2018, when does it become clear that the country will say we're going back to -- >> i heard one republican voting yes on this saying we were a very good party of opposition, now we have to prove we're a leadership party. >> i could make both arguments. if this doesn't go, then these guys will go with them on tax reform. they would have made their stand. i don't know. there are democrats involved here. they smell blood right now. >> yeah. >> but they don't have to do anything. they can stand back and watch the republicans destroy themselves. >> chuck and nancy will be dancing around like a waltz.
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>> yeah. >> john and chris, thank you. when we return, healthcare showdown. president trump tells republican holdouts to take it or leave it. we have an update on the vote count next. and at the top of the hour, former aetna ceo ron williams will join us and tell us what the vote means for the insurance companies. right now a look at yesterday's s&p 500 winners and losers.
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>> welcome back. you're watching "squawk box." live from the nasdaq market site in times square. ♪ >> oh! good morning. u.s. equity futures at this hour are in the green. at least a little bit. well, less than before. yesterday it was a pretty good barometer. early in the session, there was some positive feelings that maybe it was going to get done. wasn't delayed. the minute they delayed it, i saw news wires that said it was down 120. it must have been up. it moved 120. >> it was never down 120 points, but it losted gai ethe gains. >> the reaction was interesting. nlts mo >> more interesting when we were at 12,000 and it moved 100 points. like the other day, japan moved 2%. >> that's a lot of points. >> 400, 500 points so if we move
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2% now -- think what the media would do if we moved 2% on this. >> i love what cramer said the reaction would be a mini t.a.r.p. to put pressure on them to pass it. i think trump changed dynamic by saying this is it, in or out. it's not go in test, and change it again. that takes the mini t.a.r.p. off the table. there's no second go-around. >> can they push the blame to ryan? can they insulate themselves and take the blame for this not passing? or the ult mimatum not working >> if you want to teach, you are in or your out. if you want to take this vote, you're in or out. >> human nature is amazing.
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obamacare, never more popular. 70% now. for seven years, never above 40%. then republicans, they wanted to repeal it how many times did they want to pass it? now they don't want to repeal it. >> that bill would never make its way through, they knew that bill would never be signed by president obama. >> we have to get to eamon, he has a big story on the wiretapping that james rosen will talk about on fox. >> eamon is talking about healthcare. >> no? >> this is what wall street is watching, right? >> absolutely. you've been talking about it all morning. we had this moment this week where donald trump called the conservatives bluff, and last night they called his bluff. now this morning he's calling their bluff again. and they're going to vote on it. here's what we know from mick mulvaney, the omb director last night talking to republicans behind closed doors. he said donald trump is done negotiating over this republican
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healthcare bill. the vote must happen today. if the vote fails, trump will move on and simply leave obamacare in place. that's a significant threat to conservatives in the house who you guys have been saying have voted again and again to repeal obamacare. they view that as one of their most important goals in the session. kevin brady talking to kayla tausche last night suggested they simply don't have the votes. here's what he said. >> clearly we don't have the votes yet. but clearly no one is walking away from the table. not the conservatives, not the moderates, not the president. certainly none of us are. this is a campaign promise to repeal and replace. we are going to deliver on it. >> so yesterday the white house suggested that this delay in the vote was simply a matter of scheduling. they said they wanted to start the debate last night and move on to the voting this morning. they said it wasn't at all because they didn't have the votes. it was simply because they didn't like the inconvenience of having to debate and vote
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overnight. when i asked sean spicer yesterday at the white house briefing which members they had convinced to go from nos to yeses, he said there were some. he wouldn't give us names or the numbers. so this was not a white house yesterday that felt like it had the votes. felt like it was confident about how this would turn out. today it is a big gamble by the president, gambling if he puts this on the table, republicans and conservative also simply have to vote for it. we'll see if he's right later on today. >> we were talking about how for a lot of the freedom caucus members, look, they're hearing from their constituents, and constituents are saying, no, we don't want this. this is not strong enough for us. that comes down to the question, donald trump is in charge. he's the president. for some of these freedom caucus members, they may feel like their constituents are in charge. it doesn't matter. if they wanted to keep their jobs, they have to answer to the
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constituents. >> this white house did not do the basic number of blocking and tackling things that you normally do. they didn't put out their own plan from the white house. so they didn't sit down behind closed doors and make some hard decisions about where they wanted to go here. they signed on to paul ryan's plan on capitol hill. they didn't go out and get the help of the inside groups in washington. a lot of conservative groups needed to be talked to an persuaded before this vote. they didn't have that support from the outside groups giving ground cover politically to those members and their constituencies. they didn't really rally support publicly for the particulars of the plan. you didn't have a massive pr campaign the way we've seen in the past going out and explaining what's in the plan and why it's good for you. and that's part of the reason why these republicans are getting so much pressure from constituents. >> though, as donald trump himself pointed out, this stuff is complicated. trying to please all parties is never going to happen on this issue. >> that's why it's tough to make these big, broad promises and
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realize at the end of the day you have to make tough choices. that's where they're at right now. they might still pull it off. my sense is that the white house can often get 5five or six hous members to cave. they have all sorts of tools of persuasion availability to them. >> thank you. joining us with more on this is american enterprise institute's ben ippolito. ben, first up, do you think the bill and the many change, is that have been added over the last 24 to 36 hours, do you think this is something that will pass if the vote comes today? >> well, it's a good question. you're right to say that. this thing is a moving target. every day you wake up, it's a new bill. my sense is that they're going to be able to get some votes. the problem is just that i think this might devolve into something like we saw with medicare part "d," where boehner opened the vote before they
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really had enough firm yeses, then they kind of spent the time -- kept the vote open, did what they could to get everybody on board. the difference here is it's not obvious what the firm nos want other than a different bill. >> right. >> so actually getting them on board is kind of tough. there's no sugar subsidy here to bring them on board. >> which is why the president's approach yesterday may have been the right one, in or out. there's not another bill to come. it's your choice if you want obamacare to stay or if you want to vote for this bill, which may not be perfect, but this is it. >> that's right. i think he's starting to realize, it's been the joke of washington that all of a sudden healthcare is complicated. he's realizing it is quite complicated. we're just talking about the first step in this process. you have to pass it through the house an then it has -- if you watch seinfeld t hit has a lot yada yada yada and then it
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becomes law. we have seen the bills come out, all the iteration. they have been able to digest it. cruz and paul are attacking it as obamacare light. people like murkowski don't want planned parenthood involved. cassidy and collins saying the coverage loss is too much. this is a well-established opposition that we have not even touched yet. >> given all of that, even if the vote goes in the house's -- paul ryan's favor, and the house passes this. you're saying you're not sure this will make it through the rest of the hong halong haul in event? >> at the very least we'll see a lot of changes. if you think about the discussion we've been having about the house bill, we've been talking a lot about the individual market. so the obamacare exchanges. when you get to the senate, medicaid is really going to take center stage.
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medicaid, it is hard to overstate the importance of medicaid in state budgets. that translates well to the senate in a way that it doesn't to house members. you will have folks like john kasich pressures senators to change the medicaid expansion provisions. i think at a minimum, if there is something down ee ethe road may get out of the senate, it won't look like what we're looking at now. >> the cbo is looking at the last version of the bill, and they changed the savings to where it's only 1$150 billion that you're looking at in savings, not the trillion dollars that had originally been expected. if it goes to the senate and the main goal is to make sure medicaid is not cut, you're potentially talking about zero savings, as scored by cbo. is that something that you think the republicans could live with?
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>> well, i mean, i guess i would characterize the current situation differently. you know, 150 billion in savings, given what this bill does, doesn't really strike me as particularly impressive. if you think about the years of insurance coverage that are lost over the ten-year budget window, that breaks down to about 700 or $800 in deficit savings per year of lost coverage. that's not really impressive from a fiscally responsible perspective. i don't think that's really going to sell the bill as it is. i think you're right that it's unlikely that what will happen down the road will increase deficit savings. so that will be one of the many hurdful les we have to discuss. are we willing to increase the deficit potentially to kick 24 million off of insurance. that's a legitimate question to ask. >> a lot of big issues need to be tackled. ben, thank you for your time. coming up, the healthcare
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vote in focus. former aetna ceo ron williams will tem us whll us what it mea insurers. and billionson wi johnson will why he's voting for the healthcare bill. stay trun uned you're watching "squawk box."
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time for the executive edge. listen up to this. theranos founder elizabeth holmes plans to give out her shares of her personal stake in the country to investors who promise not to sue the company or her. that's according to a "wall street journal" report online. investors in the latest funding rounds could get about 2 additional shares for each one they bought. addre the journal says theranos's board approved the deal last month, but this is like, hey, you have something worth zero dollars, let me give you two more sozero dollars. >> two times zero is zero. >> and in the meantime you can't sue me. here's some more zero dollar
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bills. >> of course the partner fund will still sue theranos. that will be a big case. twitter is considering creating a premium subscription service allowing paying users access to data tools. they are reaching out to see if anyone is interested in this new product. >> i don't think so. >> i guess you're not. >> no. coming up, rebuilding america. infrastructure rebuilding was a key part -- >> unless they could charge me a dollar for every person i block. >> you would be so rich. >> they would be. >> you pay? >> they charge me a dollar for every person i lock. >> yeah. he blocks lots. >> wow. >> you might go bankrupt. >> zero tolerance. any way, fill lebeau will talk about how overalling the air traffic control system could
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♪ ♪ hello, my name is watson. improving the nation's infrastructure is one of president trump's big campaign promises. right now we want to find out how a new air traffic control system could improve flying.
