tv Squawk Alley CNBC March 17, 2017 11:00am-12:01pm EDT
will be announced. back to you, carl. >> all right, seema. thank you very much. good morning. it is 8:00 a.m. at adobe headquarters in san jose, it is 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪ happy st. patrick's day. welcome to "squawk alley." i'm carl quintanilla with sara eisen, jon fortt at the new york stock exchange. as seema said a moment ago, we're watching the market dip into the red, but it's largely toeing close to the flat line all morning long. the german chancellor meeting with the president for the first time at the white house today. expect them to talk trade, immigration, defense. that's all going to be on the docket for the bilateral and
potentially the joint news conference later this afternoon. our eamon javers watching all of that at the white house. hey, eamon. >> reporter: hey. good morning, carl. it's a german-themed st. patrick's day here at the west wing of the white house. as you mentioned, we are expecting angela merkel here in just a few minutes' time. about 11:20 is when we expect her arrival here at the west wing. you can see the doors ready for her. the media crews are out here ready to go. the honor guard has been up and running since very early this morning, so we're expecting a friendly visit here. obviously, germany one of the most important allies of the united states, but there is some tension in the air here, carl, because the president during his presidential campaign really went after angela merkel as a foil in the global political scene again and again, saying that she was ruining germany, she was allowing too many immigrants into that nation. so, the point of tension here is going to be how do these two leaders get past those comments and sort of move on to international diplomacy in this new trump era here in
washington, d.c.? also, we're expecting a whole lot of ceos here for a roundtable discussion in just about an hour and a half. we're expecting to see ceos of some of the major german companies, including bmw and siemens and also ceos of some major american companies, including ibm and dow chemical. i can tell you, i talked to andrew liveris of dow just moments ago as he walked in. he wouldn't tell me much about what's on the agenda, but he did say that apprenticeship and job training in particular for blue-collar workers will be on the agenda for discussion today. one of the things that ceos have been telling this white house over the past couple of months is that that program that germany has for training industrial workers is so important to their economic success. there's a lot of interest here in this white house, carl, to mimic that program and see if there can be an american version of it. expect to hear some of that conversation with the ceos and the president later on this morning, carl. >> all right, i'll pick it up, eamon, thank you. eamon javers at the white house. >> reporter: you bet. >> for more on trump's meeting with german chancellor angela merkel, let's talk trade.
ambassador michael froman joins us, and ambassador myriam shapiro joins us. great to have you. great to have trade experts to talk about the u.s./german relationship. clearly, this is critical for germany. we're the biggest buyer of german exports. the made in germany machine is doing quite well right now. what can germany convince the u.s. on its side of the things, why the u.s. needs germany from a trade perspective? >> well, germany's been a critical partner of the u.s. in europe, and chancellor merkel in particular has been a close partner of the last two presidents and working through a lot of the issues of the global economy. so, i would imagine she would want to talk to the president about how to make sure trade remains open between the u.s. and europe and to try to push president trump and has administration to take a more leadship role in the global
economy. on the other side, this president is focused on the bilateral trade deficit with certain countries, including germany. and i imagine they'll want to talk about how important it is for germany to have more demand-led growth in germany and not rely solely on exports. >> how, ambassador shapiro, is germany likely to react to that? they have the third biggest trade deficit with the united states after china and japan, and that's something we know president trump is going to go after. >> right. well, clearly, this is a very important meeting for both leaders. they have a lot riding on it with respect to trade, also security, also with respect to russia. i think what's most important is that they try to establish a personal rapport, a chemistry that would help them deal with some of these difficult issues. and if the president does mention the $65 billion trade deficit that he's been bothered about with germany, it's an opportunity for the chancellor to push back and talk about the fact that we want to grow trade both between the u.s. and germany and between the u.s. and the eu as a whole.
