Transcripts For CNBC Squawk Box 20160415

Closed relatively flat. Nikkei was down by about 0. 3 . In europe, it looks like things are modestly weaker. The dax is down by about 0. 3 . The ftse looks flat. Lets get you through some of the top stories this morning. We have citigroup expected to report at 8 00 a. M. Eastern time. Analysts looking for the bank to post earnings of 1. 03 per share on revenues of 17. 5 billion. Citi has already said Investment Banking fell during the quarter. Worth watching. The bank could give us a better snapshot of the Global Economy than some of its peers. More than half of citis revenues coming from outside the u. S. Citi was the only bank to make it through the living will process. Probably questions on that Conference Call about that as well. Were also watching oil prices ahead of this weeks highly anticipated producer meeting in doha. Ministers from the biggest opec and nonopec countries debate the next steps in a production freeze. But russias finance minister telling cnbc it wouldnt have that much of an impact. Translator we see in conditions in the slowing down of the World Economic growths, the accumulation of oil reserves by producers. Theres no serious grounds for talking about increasing oil prices. Lets show you oil prices at this hour. Wti crude sitting at 40. 96 right about now. Also, a little bit of corporate news. Exchange operator bats Global Markets pricing its ipo at 19 a share, the top of its expected range. Shares are expected to begin trading today on its own exchange. The company is hoping this goes better than its last attempt to go public back in march 2012. You might remember technical malfunctions affected trading of bats own stock. They say theyve been aggressively testing its auction system to make sure it can handle the volume today. Were you up late watching the debate . I think youd have a little more bounce in your step today. April 15th and all. Very exciting. Were you up late . I was watching bernie and hillary take brooklyn. We played the beastie boys. No sleep til brooklyn. Just hearing a couple thoughts this morning. Its almost as if bernie thinks theres this big pool of money that exists. Its a big pool. Then you got these entities like General Electric grabbing. You got verizon grabbing. You have rich people grabbing from this pool. Its a zerosum game. No concept of Wealth Creation and of actually adding to jobs, creating jobs, creating an economy that generates that. No conception of that. He was mayor of burlington. Thats his ente world. Burlington, vermont. Thats his entire world view. Honeymoon in the soviet union. He plans to raise taxes by about 15 trillion over the next ten years. He would also be looking at expenditures that are 16 trillion to 24 trillion. He beats the republican candidates, like all of them, 52 to 32. He beats the republicans more than there was a fox news poll yesterday that showed they thought he was the most trustworthy one to be president. Where are we . I did see something last night. They were asking people name as many avengers as you can. Then name as many president s. Former president s. These people were getting five and six avengers. When it came to president s, one person said grover washington, whos a saxophonist. Then he said thomas edison. They couldnt come up with anyone other than obama and washington. I swear to god. I would be better with the president s and terrible with the avengers. Same with me. I dont know if i can name a single avenger. Okay. Lets look at a couple thoughts, then ill talk about something. Democratic president ial candidates Hillary Clinton and senator Bernie Sanders squared off in a cnn debate thursday night in brooklyn, new york. With next weeks New York Primary hanging in the balance, this was the ninth and according to this the most contentious. Sanders questioned clintons experience and judgment. Heres how she responded. Talk about judgment and talk about the kinds of problems he had answering questions about even his core issue, breaking up the banks. When asked, he could not explain how that would be done. Later, sanders responded to clintons claim that she stood up to the banks when she served as senator from new york. Secretary clinton called them out. Oh, my goodness. They must have been really crushed by this. And was that before or after you received huge sums of money by giving speaking engagements behind them . So they must have been very, very upset. We will get more highlights. Got that to look forward to later this hour. One of the reasons im trying to drum up some twitter followers today. You are. What is a fake twitter account . How does that even work . So theres a lot of inactive users, some of which are bots, these sort of madeup accounts. Some of which are truly users who went on twitter and unfortunately for jack dorsey just basically stopped using twitter. Okay. I dont have enough fake or real twitter followers, so i retweeted thats because you keep blocking people. I do block people. In fact, i think most days i have a net negative for people that follow me versus people i block. But this time i tweeted out this picture of me. Im with president reagan, who was a president. I dont know whether you remember. I heard about him. He was a president. He has this great quote about Independence Day versus april 15th and which party likes which. I tweeted that out again. If you want to see it oh, you want me to go . Im trying to generate some followers. The reason youre doing that is because today is a special day. Its april 15th. Although you have until monday. Have you sent in that supplemental fair and equal check you usually send in after youve paid your normal taxes to get to the actual amount . To get it up to 90 or whatever. When do you send that one . I send my regular check in very proudly. I send my taxes in quarterly, actually. Even the patriotic millionaires, i dont think, the sanctimonious, smug people, i dont think they send free money. They just pay youre going to find a lot of friends on twitter today. Yeah, i enjoy the blocking. Just remember this. Reagan did not cut the budget. He raised it. You mean taxes. Both, actually. Raised taxes and Government Spending. To say he raised taxes is functionally true, but in a lot of ways functionally true. It is. Everyone raises taxes in some respect at some point. But he brought down capital gains. We were at 70 at one time, marginal rate. Brought it down to 28 or whatever. But he was not an austerity president. Think about all the money that was spent on defense. You mean to end the cold war. And to tear down that wall. If you look at Government Spending during reagans presidency, you would not say there was less spending. There was more spending. Just putting it out there. Why dont we look overseas at another government this morning. Theres new news out of china today. China posting its slowest Economic Growth rate since 2009, but there are some signs of a debtfueled recovery and factofactory activity, and household spending. Eunice, good morning. Or evening there. Good morning, becky. China delivered a decent economic report card for the First Quarter. Gdp came smack in line with expectations at 6. 7 . Thats well within the range the government has targeted for the year. This was the weakest quarterly growth weve seen since 2009, but there were signs of stabilization towards the end of the quarter. The march data came in better than expected. Retail sales held steady. The industrial output figure surprised a lot of people here because it came in almost a full percentage point higher than estimates at 6. 8 . Fai also improved. This is all feeding into the confidence that has been building over the last month. Weve seen a bit of a housing recovery. Also, the volatility in the currency as well as capital outflows has been calming down a bit. The export figures we saw this week for march were surprisingly strong. So thats all been positive news, that there could be some momentum. The big question is whether or not the growth is sustainable beyond a couple of quarters. Most economists here have been talking about how they believe this recovery is mainly stimulus driven. Its lending, construction. Its not companies that are much more efficient or market reforms. Also, the Bigger Picture environment is that the demand picture is looking pretty weak, both at home and overseas. Finally, the Chinese Government has been talking about how theyre pledging cuts to industrial overcapacity. Thats seen as a way to put even more downward pressure on the economy towards the latter part of the year. So i think at best, most people think that this is going to be short lived, but theyre hoping its not going to crash in any way, of course. Eunice, thank you. Also out today, chinas beige book on the First Quarter survey. Joining us now, China Beige Book International president leland miller. Good to have you. Thank you. We had a very smart economist on yesterday. We talked about both cyclical releveraging versus a longterm structural deleveraging. He says at this point were back in kind of a releveraging environment where near term things might improve. I was surprised to see that the gdp in china was the lowest weve seen. Is it a bottoming process now, or is there more slowness to come . Yeah, we dont agree with that at all. Agree with what . Well, what you said that she said. This is a temporary blip or youre hitting a bottom. Were at the beginning of a longterm structural slowdown. That doesnt mean the next several months thats what she said. But in the near term, she thinks it probably has bottomed, that theyre releveraging at this point and were putting in the lows on the gdp numbers. But long term, theyve got 1. 2 billion or 1. 3 billion that are going to be on facebook. So theyve got some things to do in the way whether you own private property, whether youre able to say what you want, whether youre able to go to Tiananmen Square without worrying about it. But have we hit bottom near term . I dont like to say weve hit bottom. I like to think were on a continual slide. The Chinese Government has stopped their reform process and decided to ease off the gas and slow down reform, slow down restructuring. Thats what releveraging means . It means theyre taking more debt and putting off their problems for longer. So it just means theyre spurring on the economy. Well, tomato, tomato. One of the things were seeing across data is they havent been spending for a while. Theyre borrowing much less than they have been each and every quarter. Now we finally have a hiring problem. The last two quarters weve seen job growth take a major hit after two to three years of stability. If you have firms that dont want to the hire, youre going to have a hard time goosing growth no matter what youre doing. Interesting. So the reforms youre talking about are purely business related. Youre not talking about societal or becoming less repressive. Here im talking about the Structural Reforms from an economic perspective. The jobs picture in china, are there is there overcapacity everywhere in all the industrial pretty much everywhere. The problem is that is state overcapacity. What were seeing in our numbers are state firms are not combatting this. You hear theyre saying theyre going to combat. And lay off people and do all these great things. It hasnt happened. Private firms are doing these things. This is painful for growth, but its good for china. But it should not be considered a bottom. This is the beginning of a long, torturous process. Im starting to see what youre saying. So if they dont close factories that are not necessary, if they dont lay off the people, if they just releverage by throwing money at projects, thats not addressing reform. And thats the chinese way. Thats what they been doing for decades now. Is there a slow way to do it . You dont expect to see them turning into a capitalist nation overnight. These thuings usually come in grades of change. No, there is right now. When you have an opportunity stimulus is dying in china. Fiscal stimulus is an open question. What they should do is use what stimulus ability they have left to cushion the pain of reform and push it along. A lot of people think, well, theyre just waiting until xi jinping gets more people in 2017, then theyll start reform. Well, putting it off and putting it off, this is not good for china. Can you tell anything about the Global Economy based on whats happening in china . The United States, we have our own domestic issues. China has their own. For some reason, not only as a socialist winning in most polls in the United States, we dont charge to lend money anymore. We pay people to lend money. Things seem upside down. Whats is china part of that problem . Well, from a political standpoint, the chinese dont have the ability to blow off steam by tossing bums out and bringing in the next guy and tossing him out. You have a buildup of pressure against the party in order to do something more dramatic. Sometimes that means pulling back on reform and not being as aggressive. As a smart guy that happens to follow china, im trying to figure out whats wrong with the Global Economy. Can you explain why growth is so slow and why we cant seem to get out of our own way . We have negative Interest Rates in many parts of the world . Too much supply, not enough demand. Is it a demographic thing . Probably, but those are the things that are going to kill us slowly over time. Were all getting killed slowly over time. This is killing us faster slowly over time . Something like that. For all the dangers, it is actually something china is looking at very happily, i think. If you have an environment thats going to zero and below globally and all the sudden these yields on these risky chinese investments start looking better. People are misunderstanding what a lower Interest Rate in china means. It could be a very good thing for the chinese economic transition. Okay, leland. Thank you. Nice to see you, sir. Its somewhere over 50, andrew, you start realizing were all terminal. Youre immortal, i know. When you say 50, im thinking 50 tax rate. You are. Hes pretty sensible about this. Im a risk i live like a risk manager thinking about all the worst things that could happen at every moment. Becky knows. In every aspect of my life. Thank you. Its good to see you. Coming up, the dow will start the final trading session of the week at its highest level since last july. If you were a risk manager, you wouldnt have realized that one. Were going to talk strategy next. At 8 