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phil lebeau joins us from o'hare airport. >> a lot of us who do a lot of flying realize the worst period of time is when we first get on our flight until we finally take off. we're on that tarmac a long time. the block times are what the airlines use from when you pull away from a gate to when you get to your destination. they put the block underneath the tire at the new facility or new airport. check out how much they have grown over the last 15, 20 years. las vegas to los angeles, up 20% in terms of the amount of time they have allotted for you. and from d.c. to new york, because that corridor is so congested, there are so many flights, you're also seeing a double-digit increase in time there as well. the congestion on the ground continues to grow at the largest airports in this country. president trump has said, look, we need to revamp the airports physically, and if you do that, perhaps build some more runways, reconfigure a few airports, have the money freed up there, you could ease that congestion.
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you also have airlines like american -- we went up in the american tower at jfk this week to get some perspective in terms of what they're doing. they're upgrading their technology in their towers as they talk with their planes before they pull away and take off. they believe that testing new management systems and ultimately if the entire system, not just the american system, but all airlines under one improved air traffic control system is upgraded, then perhaps you will see fewer ripple delays that seem to bog down traffic. >> ultimately, we want the pilot of the airplane, the air traffic controller, the distachers at the airline to all have the same information at the same time with which to make the best decisions. today there's usually a piece missing here or there, which creates some delay and uncertainty in making a decision to move a particular flight or flights. >> and he says that's the biggest problem, not just for american, but really for all the airlines, that the system needs
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to be upgraded, guys. you'll hear about next generation improvements from the faa, and there certainly have been many of those that have been made, but in the eyes of many in the airline industry, there needs to be even more investment made into air traffic control. that, they believe, is the key to easing congestion at airports around the country. >> phil, i talked to somebody a few years ago working on a story about this. they actually said, not being tongue and cheek, but the gps systems in your car are better than the systems we are using to track planes in the air. literally. >> you are not far from the truth there. and that's part of the concern that people have, that the faa has been too slow to upgrade the air traffic control system. the faa's mandate, first and foremost, is safety, not necessarily can we get the newest technology in there. they believe the technology helps and they have been doing that. so that's part of the issue here.
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the argument that you will hear from the president's administration and others is there's so much more technology that can be upgraded into the system. we can't wait any longer. it's not enough to say piecemeal we're going to roll things out. there needs to be a wholesale improvement in air traffic control. they believe that will ease congestion. >> i wouldn't care if my tax bill went up for that, phil. i think we're lulled into a sense of security because we think it's going pretty well, you know what i mean, in terms of how safe it is to fly. i think there's things we don't know, maybe, sometimes. if we knew, we might not be quite as -- >> complacent. >> you're probably right. all we think about -- we live in a "give it to me now" society, which means when we get on that tarmac, we get frustrated. why are all these people flying into new york when i'm flying into new york? well, that's congestion. >> right. >> i know. i can't believe when they say you're like 19 for takeoff.
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who are these other 18? really? why can't wie be first? >> the system has to have at least two minutes between planes because that's how it's able to do it. you're right. we don't want them beta testing a new system, but there's an argument for creating an entirely new system and having it running in conjunction and testing it while the old one is still there. >> and there are systems that are being tested piecemeal around the country, but that's not fast enough for a lot of people who say you have to invest more. >> investing from whom, phil? sounds like the faa is the one who would fit the bill. within an infrastructure plan, is there room for private/public partnership to pay for these changes? >> sure. that's part of the big debate of the airline industry. privatize air traffic control. if you do that, it'll be much more efficient. there are arguments on both sides. those who say, uh-uh, you do not want to mess with redoing air traffic control and privatizing
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it. you can do this, still have it under the faa, and have it regulated in that regard and not privatize it. interesting arguments on both sides there. >> all right. phil, thank you. phil lebeau, chicago o'hare airport. when we return, our guest host for the next hour, former aetna chairman and ceo ron williams. we'll get his take on the develop health care bill and what it may mean for the insurers. "squawk box" will be right back.
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a do or die day for the health care bill. president trump issues an ultimatum to congress, vote today or obamacare stays. former chairman and ceo of aetna
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ron williams joins us for the hour. washington watcher and political forecaster chuck gabriel will join us to talk about your investments. plus, congressman bill johnson is our guest. we'll find out which way he's voting. the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." good morning and welcome back to "squawk box" here on cnbc. we're live from the nasdaq market site in times square. ron williams, former chairman and ceo of aetna. a lot to discuss with him in just a moment. first, tha check on the markets. we saw market action dip to the downside yesterday when we got news the vote would be delayed. the vote is on today. the dow jones looking to open higher by about 17 points. s&p looking to lose about two at the open.
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the dow, by the way, logging its sixth straight down session yesterday. now up about 12.5% since the election. the ten-year note, we're watching that carefully as well in terms of the yields. we did see yields climb a little b bit. some other headlines to tell you about this morning. the trump administration has approved the keystone xl pipeline project today. that news just coming out. the obama administration had been opposed, saying the project was not in the country's national interests. but president trump is a supporter. meantime, macy's got a new ceo on the board officially naming jeffrey jeanette. he's hopeful about the company's prospects, but citigroup is not. citi downgrading the stock from neutral to buy. one economic report on today's calendar. the government is out with february durable goods orders at 8:30 a.m. eastern time. economists are looking for an increase of 1.5%. the president is done
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negotiating that gop bill to repeal and replace the affordable care act. he's now giving the house an ultimatum. pass the bill or obamacare stays. kayla joins us now with more. hello again, kayla. >> good morning, joe. that message was delivered last night by budget director nick mulvaney after a dramatic postponement of the vote, which was slated to be held on the seventh anniversary of the affordable care act. but interestingly on the hill, it was a marathon day that saw two wings of the republican party make visits to the white house to negotiate and a constant stream of leadership and white house advisers making trips in and out of speaker ryan's office to try and hash out a plan. here was the speaker's response around 9:00 p.m. >> hi, everybody. for 7 1/2 years, we have been promising the american people that we will repeal and replace this broken law because it's collapsing and it's failing families. tomorrow we're proceeding. >> well, as they proceed, it is soul searching time for
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republicans and the freedom caucus in particular, which is facing its first governing test. some of them wanted a different bill entirely, but now they need to decide whether to back a bill the president has said he would sign nits current form and is at least publicly all in or whether they decide to balk and risk alienating a president from their party very early in his term and what who is taking note of who's voting against him. but there are very real consequences for these congressmen. i talked to ted yoho of florida, who you had on yesterday. he said he's received 1800 calls from constituents in the last two days to vote against this. just 30 were in favor. but kocongress have made some changes. they're trying to offer something for everyone. they don't eliminate the mandatory or essential health benefits like maternity and mental health care, but they do give states power and funding over them, and they used an extended medicare tax to do that. the debates on the full house floor will begin at 2:00 p.m. eastern time. the voting is expected to wrap
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by about 5:00 p.m., joe. we'll see if we get more political theater because the threat from constituents is very real, or whether the political reality of washington and working with this president for the rest of his term is going to settle in. >> it is compelling and fascinating, kayla. it really is. been talking off camera with our next guest. he's very thoughtful. we decided, both of us agreed it's complicated. we're all coming to that -- >> who knew? >> we're all coming to that conclusion. we have to decide what kind of society that we are. there are pluses and minuses to everything. joining us now with more, our guest host of the hour, former aetna chairman and ceo ron williams. great to have you. maybe we'll revisit some of the philosophical discussions we've already had. maybe we'll start with that. we need to decide as a society what the minimum amount of coverage that everyone is guaranteed.
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>> there are important decisions we need to make as a society. personally, i believe we have a moral obligation to make certain that everyone has access to health service. >> and that is something, i would say, some people -- they would say it's a privilege, not a right, and that individual responsibility factors into it. i guess -- and we talked about this. the easiest way to do that is with single payer. like a lot of other countries do. then you have a system maybe where there's less accountability and it might drain some of the growth prospects for the overall economy. you have to decide, is that a trade-off that you're willing to give, or do you seem less compassionate in the interests of having economic progress for those that are participating? it's tough. >> i think the single payer would be the single worst solution. >> why? >> the simple reason is having no choice doesn't result in
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innovation and performance improvement. the biggest innovations in the delivery and design and care delivery have come from the large national employers who have substantial populations of employees who are noin innovatid give their employees access to disease management programs. the large corporations where the smoking rate is 4%. that's because they've invested in prevention and education and wellness. i would say single payer, absolutely not. >> other people will come back and say that's because you represent the insurance industry. >> that's because i know something about it, would be my answer. >> really. actually, i -- they say it's in a death spiral. is that because you haven't been there? maybe he knows something you don't know. >> it's possible. i would say it differently. the aca -- think about it as an
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airplane that was built to fly at 40,000 feet. today it's cruising at 5,000 feet. there is a 6,000-foot mountain there in front of it. we have to figure out how to get it elevated, which is doable and fixable, or we have to replace it with something that is functional and financially sustainable. i think there is a role for individual responsibility in the health care delivery system. the other quick point i would make is we confuse insurance with our moral obligation to provide health care services to people. and what we try to do is finance that moral obligation through the insurance system, which punishes the people who are fiscally responsible to buy insurance. >> the problem that the hospitals will say is if you don't force people to buy insurance, it is all being financed on their back and that the hospitals pile up with bad debt because they're never going to turn away a critically injured person who shows up at their doorstep. >> nor should they. i think the answer is that insurance is one mechanism, then we need other mechanisms for
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people who are not either financially able to buy insurance, we can use refundable tax credits and other approaches, or we have a way to fund the hospitals who are providing that kind of needed care. >> that had been medicaid to this point. the solution had been medicaid, that you won't fall below a certain level and not be helped. >> that is true. but medicaid still has not reached the entire population. in some states, medicaid is not based on justified rates to the delivery system. >> in your view, what's the one biggest problem with the aca right now? >> the biggest problem with the aca is that the system has been financed using the balance sheets of the private health care delivery system. as a society, we've not taken responsibility to have the debate joe raised, how much are we willing to allocate and create mechanisms that are based on that financial allocation. >> look, there are other people
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who say the biggest problem with what we've seen to this point with the affordable care act is it didn't do anything to bend the cost curve. health care in the united states decades ago was 5%, like it was in other developed nations. now it's approaching 20%. at what point do we say enough is enough? you can't have your health care system be responsible for 30%, 40% of your gdp. >> i would agree. i think the aca had ten titles. one of them was focused on access. that's the one that's gotten all the energy and the light. i think that we have not yet figured out how to bend the cost curve. i was reading data last night. the average delivery is between $30,000 and $50,000. why a healthy woman who goes into the hospital and doesn't have particular complications, why a delivery system would cost $30,000 to $50,000. there's an opportunity to apply the kinds of processes and techniques to create more value in the delivery system but make
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certain patients are getting the care they need. >> we also talked earlier. you would -- one option for you would be fixing the aca, but the other option for you would be a repeal and then a replacement with something that's better than the aca. you're not sure which way -- you'd be okay with either one. >> my focus is on how we get health care services to people who need health care. i try to avoid the semantics. repeal, replace, call it whatever you want to call it. the question is what is the content of the program. is it responsible from our obligation to our fellow citizens who are less fortunate than we are, and is it fiscally sustainable? those two things have to be talked about and debated in a serious way. >> i can see how you'd allow the government to take care of this, but then i worry that cost curve we're trying to bend won't happen because typically the government doesn't introduce the accountability that the private sector introduces.