one way to do that is to try to rejuvenate the bilateral trade negotiations that were begun several years ago between the u.s. and the eu. >> ambassador froman, do you think that chancellor merkel is more likely to focus on the trade deficit or on u.s. job growth? i believe german companies directly employ more than 800,000 workers inside the u.s. is that likely to be the most -- i guess the highest card that she has to play in this conversation? >> i think that's right. i think she'll want to emphasize just how much cross-border investment there is and the role that german companies play in the united states, both as employers and as major exporters. she's been very smart in bringing these ceos to washington to talk about how the u.s. is a major export platform, and that's why it's been so important for the u.s. to open other markets so more companies like bmw and others will come to the united states, build product here, both for the u.s. market
and to export all over the world. and i imagine she'll be encouraging the administration to continue down that path. >> ambassador sapiro, i wonder, i'm fascinated by this element of vocational training and the degree to which it appears we're going to -- i don't know, are we going to try to take some lessons from germany on this front? by the way, we're watching this chart of mulesoft, we'll get to that open in a few moments. but i wonder what we intend to copy and what we have to learn from germany. >> well, again, we should be looking at how to better balance trade, but it's not a question of simply eliminating a deficit. there's really no situation where a country runs a surplus with every other trading partner. it's just not how trade is done these days with global supply chains. but what we can do is look at programs like the apprenticeship, which is not a new idea, but it's an important idea. how can we do a better job in the u.s. of training and retraining our workers so they
can really have the skills they need to compete effectively in the 21st century? we have not done that effectively or as effectively as we could do, and this is an opportunity to move ahead on that front. >> one of the other points of contention, ambassador froman, relating to trade, is peter navarro, the top trade adviser to president trump, not too long ago accusing germany of currency exploitati exploitation, authorize, taking advantage of weaker euro members, and therefore, the weaker euro, to help its export machine be more competitive all over the globe. what do you think is going to be the german response to this? >> well, i think germany will make clear that they don't control the level of the euro, they don't have control over monetary policy. of course, there is an issue that you've got countries as diverse as germany and greece with different levels of productivity all using one currency, and therefore, there is an issue there within a single currency framework, but that's why it's so important to focus not so much on the currency level per se but on
encouraging the kind of domestic, demand-led growth to continue and to grow in germany so they are buying imports as well as selling exports. >> i'm also thinking back to past visits that have looked like this one. maybe not exactly like this one, but when abe came, ambassador froman, it was coordinated with announcements of new jobs in this country, new factories, massa san saying he was going to launch that vision fund. would you expect something like that just for optics sake, for bmw to say we're going to expand south carolina deployment by "x" percent? >> that's always possible, but of course, these decisions by major companies are not decisions that are made on the fly. they involve months or years of preparation in terms of how they want to deploy their capital or build out their product lines. and so, i think if you are likely to see an announcement, then it's likely to reflect plans that have been in the works for some time.
you know, i think it's smart to have the ceos get together and help underscore just how much they have in terms of common interests, and that can also help at the leader level to smooth over differences that have emerged. >> ambassador sapiro, to what extent does it matter that president trump made these comments during the campaign about chancellor merkel? immigration is an important topic. certainly, it affects the room, i suppose, that chancellor merkel might feel that she has to appear cozier with president trump. that's bound to have some political effect on her at home. how do you expect that to play out? >> well, it can't have been an easy meeting for her to prepare for, given the comments that president trump made about her policies and about germany. it's probably not an easy meeting for him to prepare for either in the sense that she's seen as not only powerful but very well respected, global leader, and one that has created
a lot of economic growth without protectionist policies. that said, they both have a lot riding on trying to establish that personal chemistry. they'll have a half hour alone, just one on one, to try to do that. and then i think the second order of business is to show the world that no matter what they might agree or disagree on, whether it's deficits or security issues, the importance of nato, the importance of eu unity or a common approach to russia, the underlying partnership remains strong. u.s. and germany are in this together and will continue to build on that partnership. i think that's the most important message. and they both seem to understand that that's where they should come out today. >> well, we will see if that happens. they couldn't be more stylistically different. if you would, would you both stay with us, because we're going to continue to talk about germany this hour? ambassador froman, ambassador sapiro, thank you for now. >> thank you. >> happy to. before we go to break, let's check on shares of mulesoft. pretty nice pop here at a
46%-47% gain on the open. we're going to talk to the ceo in just a few moments on a busy day for ipos. as we go to break, the dow's coming off three straight days of losses, adobe leading most stocks. we're going to dig into that later on this hour. jon talked to the ceo. dow for the time being down 11 points. don't go away. at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be.
more to stream to every screen. live shot of the white house, looking at the honor guard as we await the german chancellor coming for her visit with the president. we're going to be looking for the arrival, of course, perhaps a pool spray around this roundtable with german ceos. the joint press conference not until 1:20 this afternoon, but a lot of attention will be on germany, the relation with this country and the white house today. yes, and meanwhile, here on wall street, enterprise software company mulesoft just opened for tradeing with a pretty decent pop. take a look at the stock chart right now, up nearly 50%, trading above 25 bucks a share. the company's software helps more easily integrate apps in this cloud era. accounts, coca-cola, mcdonald's and spotify. joining us, greg schott, ceo of mulesoft. welcome to post 9.