00 a. M. Eastern, our special guest today will be snav senator ted cruz. Were going to talk about the economy, his tax plan, china t and a lot more. Back in just a moment. Sor richa. You are called the father of behavioral economics. Ive been called a lot of things. I have read all of your books. Did you learn anything . I learned that humans are complicated. Were emotional. Absentminded. And we make some really bad decisions. My tradeoff analytics can help Companies Make better decisions, but i am still learning what makes people tick. What makes you tick watson . Natural language processing, reasoning algorithms, statistical parsing. Now you are just showing off. Lets get back to the markets. Joining us now is ed campbell, qma managing director. Jason is also here, chief investment strategist. Gentlemen, im going back to the same issue. Im going to say joe and becky kind of called it because they kept saying the market was going to go up, as it seemed everyone else was saying it was going nowhere. Is that right . I think its probably going to go up really by default. I find myself bullish. Essentially all the things that we talked about before, in a world of negative Interest Rates, you know, what are your choices . You could see multiple expansion in a very small group of stocks. So its not indiscriminate. I dont think its quite indiscriminate. I also dont think theres enough earnings gains or Economic Growth. Nominal gdp growth is still quite weak, which makes it unstable. So i think people are going to be continued to be attracted to the big uglies. The 50 largest stocks that could be seen as proxies for sovereign debt. Did you coin t. I. N. A. . I did. There is no alternative. I have to say, i backed off that a little bit just because i think negative Interest Rates are such a bad idea. There is a chance there is no alternative. Its not happening in japan. But by the same token, i think the large cap equities are going to continue to rally. Ed, would you buy the 50 ugliest stocks. What did you call them . The big uglies. You like the big uglies . I dont know if i like the big uglies. Id say were reasonably constructive here. Weve used the word constr t constructive. I dont even know what that means. I wont use that anymore. Im curious what you think constructive is really supposed to mean. All the brokers call you up and say were constructive on the market. Cautiously optimistic . Weve come a long way from where we were in february. Global stocks have rallied 13 , 14 . I think earlier in the year we were pricing in too high a probability of a recession. Weve now taken that out. I think thats appropriate. But i think it gets a lot tougher from here. As jason mentioned, corporate earnings are lousy. Theyre projected to come in on a yearoveryear basis at negative 7 . I think some of the things weighing on earnings like the dollar and oil will dissipate as we move into the latter part of the year. Then you have another headwind from rising wages, which are going to cause a margin squeeze. So at the beginning of the year, i said 3 to 5 returns for the s p 500. I think thats probably still a pretty good estimate of where we are. So thats not a great year by any standard. But it looks a lot better than where we were at the end of february. Let me throw a different one at you. Were going to have ted cruz on in the 8 00 hour. Weve had a couple different guests who say in an Election Year some people have said in an Election Year, things can be positive. Others say it can get very, very negative, in part because of the uncertainty created around whatever conversation happens on taxes and fiscal reform. Do you think that is which of those is right . I think it depends on how close it is and when you determine who the winner is. The one thing weve seen when we looked at it in the past, is once the market figures it out, once theres an oddson favor e favorite, the market figures out quickly whos going to win, if it seems likely. That starts to get priced in quickly, usually by september. Youll start to see the market actually start to rise into the election. We havent had a contested convention in an awfully long time. This is my own opinion. In some ways, im worried as a republican about a fractured party and its impact on the market. I think the market will figure it out one way or the other. If you get into a situation where youre saying, well, now there may be a third party. Its going to be hard to mend these wounds. Then youre in a different youre a worry wort. So man to man, thats out now. Do we need to change . I guess mano a mano. Give me the pc. You think you coined t. I. N. A. I remember George Castanza i coined it for the market. Never been used in that context before. The first time ive ever heard it was from jason. Really . All right. Margaret thatcher said something similar. They called Margaret Thatcher well, she continued to say there is no alternative as far as that was my fault. Get the video. Peter schiff thinks he made up roach motel for the fed. Ill take jason. I dont want any credit i dont deserve. It was the first time i heard it. Im willing to share the credit. I think jason did. I dont know. Whats the harry truman quote . The great thing about credit. Its amazing what you can accomplish if you dont care who gets the credit. I dont care who gets the credit. Who was he, one of the avengers . We had a conversation earlier. More people can name more millennials can name the avengers than former president. They came up with grover washington, thomas edison. I dont know if i could name one avenger. We were on the other end. This is a nerd fest on this side. I have no idea. They didnt even come up with jefferson or alexander hamilton. Lincoln . All right. Thank you, guys. You know, there is no alternative. One comment on the election, just to enthe segment. Prediction markets are still 75 Hillary Clinton. Markets tend to not like uncertainty. Clinton would represent continuity. So i think that would be an okay outcome as far as the markets are concerned. Gee, thanks for adding that while we were already going to break. Anyway, coming up, debating value of earnings estimates from analysts. Yesterday, jamie dimon told us the only two numbers to really focus on. This years number versus last years. Up next, well talk to christine short from estimize. As we head to break, heres a look at yesterdays s p 500 winners and losers. Turns romantc turns romantc why pause to take a pill . Or stop to find a bathroom . Cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adeas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis and a 200 savings card. Whoa. Whats going on here . Oh hey allison. Im val, the orange money retirement squirrel from voya. Val from voya . Yeah, val from voya. Quick question, what are voya retirement squirrels doing in my house . Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . No, im more like a metaphor. Okay, a spokesmetaphor. No, im. Youre a spokesmetaphor. Yeah. Ok. See how voya can help you get organized at voya. Com. Everhas a number. Olicy but not every Insurance Company understands the life behind it. For those whove served and the families that have supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. It is that time every day where we have the executive edge. First quarter earnings season is in full swing with citigroup out later this morning. Big names like ibm, netflix, morgan stanley, and pepsi co. All set to report on monday. Weve been debating the accuracy not really the accuracy, but the relevance or the whole system of comparing estimates to actual earnings, considering that companies can, you know, give analysts sort of a lower expectation and beat expectations. It seems to be a game. Every quarter companies seem to beat expectations by about 70 . So just in watching the show yesterday while we were talking about this, jpmorgan ceo jam ja dimon weighed in, emailing, there are only two important numbers, this years number and last years number. Joining us now, christine short. Its like anything else. Id like to know as many things as i can know. Id like to know analyst estimates, where companies are guide, and make my own decision. I think its simplisticing to say either youre growing or youre not. Either you lost money last year, you made money this year. You use the whole picture, right . Yeah, i mean, its never going to happen. Youre never going to get corporations to give us, you know, less information or more Accurate Information necessarily. I understand jamies frustration. Like you said, we play this earnings game every season. You just need to be aware of it. I think if Companies Start to give one number or less information, were in an information hungry society. I think thats going to backfire on them. If you look at European Companies that reasonable give one to two forecast updates during the year, i think they really are punished for it. We have the same argument about the fed. Transparency. They give us so much. Its like, go back, give us less. Sorkin and becky, the other thing we talked about, there are some people that say extraordinary items, you either do gap or nongap. Theres the shiller. They have a multiple based just on gap earnings. Now, that isnt perfect either because there are years where theres something that isnt like, you can have a loss based on an accounting change. And its nonrecurring. Nongap is not perfect either. Its the metric we use. Nongap can mean several different things. We had some issues in the past with banks where certain banks were taking out some items, other banks werent. So you have to have a pretty solid methodology. I think the main issue is investors shouldnt be relying solely on corporate guidance or even analyst estimates. You really need to do your own research and a little deeper digging and not just take that for face value. It does require some work on the investors part as well. This is why investing is so much harder than it looks. But if youre trying to get Public Ownership as a company, you cant stop giving information. Youre still going to be required to get those quarterly estimates out there to get people to buy your stock. Its just how it is. It doesnt matter if its not perfectly accurate. You need to show youre being transparent. As jamie points out, its really hard to predict quarterly earnings. Its not all on the fault of the companies. Theres the environment youre operating in. Right. And you dont have a crystal ball. With that said, we all know they lowball. They have no incentive to be overly optimistic. Comes time to report, they beat, the stock pops, everyone is happy. It makes them look very good. And so were all sort of aware of that at this point. If you dont beat and you really get punished by the way, the economy has been very difficult. I think a lot of people have been afraid to get out in front of that. Even though things may be better for a few weeks, you pay be reluctant to say this is the new trend. Every time something pops up, the rug gets yanked out from you should. Adjusted for dollar. Weve seen a lot of companies talk about the stronger dollar. One of the tweets yesterday is what does jamie dimon think of jpmorgans analyst estimates . They did quite well. Even our estimates. We crowd source, so its not just the sell side. The sell side is a very small slice of the overall picture. We source from the buy side. Who does a better job . Nonprofessionals. The nonprofessionals on our site do better. Heres why. Theyre selecting what theyre going to estimate on. They dont have 30 to 40 stocks they have to cover. How do you intimately know 40 stocks . You dont. So they pick the five names they know very well. Students tend to be very accurate. They have a for visceral view on how these companies work. By crowd sources, our estimates tend to be more accurate than wall street 74 of the time for that reason. Its hard work. Who said that . Do your homework. Harken back to the financial crisis where if something was aaa, they had some aig insurance or something. Oh, its aaa. If you looked at the credit worthiness of all these different names, you would have had a much better idea than relying on ratings back then too. You got to dig a little deeper. Theres always calls for sell side analysts. You got to dig a little deeper. Dont just take analyst. Theyre paid to support corporate access. They dont have incentive to go against corporate guidance. They tend to tick their estimate up one cent, down one cent. Speaking truth to power. Great having you. Thank you. And this is see, im getting a lot of tweets now. This is working beautifully. You asked for it. This speaks to me. There are really only two avengers. Do you remember the old show . You dont even remember it. I watched that as a kid. I dont know who these new the avengers were this guy in a hat. You remember emma peel. Not my thing. All right. This is someone see, you get twitter followers like yourself. Yerks millennials. These are not yeah. Theyre throwing you shade. Do you know what that is . Thats a millennial will do. Well throw you shade. No, is that they diss you. Thats a millennial phrase. I throw a lot of shade on them. Yes, you throw shade left and right. Throwing shade every which way. Talk about some folks throwing shade. New york citys largest public pension is exiting all hedge fund investments. The board of the new york City Employees retirement system did vote. We talked about the potential yesterday to dump hedge funds after consultants told them they could reach their target investment with less risky funds. This flows similar moves in california and illinois. It does seem to be a trend we should be watching. Also, new yorks public advocate telling the board that hedges have underperformed, costing us millions. Let them sell their summer homes and jets and return those fees to their investors. Whoa, whoa. Theyre throwing some serious shade right there. Unaudited data showed the Pension Funds exposure. Thatll come down quick. When we return, breaking down the battle in brooklyn. Hillary clinton and Bernie Sanders attacking each others judgment and experience in last nights debate. John harwood has the details next. And later, ted cruz will join us for the 8 00 hour. Stick around. We have much more to come today. Right now as we head to a break, here is ted cruz taking a phone call from jimmy fallon as donald trump last night on the tonight show. Are you watching the democratic debate . Nope. Im watching the Princess Bride for the 843rd time. Inconceivable. Youre missing some great stuff. They just nailed hillary for flipflopping on trade. She was going back and forth, this way, that way, this way, that way. It was like watching her swipe a metro card at the subway. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of the at t network, a network that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. We believe in the power of active management. Anagement, we actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. singing alougetting to know you. Getting to know all about you. Getting to like you. Getting to hope you like me. Is someone getting to know your credit . Not without your say so. Credit lock lets you lock and unlock your transunion Credit Report with the swipe of a finger. Getting to know you. Getting to know all about you. Get onetouch credit lock, plus your score and report at transunion. Com. Get in the know. Welcome back. Lets check out u. S. Equity futures. Europe is down. Were catching a bit of a cold. Yesterday was expecting, waiting, waiting, waiting for another day like the previous two. Or when was it . Tuesday and wednesday were pretty good. Yeah, tuesday and wednesday, right. No yeah, tuesday and wednesday. Yesterday was thursday. Today is friday. I just know its tax day. The most wonderful time of the year. There we are down 26 on the dow jones, down 4 on the s p 500. Down almost 11 on the nasdaq. It was a battle in brooklyn last night. Hillary clinton and Bernie Sanders trying to win over votes ahead of next weeks New York Primary. John harwood joins us right how it with more. John, this sounded like it was a bit more contentious than the democratic debates weve seen in the past. Reporter it was, becky. It was similar to the previous democratic battles, pitting sanders idealism against Hillary Clintons pragmatism, but it was a little more new york raw. Like in this exchange over Bernie Sanders signature proposal for breaking up the big banks. If you go and read, which i hope all of you will before tuesday, senator sanders long interview with the new york daily news, talk about judgment and talk about the kinds of problems he had answering questions about even his core issue, breaking up the banks. When asked, he could not explain how that would be done. Lets talk about judgment. Lets talk about super pacs and 501c4s. Money which is completely undisclosed. Where does the money come from . Do we really feel confident about a candidate saying that shes going to bring change in america when she is so dependent on big money interests . I dont think so. Reporter now, the challenge for Bernie Sanders is hes got to change this game. Weve got a new poll out last evening from nbc which shows Hillary Clinton with a 17point lead in new york. Bernie sanders needs that not only to be wrong, not only to win new york, he needs to start winning new york and other states by big margins to overcome her delegate lead. We dont have any sign yet, guys, that hes going to be able to do that. When he pulled the punches on the email stuff originally and said im sick of the damn emails, that made me think he was innnever going to get as na when senator clinton isnt around. Theres still something to that. Big money, politicians, thats an old approach to criticizing someone. Why doesnt he bring up the Clinton Foundation and donations from foreign entities when she was secretary of state . I think that would be too damaging in the general. I still think he kind of, you know, doesnt want to give doesnt want to be too nasty because it will be brought up when hes not the nominee. Hes not going to be the nominee. He knows that. Its almost like he just likes to have this idealistic, yutopin view and be rushed by a bunch of millennials that think hes god. Is he seriously trying to be the democratic nominee, john . Reporter weve discussed this before. I think hes stuck in a little bit of a no mans land. He does not have a realistic shot at this point of winning the democratic nomination. As to the strategic choice you mentioned, hes making the one that has the biggest potential payoff in the democratic primary. It is true that if he went after her on emails and on Clinton Foundation, he could damage her in the general election, but i dont see the payoff for him in the democratic primary. Those she remains fairly popular in the democratic primary, and that kind of attack, i dont think that would give him anything. I do think Bernie Sanders at the end of the day wants the left of center side to come together and win the election. Hes been pretty clear about that. I dont think hes trying to do that stuff gratuitously. Its just not clear whether any of the attacks, including the you know, you gave the big speeches to Goldman Sachs. He had a funny, sarcastic line last night where Hillary Clinton said, i called the banks out for what they did. He said, oh, yeah, i bet they were crushed by that. Was that before or after you got a couple hundred grand to go speak with them. Hey, john, we have ted cruz on in the 8 00 a. M. Hour. Ill put you on the spot. What would be the big question youd want to ask him . Reporter you know, ted cruz is in a situation a little bit similar to Bernie Sanders. Hes got a deficit in delegates thats going to be difficult to make up. And ted cruzs challenge is that so many of the Party Establishment people who really cant stand donald trump who want another nominee dont like him at all. I guess the question is, is it really possible at this stage for him to do anything about that . People have talked about, well, he should apologize to Mitch Mcconnell for calling him a liar. You know, im not sure that would have any particular effect, either on primary voters or on the attitude of fellow republicans in washington, but thats a real barrier for him. Donald trump has an oped in the wall street journal today that says he has 2 million more votes in the primaries than ted cruz. Thats a bigger deficit than Hillary Clinton versus Bernie Sanders. Thats right. Ted cruz, ted cruz like Bernie Sanders has been winning many of the smaller caucus oriented states as opposed to the large primaries. Wisconsin was an exception. These new york numbers are very robust for donald trump. Hes also leading in pennsylvania and maryland and the other states coming up the following week. So i do think that donald trump has this thing on his racket and if he can, as he staffs up, as he gets people with more experience and delegate selection on his team, he controls his fate much more than ted cruzs. Ted cruz has to hope for something to happen. Hes got to hope for a Jordan Spieth moment from donald trump which could happen. You got the never trump people that you said dont like cruz very much and then you have the trump people so mad if its not trump. Thats the whole universe right there. The yin and yang of the election. We want to ask a lot about how hes is going to fix the entire planet in terms of growth because thats what we need. We have negative Interest Rates. He does have a tax plan which is pro growth. All right. See you later. When we come back a list of morning movers including viacom after a very new twist in the soap opera. And starting monday groundbreaking ideas and innovative start ups looking to change the world as we bring you live exclusive coverage in miami. Follow us on air and join the conversation using ea16. Stocks to watch today which is actually had cnbc first started stocks to watch. Yahoo modified its policies to specific Senior Executives will be paid severance if yahoo sells substantially all of its operating business. What . Disc Sporting Goods expressed interest in buying its rival Sports Authority which will be on sale in a bankruptcy auction. A california judge has ruled Sumner Redstone wont be deposed in a trial regarding his mental capacity. He owns voting stakes of roughly 80 in via cam. Almost 7 00. 6 56. Coming up. Well take a break and then politics in focus. We have former rnc chairman Michael Steele is here to weigh in on the race. Then ted cruz will join us for the 8 00 hour to talk about everything, taxes, economy, Banking Industry and much more. Squawk box will be right back. Tmobile does data differently. So it can do more for your business. When work takes you across the globe, your unlimited data travels with you to 140 plus countries and destinations at no extra charge. And thats not all. Because with tmobile theres no overages. Ever. Switch your business to tmobile at work. And get four lines. With 10gb of 4g lte data each for just 35 per line. Nobody does business data like tmobile. Something well show you. Through small things, big things, and spur of the moment things. Announcer live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box everyone. This is cnbc, first in business worldwide. Im becky quick along with joe kernen and Andrew Ross Sorkin and were just one hour away from our special interview with president ial candidate ted cruz. Well focus on issues that matter most to your money. Trade, tax reform, job creation and state of the nations economy. Make sure you stick around for what will be a great newshour of television. Lets check out futures. Yesterday the futures stocks did hold on to gains. We saw some major advances in the previous two sessions. This morning you see a little bit of give back. Dow futures are down. Still a very positive week for stocks overall. If you take a look at oil prices, oil this morning looks like its trading down another 2 . 40. 66. We have that doha meeting coming up but expectations are not high for a real deal to be cut. Lets tell you whats going on in the headlines. Were an hour away from citigroups quarterly earnings. The bank expected to earn 1. 03 per share. Mattel has struck a deal to buy polycom. Per share value 13. 65, 11 above yesterdays close. And bats ipo is priced at 19. High end of the expected range. First attempt you may remember back in 2012 was a failure for an exchange. Create a little bit of irony. Technical glitches. Lets talk politics. Hillary clinton and Bernie Sanders battling it out in brooklyn last night vying for votes ahead of next weeks New York Primary. This was the ninth and most contentious debate. Sanders questioned clinton experience and judgment. Heres how she responded. Talk about judgment and talk about the kinds of problems he had answering questions about even his core issue, breaking up the banks. When asked he could not explain how that would to be done. Later sanders responded to clintons claim she stood up to the banks when she served as senator from new york. Secretary clinton called them out. Oh, my goodness. They must have been really crushed by this. And was that before or after you received huge sums of money by giving speaking engagements for them. They must have been very, very upset. Joining us more with more on the race for the white house is former rnc chairman Michael Steele. Hes a political analyst for msnbc. We were expecting howard dean but he overslept. He was up late watching the debate. Michael thanks for being here. Great to be here. Lets talk first of what you thought about the debate last night. How did these two perform . It got personal and more up close than weve seen. Certainly nothing what weve seen on the republican side. These two candidates are sick of each other. Youre at a point where if youre Bernie Sanders you have to make your points land, they have to count. He missed some opportunities, i think, to come back, to really put her back on the heels a little bit, particularly on the whole wall street receiving money from wall street piece. But the reality of it is, i think hillary showed with a 17 point lead three or four days out in the New York Post that she held her own. She kept the discans to the point where she needed it. Bernie was fighting up as usual. But he did so well. It was a good debate for him. You assume Hillary Clinton will be the nominee. Yeah. I just dont see how that changes. Nothing changed last night in that regard and when you look at this thing play itself out. What bernie is doing a couple of things. Hes positioning to reposition the party. So that Elizabeth Warren and others of that mindset within the party that progressive ring really have a foot hold. Pulling her more to the left. If he goes for the jugular does it make it harder for her to pull his supporters ultimately . Thats a very interesting point because they go to ted or her supporters are much more inclined to embrace him than the other way around. His supporters really dont like her. Theres not this oh, okay in the end well come around hillary in november. Thats an opening for someone like donald trump. How many times have we heard particularly in the latter end of this process where you have a Bernie Sanders voter go well im trying to decide between bernie and donald trump. The two candidates are pulling very similar voters. Lets talk about whats happening in the republican party. Donald trump has an oped in the wall street journal today. He makes some incredibly good points. He talks about how mr. Cruz loses when people get to cast ballots. Hes up by 2 million voters. Voter disenfranchisement is 0 not just part of the cruz strategy it is the cruz strategy. The last part is the critical part. The first two parts are similar arguments that hillary make being i got 2 million more votes than bernie. Im able to get the votes i need when i need them. Its the last piece for him thats the deal breaker. If he goes into that convention and does a walk out with the nomination. You are talking donald trump. Donald trump. If he goes in with hundred or fewer delegates necessary to win the nomination. Its hard for people to walk that back. Well take those 1100 votes you have and give them to someone else. Ive seen enough of these i dont think donald was peckin its well written. You see fingerprints. Donald was in charge. He hired the guy. They put their Heads Together and come up with this. Thats what the point i made earlier. Its scary to think if he becomes a polished candidate because hes made Great Strides to almost 40 being just off the wall, say whatever come to mind. If you were to combine that with these two guys, scott walker can they corral that raw charisma. Manford brings some respectability. Theres a reason donald trump brought him in. I watched donald trump last night at the republican gala here in the city and it was interesting because at the ginger did his like 15 minute rift on building buildings here. Then he turned his head down reading text. He never does that. You begin to see now, hes seeing himself in the role and doing the