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then i could also think the accountability that the private sector introduces will be seen as not being compassionate in certain cases. the government will cover everything. it will be at 40% of gdp eventually. but then again, you run out of other people's money to do that, and then suddenly people can't get -- you know, then they're waiting nine months to see an oncologist. >> medicare, by its own estimates, 11% of the money they spend is on fraudulent causes. how do we attack the waste and fraud and still make sure that people who need it are getting that care? >> i think the answer lies in the use of data, analytics, health care system is probably the least automated. we spent billions on the electronic medical record act. we've actually gotten very little out of that. there's an opportunity to bring the kind of processes that other businesses -- ceos are mystified why the health caring delivery system is so unproductive in the context of making use of a lot
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of the tools they use in their business. >> who would pay for that though? if you're to say data analytics will be saving us money, who pays for it? is it the government, insurers, the hospitals? i'm sure nobody wants to pay for it. that's the problem. >> i think there's a lot of money in the system. there's no debate there's huge waste in the system. the question is how do we get at that waste in a way that those resources can be redeployed into a meaningful way. but the patient has a real role in this. the patient has to do the right things. i'll just pick on one, medication compliance. half the medication that's written people don't take. they don't adhere to the guidelines, so their condition very well may deteriorate. so there are huge opportunities to do a better job in many areas. >> it's not just that. giving patients the power to find things out. seven years after the vote for obamacare, we still don't have transparency as a patient. i can't find out where i'm going to get a cheaper ultrasound. i can't find out where i'm going to -- you know.
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>> you go to the lab the doctor tells you to go to. you don't think, oh, maybe there's a cheaper, more efficient lab down the block. >> i'm taking my daughter in for ultra sounds now. there are eight different places i can take her on the back of it. i can't find out how much it's going to cost until after the fact. >> i think that's a huge opportunity. i know when i was at aetna, we built transparency tools for easy to price activities. so someone who wanted a colonoscopy or ultrasound could figure it out. it gets complicated when you talk about much more complex procedures. there's no reason that you shouldn't be able to know the cost of an ultrasound. that is really a huge missing element of transparency in the system. >> do you think that the way obamacare was originally structured has been a headwind for economic growth for the past seven years? >> i believe that it has had
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some negative impacts on employment. for example, one of the things i do like about the new bill is the elimination of the 30-hour workweek as full time. employers have cut back hours to keep people at 28 hours to be certain they don't go over. >> i see facts from left-wing entities that -- here's ten myths and one of them is that there's been any effect on part-time hiring. i've had people with small -- jason trennart said they did. >> we cannot deny there's been substantial job growth. my opinion is defining full-time as 30 hours is not good for people who are in that very precarious spot getting more hours. if they could get six more hours a week, it would make a big difference in their life. >> ron, thank you.
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when we return, after the health care bill delay, sending stocks lower in yesterday's session, we're watching the dow this morning. yesterday the dow notched its sixth straight down day. we're going to talk investment strategy next with mark lehman of jmp securities. and then, which policies matter most to your money? capital alpha's chuck gabriel will join us. after that, congressman bill johnson is supporting the health care bill. he'll be our guest ahead of today's key vote. stay tuned. you're watching "squawk box" on cnbc. ways wins.
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you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. welcome back to "squawk box," everybody. let's take a look at the futures this morning. we've been keeping an eye on it, and there's relative calm today. whether this vote passes in washington or not, dow futures are indicated up by about 33 points. that might be because they think passage will happen, that the freedom caucus won't vote to keep obamacare in place. it might just be because president trump has said he will move on to the rest of his agenda if this doesn't happen. that's what wall street would like to see anyway. nasdaq is down by 1.5. joining us now to talk about the markets and stocks to bet on is mark lehman with jmp securities. he's the president there. mark, how do you read the
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market's reaction today? >> it sound like the market is expecting what i would consider a no vote. i think we're going to not have the vote for the repeal of obamacare, the next phase of this legislation. i think they're going to get back to work. i think the market is ready for that. i think that's what we saw in the last few days and that's what we're seeing already in premarket indications. >> meaning the rest of the agenda, when it comes to taxes and deregulation is more important from the market's perspective? >> i think so. that's things i think will pass much more easily. that's what the market is, i think, rallied on this year. i think that's absolutely going to be the next phase of the trump agenda. >> the counter take on that would be that if this vote is not passed, it means that the republican party has been splintered and any momentum it may have had is gone and questions whether or not the president could get the support for the other bills that he would like to see passed. what do you say to that? >> i would say the party and the country is splintered.
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i think finding ways to get along and get things like legislation passed, i think we're going to see that going forward. i think this was a very tough bill to overhaul. i think we've also heard from the constituents what this actually means to them. they're voting with phone calls and e-mails to their congressmen, et cetera. i think tax legislation is easier to look at. i think we've already seen the ramifications for some of the public companies that we've seen. i've also seen a big shift, at least we have at least, on the ipo market. people are more excited about going public. i think those kind of bills are more likely to pass, and that's where the agenda will focus on after we find out today what's going to happen. >> if someone would have told you six months ago that what's going to be easier, repealing obamacare or passing comprehensive tax reform, we're under the impression comprehensive tax reform is the hardest thing to do in the world based on what happened last time around. they had voted 90 times to
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repeal obamacare. if you told them if they can't get it together, repealing obamacare, but it will be a slam dunk on tax reform, you'd be out of your mind. you really believe that? >> they spent the last eight years telling us that repealing obamacare was the right thing to do. that wasn't going to happen for the last eight years. when push came to shove for the last three months when the republicans controlled all the houses of congress and the presidency and actually getting a bill that people will have to live with, that's a lot harder than saying obamacare is terrible. that's what we've been hearing for eight years. the reality of what the replacement is, i think, is waking people up to -- again, it's easier to disprove a negative than find something to do. i think that's what we've seen over the last ieeight years. i agree, tax rrm eform is complicated, but some of the easier things really resonate
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with a lot of investors and taxpayers. i think we're going to see that. >> mark, very quickly, outside of washington, there are a lot of things that are happening on wall street. biotech has been a very strong performer this quarter. you are still bullish despite the gains it's already made. why is that? >> we are very bullish at jmp wi. we've also seen over the last 18 months, it's not been a good time for the sector. we've seen a few more approvals. we've seen a rotation on some of the backers of biotech. we're seeing more and more programs get closer to the finish line and closer to results. we've also seen a continuation of m&a. i think m&a activity is still going to happen through 2017. that's a good backdrop for the market. >> is all that enough -- if health care actually passes and donald trump proves he can actually get something through that didn't look like it was going to go through, does then the political risk to the
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biotech sector resume? >> i think there is a heightened risk, but i think it's interesting. as the repeal of obamacare has become less and less likely across the board, i think this sector has done more and more -- has seen more and more gains. i think you're going to see more of the status quo. i think when with e do see the final legislation, if there is one, it's going to look a lot less like a complete repeal of obamacare. thus, we're going to see more status quo and that's good for biotech. >> mark, thank you. >> thank you. coming up, congressman bill johnson is confident that the health care bill will pass. we're going to speak to him ahead of today's vote. up next, who's going to stream thursday night football next season? some key tech companies are ready to bid. i'd rather watch it on nbc. that's just me. details are next. "squawk box" will be right back. time now for today's aflac trivia question. which school has the most ncaa basketball tournament victories
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energy lives here. all while reducing america's emissions. say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. now the answer to today's aflac trivia question. which school has the most ncaa
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basketball tournament victories of all time? the answer, the university of kentucky with 120 wins. >> we were both wrong with that. okay. when we come back, more from our guest host, former aetna chairman and ceo ron williams. plus, washington policies and your portfolio. chuck gabriel will join us. ♪ ♪ 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.