>> thanks. good to be here. >> quite a journey to hear. first we hear pricing around $16, you priced around $17, now you open up here. arguably, your ipo is more important for silicon valley writ large than snap was, because there are a lot of sort of midmarket enterprise cloud plays, and people don't naturally get excited about it unless you do well. how rough was the road to get here? how are you feeling about the way this has opened? >> well, if you're talking about the road for the company, we spent ten years building this place. so, that was a long road, but a lot of great work. the actual ipo process went very well. it's a great market right now. there are a lot of great companies that have been built over the past few years that are ready to go public, and i think we're just seeing the results of th that, and the market is interested in the growth of a lot of these companies like ours. >> at end of 2016, it didn't necessarily look like it would be a great market for this. >> yeah, yeah. >> what were you hearing at that point? what kind of questions did you get preparing for this day right here from investors? >> well, investors just want to
know that there's a long-term growth trajectory for the company. they want to know that there's a big market and a big market opportunity. and if you have those two things and you're showing that you're executing as a company, then you usually can go forward. and people are pretty excited about the story. >> now, if i understand your business correctly, a big part of what you're doing is playing in the cloud era. there are a lot of different types of applications, salesforce, various things that a company might use. you're providing a dashboard where people can integrate those things, a tool where people can use that data, companies with use that data internally more efficiently. now, normally, the way enterprise software works, big companies buy up the smaller players as a new trend matures, and they do that themselves. are you a play against the sort of bet that that sort of cloud consolidation is going to occur? and if we see consolidation, is that going to hurt you? >> i would see it more as if you think about the explosion of applications -- so now there's thousands of sas applications.
our company alone runs 200 sas applications, so you have 50 billion connected devices expected by 2020 and people moving workloads into the cloud. so, you have this incredible diversity of i.t. assets. and the real struggle that companies face is how do you make it all work together? how do you make it all connect so when a patient comes into a hospital, all those systems are connected together, or somebody is ordering online, how do you make all those systems tie together. we provide the connectivity to make it all work together. and people build what we call an application network to make that happen. >> so, who's the biggest competitor, ibm? >> our biggest competitor is actually custom point-to-point code. what people tend to do is they write code to make that all work together, and we provide this platform to enable that to happen. >> but somehow, you're getting companies like coca-cola, to pay on average $143,000 per year for your services. >> yeah, yeah. big companies, coca-cola, bank of america, salesforce, spotify,
companies, really interesting companies using us really to build their business upon. >> and traditionally, though, it is the ibms and oracles of the world that buy up these smaller companies and say we're going to integrate these for you. one throat to choke, right? so, you're taking the throat out of the equation. how does that play, if we do eventually get into an era where oracle, which had a very good quarter just a couple of days ago, starts to acquire more of these companies that are your customers and try to integrate them themselves? >> yeah, i think you're always going to see integration happen. s.a.p. had that for a long period of time. it was the one place. and oracle will have it and salesforce and workday, but there are so many companies, everybody moving to the cloud on amazon and google cloud. so, there are so many places that people are building their applications. i don't see it all converging to one central system. >> how do you deal with the sales and marketing challenge? right now, one of the big barriers to your profitability is you're having to get the word out, go out there, get a sales
force, acquire customers traditionally in the enterprise business. that's one of the reasons why bigger players try to come in and acquire because they already have that as a sunk cost. how do you push through that challenge into perhaps eventual profitability? >> yeah. our biggest thing is that we are a recurring revenue model, so all of our software subscriptions are annual or few-year contracts. then we renew them with our customers and expand them dramatically over time. so it's that land-and-expand model for our business that helps us be more productive from a sales and marketing standpoint. >> all right. greg schott, ceo of mulesoft. and stock is higher even during this conversation, up now better than 50%, trading near $26 a share. >> thank you very much. >> thanks. and when we come back, president trump and chancellor angela merkel from germany about to meet at the white house. we'll bring you that when it happens live. be right back.