disciplined things you need to do. Weve been searching for an establishment republican. Someone who you were the chairman of the rnc. I was not an establishment republican. Youre it. Youre it for today. Are you never trump or will you vote for trump . Ill vote for the nominee. If trump is my nominee ill fight for him to beat hillary. You either want Hillary Clinton as president or you dont. Thats not what the establishment is saying. There you go. Thats your position. Who would you like to see win the nomination in your party . You know ive not picked a horse in this for a very good reason because of the work i do. I try to keep my head clear of that. Do a clean analysis. Look at the qualifications of everybody on deck. I think the most underrated candidate left standing is john kasich. I think john kasich despite what people say is he even really left standing . Thats the attitude and the view that i think underestimates what could happen downstream. Youre seeing him sitting in the second chair right now in new york. Hes in the second chair in places like maryland. He could do very well in a state like pennsylvania. The point is he done have a clear path to 1237. That number doesnt work for him. What does work for him is to amass the delegates he needs and to go into that Convention Hall as the other two at the top cruz and trump go at it, be the guy who everyone turns to and go okay this will work. You just pointed out the disenfranchisement. Ted cruz has a much better claim to say that look if its not donald it should be me. So hes a better claim only because hes closer to donald trump. Again the voter disenfranchisement if youre worried about that. If youre worried donald trump doesnt get that, if you give it to someone who has won one state. His own state. The most likely guy and even harwood said it the ball is on the racquet for donald trump. Im not discounting that. If donald trump goes in there short 200 plus delegates, then its a whole different ball game. Theres 27 places. If you want a majority in all based on congressional districts. There are 95 delegates. Add that on and then add pennsylvania. He starts getting on the roll. Im there with you. At the end of the day you need 1237. Would he say yes as vice president. I dont see that as a reality. Rubio or scott walker i dont know. I dont think i dont think that would be the way donald trump goes. Hell look to somebody who was on the stage with him. Hell look out beyond that. We got cruz on in the 8 00 hour. Anything you havent heard from him that you want to know . No. No . No. Ted cruz has been making his argument and hes been doing an effective job of making a principle conservative argument. The problem he has is two fold. One is, hes got cynics backing him. So the American People saying people back you who say they dont like you so why should i back you. That makes it harder for him to climb up the hill against donald trump. Thats the reality of it. The second thing is the way he communicates sometimes, people kind of walk away feeling a little bit disconnected. If he can close that gap with some of the voters out there he can do better in places like the northeast which right now does not look strong for him. Michael, thank you so much for joining us. A reminder to stay right here on squawk box for our special one hour event with president ial candidate senator ted cruz. That starts at 8 00 a. M. Eastern just about 48 minutes way. Coming up, the Dow Jones Industrial average ending yesterdays session at its highest level since july of last year. Well find if earnings are on the move and bulls are in control. Well talk trade, china, politics and more with the president and ceo of the National Association of manufacturers jay timmons. Squawk box will be right back. With strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. The dow sitting at levels not seen since july of last year investors have turned their focus to earnings. Still watching oil prices. Check out the futures down about 25 this morning. We got weakness in europe also. I dont know what their problem is. Joining us now is Senior Investment strategist at bank of america. I know, dan, i cant help but look. Lets look at a one year chart. Pretty good looking reverse head and shoulders. People have written in the shoulders dont have to be perfect. You can have lower lows and lower highs but if you do make a nice maybe its time. Are fundamentals matching up . Look at that. Its not perfect. We havent got into new highs yet. But that can look like a reverse head and shoulders if we go from here, couldnt it . It looks like a monster. A monster head and shoulders, the technical term. If you look at whats happened in the last couple of months were staring down the barrel of a gun. Macro levels were hitting their worst levels since the crisis. The data has turned and things are looking better. Right now although this earnings season everybody that comes on your show talks about how this is the worst earnings season since the crisis, but this is the trough. Youll see earnings get better from here. I think the problem is, i think with the 14 rally we had in the markets a lot is priced in. Three months ago the First Quarter estimate for gdp was 3 . 2. 7 . Yep. Now its zero. Are you telling me you said economic things have improved. Whats improved. Now were looking at a zero or possible negative First Quarter. Things have slowed. So they have slowed. First quarter gdp data slowed but its not just about gdp. Look at the trajectory and a lot of improvement in the macro data. Part of the reason the gdp is solo. January and february were horrible. Look at the move into march you saw ism is back up above 50 and any orders are strong. Retail sales stunk for march. Retail sales is weak. But for the s p earnings were more focused on business spending and exports and thats the stuff thats improved. The dollar has gone from being up 16 basically last year. Dollar and oil have come under control. Its frustrating. Leading Economic Indicators include stock prices. Stock prices went up in march and part of april. So its almost coincidence. Things are Getting Better in your view and stocks going up. A lot is riced in. Whats interesting about this earnings season because the improvement of the data was back ended weighted. It wasnt until march and april you see things improve. Commentary will be interesting to hear. You wont see it in the numbers. We think earnings will be down 4 or 6 . The commentary youll get more glimmers of hope. Things are improving. Maybe not fully include in their guidance because they like to sand bag things. You watched yesterday . Thats what we talked about yesterday. Sand bag. The percentage has gotten higher because guidance. Youll get in term of the commentary you hear they will say last three weeks of the quarter things were good and theres momentum into april. I think thats the kind of commentary that maybe gets the market to grind higher. Again i think as we look out to the rest of the year theres a lot to be worried about. Valueiations are at 11 month highs. Looking at the calendar you have the possible fed hike in june. You have the Eu Referendum coming a few weeks after that. Political uncertainty coming in to play. Theres a lot. We think there will be a lot more volatility and i would expect to see at least 5 , 10 pull backs. So you want to fade in the near term. Fade. Shade or fade. If you miss the expectations, if you maid the expectation then you throw some shade. How about that . I dont know. I cant fake it. So then you havent even talked about something that scares me and that is germany is at 15 basis points right now. You got a refugee problem and they have a terrorism problem. And, you know, for that those are the black swans. You gave me enough to worry about without any of that stuff going wrong and that stuff can go wrong at any time. I dont know use people hate to invest in the u. S. Investors, based on what we see investors have been understanding weight in the u. S. For 14 months. People pile money in europe that they hadnt had the rally like the u. S. Had. One of the biggest issues were worried about is credit. Credit has gone up a lot in the lower quality areas of the market. Record areas of high yield leverage and whatnot. If youre worried about credit, europe is way worse off than the u. S. I dont understand this hatred of the u. S. In favor of europe. U. S. Needs europe and needs china. They need us. We need them. Thats the scary thing about twitter. I hate that first tweet shots fired in some european city and unclear you just dread because you have paris followed by belgium and thats not going to help the then recover at all. Absolutely. On fleek. How do you spell that . Fleek. Thats not a word. Thats what they say. How old your dan . Your 30 . Im 36. Is that a millennial. Im at the cusp of being a millennial. I never heard the word. Do you live with your paint. Do you have a bun. Peopler with the man bun. Anyway, work with me. Youre not. How do you know this . You hang out with them. Youre on fleek. Im on fleek. Like that word. Ill work on fleek. Coming up crude prices under pressure this morning. Big weekend for producers when they meet in doha and could set the stage for some monday morning volatility. How do you figure out all these praises. You could be a goat, greatest of all time. Ill going to call you a goat. Im an old goat. Dan youll join us to discuss the importance of this weekends meet up and what it means for oil prices. Announcer now for todays aflac trivia question. What is the longestrunning Broadway Musical. The answer when squawk box continues. I help pay the doctor, aint that enough for you . Theres things Major Medical doesnt do. Aflac pays cash so we dont have to fret. Something families should get like a safety net help with food, gas and rent so cover your back, with. Aaaaaaaaflac learn about one day pay at aflac. Com rap what if 30,000 people download the new app . Were good. Okay. What if a Million People download the new app . Were good. Five million . Good. We scale on demand. Hybrid infrastructure, boom. Ok. What if 30 Million People download the app . Were not good. Were total heroes. Scale on demand with the Number One Company in cloud infrastructure. p. That, you haveit, wait yoto rinse it first like. Bakedon . Its never gonna work. Alfredo. Dish issues . Cascade platinum. Powers. Through. Your toughest stuckon food. So let your dishwasher be the dishwasher. E . Told you it would work. Cascade. Now the answer to todays aflac trivia question. What is the longest running Broadway Musical . The answer, phantphantom of t oper opera. When you tell a 22yearold that they have to turn off the phone they hear please cut off your left arm. He elaborated on twitter after negative feedback amc would designate certain auditoriums an text friendly. We bring you live coverage from the emerge conference in miami. Join the conversation usin using ea16. When we come back what investors should take away from this weekends meeting of Oil Producers in doha. Can the oil glut be dined. Well bring you new results from cnbcs oil survey. Ted cruz will join us at 8 00 a. M. As we head to a break take a look at u. S. Equity futures. Dow futures down, s p down and nasdaq down. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Among the stories that are front and center at this hour, were throwing shade, on fleek. Not on fleek. We got some economic, key Economic Data to tell you about wrapping up the week. The latest futures on Industrial Production expected to post a small decline. And then at 10 00 the midapril Consumer Sentiment from the university of chicago expected to register an increase. We should tell you that dicks Sporting Goods interested in buying Sports Authority. Part of the companys bankruptcy. Am i a creditor . Get in and use it. I have to check it out. Its diesel emission scandal weighs on volkswagen. It report ad drop in marsalis. Its 16th monthly drop in 18 months. I thought netflix, that you just turn on netflix and watch. Nope. It means youre youre on fleek. Youre on fleek. Anyway. Cnbcs exclusive oil survey polls analyst traders in major energy funds to get the latest pulse on energy fundamentals, pricing and strategy and new results are now out just ahead of sundays crucial producer meeting in doha. You got your plane tickets . No, i dont have my plane tickets but im still blushing about the conversation about fleek and try to focus on the results. Our survey revealing, joe, theres little consensus on what will happen in to haddoha. Half of our participants said theres less than a 50 chance of this freeze agreement happening. Some think something could happen but dont know what. So thats why this risk premium on oil. Is a freeze enough . Do we get a freeze . A cut . A cut isnt likely. 