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call today. comcast business. built for business. ♪ gornod morning, everybody. welcome back to "squawk box" here on cnbc. it is friday. among the stories front and center this morning, trans-canada has received official u.s. approval for the keystone xl pipeline project. that news coming earlier this hour from the canadian company. president trump will make his own announcement about the approval later today at the white house at a meeting with trans-canada's ceo. the situation is fluid, but at the moment, the vote on the obamacare replacement bill is seen taking place sometime this
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afternoon. gop leaders are still trying to marshal enough votes for passage. we'll have more in a few minutes. british police have made two more arrests in connection with this week's london attack. nine people are now in custody. one woman has been released on bail. all right. >> still going back and forth? >> yeah, ucla has 11 national titles. john wooden had ten. kentucky, university of kentucky, is second with eight. apparently they have more tournament wins, i guess. i guess you could do that. >> but we were just trying to figure out when the tournament started. >> in 1985 the tournament expanded to 64 teams. duke's won five. connecticut, four. kentucky, north carolina have three. >> a lot more games in the tournament to play than ucla. >> this is important. these are important -- >> it's a good thing you're
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bringing it to the public. >> yeah, yeah. that's my life. >> you're dedicated. >> the nfl is selling the rights to stream its thursday night football games next season. at least four big tech companies are interested. they're the four you might think of. facebook, amazon, twitter, and google's youtube have all reportedly submitted proposals to the nfl in hopes of streaming the games. all four companies also talked to the nfl last year about the deal, which twitter won with a $10 million deal. the league is likely to make a decision within the next month and provide some kind of update to league owners at the meeting in phoenix next week. you give this the read it deserves, becky. >> a big upset in the ncaa tournament last night. in the west region. >> really? who was it? >> the 11th seed xavier faced two-seed arizona. >> what? oh, my god. >> and took a two-point lead with less than a minute to go.
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arizona tried and missed a desperation shot with just seconds left. and xavier held on to win 73-71. >> oh, my god. it's impossible. cinderella. >> the cinderella story, of course, with bill murray. fits perfectly. the musketeers advance to the elite eight for only the third time in the school's history. they're going to be playing top-seed gonzaga tomorrow night. >> might watch that. >> i'm going to watch. >> 6:00 p.m. but you know what, i can watch it but if it's too close, i have to turn it off. >> you're a nervous nelly. >> i know. those coaches, i don't know how -- you know what, they learn that it doesn't always work out right. if you have a thousand wins -- >> but how many of those guys are also coping with stomach issues. >> it's nerve racking. those last two minutes are probably the worst. >> but the best part of the game probably.
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>> yeah. anyway, the vote on the gop health care plan expected this afternoon. taking a look at the futures and how we're setting up ahead of that vote, it had been a mixed picture for most of the day. the dow looks like it's strengthening a bit. the s&p and nasdaq looking to open slightly lower. let's bring in chuck gabriel. given the ultimatum essentially that the president has given the house, game this out for us in terms of what happens and how the market reacts. >> we think they'll probably eke it out. probably won't happen until after the close of the market today. probably take several hours. you have to remember that nancy pelosi didn't have the votes when they brought the affordable care act for final passage. dennis hastert didn't have the votes for the medicare prescription drug bill, you know, back in 2003. so they want to get within at least ten. then they think they can pigeon hole and buy enough votes to get there. but they're not even within ten
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now. they have a little bit more work to do. >> let's say it doesn't happen. let's say it does not pass. who bears the brunt of the political damage, in your view? >> there will be a lot of finger pointing. it's interesting. i think the delineation of duties is supposedly that donald trump is supposed to help deliver this unwieldy freedom caucus, the 30 house conservatives, and paul ryan, speaker ryan, is supposed to deliver the 10 or 15 moderates that have been rebelling. i think paul ryan has done a great job. there's a new mental health deal, for instance, for congressman murphy that emerged last night. this is how i think donald trump is going to negotiate. basically, he's going to give ultimatums. even though this looks a little bit like the husband of the late delivering wife telling her to have the baby by the weekend or he's going to move on. it will work. the markets, i think -- the only thing i would worry about for the markets is there is a chance it could still be delayed, or even the worst case, they could follow through and lose.
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i do think that there's too much false confidence in the notion that if they do pivot and try to move quickly to tax reform, that they can do that. that is going to be a difficult enough assignment. >> that's why i asked who bears the most political damage at this point because if the fingers are mostly pointing to a particular individual, that individual is going to have a heavy hand in getting tax reform through, i would say the tax reform might not be very likely, would it, and the markets would react negatively. in terms of trying to figure out who will take the blame, who do you think is going to take the blame? >> i think unfortunately -- i don't know necessarily blame, but the most damage would be to speaker ryan. it's particularly important for investors because he's obviously also a co-author or co-sponsor of this major tax reform bill, the brady/ryan tax reform bill that is the major vehicle for tax reform on the floor. so i think unfortunately, he would bear the brunt of the blame.
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as i mentioned earlier, i think the way they divvy things up, the white house is supposed to have the major responsibility for moving this freedom caucus. sort of a bottom line here, i know joe has watched this a long time too, the freedom caucus is an eighth hof the republican caucus. they never really sign ud ed up replace obamacare. repeal is something they did last congress. why replace an entitlement is the way a lot of them view this. they're going to need zantac all around. >> it seems like they're living in the past a little bit, chuck. i don't know. there comes a time where you have to just face reality. it's great to be a purist, an idealist. the journal had a great last paragraph today. there was a time -- the way that obamacare was handled, there was a time when a clean replacement probably -- it may have worked. what are those sayings? the toothpaste is out of the
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tube, the gate is left behind, the genie is out of the bottle. here's the journal. by insisting on the impossible over the achievable, these self-styled guardians of conservative purity could become the worst friends that conservative ideas and free markets have had in decades. i've said that to these guys, and then they recite patrick henry. i'm like, what the hell are you doing? are you patrick henry now? you came from some small county down in alabama. your family's run a hardware store. now you're patrick henry? >> the way congress has always been designed, particularly the house, is everybody has to vote in their self-interest. these 30 or so freedom caucus guys are basically from -- we would call them virtual man caves. their districts, all they worry about, is being primaried. i do think where the journal could really be helpful, even at this late stage, is just to remind republicans that they
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have the opportunity -- the more important opportunity -- and this will all take place in the senate, but to actually reform medicaid. ronald reagan tried to turn medicaid into a bloc grant a number of years ago, three decades ago. i was on the hill at that point. this is really important stuff. it will be a tremendous, tremendous achievement. >> thanks, chuck. >> the captain going down with the ship. saluting or something. you don't have to die. you know what i mean? >> roger that. >> get on a lifeboat. >> sorry. thanks, chuck. i don't know. i could switch what i think, you know. >> and you do. >> maybe we should repeal. i don't know. just repeal. anyway, coming up, congressman bill johnson joins us after the break. he'll tell us why he's supporting the gop health care bill. as we head to break, here's a look at the nasdaq's performance in yesterday's session.
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i won't. (cannon sound)
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our next guest supports the gop health care bill. joining us from washington, republican congressman bill johnson from ohio. he sits on the energy and commerce committee as well as the budget committee.