around this time, we are expecting the german chancellor to arrive at the white house. again, you see pictures of the honor guard awaiting her arrival. of course, when she shows up, we'll bring you live pictures. in the meantime, this administration and the gop pushing for deregulation across the board. how's that going to impact stocks? joining us at post 9, david bianco, deutsch's bank asset management chief investment strategist. mike santoli is our market commentator, of course. long discussion about what exactly markets are trying to bake in. >> yes. >> if not legislative hopes, how much is riding on what can be done more easily regardi ining ? >> it seems to me deregulation is the shortest path to getting policy help for the market and i think the market is hunting for reasons to believe that 2017 earnings are not going to go down anymore in terms of the forecast and maybe it can come up in some sectors. if you look from the election, s&p 500's up 11%, s&p 500 2017 earnings forecast down 1%. so, you have to try to find a way to say we can be supportive of the fundamentals.
to me, if you look at financials, energy hasn't performed well, but those are areas where it seems to me deregulation is sort of assumed to be a potential upside potential for those earnings. >> why hasn't that worked more in energy, david? >> you know, actually, i think there's many good reasons why energy hasn't worked. the valuations have gotten very demanding ever since the oil prices bounced off the bottom. i believe most energy stocks are still trading on the expectation of about $65 normal oil, maybe slightly lower if we've got great efficiency. but getting to that oil price is going to take some time. i think it's going to be a volatile path. and with the fed hike, we do think we'll get two more hikes this year, we think the dollar grinds upward, doesn't surge, but grinds upward and puts some headwind on the oil price recovery. >> when you start to think about different sectors getting deregulated, one that comes to mind is health care, because it's sort of unclear. we've heard this talk for the drugmakers that they need more regulation, potentially, when it comes to prices. >> sure. >> and on the other hand, less when it comes to the gop's new health care bill.
how do you make sense of that one? >> yeah, obviously, it's subsectors within health care that i think it matters most. biotech is actually doing okay. i think there is a general sense that regulation's going to err on the side of speedier approvals, but to me, that's not necessarily the big driver of pharmaceutical stocks right now. yes, it's a help. and then when it comes to the number of people covered, obviously, that's already -- i think the hospitals have already taken a hit on that. so, to me, that's not about the deregulation. it's about kind of changing the rules of the game that these guys have been trying to live with for seven years. >> david, it seems like across-the-board deregulation sounds great until it's not, right, until you start remembering wells fargo, the financial crisis. nobody likes regulation, but people tend to like consumer protection a bit more. if we are factoring in the idea that deregulation is going to happen, how do you weigh that in how you price stocks? should you expect more volatility? should you expect that if something bad happens, it has a bigger impact down the road? >> well, one industry that's more regulated than ever before
is going to stay that way. it is the financial sector. it is banks. and they've taken a lot of steps to make their balance sheets stronger and take less risk. that's going to stay highly regulated, regardless of how politics play out. i think -- >> you don't believe that president trump when he says he's going to do a number on dodd/frank? >> hopefully, it's going to be a better balance of regulation where it's effective regulation without such a high cost of compliance and bureaucracy. look, i welcome deregulation, and we see some encouraging things when it relates to utilities and transportation, but then what you have with politicians is that they all have their pet peeves and they're deregulating certain areas, and yet, then i see more government intervention, if you will, on issues of trade, and there's still plenty of intervention on the issue of health care, particularly when it comes to pricing, and we'd all, particularly a person who's an investor, i want to say let markets do their thing, set the right prices and let trade and currency values set themselves. >> speaking of prices, i wonder how much of a deflationary or
slower inflationary aspect there is to deregular. diana olick mentioned earlier in the week that homebuilders, say like a quarter of the cost is compliance with regs. we talk about financial compliance all the time. >> sure. >> but these other businesses have it, too. >> i wonder if the impact, though, is more on the margins versus the pass-along pricing to investors. i think investors are banking on the idea that goings to fatten margins, not that it's going to basically cut prices at the consumer level. >> yeah. >> although i'm just looking at some of the international markets. if you look at the dax, which i was checking in honor of chancellor merkel's visit, it is up. the s&p 500 has been impressive, up 16%. >> yes. >> so, globally, it doesn't seem to feel like everyone's deregulating. so i wonder how much that's part of the global trade. >> a bunch of things to be said. the german economy has been the rock of europe. there are still challenges for european interest rates and european currencies. i think the euro has a little bit of a reprieve for the spring, because i think the elections in france would be