60 polled said a freeze is enough to support oil prices over 40 a barrel because it shows producers are getting serious about some sort of cooperation. Now barclays is out that outcome isnt as important as the commentary. That could concern some shorts in this trade. A lot of Short Covering has happened in the last few things. One thing everybody agreed on saudi arabia is the swing country. No question. It has the most influence. Then russia, iran and venezuela. Implications far more important even than oil prices as they impact regional stability. Tense negotiations yes. Have side deals been cut in an advance . Maybe. We just have to wait and see. When they Say Something could be done that could be the framework for an agreement. That counts as something . Right. Theres an opec meeting in june. We could see some of this commentary come out. Some sort of coordination leading to an effort. At that point tough to say right now. Okay. Stick around. For more on expectations, lets bring in dan yergin. You just heard this. Do you agree with our assessment here at the table . I think the assessment was interesting because it was a split assessment. Im in the camp that there will be some kind of loose agreement, doha is not one stop shopping. Its more like a bridge to the future to get to the stabilization. The thing you have to keep in mind the position of these countries. In 2014 opec revenues were about a trillion dollars. Last year they were about half a trillion dollars. This year they are on track to be down another 20 . These countries are under tremendous pressure. If they walkway with nothing from do has, its going to be very costly for all of them and i think thats upper most in their mind. So some kind of loose agreement is probably the most likely outcome. Jack, you mentioned this idea of side agreements. Side agreements maybe. Who is in cahoots . When they have these private side deals who is having those deals right now i think the key players are russia and saudi arabia. Are they in cahoots together . They could be. The Saudi Arabia Oil minister would deny. Russia wants the market to believe they are having these conversations. You have the oil minister from saudi arabia coming out and saying a cut is not happening. Thats right. Nobody is going to cut. Thats just off the table. But i think one of the striking things is this new sort of detant between russia and saudi arabia this dialogue. A lot of trips back and forth. It has to do with the price of oil. Has to do with the shifting geopolitics and Nuclear Agreement with iran. Thats helped to strengthen this dialogue. The russians started the freeze conversation and when it was first on table people dismissed it. 15, 16 countries now are going to gettogether and if they walk away with nothing, a lot of prestige will be left behind. We had a guest on the show earlier this week who came out and said that wti crude would be trading at 85 a barrel within the next year. Said it was a no brainer. This year. By the end of this year. Does that make sense to you or is that absolutely absurd and crazy . I think you would have to see some Major Political event. Venezuela shut down as it was in 2002 for Something Like that to happen. At least in our view based on the fundamentals, kind of being 40 to 50 range in the second half of the year. Kind of already there now. Which is why doha freezes like a bridge to get there. But just on the fundamentals when you look at the inventories theres going to be a lot of oil that has to seep out of those inventories. Thats what our people said. 40 to 50 would be the range you see as we go the end of the year. Some people were looking for 60 to 70. It wont happen. What will happen deal or no deal in doha we stay in this range of 30 to 45. Freeze current at levels were still producing. It can go down again . If they walk away its interesting about their meeting in doha. Something is happening here in washington, imf and world bank and concern about world growth. If you had a further slow down in world growth, perhaps plus no agreement then you see prices down. Wouldnt you say, dan, that there will be nowhere in the world where theres a negativeinterestrate if oil is at 35 . I think thats right. I have to reflect on that. Right . Negative Interest Rates, what the hell is that . That is globe that really is struggling with generating any type of inflation or growth. Right. Thats one reason we havent seen because Interest Rates are solo, we havent seen the impact of low oil prices as a stimulus because theres not much room to cut Interest Rates. Different world. Its a world where negative Interest Rates and 30 oil makes sense. Negative Interest Rates and 85 oil doesnt make sense. We got to run. Daniel thank you. Jackie, thank you. Go big red. When we return the state of u. S. Manufacturing National Association of manufacturers ceo jay unttimmons will join us. In the meantime take a look at the futures at this hour. Weaker this morning with the dow futures down by 25 points. Still the markets are on tap for a strong week for stocks. S p futures down by four points, dow by ten. Ted cruz less than 30 minutes away. Stick around. Squawk box will be right back. Over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. The husband and wife had lived theand he had passed away. Ars, the house just got abandoned, ya know, there were like the outlines on the wall from where the pictures used to hang. [crying] yeah, you know, it just wanted to be loved again. We got to do that with our family. Its cool. laughs whatever home means to you, well help you find it. Zillow. Welcome back. To the totally dope squawk box. Were looking at futures. On fleek. Were on fleek as much as we can. This can get out of hand. My head will explode. Markets throwing shade. No development in any movie too insignificant to cause a term that becomes used by the entire group of millennials. No different than any other generation that went before. The term yaz came from somebody seeing lady gaga walk out of a building and video. Youre a goat. I am a goat. Explain what goat is. Greatest of all time. Thats from l. L. Cool j. Goat. Now i know everything. I wont forget. More than 12 million men and women in the United States hold manufacturing jobs. They are key voting bloc in the president ial campaign thats taken on technology, trade and taxes. Jay timmons is president of National Association of manufacturers. Jay, thanks for being with us. You know, the read we get in terms of manufacturing right now is that things are not great. Its been a difficult time. If you look over the last several quarters. Would you agree with that . Weve been facing a lot of headwinds and no doubt theres a lot of uncertainty. And frankly manufacturers are looking forward to candidates, talking about the policy platforms that they have to improve the manufacturing economy right here in the United States. So, when you listen to the cane, when you listen to the pitches they have what things do you think offer promises to your base . To be really frank about it, becky, what we hear, i think hat the American People hear are a lot of talk about issues that are not related to growing a Good Business economy, growing a good manufacturing economy. Focusing on issues or personalities that really have nothing to do with growing an economy. What we want to hear is we want to hear a discussion about tax policy, trade policy. We want to have a robust discussion about infrastructure investments. And many other policies that are related to manufacturing. Frankly were just not hearing it from the candidate in any significant way. We do hear a lot about trade from many candidates. Donald trump has talked about what hell do. We hear about trade in a negative way which is unfortunate. If you think about customers, people that youre trying to sell your products to, you think about 20 customers in the world, 19 of them live outside of the United States. We want to be able to access those customers and what the candidates are talking about doing is really very draconian. They are talking about doing away with trade agreements and not, not taking care of the fundamentals of trade policy, like the he xm bank reauthoration which took a year to do and still in a very frustrated state in the senate. Xm bank used to be a shooin. Now both sides are looking at it askance. This populist rhetoric taking off is very destructive to who we are. The xm bank has been in existence for 80 years. It has done great work in helping to expand export markets for u. S. Products all around the world. Were competing with 70 other countries who have banks of their own. And now we have politicians saying oh, we dont need this any more. Thats preposterous. We need candidates thinking rationally about the policies that are going to make us grow and thrive as a nation instead of this populace rhetoric that they get caught up. The populace rhetoric is there because of whats happened to the manufacturing industry. Thats part it. Since the peak of manufacturing jobs in 1979, i think were down 37 . Those jobs are gone. And thats something that american households feel across the country. First of all, they are not gone. They should be back. And why should they be back . They should be back if we were actually Strong Enough if we had the back bone. Enough, if our policymakers had the back bone to actually adopt the policies that would allow manufacturing in this country to thrive. We talked about trade. We talked about the importance of trade agreements. We need to have tax policy thats going to incent investment in job creation in this country. We need to have a consistent Investment Strategy for infrastructure in this country. We need to make sure our Health Care Costs and other cost burdens to manufacturers and to businesses throughout the economy are lowered so that we incent businesses to invest here and kraeft businesses here. Weve had the trade policies since the early 90s the trade policies have come. Do you think its more the tax problems that have created this tax policies are clearly a problem. We have the highest Corporate Tax rate in america. We have small manufacturers paying at the individual rates, some of the highest rates in the history of our country. Taxes are draining the ability of businesses to invest in this country. But i wouldnt minimize the trade argument. Because we have had trade agreements. But right now were looking at the Transpacific Partnership where we have the potential to access markets throughout the asiapacific region. If we dont set the rules of the game in the asiapacific region china will. Those are the facts. Thats the reality. We have to start paying attention to it. Thats why weve come out with our 11point program at the National Association of manufacturers competing to win in a Global Economy. And we want our candidate, if they want to be a manufacturing candidate, then they need to take a look that document and Start Talking about these issues in a real and credible way. You say you dont like what youve heard from any of the five major candidates who are there but if you had to pick one, where would you lie im not saying that we dont like what weve heard at all. Each candidate has talked about manufacturing. Some have talked about it in a positive way. Some have talked about it in a very negative way. There are some policy proposals that are worth considering. Your next guest, your guest at 8 00 has some interesting tax proposals. But what happens in these contests so often is candidates get distracted with personalities and issues that are unrelated to the growth of an economy. A lot of times they start to concussion on negative social issues that divide our country instead of uniting us around a common purpose of building our economy, strengthening our communities, and ensuring that america remains an exceptional nation because of our manufacturing base. And thats what we want to hear from the candidates. We want to hear a complete focus on what it will take to grow our economy and strengthen our manufacturing base. You said you liked ted cruz or thought his tax plans were interesting. You like the flat tax at 10 , you like the value added tax or you do not like those plans. I think its important to have a discussion about our tax rates. Again we have the highest tax rates in the world on the corporate side. We have high taxes on the individual side. All candidates acknowledge our tax rates and tax base and tax system is uncompetitive in a World Economy and we need to have a discussion, a very thorough and robust discussion about what it takes to fix that. So im encouraged that some cane are at least willing to have that discussion. Jay, thank you for joining us today. Thank you. Great to be here. All right. Did you read this . Theres a gentleman who immigrated to this country and then worked on wall street but he just did you thread . I saw it. Takes an immigrant like me to parse the poison that Bernie Sanders is peddling to nations youth in this country. Take someone who has experienced socialisms failure firsthand, first as a small child later as a young adult to see why sanders is succeeding because we elder, immigrant and native born alike have failed to teach our children and grandchildren about the economic history and false promises of socialism that infests our world and left millions of people worse off. I just more than any other factor, listening to Bernie Sanders talk makes me crazy thinking he has 90 of these people under some type of skull that no nothing what happens if i told you that the republicans built Bernie Sanders. What if i told you barack obama built the current republicans . Tit for tat. Go back to george bush built obama. We can go back. You know where we end up . Ted cruz at 8 00. In fact when we come back we have some stocks to watch. Plus the great escape. A chimp making a dash for freedom in japan. Even putting on a high wire act along the way. That story is next. I could get used to this. Now you can, with the luxuriously transformed 2016 lexus es and es hybrid. Check it out everybody som video gone virtually. A chimp fled a stein northern japan and then tried to avoid capture by climbing an electrical pole. He was free for two hours before he was swhoot sedative arrow and fell into rescue blankets. He was unharmed and is recovering from the sedatives. Hes not feeling at authenticate great today. Lets take a look at some stocks to watch this morning. Costco raised its quarrel dividend. And voice and Video Services company polycom being bought by Mobil Technology company. The price is 2 billion in cash and stock. Its about 11 above polycoms thursday close. Joous department of agriculture will be buying up to 30 Million Pounds of wild blueberries from the state of maine to help stabilize price. Prices have dropped in 50 threatening the states biggest industry. Agency expected to pay up to 13 million to prop up the fruit. Coming up the interview morning, republican president ial candidate ted cruz is here. For an hour. His plan to grow the economy if he were to win the white house straight ahead. Joining us right after the break. Well be right back. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. We believe in the power of active management. Management, by debating our research to find the best investments. By looking at global and local insights to benefit from different points of view. And by consistently breaking apart risk to focus on longterm value. We actively manage with expertise and conviction. So you can invest with more certainty. Mfs. Thats the power of active management. This is a special presentation of squawk box. Decision 2016. Republican president ial hopeful ted cruz joins us in studio for the hour. Taxes, spending, jobs and his plan to jump start the u. S. Economy. China, trade, immigration and corporate inversions. The fed regulation and too big to fail. No topic is off the table. As the final hour of squawk box begins right now. Announcer live from the most powerful city in the world, new york. This is squawk box. Welcome back to squawk box everybody. This is cnbc first in business worldwide. Im becky quick along with concern ken and Andrew Ross Sorkin and were excited to have senator ted cruz in studio with us this morning. Senator, thank you for being here. Great to see you. Good morning. We have a lot to talk about and get to plenty of topics. Lets take a quick check on the markets. U. S. Equity futures are weaker this morning but this comes after a couple of days of big gains. Dow down by 31 points. S p down by four, nasdaq off by 11. Oil prices are weaker. They were down by 2 . You can see the decline of 2. 