Transcripts For CNBC Squawk Box 20170403

Slowed. Nat dak off by 1. 5 . Last week, a pretty good week for the markets, dow was up by 66 points for the week. Nasdaq was up by 1. 4 . If you look overnight in asia, nikkei, 0. 4 . And kospi up 0. 34 . Markets in Mainland China were closed. The european equities, the dax is off. Off by 0. 4 . Market is flat in france and london as well. A couple other big stories were watching today. Weve got a lot. On the economic calendar, the ism. Auto sales. Tomorrow, factory orders and the paychecks Small Business jobs index comes out. Wednesday, the adp employment record, ism Services Reports and fed minutes. Thursday, weekly jobless claims, friday, wholesale trade numbers and march jobs report. There are a few names of earnings this week, monsanto, walgreens, boots alliance, young china, beth, bath and beyond and constellation. And on the wall street journal, trio of fed officials speaking today. Bill dudley holds a press briefly at 10 30. Philly president Patrick Harker speaking about fintech. And richmond fed director jeffrey lacqu lacker will talk too big to fail. And in political news, President Trump is going to be hosting chinese president xi at his maralago resort in florida. Ahead of that meeting, the president suggesting trade to be a key issue to secure chinas population. The interview with the new york times, ill tell you, china has great influence over north korea, china will either decide to help us with north korea or they wont. If they do that, it will be very good for china, if they dont, it wont be good for anyone. Also saying washington is ready to go and make a big press against the Nuclear Missile programs on its own. Heres the headline, if china is not going to solve north korea, we will. There you have it. I dont know what that would entail. What does that mean . I dont know. Suggestion has been that there would be a strike that take it out. Tellerson alluded to that, too. I know, japan is right across the water there. The west coast, i dont think its risky. Pretty scary stuff. Look, anybody who has been around defense for the last 30 years says that this is the biggest concern. I know. China isnt the only major item on the political agenda this week. As you know, Trumps Supreme Court nominee neil gorsuch is facing a confirmation showdown in the senate. A Committee Vote will go on party lines theyre probably aiming. And three republicans so far, red state republicans, thats not enough, though. And most likely, they wont get enough, i guess. And that means in honor of w, the nuclear, the Nuclear Option might be on the table, right . Yeah, thats exactly it. There are three democrats now who have said they would be for neil gorsuch the president s nominee. Thats not enough. Remember, republicans have 52 seats that means in order to get to the margin they need eight democrats. Ill check my math, that makes them five votes short. The question is where are the votes going to come from. A lot of talk on yesterday with meet the press, chuck sure explaining simply that republicans just dont have the votes. Heres what he said. It looks like gorsuch will not reach the 60vote margin. So instead of changing the rules which is up to Mitch Mcconnell and the republican majority, why dont President Trump, democrats and republicans in the senate sit down and try to come up with a mainstream nominee. That might sound like a very nice idea to democrats, but its simply not going to happen. Donald trump is not going to back off this nominee who is very popular amongst conservatives in the republican base. Where does that leave Mitch Mcconnell . Heres how he explained how this is going down this week. What i can tell you is that neil gorsuch will be confirmed this week p. How that happens depending on the senate plan. The Nuclear Option changing the senate rules to allow a 60 vote margin difference and the idea here, is that republicans and democrats both very much like the filibuster, and they would like to keep it but they like the filibuster so much, they keep using it all the time which makes it very hard to manage the place. Thats Mitch Mcconnells dilemma going on this week. The other thing important to watch is the battle between the Trump Administration and House Freedom caucus of conservatives. There was a war of words on twitter over the weekend. Take a look at this tweet from the president s social media guy. Dan scavino saying donald trump is bringing back auto plants and jobs back to michigan. Justin ama is a big liability. The trump add stricken and establishment have merged into trump establishment. Same old agenda, attack conservatives, libertarians and independent thinkers. That fight between the Freedom Caucus and the president is worth watching in the coming weeks. It has real bearing on whether or not they get a Government Shutdown deal to avoid a Government Shutdown. And also so the president can get what he wants on tax reform. The president very deliberately now picking a political fight with a group that blocked him on the appeal of obamacare. Some of them, a couple of guys are coming around in the Freedom Caucus. This guy mutt be even in the Freedom Caucus, some are more and less ideological. This guy must be the like the one farthest right. He played golf with rand paul. Right, right. Rand paul is a tough senator. They were all smiles. Did you see a picture the two of them . Trump looks like a giant. I have not seen the picture. Trump looks like a giants. Rand paul is not a tall guy. No. This is the question for the Trump Administration, right . If youre calling for a primary of the most conservative figure information the house of representatives, theres like five dimensions in politics. But its very hard to get to the right of these guys in the primary. So is the president really calling for moderates to primary these conservatives . If he is, thats a very different tact than weve seen this administration take so far. Or is he simply calling for just a loyal trumpian, for lack of a better word to come in there and run against the Freedom Caucus members who wont do what trump tells them to do. Thats also sort of not only an ideological by a trump this is like a subset. You take the Freedom Caucus. Sake the subset of the most free to be Freedom Caucus people, take that subset, where could they govern . What could they possibly what would you look at . Youd just repeal obamacare and everybody would be back yeah. Would there be any government at all. Thats a good point. They dont want government. Yeah. Thats what i mean. Those guys may never, if they were in charge, we might not do anything theoretically. Right. And they dont have the votes nobody charge but they have the votes to make it very difficult for the people in charge. The question is whether the Trump Administration wants to do this with democratic votes. The Freedom Caucus is what, 32 people, Something Like that. A subset of that is even smaller as youre pointing out. Cow go on the democratic side and pull in moderates and get democratic votes. They havent been courting those votes, structuring it in in a way to get those votes. Dont get me wrong, im empathetic with that viewpoint. Its just that i dont think its not practice. Washington is not set up for that right now. But chuck sure god almighty, why dont we sit down and come up with a very good thats why we think of it sort of comically and we dont really listen, its like that was total crap just drivenle coming out, not going to do it. Not come together. No we dont come together in washington anymore. We fight in the trenches. Thats the h. W. Thing. God bless him. Anyway, i feel like our greatest living expresident , right, h. W. , right . Yeah. You might beg to differ, i guess. We have to agree on the great expresident . Hes a kind man that was wrongly hes a kind man who was wrongly laid out in a lot of ways. I didnt mean you know, we dont have to agree on that. Why dont i tell you about stocks to watch. British goods consumer, rec the benkaiser. And Schneider Electric is said to be close to selling its Software Business to europe. The deal is reportedly valid at around 1 billion and could be announced in the next couple of days. Shares of uk chip maker Imagination Technologies plunging after apple said it would no longer use its chips and products. Apple also owns about an 8 stock in a company. Its been a long time that ive seen stock down like that, down 61 sfp. Slayers in toshiba dropping today. Tesla delivered a record 25,000 vehicles in the First Quarter. That was up nearly 70 from last year. Breaks down to about 13,450 model s sedans. And 11550 model x suvs. Tesla said up 50,000 delivers in the first of the year. The company is expected to begin protection on its new and affordable model 3 in july. The dow and s p 500 each building on six positive quarters. The First Quarter was the nasdaq bust in the last three years. Were joined by marion bartles head of Merrill Lynch strategies. And peter bookmar a cnbc contributor. Folks, welcome to both of you, its very good to see you. Were setting off on a new quarter trying to figure out which direction were heading. And we have had massive momentum. Marianne, do you expect that momentum will continue kitchen a rockier backdrop . Well, washington may be wacky but theres no rise. And the first time in six years were seeing more business to the upside than dot downside. And in the u. S. Not only are we getting an expansion in earning, but were finally starting to see Top Line Sales expectations come through. This is all really positive for the markets. You know, i saw a graph that was laid out this weekend that looked at the soft data versus the hard data. Actual numbers on gdp and things versus Consumer Expectations and Business Expectations and the gap was pretty significant, just in terms of the stock expectations rising pretty rapidly. And some of the numbers catch catching up. I would say at the end of the day, earnings are the most important to the market. Certainly, im out talking my colleagues at Merrill Lynch. Theres still a lot of concern worry and on some level, some fear. Im not surprised not to see the confidence. I think its about reeducating the public about markets what we then went through eight years was tough. And it takes a while to bring back the individual investor to the markets. Peter there was a new article out this weekend, he said that there are cautionary signs that are starting to blink that uses that measure. Right. That looks like ten years of earnings. Figures out where the stock average is. He said based on that, were looking at the highest levels paid since 1989 and 2000. The question is what makes valuations matter. To me, its Interest Rates. And monetary policy. And if that is not a potential headwind that valuations begin to matter. Lets take earnings and stock prices since the ending of 2012, qe began, 14 times to 22 times. All because of easy monetary pose. This year may be the first year in this experiment that all four major Central Banks may bupull back. Front page of the wall street journal central bankers rethink 2 inflation target . I think that needs to be in the academic ditches. To say we neat to raise the cost of living by 2 is somehow going to make a better economy remains outrageous and remains in the halls of academia not in real life. Its reducing the purchase power by 2 . Not saying it may be lower, theyre saying if it goes higher. What are you talking about, you say 2 is going to hurt the purchasing power of people, youd rather have deflation . No, id rather have price stability. Zero ideally, thats how you gain wages. Earnings are only growing around 2 . You cant look at inflation in a bubble. You have to look at it with thats a hard take on this. For years i think youve suggested on this show that we should raise Interest Rates, this is effectively suggesting that the money continue on as a target in a way to enable these guys . What this article said if we had a period of time below 2 inflation we could tolerate 2 inflation to get an average. The 2 inflation is made up of thin air. Theres no risk there. But i think we should stay at 2, not go above it, you want to be forward looking you dont want to let it out. Janet yellen has clearly told us that shes willing to run the economy hot. Im going to talk about that. A little bit longer, to make sure that the reflationary trends take hold. Right. Thats been the risk. And because of the reflationary risks come from other countries such as europe and japan. I think thats clearly laid out the market that willing to run at 2 and quite possibly run it a little hotter. Here we have artificial rates that are low. Inflation is not a black or white thing. Theres some good deflation. The drop in technology prices is good deflation. Progress efficiency leads to lower prices. So this idea of trying to pick a proper inflation rate irrespective of wages lets just say that wages went to 3 . Wed still be no better off than 1 . You got to look at real wage growth. What does it mean for the markets and stocks that this is the feds new line of thinking. If it leads to higher Interest Rates, that earnings can be good, if multiples start to contract well there will be a discrepancy between the economy and stock prices. Marianne, quick last word . Well, if we get Corporate Tax rate cuts thats going to expand earnings. Even if you look at where pe ratios are today, relative to where Interest Rates are. Interest rates are 300 points basis below where we are. As long as the fed raises rates in a global fashion, the market can continue to go up. Thank you both for kicking us off on this monday morning. When we come back, well talk march madness. I was just going along to figure out where i stand in the brackets. Were going to talk march madness which ends tonight. Going against each other for the national title. Thats your total that you have. It cant go up from there. Plus, Tech Companies teaming up to take on fake news on squawk box. Squawk box returns in a moment. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. We love that Basketball Basketball theyre playing basketball im out of it. Okay. The Mens National College Basketball game kicks off tonight, 9 20 p. M. 9 20. It might as well be 2 00 a. M. , really. At 2 00 a. M. , you could get up earlier and watch it. Top seeds gonzaga and North Carolina face off in an east coast versus west coast battle. I mean, i really like the South Carolina team. And i should like gonzaga, i dont know, i still think they i got that stigma of playing in what some people think is not a great league. Right. They were like 361. I love my guy on South Carolina, Justin Jackson. You sound like youll be okay whoever wins. You could either win i could come in second. Of all of the people to win, who would be the most obnoxious. I did not realize he got himself out of the wrong bracket that i was in. Got put in the right one. To be honest with you, before he put them in, he asked me about my bracket. I said im picking North Carolina. And he picked it. You know, mississippi state, they beat connecticut. I went to the harlem globetrotters. I thought you were going to the major you can spin the ball on your finger like that . No. Someone said you were going boo the poor mans harlem globetrotters. Theyre just as good as the other. I remember, we had a guest here. You were explaini icomplaining ticket passes. I did something about the magic pass. You bring the kids on the court theyre supposed to be able to play with the players. They charge extra, as you can imagine. Did they get to play with them . Yeah, but they sell like 500 magic passes so theres too many kids on the court to play with them. That was my Quick Customer Service caveat. Do you think that big center is good enough to beat Justin Jackson and barry i think our producer needs a microphone. How about kennedy nix. Did you watch that . Are you looking at him . Im looking at him. I cant see him. Okay. There he is. What about a masters pool, who would you pick . It used to be tiger against everyone else. I think youre right. D. J. Is fowler, d. J. Dustin is dominanct. Blah do you want to talk about, french things . Marine le pen taking a shot at the Political Union at a political rally. She said that the currency is like a knife in the ribs of the french people. The candidate has said that she wants to take france out of the eurozone and bring back a national currency. She has also proposed a tax on imports and Companies Hiring foreigners. Opinion polls predict that le pen will do well in the runoff. And we know how all of these holes have performed in other situations around the globe. And the ideas that shes brought forth, even if she doesnt win have a new choice and strength in france. Theres a story out today about just how strong that second poll number of macron is. Because her supporters are so strong and so willing to come out and vote, macron doesnt necessarily the knife in the ribs and its a germanbased all along, that whole system is built to benefit germany. If youre france, youve got this great country and you know you survived a couple world wars but you lost because because you talk so much. What is it . Theres some money being spent by Silicon Valley on germany. Which you can get upset about if you like. Coming up, china in focus this week as President Trump prepares to meet with the chinese president xi jinping. Were going to talk trade, currency issues and north korea. Well see if its pronounced that way and john rutledge. Heres a look at last weeks winners and losers. Kevin, meet your father. Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin trusted advice for life. Kevin, hows your mom . Life well planned. See what a Raymond James Financial Advisor can do for you. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Welcome back. Youre watching squawk box, live from the Nasdaq Market site in times square. Good morning. U. S. Open futures at this hour, not up as much as they were, i think. I just did i did a lot of math today. Figured out six quarters in a year and a half. We were up 40 earlier. Now just up 23 on the dow. The s p is up 2. Nasdaq has been strong for stronger than the other indices for a couple weeks now. Up another 8 points. Thats a much bigger percentage than what were seeing in the other. Crude back above 50. 5060 on the wti. The tenyear, there have been pieces written about the amount of Short Covering. People got stuck. They were all on the one side of that trade of Interest Rates going higher. Most in history. Billions and billions and billions of dollars of Short Covering back down to field of 240. We remain there. 238 right now. Lets talk china and President Trump mcing president xi to maralago this week. Daily beast reporter gordon chang joins us, and also john rut letch, chief investment officer. Good morning to both of you. The front page of the times. If china is not going to solve north korea, we will. Harsh and tough words from President Trump. What a way to sort of kick off a meeting like this. What does it mean . Well, it means that the United States is no longer giving china a veto over the north korea policy. George w. Bush started that in 2003 and it really hasnt worked. China has given north korea time, money and technology for Ballistic Missiles and Nuclear Weapons so, we really have to change our policy and this is a good thing. Now, im not saying that trumps going to solve it but nonetheless, we need to change our approach. When president xi sees an article like this and hes about to get on a plane, how does that work in terms of forging a relationship . Lets just say this is something that trump did, there he is blowing off steam. No im wondering whether this meeting is more like the Angela Merkel meeting that worked at the white house a little tougher to do at the white house. Or whether like some of the other meetings that are more friendly . Ill ask you, john. I think theyre going to shake hands, joe, but thats the only friendly thing theyll do. Im andrew sorkin. Andrew. Sorry. First of all, whats he going to see when he sees that article . He doesnt know english. He is not going to see anything. The meeting is a form of theater, the only thing that matters to each of these leaders is what each of them looks like to their home audience. Trump needs to seem like a tough meany to his base. And xi needs to look like hes sitting at the adult table with the u. S. Which means he has to be treated as a peer. Theres going to be a lot of fear going on. What are the hot issues, obviously, north korea is one. I agree with gordon, thats a situation that needs to be solved. U. S. Is not going to launch missiles into north korea but they might put pressure on china to solve it, and they could solve it if they want to. The most impressive place ive been in my life. The other issue is trade. Trump trained huge tariffs during the campaign. Hes not going to do that but there are issue about the border tax policy and the like. I think theyre each going to come out, look tough and not look very friendly and Say Something meaningful about so you dont think theyll look very friendly . You think neither of them will look friendly . So when we see photo ops, its going to be first of all, if youve ever sat in the room with a chinese president. Theyre the most stiff guys that youve seen. They hold their arms at the side like this. Theyre not buddies. They dont shake hands. These guys are going to look like, one friendly think xi wants out of this, he wants to get the words out of Donald Trumps mouth which is a winwin story theyre trying to put together which in secret code means theyre peers. And were doing this with mutual respect. Mutual respect in china is code word that well have more influence. How is xi going to try to bend trumps ear on trade issues . For china, trade issues are much more important than what they got from north korea. On trade, they can lose quite a lot. You got a chinese economy that is not going at the 6. 7 pace. The debt accumulation over the next 12 months is unbelievable. He really is in trouble. Last year, chinese exports fell 7. 7 . And that is going to be the big figure in xi jinpings mind when he sits down with donald trump. Lets think about this from President Trumps perspective. Hes able to make progress with north korea, will he soften his stance on trade . I dont think so. Thats what trump sort of complied in the interview. Thats what im going to say, is he willing to accept up or is there a standoff . Is there a standoff. Its south china sea, taiwan, all sorts of issues right now and its very hard to kick the can down the road any more. So i think its going to be a very contentious meeting at least when the two leader talk out of sight. I do, too, gordon but meetings like this is not where policies are made. Its where images are made. This is about projecting an image back to china. The first is hong kong. Theyre worried about political instability. That makes it very concerning about gordons point about export and gdp growth. Theyve been stuffing money through the stateowned companies to try and support the economy. The private companies are now having credit card issues in china. Liquidity squeeze. What xi would like is something that helps the capital outflows from china slow down or stop to ease up on some of the policies. Theyre not going to get it at this meeting. Will we hear President Trump talk about the manipulation of t it . The notion of currency manipulator, over a long period, of course, they own 3 trillion of reserves. Over the last two years, theyve actually sold 1 trillion of reserves and theyve supposed rnb against the dollar. So this currency manipulator thing is a big political football inside the white house and treasury right now. Gordon, i heard your first point that this is a good change in policy but its not working what were doing with north korea. But if were in a position where our side cant look at any form of compromise, how is this a good change . It would be wonderful to see a way to access their dealing with north korea. If you cant see your way to negotiation, how is this a good change in policy . Well its a good change in policy because its a recognition that the North Koreans in about four years will be able to make a nuclear warhead. Exactly, but if you cant help to get the other side of the table to some sort of agreement what does does it do to change your negotiation tactics . The chinese banks, especially bank of china had been involved in Money Laundering from the North Koreans. We could unplug them from their dollar accounts. Were not going to do that. Trump can actually get things done with very few concessions. But if you had one thing to be done the most i would assume it would be north korea, rather than a trade issue . Probably, because thats the life and security of hundreds of millions of americans. And the North Koreans are making fast progress on the ballistics. Its frightening whats coming out of that peninsula. The other thing i wanted to ask you sort of good cop bad cop. Over the weekend, how china is negotiations the relations with the United States through Jared Kushner. Hes played the good cop. President trump has played the bad calm. And Rex Tillerson, i dont even know where he is in this. What is that about . China is always trying to have a pipeline into american administrations. Now they see kouchnus kushner a that because he has the ear of the president. I think theyre mistaken about that because kushner cant do what beijing wants them to do but nonetheless thats the change for the calculus right now. They do want the yuan 1 , did they want to do that . Well, they want that as an official policy. Some years ago, the chinese decided that this that the u. S. Was the source of monetary instability. And so, building an rnb area in asia, especially was very important. They announced the silk road, last year, the silk Road Initiative before the trillion dollars of contracts, china is buying the initiative. Theyve bought it so far fromle philippines who is cooperating with them on the china sea and from malaysia. So the moneys flowing big time there. And you work for the daily beast . Yeah. Did they interview you before they hired you . Do they know you . Do they have any idea is there another gordon chang actually there is another gordon chang. Did they think thats who they were hiring . You know, youve got to ask john avlon, i actually think he knows the right gordon chang. The other one is at stanford. I think thats who they thought they were hiring. Im pretty sure. Yeah, because im the kraecr one. Yeah, youre a reactionary freak to them. Its like mad magazine, like a parody. Whole thing about mainstream views on china have largely changed. Yes. Final question do for gordon, what are these guys going to do since president xi doesnt play golf, right . He doesnt play golf because hes identified that as a badge of corruption. What are they going to do in maralago for two days . Theyve only got 24 hours. Theyre going to have a dinner. Theyre going to have private sessions between trump and xi jinping. I suspect its going to be a lot less of friendly things like trump did with shinzo abe. Does he play games . Do you go to a warm climate . I do. They can sit next to an umbrella. They can do that in a lounge chair. They may, but why go to maralago . You dont like warm weather, sitting around in a lounge chair . I would normally go to the white house. Id rather go to maralago. Anyway, well see, you know the benefit the taxpayers need to pay for this trip. When we come back this morning, President Trumps trade policy. We will talk with former deputy u. S. Trade representative robert hollyman. And the devil is in the details. Well be joined by harvard law schools tax expert. And later today, tom warner joins us live from fenway. Stay tuned. Youre warning squawk box right here on cnbc. Ingertips, ingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com hey, hows it going . Um. Who are you . Im val. The orange money retirement squirrel from voya. I represent the money you save for the future. See . Were putting away acorns to show the importance of being organized. Thats smart. Whos he . Hes the green money you can spend now. Whats up . Oh you know, gonna pay some bills, maybe buy a new tennis racket. Tennis racket for a squirrel . Hes got a killer backhand. When its time to get organized for retirement, its time to get voya. Welcome back to squawk box, everyone. Time for todays executive edge today, were talking about training workers for the factory of the future. Morgan brennan joins us. Good morning. This is one of the biggest sectors in the manufacturing sector. As tread trump pushes for rebirth, automation, robotics, the digital threat, factors for us and job descriptions. Take General Electric trip ge has been on the forefront of stock of future trend in grove city, pennsylvania big data, sensors, software, robotics are now being used to fix locomotive engines. This is part of a brilliant factory concept that ge has been rolling out. Out of the 100 recent applicants there, less than 10 pass the screen doing make the cut. And thats just nut hirethe new. The main challenge is getting people to cope with digital. Being able to use an ipad. Being able to look at data on the screen. And about teaming, teaming of people to Work Together. So ge is retraining 150,000 employees many of whom are used to paper doing calculations by hand, referencing books to get through it algorithms aug meanting reality as performance is displayed realtime on big screens. Deloitte has estimated 3. 5 Million Manufacturing jobs by 2025. 