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southeastern ohio. you should have gone a little bit -- just keep going a little further when you were settling in there. you could have made it all the way to god's country and near cincinnati. where are you, march y? >> but my district does go to god's country. it runs from an hour outside of cleveland to just outside cincinnati. it's the entire eastern flank of the state. i am down in god's country. owl after appalachia is god's country. >> excellent. to approach -- so you're a supporter. i could ask you whether you have friends in the freedom caucus, and i could ask you to speak for them and what they're thinking, but i figure i'll take a different approach. there are some people that say, you know what, now the deficit reduction is only $150 billion, 24 million people might end up not having insurance, and premiums might go up. i mean, maybe that describes why most people, i guess if you just ask them, aren't really sure this is a better alternative to
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obamacare. why is it? >> well, it's a better alternative. you said it in your last segment. there are major things we're doing here that have been long overdue. reforming medicaid, very important we do that. most importantly, we're giving the american people the choice to choose where they get their health insurance from. the broken promises of obamacare, as you know, kicked millions of people off of their policies, restricted access. we're restoring that trust in america's free enterprise system of health care delivery. i think we're grossly underestimating what's going to happen when america's markets respond to getting the federal government out of the way and giving the states more flexibility and control over regulating and managing their own insurance markets. i think this is going to be a great thing for the american people. it's what they've asked us to do. today we're going to deliver on
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that. >> it's easy to -- if you're on the other side of the aisle, it's kind of the narrative, congressman, rich people get a tax cut and poor people have a harder time getting insurance. that's a tough sell. >> the tax cut goes up and down the spectrum. there's about $800 billion in tax cuts. that's going to benefit everyone. and let's don't forget what obamacare did. the job-killing policies of obamacare put a lot of middle class, working class americans on the unemployment line. when they're able to get a job and then they get a tax credit to help them purchase a health care plan that they can afford, that's right for them, everybody wins in that scenario. so i don't buy the narrative from the other side. >> did -- who are your friends? all those guys, all 30 of them probably. >> absolutely. all of them. i can't think of one of them i
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would not call a friend. has there been political drama this week? absolutely, but that's what you see when you see legislation being crafted in realtime. that's what we see here. ultimately, what we've come to is a bill that is stronger, that meets the needs of the american people, that does more about what we're said we were going to do. remember, this is not a one-move chess match. there are three parts to this plan, and this is just the first stage. there's a lot more to do in what dr. tom price in health and human services can do, what we'll do later in stage three with legislation. so there's a lot of reasons to be optimistic today. my freedom caucus friends have helped make this bill stronger. i appreciate that. >> congressman, will you still call them friends if they vote no on this and the administration does what the president has promised, which is pick up and move on to the rest of the agenda? >> well, look, it's not my place
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to judge my freedom caucus colleagues. i certainly hope they don't do that. it's going to be the american people that passes judgment on this. if they can go back home, those that choose to vote no, if they can go back home and justify their no vote to their people, more power to them. but i'm oo going to go back home and tell my people i did exactly what they asked me to do. >> do you think that if this doesn't go, congressman, that tax reform would be harder or easier if there's a defeat here for the president and speaker ryan? >> there is no question, if we don't get this done, it's going to make everything we try to do for the next two years, the rest of this session, it's going to make it more difficult. there's no question about that. >> so why do you think your friends in the freedom caucus who oppose the bill as it stands oppose it? if they have to go back home and say, not only did we miss out on the chance of repealing obamacare, but we also made it much for difficult to pass
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comprehensive tax reform, an opportunity that could be once in a generation, which would benefit main street probably most of all in terms of small businesses, why is that such a hard sell? >> well, i can't speak for them, but i can tell you that that is exactly the calculation that i hope each and every one of my friends across our conference, not just within the freedom caucus, but across our entire conference. that's the calculation that they've got to make. going back home and telling their people that they voted no to get rid of this onerous law that's collapsed our individual markets and made health care more expensive for the american people and that it's going to make tax reform that much more difficult. that's going to be a hard message for them to deliver, and i certainly hope that they think about that long and hard before they vote today. >> you went in the air force right out of high school, congressman? >> that's right. after farming with mules for 1 0
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years. >> retired as the lieutenant colonel. you have a lot of meritorious awards. we appreciate your service then and -- this is probably harder. probably more dangerous too. anyway, congressman -- charlie wilson. charlie wilson's war? >> no, different charlie wilson. >> that makes sense. all right. thank you. pretty common name. as is yours, congressman. thank you. >> i bet the farming with mules helps though. >> stubborn. with the freedom caucus guys. yeah, exactly. >> who needs enemies. >> set that right up. turning back to our guest host this hour, former aetna chairman and ceo ron williams. ron, you heard what the congressman said about this. you hear how difficult it's going to be for the republicans just to get their own house in order on this. where do you think the real battle comes down if there's a yes vote today? >> we have to keep in mind 150 million people receive their
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insurance through their employer. by and large for them, very little, if anything, changes. there's another 40 million in medicare. very little changes for that cohort. this is really about how we treat the individual insurance market and create competition in it. and also, how do we address the medicaid market and particularly the medicaid expansion. that's where there's a lot of heat, a lot of light. you've heard discussion about medicaid reform giving block grants and different programs to the states to create more innovation. at the heart of it is how do we make certain those people who did receive subsidies, how do we make sure they have affordable access. >> you said earlier you think it's good to have insurance companies that are there and employers that are there to kind of test and try out what works, try and find innovation along the way. does that translate to the states as well? do you think it's a good idea to have the states coming up with their own ideas? >> i really do.
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i think one of the things that was talked about was that the insurance industry was unregulated. the insurance industry was regulated by 50 states, department of labor, and the city of san francisco, which had its own laws. what the insurance commissioners understood was this balance between consumer protection and financial solvency. in reality, the federal government had never regulated the health industry until recently. >> and they've never had to worry about solvency. >> never. so what we ended up with i think is more of a balance toward the consumer, which is a legitimate concern. we really need that balance. i think restoring the state's role is helpful. >> right. ron, i want to thank you for your time here today. we've truly appreciated it. we hope you come back again soon. >> very good. thank you. a lot more to come on today's health care vote and what it means for corporate america. alabama congressman mo brooks is our guest. he's said he's against the gop plan right now. we'll take a check on the futures and where we stand ahead of that key vote.
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the dow looking to add about 27 points at the open. s&p and nasdaq looking to open slightly lower. "squawk box" will be right back. ( ♪ ) upstate new york is a good place to pursue your dreams. at vicarious visions, i get to be creative, work with awesome people, and we get to make great games. ( ♪ ) what i like about the area, feels like everybody knows each other. and i can go to my local coffee shop and they know who i am. it's really cool. new york state is filled with bright minds like lisa's. to find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin.
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ways wins. search for our page, especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. welcome back to "squawk box." one economic report on today's agenda. february durable goods out at 8:30 a.m. eastern time. the headline numbers forecast to
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rise 1.5%. that's roughly in line with january. a trio of fed officials are also speaking today. charles evans, james bul lard, and new york fed president bill dudley. take a look at a couple stocks to watch this morning. micron technology earned 90 cents a share for its latest quarter, 4 cents above estimates. it also gave an upbeat forecast. just the craziest stock. i'm sure you follow it on your show. look at that. again, it goes from single digits to 30 and then back and then up. >> there are always doubts. >> it almost trades like a commodity. it's insane. if you buy it at the right time, look at that. >> great trading vehicle. that's for sure. >> anyway, improving memory chip prices, tightening supplies, and improved demand. when we used to talk about it, we'd talk about the late, great j.r. remember him?
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he was the french fry guy, the potato guy. >> the spud stud. >> the lord of the fries. we used to have all these -- the lord of the fries. you don't remember that? >> no. >> he was one of the original investors in micron. >> oh, really? >> a very colorful guy. we used to love talking about micron because we had all these lord of the fries. remember any of the other ones? anyway, under armour is higher this morning after jeffries upgraded it to buy from hold. under armour shares have lost more than half their value over the past year. there it is. thank you. jeffreys says the stock is now at an attractive entry point given a compelling growth story. nomura instanet has raised its price target on apple based on high hopes for the iphone 8 upgrade cycle. the firm rates apple a buy. >> i love when they raise it after the fact.
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when we return, congressman mo brooks on today's health care vote. he has said he will vote no. later, stocks in the health care sector you should consider for your portfolio. no matter what the outcome of today's vote. right now, as we head to a break, the ten-year note yielding 2.42%. you can't predict the market. but through good times and bad... ...at t. rowe price... ...we've helped our investors stay confident for over 75 years. call us or your advisor. t. rowe price. invest with confidence. we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person,
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the art of the deal. president trump tells congress no more talks, it's time to vote on health care. the latest from washington straight ahead. from washington to wall street, what today's vote could mean for the trump rally and your money. plus, paying for twitter? why the social network is considering a premium version. the final hour of "squawk box" begins right now. ♪ good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and melissa lee. the futures -- almost put it the two together. >> becky lee.
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>> melissa quick. treasury yields have been a real story this week, i think. the ten year down well below 2.5 at this point. we don't have it. >> i think it was 2.42 last time i saw it. >> it's going to be an interesting session based on, you know, the big ncaa games tonight. oh, actually, based on what's happening in washington. probably more important. making headlines this morning, a vote on the obamacare replacement bill is seen taking place sometime this afternoon. gop leaders are still trying to marshal enough votes for passage. more on the health care vote in just a few moments. meantime, we're going to be getting february durable goods numbers at 8:30 a.m. eastern. trans-canada has received official u.s. approval for the keystone xl pipeline project. that news coming earlier this hour from the canadian company. president trump will make his own announcement about the approval later today at the
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white house at a meeting with trans-canada ceo. a few stocks on the move this morning. finishline missing estimates by 21 cents a share. it actually reported quarterly profit of 50 cents a share. the athletic footwear and apparel maker gave a weaker than expected full-year outlook saying some of its footwear lines did not catch on with customers as it had expected. take a look at that again. with the punishing treatment we've seen of retailers, finishline shares down by about 14%. game stop reported quarterly profit of $2.38 a share, that was 9 cents above estimates. however, its full-year outlook falls short of analyst's forecasts because of discounting for its video game hardware and software. that stock is down by almost 12%. and we're watching shares of theme park operator sea world today. the company announced a china-based holding company has taken a 21% stake. it's buying those shares from funds associated with
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blackstone. back to today's top story. president trump's budget director telling republican holdouts, vote for the bill or live with obamacare. eamon javers joins us live from washington. i just read a great quote from yesterday. 50 times they try to repeal it and vote for it. now they got a chance to do it. eric kantor, cantor said now it bullets they're shooting with. back then they could do it and there was no downside. >> that's right. sean spicer said exactly that from the white house briefing room yesterday. look, they voted again and again to repeal obamacare when president obama was still in office. they knew it would never become law because of that. now he said it's a live ball. here's what white house omb director nick mulvaney told republicans yesterday behind closed doors, saying ultimately they're simply going to have to vote for this. he said trump is done negotiating over the republican health care bill.
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the vote must happen today, friday, and if the bill fails, he said, the president simply is going to move on and leave obamacare in place. the president putting all the pressure he can on these reka recalcitrant republicans, tweeting yesterday that it will only continue to get worse, we must repeal and replace. but do they have the votes for this bill? that's the big question going into today. it does not appear that they do, at least as of last night, unless some people changed their mind this morning. here's what congressman kevin brady said last night on capitol hill yesterday. >> clearly we don't have the votes yet, but clearly no one is walking away from the table. not the conservatives, not the moderates, not the president. certainly none of us are. this is a campaign promise to repeal and replace. we are going to deliver. >> now, guys, goldman sachs had an interesting analysis about all of this yesterday. goldman's conclusion was that the stock market has simply
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gotten it wrong in terms of assuming if the health care goes down to defeat, that means the president's tax bill, which the market cares about more than it cares about health care, is doomed. goldman says the politics around the tax cuts are totally different from health care. and therefore, if this goes down, the implications for the tax cut are not as disastrous as the market is assuming right now. that seems to me to be pretty solid analysis. a lot more republicans support doing tax cuts than support this bill on health care as of right now. so watch the market reaction to all of this throughout the day. >> all right. eamon, thank you very much. we'll all be watching very closely. joining us now to talk more about it is representative mo brooks of alabama. sir, thank you for joining us this morning. >> good morning. >> i don't know if you've ever read the art of the deal, but in it, donald trump says that in order to get a good deal, you have to be willing to walk away. he says he is now at that point. there will be no more negotiation. you can take or leave this bill. are you ready to walk away? >> no, i'm not ready to surrender on an issue as
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important as obamacare. i am going to vote against it though because it is one of the worst bills i have seen in my 30 years as a county commissioner, legislator, district attorney, and now congressman. it's very, very bad in a variety of ways. by the way, it's not a repeal. that is a marketing ploy. clearly it's not a repeal. if it was a repeal, you know what would happen? you would immediately see a drop in premiums. but they keep so much of obamacare in this legislation that instead of an immediate drop in people premiums, over the next couple years both the joint committee on taxation and the congressional budget office are warning us that premiums are going to go up 15% to 20%, at which time if things go well, then you might see a stabilization in following years, maybe not. on the other hand, you've also got a bill that's the largest welfare program ever proposed in the history of the republican party, which means that you're looking at an undermining of the work ethic, and we need a work ethic in our country now more than ever, on the one hand.