25 . Wti down by 92 cents ahead of the doha meeting. Quick corporate news. Exchange operator bats Global Market pricing their ipo at 19. Shares expected to begin trading today on its own exchange. The company hoping this goes better than last time. Remember their attempt to go back in march of 2012, technical malfunctions and errors impacted trading of that stock on their own exchange. Trades were eventually cancelled. They tested to make sure they can handle the volume. Earnings out from citigroup, the bank earning 1. 10 per share. Seven cents above estimates. Revenue of 17. 6 billion was above fark despite a sizable drop in Investment Banking revenue. Well keep an eye on that four. They passed their living will test, one of the only big banks to do so. Yep. The New York Primary is fast approaching, according to the latest nbc wall street journal poll donald trump leads with 54 followed in this particular instance by Ohio Governor john kasich at 21 and senator ted cruz at 18 . Joining us now for the next hour, republican president ial candidate senator ted cruz. Pleasure to have you in here, senator. Welcome. Joe, great to be back. Growth around the world, Economic Growth. Yep. Almost cures all ills. Cures the sentiment, feeling people arent getting ahead, helps you pay down deficit. Helps everything. Were in a weird world now. I check for you this morning. The german ten year is at 15 basis points. Japan there are negative Interest Rates. So its not just the anemic recovery in this country its a global phenomenon that weve never seen the likes of and i dont cho,000 explain it. I wonder if you know how to explain the cause and cure . Joe, youre preaching to the choir and i wish that more of the president ial candidates would focus on growth. Youre right. Growth is foundational. My number one priority as president would be Economic Growth. Every other problem we got, whether its unemployment, the debt and deficit, whether it is strengthening and preserving Social Security and medicare or whether it is rebuilding our medicare and keeping us safe you got to have growth to make it work. We have been trapped in stagnation for the last seven years. If we dont turn that around nothing else gets fixed. And its driven by a number of factors. Historically since world war ii our economy has grown on average about 3. 3 a year. And yet from 2008 to today its averaged only 1. 2 a year. If we stay at this level of stagnant growth 1 or 2 of gdp growth these problems are not solvable. Thats why we need an economic agenda. My economic agenda is focused directly on growth. If you get back to historic levels, 3 , 4 , 5 growth suddenly the federal budget numbers turn around dramatically. By far the biggest factor impacting. The reason i referenced germany and japan with negative Interest Rates is because it seems to be almost a global problem and youre not going to be president of japan. I dont know. I think thats a safe bet. Or europe. But almost seems like and i for seven years argued a lot in our country selfinflicted, regulations, obamacare, taxes too high. But when people argue with me they say this is a global phenomenon that came or its demographics, people are too old, not enough young people to pay for people ageing. Theres something around the whole globe that makes growth more difficult. How do you fix that . Theres a clear cause and effect if you look back through history. Every time we have out of control spending and taxes and regulation, we get what we got now. We get this stagnation. If you look at the previous four year period where gdp growth averaged less than 1 was 1978 to 1982. It was coming out of the jimmy carter administration. Very similar policies. And if you look at how we fixed and in fact you can go back in 1920s with Calvin Coolidge he limited taxes and regulatory form. Those are the two important leverages. In the 1960s john f. Kennedy did the same thing. In the 1980s Ronald Reagan did the same thing. When we passed tax reform and regulatory form and reduced the burdens on Small Businesses and Small Businesses are critical. They are the catalyst. The result has been record shattering growth. We just need to do what works. Can i make an argument to you. When you look at reagan and i dont disagree. One piece was keynesian. It wasnt on infrastructure but on defense. Thats a huge piece of this puzzle. But it wasnt the defense spending that jump started the economy. If you look at reagan, he came in, cut taxes, pulled regulations back. We were in the middle. I talked about that last four year period 78 to 82. You know what gdp growth was in 84. 7. 2 . Those are crazy numbers. Those are numbers we see in developing economies that sadly most folks say we could never do that again. Talk about living through reagan. You were a young man probably i was teenager. I was in the workforce. Like someone flipped a switch in 1980. It really was. It was weird. The hostages came out. Like someone flipped a switch. As far as the defense spending we did get a peace dividend after the cold war ended from im just suggesting those are numbers showing that, indeed, you know, defense spending went up but all i remember is that but also the Federal Reserve was making some very big moves at that point. Not compared to now. Let me agree with you. I didnt focus directly, i didnt say the lever was spending. Youre right. Reagan went in. He wanted to cut spending. He never succeed. He slowed the rate of growth but Congress Never went along with him in cutting spending in any meaningful way. The two powerful levers is tax reform and regulatory reform. Monetary policy as well matters enormously and weve had the fed, weve been on this roller coaster with the dollar where its up and down. Commodities go skyhigh. Go down. Skyhigh. We have strong dollar. Oil has plummeted. Steel makers in pennsylvania see their price going down. Farmers see their prices go down. On money we need monetary stability. Part of whats happening is its a much more Global Economy. You got a central bank that has to be very cognizant of what the ecb is doing, what the bank of japan is doing. If we raise our rates at a time when they are at negative Interest Rates thats going to make it much worse and go to exactly what youre talking about. I think Monetary Policy should not be targeting a strong there are or a weak dollar. They will claim they are not. The problem is the history of the fed has not been very good in terms of being smarter than the market. And i think trying to guess whats happening in the market, i think were far better having a rules based Monetary Policy. Ideally with some goal so you have a stable dollar. You know when you invest a dollar today you know that the dollar will keep a consistent worth rather than fluctuate wildly. I guess my point and then back to joe ace point about the growth stagnation around the globe, what explains that . Well some of it is many countries in the globe have followed the pattern of the United States of hammering Small Businesses with taxes and regulation and you end up with a spiral. That gives an might have led the way. I dont know if they followed. Europe, they invented structural now Bernie Sanders tell us how wonderful sweden is. Weve been talking about that today. The notion that theres this big sum of money and greedy corporations and greedy rich people pull out of that. They dont generate any of that wealth or growth or jobs or tax receipts, all they do is take. But 51 of the country is buying in to that. What have we done wrong . Youre telling me you dont believe it when Hillary Clinton tells you businesses dont create jobs . Thats another one. Or you didnt build this. I dont believe that either. The catalyst of our economy is Small Businesses. Twothirds of all new jobs come from Small Businesses. If you want to have the stagnation we have its very simple. You do what weve done the last seven years. Slam small businses with crushing taxes. Yesterday i was in buffalo, new york. I met with charlie the butcher. Hes got seven restaurant, by the way, an incredible sandwich. And i remember visiting with charlie. Great example of a small businessman. He was talking about the effect of 15 wage here in new york state. He said listen i got seven restaurants. I want 20. I could have 20 but i cant afford at this regulation. How many jobs are you talking about if you added another 13 restaurants. He said 160 jobs. This was conversation i had with him just talking to him, that success replicated in Small Businesses all across the country and so if im president my priorities will be lifting the tax burdens and lifting the regulatory Burt Reynolds so Small Businesses we can go from those seven charlie the butcher shops to 20 and that means the people who are benefiting. It benefits charlie. Hes a ceo. Hell do better. What it really benefits is all the teenagers, all of the kids who are starting. It was interesting charlie told me we used to hire teenagers. We dont hire them any more. Why because the labor costs are too high. We cant afford to take in an unskilled teenager. We hire more skilled workers. He was explaining that. I thought back to 1957. 1957 was when my father came from cuba. And at the time he was 18. He couldnt speak english. And the first job he got was washing dishes making 50 sense cents an hour. The reason he got that job is because he couldnt speak english. He started with that job making 50 cents an hour. Then he learned english and then became a cook made 80 cents an hour. Couple years later his next job teaching assistant and then hired at ibm as a Computer Programmer and went on the start his own small business. That journey, millions of americans have traveled that journey. If you dont get on that first running, washing dishes, your dont get the second job, the third job, the fourth job and what were doing now is teenage kids like my dad who are not getting hired. Two questions. Should thereabout a minimum wage and if so what . Then what do you do about all of the people who this is not the first running, its become the last running . You know very few people in the marketplace for whom thats the case. If you look at minimum wage jobs they tend to be entry level positions. Every time we raise the minimum wage, predictably what happens is a significant number of people lose their jobs and almost always lowincome. Often teenagers, africanamericans and hispanics. Using my father as an example. If someone had come in and jacked up the minimum wage to 2 an hour, they would have fired my dad and bought a dishwasher. A point i make to people all the time, you have now all these democratic politicians offering higher minimum wages and as you know the first principle of economics is theres no such thing as a free lunch. If you jack up the minimum wage anyone who is just starting and cant produce that level of activity would lose their job. Would do you away with the minimum wage minimum wage systematically hurts the most vulnerable. I think its within the state constitution to have a minimum wage. I think its bad policy. One observation i make to folks. I say, look, next time you go to a Fast Food Restaurant and start ordering on an ipad youre seeing the minimum wage. A teenager got fired because as you know in any business you got a trade off between capital and labor opinion you jack up the labor cost they decided it was cheaper to put capital in there, an ipad. Isnt that a microcosm of the ultimate problem. Technology will reduce so many of these jobs. We shouldnt accelerate it by having government mandate that lowincome workers be priced out of the market and not get there. They tried that with max helped room. Charlie the butcher, the plumber, youre on to something here i think. Charlie the butcher this time around that might be the guy to keep bringing up. Were going to break. I wish in my mind that the United States could have changed the dynamic of the entire globe over the past seven years. There are other people that said the globe was so slow we couldnt do any better than 2 . I would like to think if we didnt do 3, 3. 5 were big enough to have done it in the past. I think we really can and after we come back from break we can talk about how we can change it and change it dramatically going forward. Senator cruz is with us for the hour. Well slip in a quick commercial break. When we come back well talk about his tax plan, entitlement and tackling the u. S. Deficit. Stay tuned youre watching squawk box on cnbc, first in business worldwide actions speak louder. Something well show you. Through small things, big things, and spur of the moment things. Welcome back, everybody. The president ial candidates laying out their tax plans as the nations debt inches closer towards 20 trillion. Our special guest this hour is gop president ial candidate senator ted cruz. And, senator, we havent touched on the taxes yet but this is a hugely important issue and your tax plan is fairly different from a lot of the others being proposed. Youre looking at a flat tax and a vat. Talk about that. Today historically tax day. We got to monday. Maybe a couple of days more. Today is the day that tends focus the minds on the burden coming from the irs, the burden coming from our taxes. My tax plan is simple. Simple flat tax. For a typical family of four, first 36,000 you earn you pay nothing. Zero income tax, zero payroll tax. Nothing. Above 36,000 you pay a simple flat tax of 10 . No longer is a Hedge Fund Billionaire paying a lower effective tax rate than the secretary. Everybody pays the exact same. No longer do you have differential rates between ordinary income. Short term and long term cap gains doesnt matter. Everything is 10 . People allocate capital based on where its efficient rather than hat the tax laws say because the tax laws are neutral to everything. On the business side, on the business side we abolish the Corporate Income tax. We have the most punitive Corporate Income tax. Abolish the obamacare tax. Abolish the payroll tax which is the single biggest tax most working americans pay and abolish the death tax on farm erosion, ranchers and Small Businesses and replace all of those with a simple 16 Business Flat Tax and the effect is an incredible catalyst for job creation and wages going up and bringing jobs back to america. Thats my priority. High priced jobs coming back to america, wages going up for everyone. As a taxpayer i love everything you just said but if you look at the different organizations that have scored this, looking at brookings, right leaning organizations, left leaning organization, and they come up with anywhere from 4 trillion to 16 trillion additional deficit adding up from all of these. What do you say . I suspected you might say that. I printed out a comparison of tax plans that was done by the tax foundation. Tax foundation is a nonprofit. Listed as a little more right leaning. But its nonprofit, nonpartisan and scores everybodys plans. If you look at at any time way they scored in terms of the cost. The static cost is 3. 