better than feared and the fed is doing, aiming for three hikes this year, not four, but i think the euro is something that still is likely to be weaker this time a year from now. why is the dax doing well? well, the euro's been weaker, it's got the tailwind to their industrial businesses. and it is hard to put a finger on it but it is true that china is much more stable, japan is growing, europe, particularly the core like germany's growing, and the u.s. is growing. i would tell people we like what we see in the industrial economies, but i think you're best off buying european industries over u.s. industrials. and in the u.s. market, stick with the growth sectors like health care and tech. >> but to your point, sara, india, brazil, mexico -- >> turkey. >> year to date -- >> it's a globally synchronized rally. and jess, president trump does get some credit, because it took off since the election, but i just wonder how much of it is on domestic policy. >> david, are there sectors where deregulation isn't such a great thing? i mean, there are many that want
it, but tech, for instance, likes net neutrality. that's a regulation of not so much the regulations that are preventing uber, say, from growing at the speed that it wants, but is it some more than others? >> it's i guess less of a sector industry issue versus an entrenched player versus new entrant issue. not for me to decide on that. >> david, mike, good discussion. we're going to tackle the theme of deregulation all day long today. thanks, guys. as we head to break here, we are keeping our eye on the white house for you, awaiting the arrival of the german chancellor, angela merkel. the dax is outperforming the s&p over the last 12 months. plus, we stick with the deregulation nation theme all day. coming up, what it could mean for gdp and why economists are still sort of undecided about the impact. we'll be right back. at fidelity, trades are now just $4.95.
as strong as your values ♪ know that together, you can establish a meaningful legacy with the guidance and support of your dedicated pnc wealth management® team. watching for german chancellor angela merkel's arrival at the white house. joining us to talk about this upcoming bilateral, and of course, the joint news conference later this afternoon, former german ambassador to the united states, as well as former u.s. trade rep miriam sapiro, who sticks around from an earlier conversation. good to have you both. thanks once again. >> great to be here. >> ambassador klaus, i wonder, what is the game plan, do you think, for merkel going into this meeting? >> i think, first of all, i think the two leaders need to
get to know each other. that's very, very important, because you need to know each other to be able then to pick up the phone and discuss something which might come up. but then, of course, it's very important for her to explain that trade and all the other issues which are on the agenda are basically win-win. you see, it's not that just one side is winning and the other side is losing. the united states and germany are critical partners for each other, politically, economically, concerning values, but also concerning the scientific exchange. and therefore, it is win-win for both sides. >> just in case there's any pushback, can you elaborate on how the united states benefits from the german economic relationship and security relationship and partnership? >> yeah. let me start with security. we are very closely linked together by nato, and we benefit from each other's security
efforts. europe is of extreme geopolitical importance. whoever controls europe is in a very good position, and germany is a key country inside europe. and we benefit, of course, from the security protection we receive from the united states in the last 50-60 years. so, but on economics, it's equally important. what some people don't know is that 60% of all foreign direct investment in the united states comes from the european union, 60%, and a very large chunk of that comes from germany. more than 200 billion euros have been invested by german companies inside the united states, and they have created about 700,000 jobs here in the united states, not counting 1.5 million indirect jobs, which have to do with the local supply chains. and you see, this investment is critical. i think it is critical for the united states. it's also critical for germany. >> ambassador sapiro, it seems
from where i sit that germany represents the heart of the eu, the european economy, and especially given what we just saw with the netherlands vote, how closely is the rest of europe outside of germany going to be watching this meeting between the chancellor and president trump? what sort of signs are they going to be looking for that might influence the direction of politics and the economic relationship throughout the rest of the year? >> well, jon, i think with the uk now leaving the eu, the role of germany has become even more important as a leader within that body. and i agree with klaus, it's vital that the two leaders discuss both security and economic issues, especially trade. on the security front, it's important to remember that the eu and nato are the two fundamental pillars of european security. and european security -- a stable, prosperous, peaceful
europe -- is in the u.s. national security interests. so, we have a vested interest in supporting eu unity, in making sure that nato remains strong. and so, for example, the president has made it clear he wants to see nato allies, like germany, pay a larger percent of the nato budget and reach the 2% of gdp that the u.s. has reached. so, the chancellor has pledged she will do that. she's going to do it by next four to eight years. president trump would like to see that happen more quickly. it's going to be hard for her to do that before the election she's facing in the fall, but perhaps after that she might have some flexibility. so again, making sure that nato remains a strong pillar and also making sure that the u.s. is supporting eu unity, especially when we have now a new defense budget. talks about $50 billion and more in increases. well, supporting eu unity is a relatively cost-free way for the u.s. to help bolster security in