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on the other hand, ultimately you're looking at much higher taxes to pay for growing welfare burdens. finally, what this legislation does in effect is turns the american government over in time to the bernie sanders socialists in the political spectrum. that truly will be a disaster for our country. >> all right. sounds like you're not somebody who's going to look at any negotiating with this bill because from top to bottom, you just want a different bill, one that simply repeals obamacare. >> absolutely. we did that two years ago. why not do it now. >> because you're not going to get the votes right now. >> let's have a vote on whether we're going to repeal obamacare, the exact same vote we had two years ago that republicans supported in the house and republican the supported in the senate. let's see then who it is that really wants to repeal obamacare as opposed to the masquerade you're seeing today. >> it sounds like you are much more fired up than i even heard when i listened to some of your commentary yesterday. you're digging your heels in at this point. there will be no negotiation back and forth. you're going to vote no, that's it. >> i like a lot of these
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republican colleagues of mine. they're friends. outside of this one particular issue, we vote together quite a bit. but i'm not going to vote for the largest welfare program if the history of the republican party. alabama voters did not send me to washington, d.c., to increase their premium costs by another 15% to 20% f the estimates of the congressional budget office and the joint committee on taxation are accurate. i've heard no compelling argument to the contrary. >> why are you convinced premiums would go down if obamacare were repealed tomorrow? >> because you delete a lot of costs with the insurance policies you're forced to buy. why should a senior person have to purchase maternity care when it's physically impossible for them to have maternity care. >> i thought this new bill did a lot of that stripping down, so you could have a more bare bones package. >> as of this point in time, the legislation that is before us does not have that provision
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repealed. now, maybe it will later today. but even if it does that, it still does not implement the other cost-saving measures that are necessary to force the cost of premiums down. you've still got all the other things associated with obamacare that are still embedded in this legislation, on the one hand. on the other hand, it does not force interstate competition for health insurers. that competition is necessary to force pricing down and improve the quality of the insurance that's offered. in addition to that, it does none of the other things that we could do like remove the anti-trust exemptions that again create oligopolies or monopolies in the health care industry, suppressing competition, rather than having competition that would force those prices down. >> many of those things you mentioned are things that if the house took up and passed to the senate, it would be an issue where you needed 60 votes in the senate. >> no, i disagree. if we had senators on the republican side that were committed to the repeal of obamacare, as committed as the democrats are to protect it, it
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only takes 50 senators and the vice president of the united states to pass a complete and total obamacare repeal. >> you said if. you do not have the votes. >> i can't control if we have weak senators or strong senators, but i can control my own vote, and i'm voting for a piece of legislation that's bad for america. >> if obamacare stays the law of the land, do you think it's going to be gone in a year or two on its own? >> i'm sorry, but i refuse to surrender on an issue of this magnitude. >> that was a simple question. do you think obamacare is going to be the law of the land in the future if this goes down today? will it stay intact? or do you think down the road it collapses under its own weight? >> obamacare will be repealed if i have anything to say about it, but i'm one vote out of 435 in the house floor. then you have the senate. >> i'm just trying to get you to the point where in obamacare stays for the next -- just hypothetically.
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let's say it's around for the next 20 years. you have a choice of obamacare for the next 20 years or this, which republicans say has significant improvements over the existing law. if obamacare is going to stay for 20 years, you'd rather have that than have this republican law? >> i disagree that those are the only two choices. but i will say this, if this republican bill passes, then the largest welfare proposal the republicans ever passed is embedded in our law forever. it is now the new baseline. if the republican bill passes, we'll never be able to muster the votes to repeal it, but there's always hope that the american people that won't repeal obamacare will send us enough congressmen and senators to capitol hill to repeal it, but that is not the case if this republican welfare plan passes. >> do you think that the republicans cannot pass this gop health care plan, representative, that tax reform is going to be that much harder? would you agree with that, or do you say, no, we can still move on to tax reform and get that done? >> i agree with the analysis you set forth earlier.
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that is that these are totally unrelated issues. you're going to find many people who may oppose this long-term republican welfare plan be in support of tax reform. so it's really a matter of counting votes. if the tax reform is good, then i think it will pass. if it is bad, then it won't. if you have too many special interest groups that get involved and try to get special treatment to the detriment of the general population, that's my greatest fear, then tax reform is going to face a major challenge. on the other hand, if this tax reform does what's in the best interests of america as a whole, it should pass the house. again, i can't control what goes on in the senate. >> but sir, there are so many different opinions on what's in the best interest of the american people. the idea of trying to cobble that together and be completely pure to one thought without compromising, it sounds to me like you want to compromise, and i'm afraid you'll get nowhere without compromise on any of these issues? >> i'm happy to compromise so long as it's in the best
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interest of the american people. >> but what is -- >> well, let my give you an example of what's not in the best interest of the american people. when you have the buffalo buyout, something that affects a few counties in new york, in order to garner the votes of congressmen who otherwise presumably would be against this bad legislation, that corrupts the public policy debate. we have to avoid that. if you're doing something that is across the board that affects all americans equally, that's the kind of thing that's in the best interest of the american people. >> what you're just talking about, not defending the practice, but has long been the way that leadership and administrations have gotten their votes to get bills through. that's how they buy compromise. >> and it very much helps to explain why we have a trillion-dollar deficit and we're staring in the face a debilitating solvency and bankruptcy of a country that it took two centuries of our american ancestors to build. >> but sir, you have so many differing opinions when you have so many people in the congress to get together to come up with something that's in the best
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interest of the american people. most of them, i would say, are probably doing what they think is best. the idea of getting there without having compromise seems like a pretty tough way to do it. >> they're not doing what they think is best if they need a special deal in an unrelated matter to convince them to vote for something that they believe is not best. they would need that special deal if they truly believe that what they were voting on was in the best interest of the american people. >> congressman, if we did a clean repeal and didn't replace anything and then -- i don't know how that would leave a lot of people that have insurance now. maybe they wouldn't have it. maybe they'd be going back to emergency rooms. you understand how that's going to look with media and what the media will do with everyone that loses their insurance and has cancer. you can imagine that. do you think the republicans could get elected in 2018 again and in 2020 if you completely e are peel obamacare with no
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replacement. what do you think that would do to the party? do you think that's in the best interest of the gop? >> well, let me approach that in two different respects. number one, the repeal i'm talking about will have an effective date that is sometime in the future. that gives us plenty of time in which to come up with whatever improvements to the health care system we want. in addition, since democrats are no longer having to vote for a bill that not only has a replacement, it also has a repeal for provision, since they're no longer in that kind of situation, they can now participate as active voting members for whatever the changes may be. right now with this putting it all together scenario, you effectively locked out 40% to 45% of the members of the united states senate and congress from participation in ways to improve the health care system that we have. so first and foremost, you have to be mindful of that aspect of it. but second, there are tens of millions of more americans who
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are being harmed by obamacare and the escalating premium prices who are being asked to pay not only for their own health insurance but also others. then there are people who are the recipients of these welfare benefits. so if you're talking about it from a purely political dynamic, where the most votes are, the most votes are with the american people that are having to shoulder not only their own burdens, pay for their own family's health insurance, but also contribute to the payment of other families' health insurance, those families that want to be dependent on these other folks. so i'm more comfortable working with people who want to take advantage of the opportunities that have been given in america that you can be self-reliant than i am ceding my vote to people who want it done to these folks over here. >> okay. i think that view point was certainly maybe more feasible eight years ago or so. you know yourself, congressman, when you get an entitlement, it's tough to take it back. >> it is very difficult. >> you're battling the
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democrats. you're battling mainstream media. i just don't -- i think maybe that horse already left the barn. >> we can either go bankrupt as a country or we can dot right thing. that's how simple it is. >> right. all right, congressman. we understand where you stand. that's for sure. we appreciate your time today. thank you. >> have a good day. >> you too. coming up, what today's health care vote could mean for stocks. two wall street strategists join us next. then at 8:30 a.m. eastern time, president trump's budget director nick mulvaney will join us live. stay tuned. you're watching "squawk box" on cnbc. i like russo. his on/off splits are the best here. yeah, but his offensive win shares didn't even break 4. come on, check out that stop-and-pop! what do you think? my trade-off analytics indicate no one creates more space on offense. this allows him to nail a jumper from a densely populated urban area. what you're trying to say is... from way downtown?