6 trillion. A lot of money. Scoring is static, assuming that cutting taxes has no impact on the economy. That makes no sense. Thats an ali in wonderland scoring. If you score it with dynamic scoring taking into effect what happens when you cut taxes, then the total cost of this plan is 768 billion. Less than a trillion. If you contrast that, for example to Donald Trumps plan, donalds plan costs over 10 trillion. Bernie sanders is off the charts. It is. And the difference is even though donalds is more than ten times as expensive as mine is, my tax plan produces more Economic Growth, 4. 9 million new jobs. Coming from this Capital Investment increases 44 . One of the big reasons is that any business when you invest in capital its immediately deductible. No longer do you have complicated de complicated depreciation tables. You make an expenditure you immediately capital squeeze it. Then impact on after tax wages take home way. Every income group sees a double digit increase in after tax pay. The average family in america under the cruz simple flat tax will take home 7600 more. Thats real money that makes a difference for someone struggling to make ends meet. What do you say to the person a flat tax resultly regressive on the poor, right . And that it ultimately actually would exacerbate inequality not solve it. I would say number one, if youre concerned about income in equality, we know what doesnt work. The obamaclinton approach. They talk about income in equality. Its increased dramatically in the last seven years. The top 1 , the millionaires and billionaires, today they have a higher share of our nations income than any year since 1928, the year before the Great Depression and great stock crash. Those who walk the corridors of power in washington have gotten fat and happy. The rich have done great under Big Government and the reason is simple. Big business gets in bed with Big Government. If you have lobbyists and accountants and lawyer you can game the system. A lot of that is the fed policy. The fed has definitely contributed to it but its also you know, its also lob jig. Lets take, for example, you were talking about Big Bank Earnings at the top of the show. Lets take doddfrank. Doddfrank was sold to the American People as stopping too big to fail. How has that worked out . The big banks have all gotten bigger. They are printing money. The people who got hammered is the little guys. Small banks, Financial Institutions going out of business at a record pace. The point i make thats not accidental. That wasnt an unintended side effect. The lawyers and lobbyists for the giant banks were in the room with the Democratic Senators writing doddfrank and heres the game washington plays. When they put a massive Regulatory Burden on everyone the big guys can absorb that cost. Hire 100 more accountants and lawyers. But the Little Community banks their competition predictably gets driven out of business. My to discuss on the little guys. I want more and more Small Businesses, Small Community and by the way, theres a multiplier effect. Because the giant banks by and large are not the key lend towers Small Businesses. Little Community Banks lending to charlie the butcher. And what that means when you drive Community Banks out of business youre also starving small business. Jets your rivals say here you are in new york city trying to raise money from executives at the biggest banks. Well take money from anyone. Andrew i would love a check right now. 2700 go to ted cruz. Org. Touchet. The fed had to do what its done because there was none of the Growth Initiatives ever instituted over the past seven years. Just more regulation not less. Theres been nothing done grease the skids for the privatesector. To stay at 1. 5 we needed qe 1, 2, 3, zero Interest Rates to stay at 7. 5 to conjure up animal spirits by raising asset values and rich people are the ones that get the asset value that accrue the benefits. One vicious circle. You dont do what you need to do fiscally and then youre stuck with the only game in town. The problem with using Monetary Policy, it is a very ineffective way to juice the system because you create bubbles. So youre right. The fed has for those with assets has driven up stock price, driven up asset values. Thats not built on anything real. Not built on an increase in the Intrinsic Value of those assets just based on playing games with money which means a crash will be coming. Its far better if you want to drive up the economy and jobs its far better to reduce the burdens on Small Businesses where you create more jobs than were producing more. Thats growth. I want asset values to go up because theres more production because its worth more. Your plan, andrew lets try to come up with a probability of getting Something Like that through. We can even do anything at the edges. Youre going get rid of everything whats the prospects of that happening in congress. Challenging. How would you do it . Let me point to a historical analog. Getting this done is not easy. Could i get this done in Todays Congress . Not a chance. Lets go back to the last time we had this kind of stagnation which is the late 70s and we passed major tax reform which produced incredible Economic Growth. 1981 reagan came into office and tip oneill a democratic was speaker of the house. Tip told reagan dont even bother to send your tax plan over. It was dead on arrival. Those were the words tip said. Tip said i got 20 democratic votes to kill it. Remember we had a democratic house. Now reagan didnt saunter down to capitol hill and poor tip a drink and use his legendary irish wit. That wouldnt have done it. Tip wouldnt be persuaded by blarney. It helped. They had a relationship. Thats a wonderful thing. Im very glad to have a drink with anybody. Look im nearly half irish that makes me happy and im also have cuban so if we light a cigar not a bad mix. 3 8 . Half cuban, 3 8 irish, 3 8 italian. Volatile mix. What reagan did instead is he took to the air waves and took the case to the American People. He took the case to the American People. If you want to turn around the economy we got cut taxes. We have to simplify the tax code. He made the case to the people. The switch boards lit up. Millions of calls came in. Tip saw his 20 votes become 19, 18, 17 and disappear and reagan passed a tax rate. He cut it to 28. If you suggested that in 1979. If i said andrew ill cut the top marginal rate from 70 to 28 and joe asked what are the chances of doing that you would say its challenging. That would have been a polite euphemism. Reagan under stood make the case to the people. We need to talk about a value add tax. Democrats and republicans hate the idea for different reasons. Coming up much more, well talk to the senator and were also going to talk about china, trade, immigration, the banks. Stay tune youre watching squawk box right here on cnbc, first in business worldwide. Back in a moment. But youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. These are the hands that plow the data, dig up clues, create opportunity, and weave messages that lead to sales. These are the hands of pitney bowes, the craftsmen of commerce. These are the hands, the hands that drive commerce, that build business across borders. These are the hands of pitney bowes, the craftsmen of commerce. Dont stop me now dont stop me now welcome back to squawk box everyone. We have much more with republican president ial candidates ted cruz. First a quick round up of todays top stories. Citigroup posting better than expected earnings and revenue. Take a look at the shares. That stock up by better 2. 25 . Oil prices falling this morning ahead of a producer meeting in doha. On the agenda a production freeze. A lot of questions whether anything will get accomplished. Why weve seen a pull back in crude. And bats Global Markets pricing its ipo at 19 a share. Shares are expected to trade today on its own exchange and the company is hoping it goes better than the last go around back in 2012 when technology motorcycle fu malfunctions impacted the stock. Now back to our news maker of the morning met life shedding the too big to fail label in court this morning. Gop president ial candidate ted cruz is spending the hour with us. Well talk a lot about banks and wall street and all sorts of things. I want to start with this. You were prepared to shut the government down in 2013. And there are a lot of people on wall street and i know youre here and trying to raise some money in the city who thought that was absolutely crazy. What do you tell them about your willingness to compromise and also your willingness to put what some people thought was the governments Credit Rating and Everything Else in the economy in jeopardy . Well, look on the question of compromise, my approach is the same as reagans. Regan said what do you do if they offer you half a loaf. You take it and come back for more. Im perfectly happy, i said this since the day i was elected to compromise with anyone. Ill compromise with martians if they are willing to sling the size of government and reduce the burdens on Small Businesses, willing to protect the bill of rights. What i dont support is compromise that goes backwards and makes the situation worse. I wrote a book last year called a time for truth. The opening chapter is entitle ed mendanacity. They read it. It takes 15 minutes to read. Not a very long chapter. Their view is different. I simply describe what happened with the debt sealing and they are astonished how bad it is. Heres the problem. You think about it. We now have a republican majority in the house. A republican majority in the senate. That got elected promising the people well stand up to these misguided policies from obama that had been hurting people for so long. And yet at every juncture, the batles identify had at every juncture they believe you cant stand up to obama. You pick your batles. I fought obamacare, amnesty and the debt because i think those have the bang for the buck and leadership consistently says no, no we cant fight here. We cant fight here. We cant fight here. You mention ad shutdown. Its actually how leadership essentially capitulates. Leadership said publicly well never ever allow the government to shut down under any circumstances. Now, lets suppose youre playing poker. Youre playing poker with me and i say if you ever raise me i will fold. How is the rest of that game going to go . Youll take every bit of my money because i told you what ill do. Heres what obama does on every single negotiation. Republican leadership has told him if he just whispers the word shutdown Republican Leadership capitulates on everything. Funds his illegal amnesty, fund his program to bring syrian refugees, muslim refugees after the fbi told us they couldnt vet them to make sure they wouldnt terrorist. Obama said shutdown and they said oh, no we cant do that. In any business deal another example youre buying my company and i tell you and drew ill sell my company to you no matter what it doesnt matter the price. Youll offer an awfully low price. To the extent that were in a city of deal makers on wall street here, your ability to make a deal or in this case not make a deal. Look i spent my career before i was in the senate as Usa Supreme Court litigator, representing the state of texas, representing fortune 500 companies before the federal court, before the u. S. Supreme court and winning over and over and over again. Winning landmark 54 victories in front of the u. S. Supreme court. But to make a deal, you know, its worth asking what is worth fighting for . Let me give when you talk, though, playing poker, i think there are people on wall street and people who understand finances and worry about things this is more like playing russian roulette. Let me go the debt selling. The debt selling periodically Congress Raises the debt sealing and usually negotiation that accompanies that. The last time it came up, president obama demand ad clean debt ceiling. Trillions of new debt with no spending reforms or experiencing cuts. It was an audacious ask but he does that. House leadership decided to give obama to go everything he wanted. They pass ad clean debt ceiling and overruled about 200 house republicans. House Republican Leadership plus all the democrats. Then it goes to the senate. The week we took up the senate, the usual rules in the senate are that it takes 60 votes to take up a debt ceiling. But any rule in the senate can be changed by unanimous consent. The week we were going to take it up we go the tuesday lunch and Republican Leadership stands up and says, im asking every one of you to consent, there were 45 of us at the time in the minority to unanimously consent to lower the threshold for harry reid to take up the debt ceiling from 60 votes 240 votes and our leadership said you have to agree to this. Number one they said it will happen. Hallelulia and were scared of this issue. Number, two if we do that the democrats that have votes to do it on their own we can all vote no and go home and tell our constituents we voted no. Let me ask you too big to fail. Donald trump says youre owned by Goldman Sachs. Are you prepared to break up Goldman Sachs . I dont believe the government should be targeting anybody. Ill tell you if you look who goldman is supporting it aint me. Goldman is supporting hillary big time and in the republican field they are supporting everybody else but me. The simple reality, donald has an interesting pattern of accusing other people of doing what hes doing. You know, he owes what north of 400 million in on the loose a dozen different banks. We dont know. Because his report several loans are hundred millions or above. 