europe. and i think the other eu states appreciate what's at stake here and will be very supportive of a good meeting today. >> that's a lot of happy talk after a period in which the president, klaus, said the nato model was irrelevant, obviously has championed national candidates, encouraged brexit, was arguably behind a different result in the netherlands. does that all get forgotten? >> well, i think there's a learning curve here, and i think that some in the white house understand just how important the eu is and nato, and the president has been moving more towards in the direction, certainly, of shoring up nato. >> klaus, do you agree? >> i think -- i'm very confident that president trump, like all other presidents of the united states since the 1950s, will come to appreciate the extreme importance of the european union. what we should not forget is that the european union is the
most successful instrument of peaceful change in the last few decades. it's just remarkable what the european union has done for central and eastern europe after the end of the cold war. you see, between world war i and world war ii, 28 of the then 38 european countries were authoritarian governments. nowadays, we practically have only democracies, and that is due to the european union and to nato. and so, i think -- i totally agree with ambassador sapiro, that the eu is in the vital interests of the united states -- >> yes. >> -- and all american presidents since president truman have acted like that and on that and really helped europe to further integrate. >> she might have some trouble, though, convincing president trump of that fact. he campaigned, as carl mentioned, for britain to leave the eu. ambassador, i wonder how much the dynamic changes, because
chancellor merkel herself is facing an election this year, this fall, amid increasing polarization across europe and in her own country. does that have to change her stance today on europe and on some of these key issues? >> no, i don't think that this changes anything. she, you see everybody who is in a likely position to govern germany after the elections in september, and of course, chancellor merkel is the favorite in that election -- i think all of them very deeply believe in the european union, very deeply believe in nato, and i think she will make that case to president trump, and i'm pretty confident that she will be able to convince him that nato and the european union are of extreme importance because of the geopolitical importance of europe. >> ambassador sapiro, i'm wondering, what does a win look
like for president trump? i think now we're seeing -- this could be the chancellor's car arriving at the white house. we expect to see chancellor merkel and those with her coming out in a moment. there is president trump standing at the door, getting ready to greet her. let's watch. okay. >> looks like a handshake, although it's hard to see because -- >> we definitely got our shot blocked this morning by that soldier and the flag. we were commenting earlier this morning about just how different these two officials are. obviously, man and woman. one's a former chemist. the other made his career in real estate. merkel actually got her start in government as the berlin wall was falling. and here we are at a period where we're actually procuring the design, construction of a wall on our southern border. >> which -- >> i said they're the political inverse of one another.
>> which is a domestic issue, which i don't know if it will come up or not, but i like how politico described chancellor merkel as a star pupil at school, immerses herself in policy details, wields those facts in debates to underpin her arguments. actually, they compared her to president obama in that fact that they would sort of both get pretty wonky when it comes to policy. president trump has a totally different style. he's more big-picture. he's more grandiose. he's less experienced. she's running for her fourth time as chancellor, has been in this job 11 years. and i mentioned earlier, this is her third relationship that she is pursuing as head of state with a u.s. head of state. i misspoke earlier and said clinton. actually, president bush, president obama and now president trump. >> and at the same time, one could argue that they need each other in this meeting if president trump performs well. his global, bona fide get burnished at a time where if you believe the polls, he is not polling particularly well in the u.s., and chancellor merkel facing that election, arguably
those who -- >> although america first. that's his campaign, that's his talking point. >> sure, but he's got policies right now that he's trying to push through congress where popular support certainly wouldn't hurt him. at the same time, chancellor merkel up for re-election, probably some of the people who she wants to vote for her sympathetic to a president trump. >> well, and we're going to find out just how much of the limited q&a we expect to get during the joint presser's going to be about north korea or wiretapping allegations or health care or tax reform. there's a lot of domestic policy that's sort of getting in the way of the larger trade conversation. >> and i'm sure they'll get questions on some of the issues that divide them and that have divided them in the past, including nato, the treatment of refugees under chancellor merkel, which, of course, president trump as a campaigner spoke out against. >> ambassadors, thank you so much for your time. >> my pleasure. >> was a pleasure. >> appreciate it very much. we've been watching the market hover into the brief shallowly,
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stunning run and his take on netflix and the future of snap. plus, one of our traders will help investors get the timing right on what could be the trade of the year. we'll also get you ahead of key earnings next week. fedex, nike, micron, kb homes all reporting among others. "the halftime report" top of the hour. see you in about 15. >> scott, thanks very much. it is deregulation nation all day on cnbc. one of the question on investors' minds, how the administration's new policies will affect u.s. growth. the economist jury still out, some might say. steve liesman has details. >> economist vaez a love-hate relationship with deregulation. they love it because they think regulations can be a dead weight loss on the economy. they can reduce competition and make companies inefficient. but economists hate deregulation because it's almost impossible to measure either the cost on the one side or the potential benefits on the other. in a surprising result from our cnbc fed survey, second time in a row respondents say the most important initiative for president trump not individual