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welcome back to "squawk box." joining us now, ed campbell, manager director at qma. gentlemen, good to see you. how important is this health care vote in terms of whether or not this trump rally that we've seen since the election remains impac intact? >> i think over the past few days you've seen some of the euphoria on trump's ability to work with congress have worn off. you've seen financials and
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industrial stocks have been leading the decline. granted, a 1% decline on the s&p is pretty minor in the grand scale of things. i think the health care vote, it's not like the brexit. oh, will they or won't they. if it doesn't work, they'll hopefully just switch to focusing on tax reform. >> what has changed for sure is -- well, what appears to have changed is volatility. for the week, volatility is up by about 14% or so. granted it's still below 13, which is historically low. can we say the era of low volatility is probably over at this point? >> a lot of people have prematurely declared that a lot of times, so i'm going to be hesitant to say that. i do agree with the sentiments expressed. this is important in that on a total return basis, the market is up about 17% since the election. a good chunk of that is driven by the improvement in business sentiment, driven by the expectation of pro growth policies. and if republicans are unable to deliver on the health care bill,
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it's going to sew doubts about their ability to deliver on anything else. >> how much of a premium is on the market for that? >> you know, it's hard to put an exact number on t but i would say about one-third of the rally has been driven by improving economic and earnings performance that would have happened regardless of the outcome of the election. about two-thirds of it is driven by the expectation of pro growth policies. so i think if the vote is -- if it gets voted down, we're going to see short-term declines, and it will really depend on their ability to, if they can, pivot to tax reform. i mean, that's really the issue that the market is most focused on. health care is really not the issue du jour for the market. it's tax reform. if they can't deliver on health care, tax reform is not going to be any less complicated. >> and infrastructure might not be any less complicated, and deregulation might not be any less complicated.
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in terms o of the selloff we've seen in banks, in some of the reflation trades like the materials trades, what do you do with those if this health care bill doesn't pass? sort of extrapolate for us. >> well, look, i think you've seen some profit taking in the financials, industrial stocks that have led the rally higher. i think it's really not the end of the world. i think -- like, the vix is still 11 and change. >> what does the end of the world translate to for investors? is it a dip you buy? do you still wait on the sidelines and see how this shakes out? >> a lot of the large institutional investors we talk to are quite underallocated and looking for dips to buy. i know that's been the story for the past couple years. a lot of people are interested in looking at pullbacks to buy. a 1% pullback is unfortunately not enough to buy into. >> in terms of the start of a correction, everyone says we're in a rally, a bull market. a 5% correction is to be expected. >> par for the course. >> the start of it? >> it may be.
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if we do get a dip, i think it's a dip to buy. >> a dip mean manager 5% or this dip here? >> i mean, if the health care bill is voted down, you know, you certainly could see a 3% to 5% correction, but i do agree that this is not brexit. >> okay. ed and provit, thank you. still to come this morning, breaking economic news on manufacturing. then president trump's budget director telling republican holdouts vote for the bill today or live with obamacare. he'll join us lye at 8:30 eastern time.
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coming up, life goes on. there's durable goods numbers that will hit the tape for february. then back to this. the surreal world of washington. the news maker of the morning, president trump's budget director nick mulvaney will join us live. stay tuned.
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welcome back to "squawk box." breaking news. yes, we have our first look, preliminary february look at durable goods. expecting up 1.3. we received a bit more. up 1.7. last month was pushed up by 0.3 from 2% to 2.3. take out transportation, still good but not as good as we expected. up 0.4. we were looking to closer 0.4. if you look at capital goods orders, nondefense, it is down 0.1. we like to see this business spending, this capital investing
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do better. so that's not good. last month we did get a revision of upward 0.2 from minus 0.1 to positive 0.1. if with e look at shipments versus orders, they were good. shipments were good. they were up 1%. last month, down 0.3. that was revised from down 0.4. let me stick with capital goods order, nondefense. it was down 0.1. the issue is we've had too many negative numbers. the recent high water mark was up 1.7. before that, september down 1.5. this is spotty. it needs to improve. if we look at yields, they're really sort of set in stone. 2.41 on tens. 3.02 on 30s. pretty much where it was yesterday. of course, we're all waiting to see what happens with regard to replace and repeal. but we will see as the day progresses equities still holding a bit. hey, beck wy, hope you have a great weekend. back to you and the gang. >> rick, you too. see you monday.
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back to today's top story, the house vote on health care. joining us now is the former acting administrator for the centers for medicare and medicaid during the obama administration. it's great to see you. you were a big private sector guy. you know exactly what you're towni talking about with united health group. you came in and helped implement obamacare in one of the darkest hours. but i don't expect you to just rubber stamp everything that obamacare does. how would you fix where obamacare is, and is the pending legislation right now a good start or the wrong approach? >> i think that's exactly right. you know, i think as with everything else we've ever done in this country's history of any size -- by the way, not unlike anything we've ever done in business -- where we start we always have to continue to make improvements. medicare, medicaid, social security, you know, the aca is the same way. the answer, though, is really we
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should be focusing on surgical fixes that help us increase competition and help us particularly increase competition in the -- with the middle class. most of the -- in fact, all independent analysts say we got a stable market now and we really need to focus on things that'll continue to help drive affordability in health care, bring down drug costs. this bill is something very, very different. let's remember what's in this bill. this bill at its score raises rates on people by about 20% according to the cbo. it takes coverage away from people, particularly older people, and it cuts the medicaid program. it's a very different place than we ought to go. >> we're going to come back to you. we have nick mulvaney quickly. if you'll just stand by. let's get to president trump's budget director. direct mulvaney joining us from washington. great to be with you, sir. thanks for joining us. >> thanks and good morning. >> director mulvaney, you're on the record this morning recently saying that you don't know at
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this point whether the votes are there or not. we also have the narrative that there's a take it or leave it last night from the president on the freedom caucus and other members of the house. are there still negotiations going on that we don't know about, or is it all done? are you not talking? are there no more concessions being offered or things being considered by some of the no votes? >> yeah, a couple different things. the ultimatum wasn't delivered to the house freedom caucus. the ultimatum was zlifrdelivere the house republicans as a group. i delivered it myself. the president wants a vote today. that's not targeting any moderate group, any conservative group. he wants a vote. he's tired of the drawn-out negotiations. he's tired of folks always coming up with better ideas and nitpicking the bill as it is. this is not a politician. this is a businessman. he thinks the time has come for a vote. regarding whether or not he's got the votes, that's up to mr. ryan and mr. mccarthy to count the votes. as so whether or not
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negotiations are ceased, i think we made it clear last knight. if the republicans need to work amongst themselves on the hill in order to tweak the bill here or there, in order to get the necessary votes to pass, that's fine with the president as long as it doesn't change the underlying bill, and i doubt it would at this point. but when i said last night to the group that the negotiations had ended, that meant the president had talked to everybody. there's been more people in the white house here behind me in the last week than there probably were during the entire eight years of the obama administration. the president has done what he's supposed to do. he is done negotiating. if they want to fix the bill or tweak the bill better, that's fine with him. but he's done negotiating with anybody. >> so it would be naive to think there aren't a bunch of back room things going on right now as we speak. there are. >> sure, that's the way legislation gets done. the point of the matter is the president has his offer on the table, and he wants a vote today. >> do you think -- i don't want to talk about freedom caucus solely because you kind of got on the whole house. i understand that. but do you think that this
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remedy where states get to decide what's mandated and what's not, should that be enough for these guys? are they sacrificing the good for the perfect? >> with respect to my friends with whom i've served and a group i helped found, yes, i really do believe that. the essential health benefits -- we're getting drawn down into details. let's step back and talk about what the purpose is here. the house freedom caucus wants lower premiums. i have news for them. so does the president. the moderates in the house republican conference was lower premiums. everyone wants lower premiums. we think essential health benefits along with the other things, what tom price can do, for example, as secretary of hhs, will lower premiums. we only have to lower them for two years. the cbo has already made very clear in years one and two premiums may go up under this plan, but will go down in year three and under the long-term. it's a short-term problem, but it could be easily fixed. the things the president has
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talked about in phase two and phase three do that as well. that should be enough for everybody in the house, regardless of their political philosophies. >> you know, director, the president said -- is on the record saying if he didn't care about the american people, he'd let obamacare collapse over the next year or two. if this were to get a no vote today, maybe that's -- you know, to a lot of pure conservatives, that might even work better, if it collapsed under its own weight. will there be no plan b whatsoever? would the president let it just play out over the next 18 months or so? do you know? >> yeah, he absolutely will. he has other things that he wants to do. this is -- impatient is not the right -- busy would be the right way to describe this president. he works 18 hours a day. he has other things to do. he wants to get tax reform done. he wants an infrastructure bill approved. he's got other jobs, programs moving through the white house behind me. he doesn't have time, doesn't want to spend the time for the
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next two, four, six, eight months, whatever it would take -- that's what it would take, by the way, if you let the house go about its own business. he wants to move on to other things to help fix the country. >> do you think that it would be harder or easier to get tax reform done given whether this is up or down on health care? harder or easier? >> i've heard a lot of discussion about that. i've heard both sides of the argument. i think at the end of the day, legislation stands on its own merits. the viability of a tax plan will be based almost exclusively on the merits of that plan. i can assure you we think it's going to be an excellent plan. we do not think it's impacted one way or the other by this decision. >> there's not votes for a clean repeal, is there? could that ever happen, instead of just letting it go? could congress offer that up to see if that would pass, obamacare with no replacement? >> another one of the things that goes unreported, to my friends who have said this doesn't do enough to repeal, the bill that's currently in front of the house today that supposedly doesn't do enough to repeal obamacare, it does more than the 2015 bill.