400 million or more that he owes. Of courser wont release his taxes, which is unprecedented, by the way. You ultimately say youre a supporter of wall street then people say thats a function of your wife or would you ultimately say at the same time you say you are not for the elites. Let me answer that on principle. I am for the working men and women of this country. When i got elected to the senate just about every lobbyist was opposed. When i got there i sat down with them. Listen if youre facing irrational regulations, if youre facing government getting in the way of your increasing productivity youll have no greater friends than i am in getting washington off your back. If youre looking forehand outs, if youre looking for subsidys or special deals i aint your guy. When it comes to wall street listen wall street performs an important function providing capital for new enterprises, helping the Economic System operate. That is important and valuable and there are wonderful people who work in the city, work in the financial sector. But it shouldnt be the case that wall street plays in a rigged casino heads i win, tails i win. Where wall street can gamble with other peoples money and the government bales them out if they lose. You know what the incentives are then go for it big time because Everyone Wants their private jet and if they lose the government bales them out. I think if youre taking risks you should bear the consequences of the risk and the taxpayer should be on the hook to bail you out. Could you be for wall street without having to do anything with your spouse probably. You could probably be against wall street without wanting to break up Goldman Sachs. Theres things in the middle. Theyre things in the middle. The reason i pressed on that i actually dont like this vindictive style of politics you see from the clintons and you see from donald trump that you pick out someone and say were going to use government to go punish this company. Thats not what government should be. This is not you know, this is not a latin americian dictator saying okay youre disfavored. We should apply the rules fairly. If any company is seeking special government failures and my answer its worth underscoring, lets go back to the beginning of these primaries. First state was iowa. I campaigned against the ethanol mandate in iowa. Yes, you did. There were a lot of farmers there. Everyone said it was political suicide. So, you were only one. Toichbs lie one. My opponent, donald trump promised to increase the ethanol mandate. When it came to cronyism and subsidys he wanted to do that. I want to give credit to the incredible people in iowa we won a landslide. I made a case to the corn farmers to the ethanol industry ill lift the epa barriers that prevents them from expanding. I said you can expand your market more not through government handouts. Well get to him. So thats where were going to go, father of supply side economics, senator cruz is indeed our guest host because he booked this guy, called him up, begged him to come on. Well get his take on proposals being pitched on the campaign trail when squawk box comes back. Jake reese, day to feel alive jake reese, day to feel alive we built our factories here because of a huge natural resource. Not the land. The water. Or power sources. Its the people. American workers. They build worldclass products. And that builds communities. And a better future. For all of us. Because making something in america means so much, to so many. Weathertech. Proudly made in america. The first stock index musiwas createdoughout over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Hes the father of supply side economics, art laffer has been a go to fiscal adviser to world leaders. He joins us now. Art is chair mapp of laffer associates. Art great to have you. Thanks for coming on. We had a great discussion with senator cruz already about his tax plan. I dont know if youre watching but im sure youre familiar it. Is dynamic scoring for real the other side tells me its voodoo economics. The other side is wrong. Dynamic scoring is right way to do it. Thank you for having me on. I did watch the other segment. I thought ted did a great job explaining how it works and what the dynamic would be except i think he underestimated the dynamics that would occur. If you look at his tax plan it makes reagans tax plan look weak in the 1980s. I expect to see greater growth rate not only because obama is worse than jimmy carter because i think this tax plan is better than rb. Takes the top rate down. Youll get more than that because our economy is relatively much worse off than it was than jimmy carter. Ill let senator answer in a second. Theres an explanation or a narrative for why it didnt happen this time that i hear from the left all the time and thats that previous recessions were caused by the fed raising rates after the economy had overheated. That causes a recession to come on. This one was a totally different animal and by definition, even though it was deep it was never is going to have the sharp rebound because it was a debt overhang that caused it. So you couldnt ask for anything better than 1. 5 to 2 . When Interest Rates are too low which they have been under bernanke, you restrict supply. Theres not been the flow of money into Mortgage Market low Interest Rates nobody will lend money for three years at 3. 5 with a highrisk factor. Therefore the Housing Market has stayed depressed for the last decade and its because of the quantitative easing and the operation twists. Its because of that. We need markets to operate in a money market for tint rate the market determined rate so you get the correct demand and the correct supply but too high rates and too low rates both of them kill the Housing Market. Senator . Well, art its good to see you. Thank you for joining us. Saturday long time friend and indeed. Ill note that if you look at the object i agree with art that the numbers that were estimated, if anything underselling the gdp impact and my object, my object is a minimum of 5 gdp growth. Jfk when he campaigned, he campaigned promising 5 gdp growth and he ended up producing 5 gdp growth. How . The tax revenues were higher. He went into surplus because of his Economic Growth. Thats exactly right. Wealthy ended up paying more. When you cut the tax rates the wealthy paid a higher percentage of taxes. Art tell us what would the impact be on the economy . What would the impact be on working men and women if we had four years or eight years of 5 gdp growth instead of the stagnant 1 or 2 now. It would be huge. The biggest driver of revenue is gopd growth. What very few people have talked about on your plan and if i may is the revenue impact on cities, counties, local districts and state budget wos be enormous as well and no one is even looking at that. The impact on Income Redistribution would be huge. John f. Kennedy put it beautifully. You referred to kennedy and he was my hero. He said the best form of welfare is a good high paying job. Creating those jobs will reduce inequality dramatically and lead to more prosperity. Much higher revenue impact. Youll get higher growth rates than 5 and reduce inequality. Whats not to love in this plan. Were going to try to save some time for the end. Larry kudlow and you go way back. Larry likes trumps plan as well. Is trumps plan i love trumps plan. I love trumps plan. I think it would be very pro growth. The two of them i believe are very pro growth supply side candidates and either one of them going into the presidency would be the most wonderful thing for america. My two favorite candidates are the final 2019 race and i just think of them are great. Well leave it there. Thank you. Appreciate it. Thank you very much. Well slip in you brought him on. He hasnt endorsed you. Sound like he endorsed one of you. Final pitch, a pitch . Final discussion from senator cruz when box comes back. Today, were seeing new technologies make healthcare more personal with patientcentric, digital innovations; from selfmonitoring devices that can interpret personal data and enable targeted care, to Cloud Platforms that invite providers to collaborate with the patients they serve. Thats why over 90 of the top 25 Global Pharmaceutical Companies are turning to cognizant. Our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way Clinical Research sites collaborate with pharmaceutical companies, and enhancing Patient Engagement with innovative platforms and solutions. Our populations growing healthcare needs present growing opportunities for our clients to advance the future of medicine with digital, and improve the quality of lives. Our special guest this hour republican president ial candidate ted cruz. I heard climate change, Global Warming, the biggest threat facing the United States right now. In fact, bigger than isis. I heard it was actually caused by or isis was also caused by Global Warming. Youre on record saying the Scientific Evidence at this point is not consistent with the idea. I have some sympathy because im skeptical that a 1 11 100 is t gauge for the planets controlled temperature. Are you still saying that . Not being a denier would be a disquali disqualifier. Youre skeptical. Im totally skeptical. Thats what a scientist is supposed to be. You studied at mit. Right. Im the son of two scientists. If you look at Global Warming its become, in effect, a religion rather than a science. For anyone at home who wants to see an interesting sclanch is google my name and the chairman of the sierra club. I asked him about the simple facts, the data and evidence. I think Public Policy should be based on data and evidence and not political theories and i asked him in particular what do you do about the fact that the satellite we have satellites in the atmosphere measuring the temperature in the atmosphere, the satellite has been showing in 18 years theres been no significant warming whatsoever. If you watch that exchange, youll see that the president of the sierra club has no idea how to understand, doesnt even understand the basic facts. It was so bad that the democratic Ranking Member senator kunz said its not fair to ask him about this because this is not the topic of the hearing. I laughed and said his entire prepared testimony both written and oral is you dont know any of the science or facts yourself. Youre relying on this 97 supposed consensus among all the scientists. Its one bogus study. Is elon musk wasting his time . Look it. I dont know. I do know this. Im old enough to remember back in the 1970s when there were a bunch of leftwinged scientists saying there was global cooling. Then the evidence didnt let me finish this point. Then the evidence didnt back it up. Suddenly the theory transmorbified went from cooling to warming. Theres a conclusion they want control of your lives. Now its not Global Warming. Thats not the chic way to put it. Clie malmat change. What do you do in the automotive world and the energy world . Let me start with the data. Climate change is the perfect pseudo scientific theory with a politician because it can never be proven. Whether it gets wetter or dryer, the climates always changing and the solution is identical to their cooling and warming. Its massive government control over the economy and this isnt theory rhettic. Im not going to try to debate the merits of this issue with you. As a function of the way you must think about it, what do you do about emissions controls and the way that the epa controls these issues . Theres a perfectly legitimate way to kear the air and water clean. Every one of us breathes. We want our kids to drink and breathe. Ill tell you, Carbon Dioxide is not a pollute ant. Even is emitting Carbon Dioxide right now. When we breathe out, we emit Carbon Dioxide. By the way, its plant food. I chaired the subcommittee on science and space in the Senate Conference committee. A princeton ph. D. Professor explained there have been periods in the World History with much higher Carbon Dioxide and it produced incredible green and plant growth and was incredibly beneficial and yet the left doesnt actually engage in facts that we had the sodastream ceo sitting where you. They carbonate beverages. I said youre deliberately carbonating bev ranges. His face dropped. He had no idea how to answer that. All i can tell you is its been labeled a pollutant. You see smokestacks with ballot soot co black soot coming out. The reason is to drive up the cost of living. If youre a single mom right now, it means your electricity is going up, gas is going up. It means the cost of living is going up dramatically and you cant afford it. I think should we keep the air and water clean, absolutely, but we should. Be driving up costs on people who have been struggling and have been hurting so bad under the obama economy. Senator, we only have a few seconds left and i hate to play speed round to get through but ill throw a few words. The inversion and what the secretarys done. Were doing it entirely backward. Massive taxes are driving companies overseas. In adeggs to my flat tax plan, im going appeal obama care and reign in the regulators. And in four years were talking about corporate inversions and well be talking about inversion of companies coming to america because the Business Environment so good and there are literally trillions of dollars of capital on the sidelines right now that if we have stability on taxes, if we lift the Regulatory Burdens, you cant force businesses to stay here as the Treasury Department is doing. Youre creating businesses that want to be here and that will produce jobs and wanting to stay here. The taxes. Theyre getting their nose under a tax that can ever be increased. Value added tax means different thing. In europe its added as a sales tax on a product youre buying and critics have accused that. Its not a value added tax. Its not a sales tax at all. It oohs business tax that applies uniformly across all businesses and one of the most potent things of a flat tarks its border adjustable which means all exports are taxfree and imports pay the 16 flat tax. That will brick millions of highpaying jobs back to america and its a much better solution to Donald Trumps 40 tariff and will drive up costs for americans and start a trade war. My solution fixes the problem. Thank you so much. Time for squawk on the street. Well see you on monday. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber with the premarket exchange. The stock is focused on three things. Stock. Inlienld and the opec meeting this morning. Europe is ready to start their