and business tax cuts, it is deregulation. since president trump was elected, the percentage of respondents saying tax and regulatory policy are the number one threats to growth. it has plunged to just 7%. it was the number one threat during much of president obama's tenure. yet, most economists we contacted say it's almost impossible to gauge the growth impact of less regulation. but one paper says it includes professors from duke and stanford, suggesting regulation may have cost the economy $4 trillion. measuring regulation from 1980 to 2012, they think the economy could be 25% larger or $13,000 per capita in america if regulation hadn't grown so much since 1980. take a look at this. the unique study used machine learning to read the federal code in a database called red data. they found a massive rise in the number of restricted words like shall, may, may not and prohibited. these words top a million now from under 600,000 in 1977. now, the researchers
acknowledge, they don't measure potential benefits of growth from regulations like cleaner air or safer food, but the idea that the economy can be more efficient with less regulation, that seems widely accepted. how much? well, that's where the disagreements begin. oh, yeah, and a quick programming note, guys. on monday, exclusive interview, talking with philadelphia fed president patrick harker, 10:00 eastern on this show about some issues like the outlook for growth as well as the outlook for monetary policy. carl? >> wow, that is a heck of a chart regarding those -- >> yeah, thou shalt not. >> that's good stuff. thank you very much, steve. steve liesman. for more on the economic and market impact of deregulation, we're joined by william beach, vice president of policy research at george mason university and jared bernstein, senior fellow at the center on budget and policy priorities. guys, good morning to both of you. jared, do you think we overshot on regs long ago? >> not in any measurable way. i think the key thing from what steve was saying -- i get that
the markets love deregulation, especially the financial sector, and we can talk a little bit about that, because i think i know what that's about, but broadly speaking, you really can't find deregulation impacts in prices or growth. and it's really, really important not to forget the benefit side of the equation, and that's often missing in the research, as steve suggested. remember, it was in no small part -- and alan greenspan agreed with what i'm about to say, because we overdid financial deregulation in the '90s and 2000s, we ended up with a market crash that cost the economy trillions of dollars, 26 million jobs, $11 trillion in lost wealth, and that's not something we should forget, even though it was ten years ago. >> william, so, if we're caught in this constant pendulum swing of undershooting and overshooting on regs, where do you think we are about right now? >> well, i think it's time to begin the budget regulations. jared raises some good points there, but let's look at how
budgets of the small business sector and the medium-sized sector are affected by regulations. increasingly, you have to hire people just to comply with the regulations. these are folks that are not producing the services or the goods where the profits come from. what our research shows i that there is a now almost unexpectably high cumulative cost of regulation. it's a burden. that's where the trump administration's one in two out regulatory budget is welcome. is will stall or slow down that accumulation. we think if it does so, we'll get 0.4 to 0.5 of a percent boost in the growth rate. we think the economy is $4 trillion smaller today because of the accumulation. >> william, maybe it's the contrary journalist in me. since 1980 we had rise of things like cable and internet and there are necessary regulation that go with that.
regulation is a bad word. nobody likes regulations. people do tend to like rules of the road and they do like protections. why are we talking about this as if regulations across the board are a bad idea and a let to the economy? >> we're not talking about across the board. there's a bunch of industries. ethanol, for instance, that have been built in part because they had regulations passed that benefited them. so there are industries that would, if we deregulated or slowed down regulation would see a slowdown in their growth. most regulations, most industries are affected in a sense of it's a constraint on their growth as opposed to a negative. it slows down. >> listen, i think the problem with -- >> i think we do know that. >> i think the problem -- i'm sorry. let me just interject. i think the problem with this kind of a conversation and it's always the problem when you talk about this issue is that it's always from 30,000 feet up. to make sense of this, you
really have to talk about specific regulations and deregulations. so for example, the trump administration wants to get rid of the consumer protection bureau and i suspect a lot of people hearing my voice think that's a good idea. on the other hand, $12 billion have been returned to consumers who have been ripped off by the likes of the wells fargo problem where they set up 2 million accounts that customers really didn't ask for. so it's just a microcosm example of why we need regs. ethan ethanol, formula in washington is corn plus cash subsidies. i'm ready to sit down and talk about that. the broad conversation -- >> over the course of several years almost 20 years we've had a steady deregulation of telecommunication and what was the result of that?