2 million could go unfilled due to a mismatch. Lock hed maheed martin, john d connick are putting money towards retraining. Were talking about how the workforce, but other americans to try and find future employees to fire. I guess thats the question, how much is the government doing this and how much is private industry going to step in and do it . Exactly. When you have many of these companies saying theyre going to step up their manufacturing in the states. Hiring more people to do that. I was with ge in four different factories last week. What one plant manager said to me was, its no longer a matter of hiring someone offer the street. You have to have certain licenses certain degrees and education, certain skills that didnt exist a couple years ago. So a lot of these companies cant necessarily wait to see government move in and do retraining and do those skills. Theyre actually investing their own money. Theyre doing that too. So at 35 factory, we saw with Lockheed Martin you have robotics applying a selfcoating to that plane now so the guys that used to do the painting are getting paid to operate the robots. Morgan, thank you. Coming up, tech leaders teaming up to take on fake news. That story next. Well show you why nearly half of millennials in San Francisco say they want to move. Leave the basement. And as we head to break, heres a quick check of whats happening in the european markets right now. Who wants a donut . It use to be everyone had to be in the office. We lacked the technology to be flexible and productive. Then cdw orchestrated a collaboration solution for us. Using the lenovo x1 carbon. Powered by intel core processor technology. Now we can access our network and Work Together from anywhere. Hey hey everybody. You coming back for the Team Building . Mobility by lenovo. No . It orchestration by cdw. Welcome back to squawk box. Just a shot of times square there. Tech leaders teaming up to launch a 14 million fund to promote News Literacy and increase trust in journalism. Among contributors, facebook, mozilla and the founder of craigslist. The initiative would be based at the City University of new york. Trying to combat fake news. 46 of millennials living in the San Francisco bay area say that they are ready to leave. A new poll from the Bay Area Council showed that the high cost of living was the biggest motivating factor. 65 of millennials said it is one of the areas biggest problems. An analysis from rental startup rad pad said mid to senior level engineers at Companies Like google, uber or airbnb can expect to pay 50 to 60 of their salaries to rent an apartment near work. Theres a new pintsized boss at the box office. Boss baby claimed the top spot an estimated 49 million in the u. S. And canada. And the animated movie stars alec baldwin and the voice of a capitalist people. The sorkin boys loved it. Beauty and the beast was a close second. Its now made nearly 400 million. Dreamworks animation now a unit of nbc universal. Thats it. Coming up when we return the First Quarter is in the books. Were going to take a look at trading in q2 when squawk box returns with two big hours at 7 00. Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . The market. Redict but through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Stocks looking to start the Second Quarter on a positive note. Washington, the jobs report, economic data, and earnings all set to drive markets. Well find out if there is room to run. President trump draws a hard line on dealing with north korea. This comes as he prepares to welcome chinas president to the United States this week. We have a preview of whats to come straight ahead. And tesla drives past expectations. The numbers and Market Reaction as the second hour of squawk box begins right now. Live from new york where business never sleeps, this is squawk box. Good morning, welcome back to squawk box right here on cnbc. Were live at the Nasdaq Marketsite in times square, Andrew Ross Sorkin along with becky quick and joe kernen. Take a look at the futures. Dow looks like it would open up higher. 16 points higher. Nasdaq looking to open higher as well. About seven points higher. And the s p 500 looking to open about a point higher. The q1 rally slowed in march for the month. The s p finished flat. The dow lost nearly a percent and the nasdaq gained about 1. 5 . Among the stories were following this morning. One of the biggest stock moves is Imagination Tech has lost about twothirds of its value after apple said it would stop using imaginations Graphics Technology in about two years. Imagination says apple is developing its own graphics chip. Apple is not totally unaffected by the stock drop. It has an 8 stake in imagine tech. So, a little mini cannibalization of its own. Apple reportedly among the bidders for toshibas flash memory units. Thats according to japanese newspapers which say that amazon and google are also bidding. Reports last week said that Silver Lake Partners and broadcom have a joint bid going on the table for that unit, as well. And then a little news on starbucks this morning. It has a new ceo as of today. This is Kevin Johnson officially takes over from Howard Schultz who will remain the companys chairman. Politics now. And President Trumps agenda this weekend was health care. He brought senator rand paul to his Virginia Golf Course yesterday. Along with budget director nick mulvaney. The republican senator from kentucky spoke out strongly against the original gop bill. Repeal and replace obamacare. Yesterday trump tweeted saying talks on repealing the law have continued, and will continue until a deal is struck. And rand paul was, who knows, you know, on a golf course, rand paul sounded sort of optimistic after playing golf. They got a nice day. I dont know if theyre going to play maybe it wasnt like we had on how about the rain . Last week it was like 40 days and 40 nights. Its going to happen again tonight. Tonight the rain starts against. But yesterday was beautiful. It was. Probably in virginia, too. Spring is here. Is it . Officially. I hear birds. Chirping every time you open . And springy type birds. We have a nest right on our front porch. Thats always fun to watch. Yeah. Are those eggs, or still i dont know. Theyre not fat from the winter. You get fat in the fall as you head into the winter. Yeah, but then you dont really and you wear all the you dont take off the weight until summer i dont think. I think its eggs. Its really not eggs . Maybe. They lay like i dont know. I didnt grab them to see what was going on. Robins. We dont have birds in new york city so i dont know what youre talking about. You do. You have flying rats. Your pigeons. We have great pigeons. I love our pigeons. Beautiful. Beautiful. Love our pigeons. I caught one one time. I didnt know what to do with it. Feed the pigeons. Other Washington News the Senate Judiciary committee is scheduled to vote on Supreme Court nominee neil gorsuch today. Democrats want to block the confirmation and appear to have enough votes to filibuster. But the republicans are threatening to invoke whats called the Nuclear Option. Changing the rules to require only a 51vote majority. When a nominee doesnt get 60 votes, you shouldnt change the rules. You should change the nominee. Republicans say they will use that Nuclear Option if necessary. Lets get to the markets. And the start of the Second Quarter, the three major indexes posted quarterly gains of at least 4. 6 in the First Quarter. Really, i would love that to annualize that. The nasdaq also recorded id even rather annualize this recorded its best quarterly performance since 2013, tech stocks rose more than 12 in the period. That would be that would be nice. For the whole year. Joining us now, jana barton Vice President and Portfolio Manager at eaton Vance Management j. J. Kinnehan. And Michael Thomas from s p Adviser Services and also here. J. J. , i want to start with you quickly just about whether the sort of relatively quiet march that we saw, is that if you look at the vix and you look at we started seeing 150 up, 150 down. It almost looked like it was stalling. Is that just a consolidation . Or is it the beginning of a topping pattern . What are the underlying fundamentals or technicals . Well i think theres a couple things going on, joe. First of all, there wasnt quite as much to trade on, and what i mean by that is were still, you know, wed become a policy driven market rather than just a fed driven market as we were for the last few years. So with that, the primary policy thing were all waiting on is the tax plan. So we talked about the fed foot underput the market for awhile. I think youre seeing a tax put underneath the market right now and until that comes out i feel like were going to kind of bounce back and forth. We do have earnings starting here and at the end of the day earnings always do carry stock prices, sometimes it takes a little while for them to sort of catch up. But with that it will be very interesting to see with the rally weve had since the election, if the earnings are starting to support it, were seeing a lot of evidence in the numbers, which actually started in october, that the stocks will support these levels, so it wont surprise me if we kind of bounce around for a little bit here until we start to get some of the financial earnings, et cetera, and thats when the market can get some momentum. With that said, you know, were about 2363 here on the s p 500 cash and so 2373 is going to be a little bit of a challenge for us to get through. You know, to put that in dow terms for people thats 80 to 100 dow points up from here where i think youll start to see some resistance. Jana youre more bottoms up. The markets not cheap i think, in your view. But there you think its important to pick the right stocks and i mean youre not youre not going to cash, youre just buying selectively. Absolutely, joe. You know, we spend very little time focusing on the market, but we spend a lot of time focusing on the companies that we own. And were bullish on companies that we have in our focus Growth Opportunities fund. I think its important to highlight the resiliency of the market given the uncertainty weve seen, the palsy and the uncertainty on the geopolitical front and sectors like tech, like health care, consumer, have some of the best earnings and Revenue Growth profiles so those are the names and areas of the market that we continue to see a lot more to come from. You know, yana, we have Mike Thompson here. Just by chance, who like knows what all the earnings are going to be for all the different companies. So, i dont know, you guys should probably talk i think. He can tell you whether the ones that youre talking about here are the ones because you would like to buy things that arent too expensive that are going to show growth in earnings, right . Is that eaton vance . Thats right, yeah. We have a tough job. Were all predicting a future, which is difficult task. It is. To say the least. Hes never wrong about thompson at least ive never seen it. Are those the right areas to be in, based on what youre expecting for the next two quarters of earnings . Earnings growth looks good. Listen, i think your trouble spots are industrials, and basically consumer discretionary, those are our warnings spots, both going to come in negative. Consumer discretionary, expecting a down 4 this quarter, which is, you know, a little unusual. Havent seen that since the Second Quarter of 2009. We were in recession. But overall, s p earnings expected to bring in about 10 , 9. 9 . Interesting enough, two really nice harbingers, right, financials, expecting about 16. 1 , despite the fact the yield curve has actually flattened from the traditional way, and technology, up 16. 5 , those usually precede good things in the market. So, feeling reasonably good about the market. A little asymmetric around the discretionary and the industrials. But you know, again, i think i heard it earlier, you know, theres a lot of policy things that could make a big difference. Yeah, so, did you what did you say, yana, tech and health . What are the ones that you think you can buy growth cheap or at least at reasonable prices. What were they . So, yes, tech and health care. And i know were focused on q2 here as were heading into spring, but i think its important to highlight that these are the names that are benefiting from longterm secular trends that are here to stay for multiple decades not just quarter. The likes of amazon and facebook and the transition were seeing in those markets. Even biotech thats trading at a 20 discount to the market. A name like selgene that continues to be at a discount to the market in its own growth rate, those are just some areas. Were still selective in pockets of industrials, and actually energy. Joe, just while i have you here, technically, what is the tenyear telling us right now do you think . Is it are there Short Covering factors . Is it whats a flat yield curve . Is the economy not going to pick up . Whats the deal . Well, i think, you know, if you look at the next fed meeting were only looking at about a 6 probability of a rate hike so i think were pushing a little bit kicking the can if you will but you have to follow with what the fed have said. Theyve been very transparent what they want to do. And if you look at the probabilities they predicted whats going to happen pretty well. So with that were still looking at at least two rate hikes going out for the year. And so again, does that mean we wont bounce between 2 and 2. 5 on the or you know, on the yield. Yeah i think that thats definitely, we continue with that sort of possibility. As i said, you have to tie that back to what we talked about with stock market until we have more clarity on whats going to happen taxwise i think were going to just continue to trade in ranges for a little bit, unless of course the earnings season blows the top off of things. Yeah. You know, based on what mike was saying we could have a nice earnings season. I think people are expecting that financials and tech could at least take us to challenge the alltime highs over the next few months. When you look at the chart it kind of looks reasonable. It moved up, you know, given that the fed started tightening and then just sort of been kind of in the mid point of its range. You just said kicking the can. Thats the second time today, and earlier when someone said kicking the can its been years. That was our most remember that was at the time. Were back to 2014, joe. That was the euro when bernanke because the euro the eu was kicking the can down the road. 250u8ly the ecb. The ecb, yes. And we used id every day. Now we use animal spirits. And before that it might have been ive given away some of those older ties. Should you save thick ties because theyre coming back, sorkin . Mines thin. I know they are. But do you get rid of thick ties when they go out of style . No, in 20 years theyll be hot again. Theyre 100 its ridiculous what you pay for ties. Or what someone pace at cnbc joe, if you wear them every day you know they always come back into style. In ten or twelve years. They do. But some are so thick they just tom ford is doing a really wide tie now. Is he really . You can break out some of your old, old ties from the 50s. I have trouble giving that stuff away. Its silk. And your dads, you dont give those things away. You can dad move, keep it for 40 years. I dont know the whole j. J. , joe thing i dont know what to do with that. You think you can be on cnbc more. One show, joe kinnehanp and the next day j. J. , which is it . What is it on your commercial that you run all the time . J. J. Or joe . Its j. J. Personalities all right, mike, thank you. When we come back, President Trump putting trade partners on notice, especially china. Hes going to be meeting this week with chinas president to talk trade. North korea and much more. Well give you a preview of that meeting. Its being very closely watched by the markets. And then oil logging its strongest week of the year last week. Is optimism building in the sector . Well drill down on where prices are headed in just a bit. Stay tuned, you are watching squawk box on cnbc. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Welcome back to squawk box. President trump putting u. S. Trading partners on notice with his latest executive orders. Commerce secretary wilbur ross says were already in the middle of a trade war. We are in a trade war. We have been for decades. The only difference is that our troops are finally coming to the ramparts. We didnt end up with a trade deficit accidentally. Joining us right now to discuss trade relations with china ahead of this weeks meeting between President Trump and chinese president xi, former u. S. Deputy trade representative ambassador robert halleren. Good morning. Help us understand what is going to happen during this meeting. We talked about it in the last hour given some of the comments that President Trump made to the Financial Times over the weekend where he threatened them, effectively said if china is not going to solve north korea, we will. Well, we have a very complex relationship with china. They are our second largest trading partner in the world. They are a Strategic Partner on a lot of things we do together related to the war on terrorism, and they are an indispensable partner in figuring out the solution to north korea. So its a very big agenda, complex agenda. And all the eyes are going to be on maralago at the end of this week. Do you expect this to look like a friendly meeting . Or to look like a little more like the Angela Merkel meeting . No. I think that the setting, maralago, says a lot about what the tone of the meeting is going to be. I think the fact that president xi jinping is bringing his wife to those meetings also says a lot about the way both sides of it can structure the meeting. I think president xi jinping has three primary goals for those meetings. One is stabibility. One is access. One is influence. He wants a stable relationship with the u. S. As much as possible. He wants greater access by Chinese Companies in the u. S. Market. And he wants influence, both visavis the u. S. But in the stature of the world, and how the world looks at him as a global leader. When you think about the theater of it all, in terms of it taking place at maralago. There was some conversation behind the scenes that president xi wanted it to be at maralago because, in part, abe was at maralago. The wife is coming. Even though they dont play golf. Theyre still doing it there. How much is this about the theater in terms of what it says to the rest of the world . Well, i think a lot of it is about positioning, visavis other Major Players like japan. But i also think a lot of it is attempt by president xi jinping to build a personal relationship with President Trump and doing it in the president s home effectively causes that to happen. So i think its very strategic. And again, xi jinping is a very tested world leader. They know a lot about optics, as well as substance. And im sure that the chinese request to do it in maralago really played very much in to that perception. You know theres not a golf course at maralago. Its not a golf club. Its effectively the president s home. Right. He has a golf course in virginia that trump owns, too. Theres a golf course in palm beach that he owns, but its not a golf course. Its on the ocean, and maralago. So its, you know i dont know. I cant you were in the Obama Administration, ambassador. Youre saying a bunch of stuff here that doesnt sound like you fit in there very well. Weve got to be tough weve got to renegotiate nafta. Right. On china trade weve got to be tough with china on trade. Right. China continues to block entry of all of our flagship products, so you dont think that this guy is like a total nut job, trump . No, look, i think that the u. S. Has and continue, we certainly took a very tough policy with china about greater market access. Usgr released last week a study on barriers to trade, and we released one in january before i left office, about chinese barriers to trade. And there is a long list. The big problem with china is that our flagship industries, like cloud computing, cannot get access to the chinese market. So when we look at trying to address the imbalance of trade between our countries, one, is to look at the imports into the u. S. But we need to really look at the exports in areas where we are competitive, you know, china had an opportunity to become a marketbased economy. They had been very reluctant to step up to the plate to do that. And we need to use all of our force to try to encourage that. How one gets there may be different between different administrations. We felt that there was a lot that we could obtain by trying to negotiate a bilateral investment treaty. Other things to give greater market access. But the inherent difficulty in doing business in china is clear and it was clear in our Administration Just as i think its clear in this administration. Do you think theres any way we can deal with north korea, that just isnt one worse choice between another worse choice . I mean its pretty frightening for just anyone on the global community, isnt it . I mean, can china really say, stop and theyll stop . Well, china has the influence, and the ultimate influence on north korea. And what i think has changed between our administration and this administration is the increasing capacity of north korea to test the system, and to challenge the stability of both asia and the u. S. And so i think additional steps need to be taken to that some of the trade issues that we are longterm issues with china. I would say that figuring out a way with china to address the problem with north korea is the number one issue. And it should be the number one issue in the meeting at maralago this week. Would china consider that a win if they were able to contain north korea . I mean it sounds like its gotten out of control at this point, too. Well, look, china would consider it a win, because instability in north korea very much impacts them. But were, you know, in a situation where one of our strongest allies, south korea, to whom weve committed our support for defense purposes, is at severe risk because of this. China is at severe risk because of instability. And we need to find a solution to that problem, and the, you know, the pressure is mounting. Clearly many administrations have tried to find a successful approach to north korea. We have not found that yet. But, china, i would argue, is absolutely indispensable player in a solution that the u. S. Is able to achieve. Okay. We got to leave it there ambassador. We appreciate your time. And of course your perspective. Thanks so much. Thank you. I think if you join, i think you get to play at Trump National. Which ive played. If you join maralago . If you join maralago. You get to play at Trump National. But its just a big mansion like on right in palm beach. Who is it, meriwethers former and our buddy jeff green has like remember. A remember of maralago. And then i guess you get to play Trump National. If youre a member of maralago you get to play golf. But i just mean that it is it a separate membership to be at Trump National . Can you join Trump National without being part of maralago . I dont know. I dont you sure . Im i played. Ive played there. When we return, talks of extending production cuts help to fuel a rally in Oil Prices Last week. Were going to find out if the upward trend will continue. This morning wcis pretty flat. Up five cents to 50. 55. But up next are the boss baby delivering at the box office this weekend. That story and other corporate headlines are coming up. Squawk box will be right back. R of innovative thinking. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Itthat can make a worldces,. Readof difference. Expedia, everything in one place, so you can travel the world better. Excuse me, are you aware of whats happening right now . Were facing 20 billion security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. Welcome back, everybody. After two weeks of domination by beauty and the beast there is a new pint sized boss at the box office. Dreamworks boss baby claimed the top spot. The animated movie stars alec baldwin as the voice of capitalist baby. Disneys beauty and the beast was a close second with 47. 5 million. That movie has now made nearly 400 million. Coming up when we return were going to talk oil and your portfolio as we head to a break take a look at u. S. Equity futures at this hour. Youre looking at the dow looking like it would open about 20 points higher. Nasdaq up about 7 points. The s p 500 up about 1 point. Up. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Please repeat the objective. Thrivent mutual funds. Managed by humans, not robots. Before investing, carefully read and consider fund objectives, risks, charges and expenses in the prospectus at thriventfunds. Com. Predictable. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. Good morning, everybody. Welcome back to squawk box here on cnbc. We are live from the Nasdaq Marketsite in times square. Among the stories front and center this morning today is the day that u. S. Automakers report their march Sales Numbers. Edmunds estimates overall sales will be up by 2. 1 from a year ago. The first two economic reports of the month are out at 10 00 a. M. Eastern time well get the march Manufacturing Index from the institute for supply management and the government will be out with february Construction Spending number as well. Shares of tesla are rising in the premarket trading. The automaker delivered 25,000 vehicles during the First Quarter. The largest ever quarterly total. Optimism is building in the energy sector. And jackie deangeles joins us now with some of the factors behind that confidence. Good morning to you, andrew. According to bbo, energy cfos are optimistic about energy ipos and private equity executives are hopeful about interest in the sector because of higher commodity prices. So that gives you a sense that theyre feeling like the support in oil prices is here to stay. Bbos studies show that more than half of energy cfos expect private Equity Investments to be the leading source of deal capital while roughly half of private equity execs say that Natural Resource valuations will rise during the remainder of the year. The factors driving the optimism include opec support measures, trump policies, higher oil prices, continued cost cutting, technology and also tax benefits to the sector. But, even if the Second Quarter is strong, there are Downside Risks here for the rest of the year. Last week, rig counts rose for the seventh straight week. That was the best quarter since early 2011. That means that u. S. Supply is going to continue to skwel. In a note, one chief economist points out that the market is torn between divergent streams of pressure. Opec and nonopec members have agreed to cut production. On the other hand the Trump Administration is intent on further growing domestic production, adding to an already high inventory level which will expectedly compound downward pressure on energy costs. So the push pull here guys is probably to stay. This is a seasonal bounce we see every year because of summer driving. All right, thank you. For more on oil prices, lets bring in john, a contributor for cnbc. And all this optimism my guess is you think is a little misplaced. It was a rough quarter. If anything its certainly early at this point given where global supplies are. Given the production trends that jackie just referenced. And just the struggles that continue to be out there in terms of what the real demand picture is looking like, as well. What would you guess if you had to say where you think oil prices are headed for the next nine months, the rest of the year . Well, i think we are seeing a bit of a rebound at the moment we generally get some generalized market anxiety, and run up to the summer driving season is again as jackie just mentioned. But i think this will fall on itself. And i think we will see it. Well have a trip back the rally will fall on itself. And well head back down to the low 40s. Is that because you think opec and nonopec members wont be able to continue with their production cuts or is it because you think that the rig counts thats gone up will continue to increase supply coming from the United States . Its kind of a onetwo punch. Just this month this coming month of april that were in were going to see u. S. Domestic production from the shale players rise by 100,000 barrels. So thats going to hurt. And i dont i think theres a real question as to whether or not the saudis are going to see it in their own interests to stick to the production deal, a, because theres been so much cheating going on. The russians in particular have been very slow to come along. And the saudis arent going to want to lose market share and they have a jump in internal demand over the summer. They take crude oil and burn it to make electricity in sort of a simple process to meet the ac demand. But, and so i think theyre going to want to incorporate that into their production levels and not continue to cut at least for now. Theyll revisit it again in november. John im hearing rumors that the saudi ipo could be delayed to late 2018. You think that sort of changes their timing here . That they step back a little bit and not handle where that market share until they get closer . Theres certainly a play here for them to try to destroy the higher cost producers one more time. And if they are i know they have been unhappy with the valuation that they so far seem to be getting from the Global Financial industry for aramco much less than the 2 trillion that they were expecting. Yeah but why is that a surprise . Its not like youre actually selling the company. This is a very different sort of ipo. This is, you know, youre not going to have ownership in whats really happening. Its sort of like people who fall in love with their house, and want to, you know, an exorbitant evaluation for it even though they cant get anywhere near what theyre asking for it. Its not like this would be a regular ipo of a company. Youre not going to have control over any of this. You just want to ride on the coattails of it. You want to sell your house but continue to live in it. For sure. But again, you know, so they had lofty designs on what aramco is worth and it just isnt. And so particularly given the longerterm trends. I think