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but to your point, there would not be the votes today, i don't think, in the house to do a clean repeal without a e a replacement. in fact, the president doesn't support that. he wants to do repeal and replace at the same time. so as far as he's concerned, the to 15 pure repeal bill or mini repeal bill is off the table. >> director mulvaney, we know you got places to go, things to do, people to see. we'll let you go. we appreciate you stopping by this morning. thanks. >> thanks, guys. >> you're welcome. now back to the former acting administrator for the centers for medicaid and medicare services during the obama administration. so you were making a point about premiums going up. you just heard director mulvaney say that's only in the first two years. then they would come down. did he convince you of the merits of this replacement plan? >> no, and i think he was being very selective. the reason that the cbo shows the premiums go down in the outer years is very simple. it's because the majority of people that are buying the
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product that are older than 35, that are in their 50s can't afford it any longer. so when they can't afford the product because the tax credits shrink, because premiums skyrocket, they have to pay thousands of dollars more for the product. they don't buy it. the only people buying the product in the out year are the younger people, and the younger people are paying a lower premium because that's how it's structured. so it's not because the product gets more affordable. it gets less affordable and only becomes affordable for people who are younger and healthier. >> you've heard when speaker ryan talks about why obamacare needs to be replaced. in your view, does not being mandated do something or having the choice to pick something different than what the government dictates or having more private sector competition or -- do any of those things as a former private sector guy -- are you aware of the negatives to the way the affordable care
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act was structured and is currently in place? what should we keep, 50%, 80%? it's not perfect. >> sure. the individual mandate is about as popular as vegetables are with my kids. unfortunately, sometimes they've got to eat them. the reality is if you want to have coverage for everybody, if you want to have coverage for people who have pre-existing conditions, one of the trade-offs is you've got to find a way to say to people who only use the health care system when they get sick and have uncompensated care to participate in the system. there may be other ways to do it, but certainly the way that they've put forward in this bill actually makes it worse. so i think the main problem you have, it's not that there aren't tactical solutions to some of the things that people talk about. the problem is you've got a plan right now on the table that increases deductibles. you've got a plan right now that takes away benefits from people. you've got a plan right now that brings up premiums. you have a plan that cuts
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medicaid for needy kids and seniors in order to pass a tax break. so if this were really a bill focused on looking at the tactical problems that you're talking about or that any of us can see the challenges that americans deal with and it was surgically focused on that, i think you'd bet bipartisan for that. when you have a bill that does what this bill is doing, it's very much in the other direction. as you've said, i'm a business person first. i'm a problem solver. i don't see the problems being solved here. >> yeah, i don't see any hope for any bipartisan -- that's as much of a pipe dream as we hear from some on the other side about how to fix this. some of the things -- so we're stuck, andy, then. i don't want to bring up the va necessarily, but we've seen government-run entities. we know that costs are hard to control and accountability is not really there. we all want a compassionate
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society, but we all want an economy that can grow as quickly to raise as many people up into the american dream as we have. and we have to somehow find a place where we don't turn into an entitlement state like europe, where they don't grow anymore in terms of gdp, but we want to be compassionate and give people that need help, help. but other people might need to do it on their own. they may need to take some initiative and actually, you know, individualism and earn success. how do we walk that line? >> yeah, look, i think you're exactly right. democrats need to understand that -- and i think do understand -- but need to be clear with the american public we need these programs to be sustainable. the aca added a dozen years to the life of the medicare trust fund as one example. this bill brings it back three years. but there are meeting places here. i think what you're pointing to is very important. the american people do expect that washington can work together on some of these
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problems. i think if you get past the campaign rhetoric of obamacare bad or people like or don't like trump and just move to more of a problem solving mode, i think the president would find that if you let a little bit more time pass and he picked up the phone and called chuck schumer and said can we get some people in a room to focus on how to surgely fix things, he would find a receptive audience. that would be a different path. that path will still be available. i think it, available after he took a look at some of his other priorities, such as taxes and infrastructure. i think it takes more time to get health care done than people like. it takes more cooperation. if we've learned anything over these last few years, and i've felt it personally, for one party to own all of health care is just not a great formula for the country. >> wow. you've seen senator schumer in the last couple weeks? you really think that the president could call him and something good -- i don't know. you know what, you're like -- who's the guy that said i never
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met a man i didn't like? you see the good in everybody, andy. stay positive. i guess we need to in these days, don't we. will rogers. the will rogers of health care. >> i don't think -- sorry. i don't think senator schumer is going to ever agree to anything that takes coverage away from people. >> he's never going to agree to anything, andy. did you see that? you saw the gorsuch comments. anyway, we appreciate your time today. thank you. >> thank you. when we return, as we continue to wait for a house vote today, how should investors be playing in this space? we're going to ask a top analyst next. stay tuned. you're watching "squawk box" on cnbc.
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welcome back to "squawk box," everybody. all of wall street is following what's happening in washington today with the health care vote, but let's take a look in particular at the sector to see which stocks are, whoi working investors as we approach this vote. joining us is mike weinstein from jpmorgan. obviously there are a lot of moving pieces on this. a lot of things that are getting tweaked and changed just in the last several days. based on what you know at this point, if this bill were to pass, who would be the winners and who would be the losers? >> good question. so the first thing to remember is today is about politics more than stocks. it's really more about what comes next than when it comes
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about health care. just to think for the broader market, what matters most is what comes next. the congress and the president's ability to get through the things that matter to the market, which are tax reform, deregulation, and infrastructure spending. those are the things that have been driving the market higher over the last several months. for health care, we're already at a point. the good news is that we're already at a point where it's pretty clear the administration isn't going to want to deal be health care again any time soon. whatever happens today, whether it fails, whether it passes, we're still a long way from actually having a bill that's going to make its way all the way through congress to the president's desk. so health care stocks in general win if the bill fails today or if the president says i'm tired of dealing with health care, i'm not going to go deal with all this other stuff i've been talking about like drug pricing. i'm going to move on to things that really matter, which i care
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about, which are tax reform, infrastructure spending, and deregulation. >> the entire reason we were looking at health care first was because they were going to find a way to save money, to get some of these things passed. it had to happen. all along they've been telling us tax reform could go on a parallel path. parallel path. you say if this gets put on the back burner, health care, that all of those health care stocks go up. that is because why? >> well, so it won't be all of health care just to be clear, but it will be the vast majority. the vast majority benefit because if you thought this bill was going to make it through not only get the positive vote today in the house, assuming there's a vote, but make its way through the senate through some compromise and to the president's desk and actually become law, then you would see a decrease in the number of covered lives. the cbo estimates that 14 million fewer people would have insurance next year and that would rise to 21 million by the end of the decade. so fewer people with insurance means that fewer people are going to hospitals, fewer people
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are getting lab tests, fewer people are getting medical procedures, prescriptions, all those things that result in health care consumption. that also puts more pressure on hospitals and their profitability if few people showing up in the hospital of the back door of the emergency room can actually pay for it. so status quo in general is good for health care stocks almost across the board. >> what happens to these stocks today if the bill is passed? >> that's a great question. first thing it's looking likely right now, we won't actually have a vote until very late in the day or after the market close. but that's all obviously influx depending on what happens over the course of this morning. but if the bill passes today, i would expect health care stocks and particularly certain sectors to be weaker. i think when investor look across the health care landscape and see who's most at risk if it passes, the answer there would be hospital stocks. it would be managed medicaid
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companies. and then from there the impact kind of decreases and becomes all those volume plays like lab companies, i mentioned, or even capital spending play. so if hospitals are squeezed, they have less money to spend on capital equipment or health care i.t. but problem the focus if you want to watch focus stocks, i would focus on the hospital names and those managed medicaid names. >> right. mike, thank you so much for joining us today. >> absolutely. >> when we return, jim cramer joins us live from the new york stock exchange. stay tuned. you're watching "squawk box" on cnbc. ♪
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let's get down to the new york stock exchange. jim cramer joins us now. you know, tried to talk you out of villanova and into xavier, jim, but -- >> ucla. ucla is my top pick. >> why you got to throw that at me when xavier has made it to the elite eight? >> i'm still alive. >> oh, you're still alive. >> i'm still alive. i'm number six in my pool. >> i'm excited. i'm excited about gonzaga-xavier. i'm going to watch tonight. >> look, it's always -- it's the
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single best thing in sports. it is. >> it is. >> last night's game was gripping. >> you stayed up for that? i don't know how -- i don't believe -- >> what am i going to do? are you going to sleep during, you know, arizona? >> yes, i have to. i need seven or eight. >> i got oregon in final four. >> do you really? >> that's a big one for me. >> well, you're okay then. you're alive. >> your show's been amazing this morning. i mean everything. that guy from -- the fella who was in the -- >> alabama. >> -- with the private sector. >> oh, yeah, slavitt. >> can we elect him? >> actually he's tweeting out there's the real world versus politics. i'm asking questions that i don't know the answer to, jim. i really am. >> nobody does, joe. let's admit it, right? but i felt that guy had a clear head. he really had some interesting suggestions. you've been in the private sector, unh got tired of the
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program. wow, i learned a lot from him. >> yeah. so harder, easier for tax reform if this goes down? >> well, i think you have a quick dip because people were hoping something would happen here. that's a little uninformed. and then they go right to tax reform because they need a win. and that's good. i think you have to buy the dip on a failure. joe, this could take forever, the senate. i mean, last time people forget how long it took. it was like a year. >> you know what, we're so late that "squawk on the street" is next. we're going to break. see you in a couple minutes. >> ucla. >> they've won a lot. not like they haven't done --.
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that's transfarency. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is off. it is the final countdown, again, as the market looks to a potential house vote on health care today. the debate now shifting to whether a failure to repeal is bearish, maybe bullish. futures are pretty steady. strong pmis out of europe, but stocks are red there. durables show cap x is improving. ten-year remains in tight range. roadmap begins with trump's mess

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