entry of firms, massive decreases in price. massive increases in the quality and variety of products. not every industry will be positively benefited by deregulation. i just made the point that some are built on regulations but we need to recognize the fact now that we have accumulated so many regulations on the emerging small and existing businesses that it is slowing their ability to invest in growth. >> i think that's a very fair point. i think telecom is a good example. there are lots of markets and even in urban areas where telecom still has a monopoly and we shouldn't allow monopolies. i think it's a balance. >> right. you recognize the gains that have been made. so let's look at gains in waste management and aerospace. these are areas where i think we could see very positive gains if we were prudent on regulation. >> don't answer. that's a great place to end. we have to continue that one another time.
thank you so much. >> thank you. it's time to get to the cme group. rick santelli with the santelli exchange. >> thank you. many people i talk to whether it's sources, traders, people on cnbc that are in the news business, market timing. trade timing. this is a huge issue. i'm not talking about that kind of market timing. i am talking about literally timing markets. i'll tell you what i mean. we've talked about time and price 90% of most of the research whether you do it the old fashioned way which i still try to do or you have computers with all of your various models, it's all about price. time is every bit as essential. i'll give you an example. i look at interday as less important than closes and weekly and monthly more important than daily closes. it's about time. what i'm getting at, say when you get to certain areas where markets have big moves, you almost time how many hours are
trading days they spent in certain price ranges because many times that's the key. so if markets like the dow lately and all of the stock markets had this big move. if we had timed it and it lasted two or three days and then started to reverse, that's much different than consolidation, which is actually the great equalizer in this discussion because i continue to say one of the biggest most overlooked clues is when you have trends to time the markets and consolidation is the way to overbought or oversold gets out of the market and usually a trend continuing pattern follows. this is essential especially at this point in time. sarah, back to you. >> all right. rick, did you time yourself on that one? i saw the clock was going. >> i did. 90 seconds right on the nose. >> you nailed it. rick santelli. later we'll take you to washington for the full joint news conference with president trump and german chancellor
my name's scott strenfel and i'm a meteorologist at pg&e. we make sure that our crews as well as our customers are prepared to how weather may impact their energy. so every single day we're monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. during storm season we want our customers to be ready and stay safe. learn how you can be prepared at pge.com/beprepared. together, we're building a better california. shares of adobe sharing at 100 bucks a share beating estimates on the top and bottom and issuing stronger than expected forecast for the current quarter. here's the ceo on "closing bell" with me yesterday. >> as it relates to creative cloud specifically we saw strength across the board. we talked about how international represents a good
opportunity that did well in q1. small and medium business is our team's offering did well in europe and we continue to do a really good job with focusing on delivering value for our existing customers. >> and, guys, on the heels of orac oracle's strong report on cloud from an infrastructure and platform perspective, it feels like something is about to happen in the valley. the other shoe to drop when it comes to cloud. i'm not sure if its employment in i.t. coming down because f m companies are farming that out to third parties but interesting. >> that would have all kinds of implications for real estate values in a town where hardly anybody could afford to live and a bunch of other things. >> it would indeed. these companies doing quite well. interesting to hear him talk about international growth for adobe's cloud. some people think that it's fully priced. here's a company that's been known to acquire and other ways that they can figure that out. >> maybe the other shoe to drop
would be price war competition on the cloud since everyone is going after that growth so competitively. we saw oracle calling out. >> infrastructure-wise definitely. software not as competitive. >> another all-time high. that chart is probably one of the best looking charts out there. a good weekend, everybody. let's get to wapner and "the half." william to "the halftime report." i'm scott wapner. why the nasdaq is outperforming this year and stocks that could keep climbing. with us, josh, steven, erin brown. let's begin with tech from the chips to apple and others. that sector has been the place to be for investors. nasdaq up 10% this year, josh. everybody talks about the banks and all these other sectors. why is tech doing as well as it is? >> this is the supreme irony of the ral