though for now, again, let them try to squeeze market out a little bit. Shake out some higher cost players, and its a better looking landscape for them. Maybe they do have a better valuation going forward. On the other side of things you have venezuela. A lot of political pressures there. And people wondering what thats going to mean to Oil Production in that country. Ill tell you probably one of the most underreported stories over the past couple of weeks now, late last week, looked like president maduro there was going to become the dictator in chief. The courts suspended the legislature and its a really sad thing. This was a very strongly democratic country that always abided Election Results whether they were sort of right wing or left wing. He himself, the president maduro, told the court not to do that. Not to suspend the legislature. So theyre back in business. Crisis averted but they gave him the power, still, to cut deals on behalf of the staterun oil company. So, a lot of moving parts there, as well. The fear i have, and this is bullish for oil prices, is that theyre basically unable to operate and we lose that production at least for a time until this country rises back Election Results better than the left in our country . Oh, stop. Would you say that they its actually amazed to me, joe. They have swung from sort of more conservative to more, you know, sort of liberal. So about the same . Or more than we accept. Well now its gone hard core liberal. But theres been a loyal sort of opposition. Yeah. Its amazing. Its very interesting study in democratic sort of functioning. Believe it or not. John, we know how much. We know how much the shale producers are pumping just because of the higher price but the Trump Administration policies, drill more, build more pipelines, how does that impact everything . Low 40s or maybe lower than that . Maybe lower than that. I am afraid its too much of a good thing at least for a time. But, again, you know, demand trends are higher and higher. And to the extent that these pipeline projects, in particular, can lower the cost to get this oil to market, the Dakota Access pipeline is going to save 5 a barrel off the cost for hess for example. Its incredible. So those kinds of projects, if they get done, built, makes the shale guys even more competitive, more of a headache for opec going forward. John, thank you very much. Jackie, thank you. When we return, is President Trumps tax plan the key to economic growth, and major investment here in the United States . Were going to ask one of the nations foremost tax experts about the president s proposal, and find out what it could mean for your investment. In the meantime, check out the futures on this monday morning. Still in positive territory but they have given back some of the gains. This morning when we started, dow futures were up by 40 points. Now up by 15. S p futures up by 1. The nasdaq up by 6. 5. Brian, i just need to know if the customer app will be live monday. Can we at least analyze customer traffic . Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Welcome back to squawk box this morning. Tax reform now front and center after health care was put on the back burner. Joining us to weigh in on tax reform one of the nations foremost tax experts. He is a Harvard Business School Professor of finance, also professor of law at harvard law school. Good morning. Good morning. So the big issue, of course, is the border adjustment tax and whether its going to happen or not. There seems to be some conflict even within the conservative republican side of this, some reports out over the weekend that the Koch Brothers and others were trying to push away from a border adjustment tax. You think it happens . Im not a political prognosticator but i think as people learn more about what it is theyre becoming more cautious about it. Its been a distraction. The reality is its a complete teardown of the tax system and were switching to this cash flow tax and thats what people should be focused on. The border adjustment may not last the process and is kind of the ornament on the christmas tree. There were two points for the border adjustment tax, one was to raise a trillion dollars for the payfor, the other was to tear down the tax system and deal with the territorial system. Is there a way to do either of those without the border adjustment tax . Youre exactly right. The first piece is the budget gimmickry. They cut a trillion dollars. Thats kind of just gimmickry, frankly. The more important point is can we do something about territorialty without doing something so significant. The answer is absolutely yes. There was a plan that was around for a couple of years, we could reduce the statue tear race, switch to territoriality, a much more modest reform that addresses whats really wrong. To stop companies from going that is the big problem. Were taking a sledge hammer to something that requires something much more precise. From a practical perspective, what kind of Corporate Tax rate makes sense, and how do you map it out . Meaning, where do you think we could end with . So i think what makes sense is we want to be at a place where there arent incentives to shift profits. That means we want to be around our competitor countries. We want to be around 18 , 19 . The question is can you do that and pay for it . The answer is likely no. Now the way they get there is by having a trillion dollars of budget gimmickry. Now if we kind of loosen up revenue neutrality which is what we should be doing, theyre doing it by art fis. I think we should be explicit about it and we can get to 18, 19 and take away interest deductibility, get some other payfors. Not like camp. Camp did a lot of payfors that were not that great. Youre talking about acknowledge to say that the math doesnt add. I think revenue neutrality is leading us to kind of do something massive and structurally kind of not correct in a way that doesnt make sense. So your point is the dynamic scoring would make up well and also we have a real problem with our Corporate Tax system and its broken and we should fix it and the most direct way to do that is to cut the rate, get as many Creative Forces as you can without screwing things up and accept the fact that you may be a little bit on the revenue side. Im unclear about that part of it. Youre saying this may not be revenue neutral, it may not be revenue neutral with dynamic scoring, either we just have to accept that were going to take in less revenue than we used to . Think about the alternative. The alternatives, we continue to have the american corporations leaving, getting bought by foreign acquirers and continue to have transfer pricing profits out of this country. Theres no reason we want any of those things. How do you then pay youve got to pay for something at some point. And if you put it into part of the context of larger individual reform theres lots of ways to do this. We need a higher bracket. We need a new higher bracket of 1. 5 million plus. So hold on. So your idea is you want the individual to pay more. Well, i want the high income tax to pay more. Okay. I think you can do this in a revenue neutral way but youve got to incorporate the individual side. Were saying Corporate Tax reform has got to be revenue neutral. The Trump Administration is not talking about raising rates on the wealthiest at this point. Well im not part of the Trump Administration. I mean, yeah, thats true. But i think thats wrong. I think theres a huge taste for redistribution thats not being surfaced currently by the Trump Administration. Do you also want to lower rates on the middle class or no . I think the big pieces we want to do is expand the eitc massively. We want to help those folks at the bottom end. A larger standard deduction. Theres a lot of things one can do that are not necessary ply in the cards right now but if you want to do the right thing i think thats the way to go. If the rate was say 25 , does that you think that doesnt move the needle . I think it totally moves the needle. We should not like the perfect be enemy of the good. We would like to get it to 18 or 19. If it gets to 25 ill take it. Its better than tearing down things. Talk to us about the tearing down piece. What do you think the border adjustment tax would do to our economy . I think it would do a lot less than people think. In part because we are already kind of a quasiconsumption tax. Were halfway between. The idea were going to get lots of new investments because of this is not exactly right. Debt finance investment in this country today has a negative tax rate. It would go to zero. The idea that were going to get a huge growth is not true. I think paul ryan weve had david tepper come on. He likes it. Who else likes it . I dont know that tepper liked it as much as he said he could live with it. A lot of people i think what would the high rate be for a million and a half and above . It would be a flat rate with no deductions. But how high would we go . I think you can go fairly high like 40, 45. Because that sort of is 40 so lets go 45plus. I think you can get there. You mean just on the federal level anything above 1. 5 million would be 40 to 45 . That would raise a lot of money. I think the problem is our top bracket has gotten really big. Top bracket used to be 0. 1 of the population. Because the high end has risen so quickly its now 1 of the population. If you got rid of deductions why isnt 35 enough . Well in part the idea is that it could raise a lot of money, youre absolutely right. But i think we want to have the top bracket do what its supposed to do which is tax but it does though. Right now the top bracket is a lot of people. 35 , thats going to be a lions share of, you know what would that represent of revenue . It would be probably how much of the total revenue. Large chunk of it. But i think you really want to sock them even more than 35 . I dont want to top 1 . I want to sock the 0. 1 . But thats 1. 5 1. 5 million or above. Thats the way to go. Thats what we need is a new top bracket. You do it in a way that Small Businesses that make that, wed have to change that, too. We have to and by the way, so thats a big part of the border adjustment thing that they havent figured out either. You would continue things as they are currently which is you allow them to be taxed at the individual level. Youd have to worry about people being a little bit more aggressive in switching. But i think that we can tweak. Okay. Interesting. Professor. Thank you. My pleasure. All right, thank you. Coming up, stocks to watch as we get ready for the open on wall street. And speaking of opens, it is opening day for Major League Baseball. The red sox are ready for their home opener against the pittsburgh pirates. Red sox chairman tom warner will join us to talk about the business of baseball. Squawk box will be back. Box for decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. You never got the brakes looked at . E girl. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading Companies Lead with digital. Welcome back to squawk box, everybody. On this weeks economic calendar, today, the ism Manufacturing Index, Construction Spending, and march auto sales. Tomorrow, factory orders, and paychex Small Business jobs index. On wednesday the adp employment report, ism Services Index and the fed minutes. Then thursday weve got the weekly jobless claims and friday, wholesale trade numbers and the march jobs report. There are a few names of note. Reporting earnings this week monsanto, walgreens, boost alliance, yum china, Bed Bath Beyond and consolation brands. Also on the wall street agenda, fed new york president bill dudley holding an Economic Press briefing. Thats going to happen at 10 30 a. M. Eastern time. A lot of people are going to watch what he has to say. President Patrick Harker speaking later this afternoon and richmond fed president jeff lacquer will talk about too big to fail this evening. Joseph . Yes. Lets take a look at a couple stocks to watch this morning. Myleene the drugmaker lower in premarket trading after the Company Expanded a previously announced epipen recall. Now it includes the United States. Las vegas sands and wynn resorts are both moving higher following new figures thats showing gambling revenue in macau is up 18 . Wow. In march. From last march. And that marks the eighth consecutive monthly gain and a larger rise than analysts had been of course coming back from some real weaknesses. Yeah. Why . Macau, the chinese well not just tourism but they were cutting down on corruption in a big way, too. Is it affecting things like lbmh and all sorts was high end brands that are out there, as well . Never been. You havent, have you . Macau. China, yes. Mmhmm. The Mens National championship College Basketball game. Tips off at 9 20. 9 20. 9 20 p. M. It wont be done till, you know, probably at least midnight. Tell the truth, are you going to check the scores after you go to bed . Are you going to look up no im not. No, no, no. Do you want me to call you if you win . Please. No. Im hopeful that North Carolina. I mean ive watched them enough i forgot youre rooting for brian steele. Ill be second. I have North Carolina. He really kind of stole my North Carolina. He did. He did it well. I was picking and then, i dont know. He also had he must have had good picks earlier on. He was down low. I think he still had maybe even gonzaga im not sure or oregon or something. Top seeds gonzaga and North Carolina face off in an east coast versus west coast battle. And a couple of big youve seen the one guy on gonzaga, right . Yeah. Like a giant. Yeah. Hes 71. And got this big, long is he really . Yeah. 71. Wow. And, i dont know, North Carolinas good. North carolinas good. And people that saw towards the end of the year, duke came back and beat North Carolina. But theyve got some good players. I mean, pick the one team out of 64 that wins, not easy to do. Not bad. Not easy. Ive never done it before if they do it. Villanova the year before they won, i picked them. And i picked them, too. Anyway. In other sporting news, the masters tees off this is impossible to pick, too. Tees off this week in augusta, georgia. Round one starts on thursday and well have that unfortunately i bet you theres going to be a lot about arnie. Because arnie was there last year, too. He was unable to hit the tee shot. But, gary player will be there. Again, awesome, the black knight. And then jack will be there. But, there will be a void on that opening where billy payne does the intro. Its always great. Its really great. Isnt it . Very serene. It is. And i dont know who to pick. Could be anybody or it could be Dustin Johnson or i dont know. Rickie fowler . In Media Entertainment news, john cena proposed to his girlfriend in the middle of the ring of wrestle mania last night. Why the proposal came just after the two ton a Tag Team Match in front of thousands of fans. Nikki bella quickly accepted the proposal. I think its weird to rush out of the masters to get to this. Who are these people . And why do you you dont know him. That guy is pretty hes in hes in a lot of stuff in hollywood. Yeah ive seen him and i wondered who is he and why is he like the toughest guy on the planet. Yeah. Yeah im not criticizing him. I dont know her. Who is she . Thats his now fiancee. Yeah but who is she . A wrestler. Oh, shes a wrestler, too . Yeah. Wow. The whole thing wrestling is kind of strange. Isnt it . Yeah. Did you see gronkowski this weekend . Got into the ring during a wrestle mania and actually nobody told him its fake . He plowed over some guy. Oh, i didnt see that. Joking. It was yeah, yeah. Is there anyone that doesnt know it was pretty impressive. He got down in a threepoint stance and took off, and knocked the guy right off. You know what we havent talked about . Whats that . Nothing. Stop do they stop marijuana testing for athletes . Oh. Good topic. I saw that. Its legal in some states. I know. So, it changes the entire dynamic. Because its baseball opening day. Football that jerry jones said maybe stop testing because half of them are yeah. I dont know. Certain steroids certain drugs are legal in the world. But are not legal for the player. And by that should they then stop testing in workplaces too . Right. When we come back, doing business in china. What could change for u. S. Companies if the import tax is raised. The former senior director for China Affairs and leader of the Albright Stonebridge groups china and east asia practices will join us. Stick around. Es me the peace of mind and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. Gave us the power to turn this enemy into an ally . Microsoft and its partners are using smart traps to capture mosquitoes and sequence their dna to fight disease. There are over 100 million pieces of dna in every sample. With the microsoft cloud, we can analyze the data faster than ever before. If we can detect new viruses before they spread, we may someday prevent outbreaks before they begin. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Markets now. It is the first trading day of the Second Quarter. The dow and the s p 500 coming off a six quarter winning streak. A big meeting at maralago this week. President trump triggers a stuffer stance on north korea ahead of his sum it with chinas president. Plus batter up. Boston red sox chairman tom werner talks business behind the plate. Thats ahead of todays opening day. Lets hear it for joe kernen. Hit the field as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york. This is squawk box. Good morning, and welcome back to squawk box live from the Nasdaq Marketsite in longacre square, new york, im joe kernen along with becky quick and Andrew Ross Sorkin. First quarter is officially in the books. The dow and the s p 500 are on a six quarter winning streak. Lets get a check on the futures this morning for the dow now up slowly giving back some of the more positive gains that were indicated earlier. Up 40 when the show started. Up 13 now on the dow. Half point on the s p. Up under 6 on the nasdaq. Tenyear treasury yields, 2. 38 . Over 3 , though on the 30 year. Everybodys longacre square. Did they move . Where are they . Longacre square. Which everyone knows, america. It was always called that. Up until you were born. Always called that. And then, you know the last 100 years its been called times square. They bought a building because of the new york times. They bought a building and tried to change it establishment we didnt try to change it. Yeah, you know. Anyway, we are live in squawk square right here at the nasdaq. Squawk roads of the world. Among todays top corporate stories, the british firm Imagination Technologies are plunging after apple said its going to stop using the companys Graphics Technology in just about two years. Imagination says apple is developing its own graphics chip and the reason this matters, is because apple is basically its only customer. Certainly by far its biggest customer. It owns about 8 of the stake. The stake in the company is worth significantly less today. That stock is down 63 on this news. Down 1 71 to 97. They cant figure out how to i dont know what the market cap is of that. You know what i mean . Id like to know. The market cap so we could figure out what 8 is of the losing apparently losing that is not nearly as much as its going to gain by starting to do the stuff inhouse. Ford also recalling more than 50,000 f250 pickup trucks in the United States and canada for a potential problem that could cause the vehicles to roll while the transmission is in the park position. The automaker said it knew of no injuries associated with the problem. And on the economic agenda the march ism Manufacturing Index and february Construction Spending are both out. They hit at 10 00 a. M. Eastern time. Real quick by the way. Market cap 274 or was 274 million dollars. Before. So the microcap. But its an interesting story of what happens when you have one customer you lose 50 . You have one customer and that customer decides its going to do it inhouse. This is the heft that walmarts been able to throw around. A lot of Big Companies can. A suggestion jordan spieth. Were leaving him out. Huh. Our friend. I wonder if you can imagine who would have yeah, jordan spieth. Someone this thinks he should be mentioned. Randall . Could have been anybody. But hes right. Jordan finished second first and huh . Jimmy walker. But jordan plays well there. Yeah. And he would certainly and were going to get him a head set with a microphone. Youre like paul shaffer. But you dont but, hes tense i think in the fedexcup this year. Hes not right . He hasnt been playing quite but i thats a good suggestion. Jordan spieth. In the meantime lets talk a little business and politics this morning. President trump getting ready to meet with chinese president xi this week. Kayla tausche joins us from k. C. This morning. Andrew, the president has said that it is going to be a difficult meeting, citing the companys or the countrys trade deficits and trade practices which is a frequent campaign talking point that got him elected. Heres what he said about china on the campaign trail. We cant continue to allow china to rape our country. And thats what theyre doing. Its the greatest theft in the history of the world. In an interview with the Financial Times the president offering more positive words in a trade mark tease about what could come from this weeks meeting saying, quote, i have Great Respect for the president of china. I have Great Respect for china. I would not be at all surprised if we did something that would be very dramatic and good for both countries. Senior Administration Officials have said the topic and focus is defusing the north korea situation, which in january the president tweeted the possibility of a north korean Nuclear Missile reaching the u. S. , quote, it wont happen. But then earlier this month, blaming china, saying its done little to help. Now, Chinese Government Officials Say that whats more important to them is what a president elect or president in office says and does with regard to china u. S. Relations. But to that end, take a look at some of the contact between the administration, and leaders in asia since that election. The President Trump broke protocol in december by getting on the phone with the president of taiwan, which hadnt happened since 1979. And really irked china. But then, President Trump got on the phone with president xi in february and secretary of state Rex Tillerson visited china, among many other stops in asia earlier this month. Just a couple weeks ago. So we will see exactly how the tenor of their relations has changed in person, guys, once xi and trump meet facetoface at maralago. Axios reports there is no golf planned. It will be a working session for the most part. But well see that body language and whether theyve been able to sweep some of this bad blood away from the campaign. All right, kayla. Thank you very much. Joining us right now is amy selecos, Albright Stonebridges principle, also the senior director for China Affairs with the office of u. S. Trade representatives. Amy, thank you very much for joining us this morning. Great to be with you. Seems like there are two major issues on the table. First of all, security in terms of north korea and what we can do there. And second of all trade. Do you think either of these is going to take a pole position . Well, i think that this summit thats going to happen on thursday and friday between President Trump and president xi is more about reassurance than results. And as you were just discussing earlier, so much of the rhetoric of the Trump Campaign really did put china back on its heels. And so its been very anxious to try to find a way to put the relationship back on a more stable footing. Even though President Trump has very much pushed that he wants to see progress on two issues very much in his priority bucket. One being, of course, chinese assistance to rein in north korean provocations. And the other is to deal with the trade imbalance. Which he, of course, has said is unsustainable. Is there any way for both sides to emerge looking like they are winners . Because that seems to be very important to both the key players here. Absolutely. I think both sides want to, need to, appear tough with one another. But equally importantly i think both sides need to see a success coming out of this meeting, and so i think even though theres going to be some very tough talk in advance of the meeting. I think President Trump has done that through his Financial Times interview, through the executive order last week talking about trade deficits. Of course, focusing on north korea. But, i think that what will result from this meeting is the two sides saying they need to cooperate to resolve these areas of difference, rather than actually having results, and coming out with some grand bargain this week in florida. So there is a way for them both to emerge and save face in this and say yes we are making progress on what weve hoped i mean what does i understand what the american delegation wants. What does the chinese delegation want . For president xi, this visit is very important for him to make sure that u. S. china relations are on a stable footing in what is a very politically sensitive year in beijing as china goes through once every five years leadership transition. And so the president of china is very focused on ensuring that the United States doesnt destabilize china through unilateral actions, whether its initiation of a trade war, provocations on north korea, the south china sea, or taiwan. And so president xi wants to come out of this meeting hearing reassurance from President Trump that the two sides will Work Together on these very challenging differences in our relationship. So the article in the Financial Times today, where donald trump basically says, the president says if we cant work with then we will handle this on our own. How does that kind of set things up as this begins . Thats really the conundrum for china. The u. S. And china, of course, agree that there should be a nuclearfree korean peninsula. But they dont agree on much when it comes to dealing with it. And so the United States, for years, has been pushing china to do more, use the leverage that it has to rein in north koreas bad behavior. China says that it cant, or wont do that because theyre worried about destabilizing effects in north korea. If the country is too isolated, it could collapse. There could be a large inflow of refugees across the border. Or, unfortunately for china, if the United States takes unilateral action, of course, thats going to put china in a worse situation because it could lead to military conflict. This is a loser for china. And so, as much as the Chinese Government doesnt want this, i have a sense that they will hear President Trump saying we have to find a way together to deal with this so that kim jongun in north korea doesnt back us into a corner from which we really cant do anything but pursue military action. Right. Forget about destabilizing north korea. If north korea has Nuclear Weapons that can reach all the way to the United States, i mean that could happen in the next four to five years. We were hearing from another guest earlier today. That becomes destabilizing for the entire globe. Something has to be done before that happens, right . Absolutely. And so, the Chinese Government has pushed the United States to stop some of its military exercises with south korea, with japan, not to deploy a Missile Defense system in south korea. But the United States has said these arent provocative, aggressive actions. Were trying to defend ourselves against a threat from north korea. China, you need to step up and help us rein in this threat so that it doesnt spin out of control. On the trade front, what do you think would be the best possible outcome for both sides . On trade, obviously, President Trump wants to see actions that lead to an improvement for the american economy. Of course, our bilateral trade deficit with china was 347 billion last year. Way too large. Unsustainable. And some in the Trump Administration really point to putting restraints on imports into the United States in order to remedy this trade imbalance. But i would say that the Trump Administration should absolutely push china on restrictions in its market that are prohibiting American Goods and services from being exported there. That has to be discussed at maralago this week. A way forward to actually address this imbalance. There are ways that they could come to agreements on this. For example on steel overcapacity coming into the United States. The United States has said this dumping has to stop. And, in fact, the Chinese Government has already made a domestic decision to reduce overcapacity in the sector. And so theres a possibility for an area of agreement there. Or, for example, on infrastructure investment. Obviously the United States, President Trump, would welcome Chinese Investment on infrastructure in the United States. Infrastructure initiative is also a top priority of president xis. And so again, interests coincide here. And they should take advantage of that. Chinese investment maybe, but maybe not chinese steel. Amy, thank you for your time today. Thank you very much. Okay coming up when we return, automakers rolling out Sales Numbers today. Another solid month expected. But this red flag up from the sales floor. Well tell you what it is. Plus new white house documents reveal the net worth of Jared Kushner, ivanka trump and so many others in the white house. Cnbcs robert frank is going to talk about the Business Empire inside the white house. And later calling all baseball fans were going to talk to Boston Red Sox chairman about this years season. And the business of the game. Starts at 8 40 eastern time. Stay tuned. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containing this information. Read it carefully. Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. So yourhow nice. A party . Ill be right there. And the butchery begins. What am i gonna wear . This party is super fancy. Lets go. Im ready. Are you my uber . [ horn honks ] [ tires screech ] hold on. [ upbeat music ] the biggest week in tv is back. [ doorbell rings ] whos that . Show me watchathon. Xfinity watchathon week now until april 9. Get unlimited access to all of netflix and more, free with xfinity on demand. Automakers are rolling out Monthly Sales today. Phil lebeau, phil lebeau joins us with a preview. Hi, phil. Hey, joe. This is one of those months where you really shouldnt Pay Attention to the head line numbers because overall sales are strong but really what you should be looking for are those underlying factors. Heres what were expecting from each of the major automakers. This is in comparison with march of last year which was not the strongest year, so youre going to see a couple like gm ams and Fiat Chrysler where theyre going to be positive gains relative to last year, industry overall up about 2 . Here are the concerns that people will be focused on when the automakers report today. First of all, youve got rising incentives. Have you been watching some of the commercials theyre playing during the basketball tournament . I mean were talking about 15 , 16 off msrp, higher Interest Rates are certainly going to be weighing on those consumers taking out loans. And youve got used car prices falling which means people are saying, wait a second, why am i buying new when i can buy a 3yearold vehicle at a great deal right now. That said, the average pace of sales for the month of march is expected to come in about 17. 3 million and the pace yeartodate has been 17. 6 million. So were roughly on track with where we were last year, which was a record year. And while were talking about auto sales, over the weekend, tesla reported its First Quarter deliveries coming in at just over 25,000 vehicles. Just a little bit higher than what analysts were expecting. Still on track to deliver at least 47,000 in the first half of this year. This is one of those reports thats really not going to move the stock a lot. It shouldnt move the stock a lot because its roughly in line with expectations. But it does clear one more risk hurdle that people had out there that would have made them potentially think about selling some of the shares of tesla. Guys get the first numbers in about an hour. Phil, back to your point about auto sales and what we should be watching. For a long time weve been talking about peak autos. You think were really there . Is this the sign of that . Yes. We are at peak autos. Now the question becomes, becky can you stay there. The question is, do we see a huge falloff from there, or do we see the Auto Industry fall back into its habit that weve seen in the past, where, well weve got to keep churning out these cars and trucks so lets throw huge incentives and cut into the profits. Because north america is really where theyre making their money. North america and china as well. Theyre not making it in europe. We know that for sure. So you do not want to see those incentives continue to climb and cut into the Profit Margins that are there. All right. Phil, thank you. Well be watching with you. Up next, an inside look at Jared Kushner and a ivanka trumps cash pile. Well tell you how their wealth is structured. That is next here on squawk box. Box. Welcome back to squawk box. New filings from the white house give an inside look into a ivanka trump and Jared Kushners Business Empire and a lot more. Robert frank joins us now with some of the details. Good morning, andrew. Jared kushner and ivanka trump have resigned from their companies but they still own a vast number of them and all the wealth that they create. Filings released by the white house friday show the couple has combined assets of between 240 million and 740 million. Kushner earned up to 180 million last year from his familys real estate empire. Now, hes resigned from about 260 entities, and hes die vested from about 58. But hes still the sole beneficiary of hundreds of entities his family owns, buildings, properties, that the Kushner Company has and a ivanka trump earned up to 10 million in 2016 from her brand and other trump properties. She has resigned from her company but still owns a stake in the d. C. Hotel. Thats valued around 25 million. And she will receive income from the Trump Organization and of course that hotel, kushner also has more than 30 million in personal debt. Most of that from Deutsche Bank and the u. S. Branch of the Israel Discount Bank. Critics say kushner and trumps vast Real Estate Holdings could create an ethical mine field as kushner becomes more important in foreign relations. His attorney saying remaining conflicts from a practical perspective are pretty narrow and very manageable. Looking through these filings on friday night, there are 60 pages of all these llcs, and federal law makes it a criminal offense to do anything that would benefit any of those entities. Wow. But how would that actually manifest itself . Well, for instance, if you have a loan from Israel Discount Bank and youre involved in the middle east Peace Process and somebody yes. No i agree with you. My question is whos going to prosecute that . Oh. It would the Justice Department. And would the Justice Department do that . Well, well see. Given the politics in all of this . Well see. And again whats interesting about real estate is its difficult to sell. I mean its easy for these guys to sell but there are so many entities with so many different investors and lenders and partners. Right. That you know, it if the Justice Department wants to look for problems, its going to easier than if they just had one company. Its very difficult when you have a lot of people from the private sector doing so well. In the administration. No. That was the beauty of the Obama Administration. Not a single conflict because no one had ever been in the private sector. Oh, stop. But i mean icahn wilbur ross. Success is great. But with wilbur, with icahn, mnuchin, these guys could easily sell liquid assets. Whats his movie . Every movie. You mentioned one at a dinner and said everybody go see it. I dont remember. The lego movie. The lego batman. He is but joe heres the different issue which is and was raised in the times today, and its farther down the list. Its people not making not making you know 180 million a year. But you have people like Donald Mcgahn who is the White House Council for example and the money hes gotten over the years from the Koch Brothers. Its mark short who got money from the freedom partners. Its bannon. Its all of these people on the payroll, the mercer family. So thats, which is very different than the other disclosures about a ivanka and jared. Right, right. I dont think anyones implying any impropriety about any of the things you just mentioned either, with koch im saying in terms of the drain the swamp idea. By the way, this was true of the Obama Administration. There were people in the Obama Administration who were taking money not while they were members of the administration but previously from democrats. Look at the whole soros connection to everything on the left. So theres its just the way of the world. Yeah, its the people who are directly in the white house advising the president on policy that is relevant to the companies they hold, that gets a little scary, i think. Sometimes what you may not even know because it was just reported literally in the past 20 minutes by propublica this morning which said that previously unreported changes to Donald Trumps trust were made on february 10th. Which allows him to quote distribute net income or principle to donald trump at his request or whenever his son or long time attorney deem appropriate. Right. Without additional disclosure. Because if there are dividends paid out and he wants money he doesnt have to one of the problems with the trump trust people talked about is rather than a fixed income stream which would have been easy. Right. Its basically as much income as he wants, when he wants it. And so that was the structure that when they created it, they could have solved that early on by saying hes going to get six payments of a lot of money every quarter. Right. But they didnt do that. Okay. Thank you. Thank you. All right. Squawk box will be right back. E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade over hereno ver here dog barking whoever threw it has to go get it. Not me somebody will get it. dog barking anyone can dream. Making it a reality is the hard part. From the b2 to the upcoming b21, Northrop Grumman stealth bombers give america an advantage in a turbulent world. And were looking for a few dreamers to join us. Good morning, everybody. Welcome back to squawk box here on cnbc. We are live from the Nasdaq Marketsite in times square. Among the stories that are fropt and center this morning, the Company Behind frenchs mustard and franks red hot sauce is considering options for the unit that produces those foods. Britain wants to pay down debt once its 16. 6 billion purchase of johnson is complete. Some analysts estimate that the units value is more than 3 billion. In other food related news. Listen to this. Conagra brands is recalling some of the hunts chili because of salmonella concerns. There are been no reports of people becoming ill. The Kevin Johnson takes over as chief executive office of starbucks. He is replacing Howard Schultz who remains as chairman. Starbucks shares have been volatile after that change was announced back in december but did close at more than a twomonth high on friday. Drink my night row. I learned about this when i was out there. Remember this . What is nitro . Ice coffee, but im down to this amount so ive drunk most of it. And it has nitrogen in it. Almost like a guinness. Remember i drank this on the set. Its great. Were going to talk about the fed. There could be a 4. 5 trillion Government Bond sale on the horizon. Steve liesman joins with that. Were talking about the elephant in the room and the thing is that no one talks about it. Everyone knows its there but no one says anything. Fed officials starting to talk gently about the 4. 5 trillion elephant. That is the Balance Sheet that it has, which is four times the size it was before the financial crisis. At least three fed officials last week spoke about the possibility of the Balance Sheet running off this year. And that is earlier than many in the market expected. The most likely move by the fed would be to announce a longterm runoff plan. That means when securities in the portfolios mature it would not reinvest the proceeds shrinking the Balance Sheet. It would likely also stop raising Interest Rates at the same time at least when it announced the plan and embarked on it. Finally the fed would most likely allow more mortgages to run off first or faster since many want the Balance Sheet to be all government treasuries. The plan is fraught with risk. The reason the fed is raising Interest Rates, before reducing the Balance Sheet is that it doesnt know how to calibrate a decline in the Balance Sheet with affects on Interest Rates and the economy. What we know is not very much. Studies suggest that the feds bond purchases or quantitative easing, reduced Interest Rates by 90 to 200 basis points. Thats a very wide margin and its why people dont necessarily kick the elephant out of the room. They dont know if its going to fit for the door or take a wall out on its way out the door. Its all hard to say. Just because it seems like rates really werent that different than they would have normally been given Interest Rates around the world. But then you wonder how much we actually are big enough that youve been influenced around the world. The other Central Banks did quantitative easing, too. Maybe we all were if your problem, which is i think correct with the counter fact yule. The basis of quantitative easing is what would have happened. And the lonic was, we went to zero and the economy, they felt, necessitated lower rates. So how do you do that when youre at zero . You buy bonds, you take them off the market. This was a big story. I want to mention three other things and you tell me what are the biggest stories to talk about. Riding, you got the fed moving the freaking goalpost now on inflation. They did it on unemployment from 6. 5 to 6 to 5. 75 to 5 you talk about that okay all right so thats not true. I agree with you. Thats a nonstory. Okay. And the fed has emphasized that they want a sustained 2 inflation move and a symmetric target. So that story the second story is why is the yield curve flattening . Is it for technical reasons . Doesnt mean were going into a slowdown does it . And the third one was, i had a third one, too, im going to come up with oh. The Energy Department. Energy department. The envelope department. Want to talk about Energy Department . No the third one was that the latest move down in yields has been Short Covering because everyone was technical. Everyone was set up for the inflation trade i think those two questions are linked and im going to let john take them. I think theres a fourth one, could we get the Corporate Tax cut. Its all related. The entire rally in the equity market since november 8th. But going back to the fed, one of the reasons, we believe they will get started this year, and weve been saying that for awhile is next year is the biggest runoff year how much. 424 billion dollars runs off the treasury portfolio next year at the fed. And, it are they going to let it roll off . Twice pushed the short date debt out so theres this big camel hump of a gear are they going to let it roll out . Well if they dont, then if youre going to get your Balance Sheet down by runoff and you reinvest 424 billion youve missed an opportunity. But thats what theyve been talking about. It stays around for a long time. And ive been surprised by yellen not being a little more committed to the idea. I think the message from the fed is clear. They want to get the Balance Sheet out of the conversation. They dont want to make it an active tool of monetary policy. They want to put it on some background formula. So, when the fed did the tapering, they tapered 10 billion a month and that was it. So i think what were going to get is some kind of plan that says this is our Balance Sheet. And they need to get the Balance Sheet down, lets say they have a fiveyear plan they need to get the Balance Sheet down to about 1. 8 trillion. So they need to get about 2. 5 trillion off the Balance Sheet. They could let half the treasuries run off and that will give them the treasury only portfolio. And then just let the mortgages run off completely. And theyve been running at about 30 million a month. So, i think were going to hear Something Like that around humphrey hawkins. 30 billion in mortgages. You think you hear it in july . Humphrey hawkins is the time to say were not starting this now, but this is the conversation. Joes interesting question which, to me, its all related, right . Which is that if you were to have a Balance Sheet runoff, in the sense that we have a rise in Interest Rates, but i think the market right now separate from the bond market separate from the stock market is rethinking the economic agenda here. And how much is going to come through. I think that decline of what about 20, 25 basis points, happened in the wake of health care. I think its absolutely right. The stock market hasnt lost its optimism. The bond market has. I think youre right. The bond market right after the election made its major move. Right. On the fear of large deficits coming from tax cuts, and the infrastructure. Maybe a trillion dollars over ten years was a sketch of what the plan might be. And now, we, health care is behind us. May come back on the table, who knows. I think it was good to put it behind and move on to taxes. Taxes are unclear. Infrastructure unclear. The skinny budget was very skinny. And so now all of a sudden maybe we dont face that really big deficit increase. Were going to face big deficits. And i do think rates are going higher. I think the feds portfolio runoff will push rates higher. But we had a really big move in the market. We were at 160 a year ago. The bond market thought gridlock was over because we had a one party rule. They just didnt know there was going to be gridlock in the one party. What i think happened is the election took the focus off of the problems in the Republican Party and put it on the problems of the democratic party. And we thought well they have problems. And they do have problems. But we knew before there were problems within the Republican Party. And they have to figure out a way to run that party if theyre going to have get some of this agenda through. And i think people are starting to discount that right now that youre not seeing the optimism with the big tax cuts. The optimism, obviously also concerns about the deficit that were part of the trump agenda. In the u. S. Youve got a twoparty system which behaves like the uk but it behave likes a sixparty european country right now because of factions within the different parties. And i think that that makes progress difficult, as does, of course, the ability of the democrats to whats your answer, joe, to the Freedom Caucus . I heard you talking about them in the morning. I told you i have empathy. I know. I have a lot of empathy, but i dont think you can sooner or later when youre not the Opposition Party you have to govern. Figure out a way to govern. I agree, though, on the democratic side. Did you see, we had perez on last week, did you see his speech . He made Michael Moore look like hes out of his gord. Hes unhinged. Did you see that . I did read about it. Thats the guy they picked to run thats going to bring them back . They made schultz like reasonable almost. Anyway, thats not oh. Why are you sighing over there . The commentary. I said nothing. I said nothing. You said nothing . Maybe he said nothing. When we return, baseball season thanks john ryding. Baseball season getting officially under way. Well talk with chairman tom werner from fenway park in just a moment. A moment. You totanobodys hurt, new car. But there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do . Drive threequarters of a car . Now if you had Liberty Mutual new car replacement™, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. With Liberty Mutual new car replacement™, well replace the full value of your car. Liberty stands with you™. Liberty mutual insurance. Welcome back to squawk box. Getting closer to the opening. And the markets and beginning of, is this the Second Quarter . Beginning of the Second Quarter. Oh, you know what . Joe doesnt have a microphone. I have it. It just slides off. Here it is. Opening of the Second Quarter, up 22 points. 23 points now on the nasdaq indicated up 8 and the s p indicated up just under 2. Okay talking about openings. Today is the big open of baseball. Open for business. The Boston Red Sox home opener at fenway park is just hours away. Here to talk about the business of baseball, big money sports, media, and the red sox nation lets bring in tom werner the chairman of fenway sports group, and the Boston Red Sox. And you are there at fenway park. Good morning to you. Good morning. Its a great day for baseball. It is a great day for baseball. Let me ask you, on this opening day, as youre thinking about the rest of the season, and dare i start out on a negative note, how do you look back at the past nfl season in terms of what happened with ratings there, and how you think Major League Baseball is thinking about that relative to this new season . Well i think that you have to look at it like theres still a dominant sport. But like all of us, we are providing a product, and you live in a world in which Attention Spans are getting narrower, and youve got to grow the game, we have to grow baseball just as the nfl has to grow its game. So you cant rest, and it doesnt mean that baseball isnt thriving in boston, our ticket sales are up this year. Our ratings were up 28 last year. But, you have to always be vigilant, because were in a very competitive world. Tom, tell us whats on tap then for this year . What would be are there going to be differences, distinctions in the game and things that youre doing differently . Well, we have to be in concert with the players on changes. And as you may know, im on a pace of play committee. I think that the game is crisp, but you know, at one point the nba decided to do a threepoint shot from beyond the perimeter. So we have to just make the game as accessible as possible. Just a small thing i was talking to somebody yesterday about trying to limit the number of mound visits. But what were trying to do, obviously, is continue to grow the game. I think its the greatest sport in america. And, we need to explain to our players that what were doing isnt too radical. Its just trying to improve the product. What would be the ideal length of a baseball game, in your mind . Well, you know, i dont think theres an arbitrary length. But right now the games are a touch over three hours long. And you can see that people are coming in and out of the game. Its hard to commit a threehour block of time. But, as i said, the most important thing is to make it crisp. To try to narrow down the time of inaction, and just to shave a few minutes off the game each year if we can. So your favorite is that good or bad . You and the cubs are composed to make it to the world are you happy about that . Are you going to lower expectations, tom . Well, its nice to be popular. But, i wake up today, the yankees are in last place. So the years starting out on a good note. Hear, hear. I see the cubs lost yesterday. But baseball is a marathon, and you know, its weve got a competitive team. We won our Division Last year. But we didnt finish the job. And, well see how it goes. But, we have a very Entertaining Team this year, and im looking forward to the first pitch in a few hours. Pitching is going to be it, if you do it, right . This new guy is pretty good . Chris sale is awesome. We have a dominant pitching staff. But, well see how it goes. Its going to be a lot of fun. I want to know i dont know. Maybe it could be a surprise, right . What is a world series win worth to you, by the way . What do you mean in terms of what is a world series win its a business show. Im curious if you get to the world series. Not just in terms of the additional dollars that come in from the from the league and what the players get, im talking about what happens to the team . Well, the cubs, well see what happens to the cubs this year. Its very hard to repeat. Thats one thing for sure. Because its such a competitive game. But obviously a world series brings more season Ticket Holders back the next year, and it creates a great sense of spirit. You know, bostons so great, you know, were going to celebrate the patriots today for their fabulous super bowl comeback. And the spirits in boston, you know, sports, as you know, is so important for the psyche of the city. And people here are so happy that winters over, and play ball. Tom you were saying the ticket sales were up this year. What does that say about the economy in boston, or does that Say Something about the team . Does that Say Something about live events . I think its about putting on an excellent product. We had not just david ortiz last year on our team, but mookie bets who was an mvpandidate and Rick Porcello who was a cy young winner. So weve got a great chemistry on our team. And i think fans like to see the new stars emerge. And weve got a bunch of Young Players who are emerging this year. So, its really about putting a product that people are willing to spend their hardearned dollars for. And going back to where we started. Valuations of Major League Baseball going up, down, staying flat . I ask only because clearly an issue about or there was an issue about ratings in the nfl, and espn, youve read the articles on the cover of business week last week, someone tweeted out actually a season of game of thrones costs 100 million. Thats less than whats spn pace for one single game of monday night football. What that ultimately means to teams like yours. Well, i think if youre in the game, if youre in any professional sport i think youre in it for the love of the game. But, as an asset class, were obviously on cnbc. You could say that its an asset class owning a professional sports franchise, and america has been a terrific investment. You could see the rumors about how much the Miami Marlins are worth, and its a great investment, because its, as you know, there arent very many of them being made, and youre part of something that is part of america. So if i was looking to invest in something, and not stocks and bonds, id try to find out how to be an investor in a professional sports franchise. Tom, we love having you on the show. We wish you a great season. Thank you. Thanks for having me on. Appreciate it, thanks. When we come back, jim cramer will be joining us live from the new york stock exchange. Well get his take on todays top stories. Dear predictable, theres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced, our senses awake, our hearts racing as one. I know this is sudden, but they say if you love something. Set it free. See you around, giulia marchs Consumer Confidence rating soared past the estimates. A month after this lets get down to the new york stock exchange. Jim cramer joins us. Happy first day of the quarter, jim. So we had 4. 5 on the dow, 10 on the nasdaq. Does that mean that we need to temper our expectations for the rest of the year . Or could we ever annualize that for four quarters . That would be unbelievable if you can annualize it. A lot of the nasdaq stocks that went up moved in the last six weeks and they go up during a slowdown. Tend to be biotech and some of the highest growth techs that do not need an accelerated economy. The stuff that sat there were big industrials. But the industrials had a big run. I think the money can cycle back into senior Growth Stocks and stocks like a disney that could go again. I think 3m and mcdonalds can go again. I think there are stocks that could have a big run. Even if Interest Rates stay as low as they are and it does not end the bull market. Are you kidding me, the money rotates to another segment. If we only get mid to high Single Digits which is what everyone forecasts now, all the sell guys, mid to high or mid to Single Digits, is that the most likely scenario . Id that would be very boring for next three quarters if we get another 2 or 3 or do you think well be surprised and do double digits . Look, if you get any sort of tax relief, i mean they have all doomed tax relief already. The papers have doomed everything and i just think thats unlikely. I dont think that everything fails for trump. That would be how we could not advance from here. But if anything goes his way, i think that you actually tax reform i think youd see double digits. That wouldnt be that hard. Tesla, cheap or expensive . Oh, it doesnt matter. You cant short tesla, because they have the 10 cent money. The fact is theyre ready to do model 3. This is a big deal. I know, listen, its all done with smoke and mirrors but a lot of people are buying teslas. I would not short this thing. I would be long it rather than short it. Long it rather than short it. 45 billion is not that much. Well, if youve got the moe it got the money it needs. Now its got the financing. You can start to make as many cars as he wants. Whos going to win the masters . Oh, geez, thats your department. Thats hard. Whos going to win tonight . You know what . Im rooting for North Carolina because i just think i think North Carolina is a great team. Im not going cinderella. I love three guys on North Carolina and i have been watching them all along. Thats who i biggpicked early o. I cant win do you know whos doing to win . Like the last person we want to win if North Carolina wins. Because it will never well never hear the end of it, brian steele. Well never he will be so obnoxious. Its okay, the mets are starting. The mets start play. Thatll bring him back down. So fine, let him have it. You know . Because the mets are starting. Last moment in the sun . Thanks, jim. See you every pig finds a kernel of corn as they say. Heres a quick programming note. Tomorrow on squawk box, dont miss outgoing ceo andy puzder. Im so glad hes coming back here. Well talk about the racy commercials too. Its time for your entrepreneur of the week. Danielle will never sell online. The owner of the fiber space doesnt want to process web orders. She wants to connect with customers at her store. Using social media she entices people to come in and buy. For more watch your business. Will your business be ready when growth presents itself . 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Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Stocks to watch this morning, barrons making a bold call on under armour saying shares of the athletic retailer could rise 30 in the year and the paper says that the company is likely to increase sales at a double digit clip for several years. Caterpillar is transferring production at the plant to two existing plants. The aurora plant has 650 workers. Lets get a final check on the markets today. U. S. Equity futures on the first trading day of the quarter. Looked like theyre going to open slightly higher based on the futures. Dow futures up by about 22 points. S p futures up by two. The nasdaq up by 8. 5. The 10 year note is still yielding right around yeah, still just under 2. 4 . Showing some oil while were at it. Yeah. Wti crude, 5074. Make sure you join us tomorrow. Squawk on the street begins right now. Good monday morning. Welcome to squawk on the street im carl quintanilla. Welcome to april and q2. Complete with global pmis, we have auto numbers on deck. Europe is mixed, ism coming in at the top of the hour. And crude is still hovering around 50. We begin with the Global Markets where they left off the modest