>> welcome to "squawk box" here on this monday morning. becky is off today. we have michelle caruso-cabrera sitting in. >> good morning. >> a lot to talk about. we did have a three day weekend and the european markets are closed today for the easter holiday, but the u.s. markets get hair first chance to react to friday's jobs report, economy adding only 1020,000 monday farm payrolls in march. unemployment rate dropping to 8.2%. there's a participation rate issue and we'll talk about that. let's take a look at u.s. equity futures. you can see red arrows across the board. dow would open about 135 points lower. nasdaq off about 33. s&p 500 also off about 18. we didn't have a three day weekend, but the rest of the world did. >> i did. >> equity markets had a three day weekend.

>> you're lucky you're not eating one meal a day down on some cuban prison. did you talk to anyone that talked to the pope is in jail? anyone who said i'd like to talk to the pope is in jail. you had no problem getting back. >> i swam. >> that's why it took all week. >> i think that's kind of cool to make a 56 chevy sea worthy. >> they've done that multiple times. >> it is is a. a sad thing that people are that desperate. but you saw down there, it's a bunch of old clunkers driving on the the roads. >> what's amazing is that the u.s. cars in the '50s are in better shape than the soviets. >> i hope you're listening. >> i've seen this, i know. >> the slide to socialism that you are constantly sort of promoting, this is what -- >> do you know what my favorite sound bite was when i was there? the treasury secretary says we

will never allow the farmers to buy and sell their land because the most productive farmers would then be able to sell -- buy all the land from the less productive farmers because they would have more money. and that would lead to inequality. it's just not fair. never mind they can't feed the people. >> at least maybe just to keep it fair, kelly evans is here. >> because he's young, she's probably with on you this. >> don't make this an age thing. >> you never heard that expression, if you're 30 and -- >> if you're under 30 -- >> if you're 40 and not conservative -- you're not 40 yet. anyway, and you know we're ganging up on you at 7:00. >> i can tell. >> you know who is coming in, john taylor. >> i saw. it will be a long three hours. having said that, my boy bubba

watson. >> you could not have picked bubba watson out of a lineup on friday. >> that's not true. i mentioned him to you. i said who is going to win, bubba watson. >> hold on a second. i watch oosthuizen. but i said who do you think is going to win. you came up with one name and that was tiger. and your second one was phil and then you looked at something in in the paper and you came up with key began bradley or bubba watson. >> bubba is my boy.egan bradley watson. >> bubba is my boy. he hits sort of crazy. sort of like me. except he actually gets it in. >> he moves the ball left and right. he's amazing. and i forgot that he almost won

the pga. and his father was in late stage battling cancer and he wanted to win a major and his dad unfortunately, he lost in that playoff and then his father died. so i don't know if you saw the emotions that came out when he won yesterday. it was just full on wooeeping about and he has a baby now. he has a son. it was awesome. >> off camera you said you thought you had never seen tiger so humble. >> humble and contrite. he's probably going on get fined. we won't know. >> for kicking the club. >> for he can cannikicking the . we expect a lot from tiger. there's a lot of golfers that were two or three over, too. so it was disappointing for tiger. >> that's why the bubba story was a nice way to book end it. >> kuchar is great and

oosthuizen, a 250 yard four iron that went in for a two on a par 5. that's like a hole in one. >> i'm aware. >> the rarest of all things happening. >> i learn at joe's feet a lot of things including golf. >> speaking of people's feet -- >> i carried them in. >> you're hot wearing shoes? >> i am, but they're -- i have the little slippers on the floor here. >> you're feeling pretty comfortable here. what are they, slippers? >> should we show people? >> i guess so. >> they're little slippers. >> those look like ballerina -- >> exactly. because the ones that i'm wearing are just decidedly not ballerina. >> i wouldn't call them dinky, but you're tall -- >> that's why they're flat, i don't need to be any taller.

>> we have to move on to the news. >> a very busy week ahead because earnings season personally kicks off tomorrow. we'll get a number of government today the a reports including import prices, the fed's beige book, jobless claims, producer price index, international trade. also china's gdp. the average price for a gallon of gasoline rising four cents during the past two week. on the bright side for consumers, that is the smallest increase since january. national average now $3.96. survey editor says if about crude oil prices stay steady, gasoline prices will peak quickly if they haven't already done so. prices already have falling in some cities including chicago and los angeles. >> did you see catalina, california, $7 a gallon.

>> a lot of hybrids there. >> yeah, that's what we want. >> i don't know what direction he is. >> if europe, it's $9 and $10. they say yeah, but it's good. i just don't think it's good to an economy. and what worries me is let's say you said every dollar in taxes goes to lowering the deficit. don't they always find a way? oh, on, we've got some other here. and then we wouldn't have on go here. >> what if they said this was going to go towards rebuilding infrastructure. >> same difference. like high speed rail between two cities in one really uses? >> no, have you looked at the last lee department of transportation bills is this very little actually goes to the -- >> do we have a highway bill passed some had. >> no, we don't. but look at the last several. there's almost no highway spending in it is the problem. >> is that because there's no funding for it? >> no, because they decide they're going to do build a

museum dedicated to the pack arrested or a film about roads in alaska, they'll build a bike path, they'll build turtle tunnels. >> do you like the shovel ready intra structure in the last $800 billion stimulus? >> right, how much did we get out of that? >> what's unfortunate nalt is doesn't change the fact that the the infrastructure needs repaired. >> but to justify raising taxes on gasoline because of that? >> do you think the rift sector can address it, is there a way to do it? >> there's a lot better ways. first of all, you have to revert that -- this is a divergent topic. >> i realize that. >> you have to divert to the states. >> but i don't know, the states right now being as strapped as they are? >> it if we're going to spend it, that's the least of evil trying to do it that way. >> they pass the gas tax take they want for the bridges and roads that they want and that

way the user and payer is actually very close to each other. >> the opposite end of the spectrum from california is wyoming. last time i checked, wyoming is like $3.30. partly because of lower taxes, but also some of the benefits being near -- >> but if you asked floridians, we're going to raise your taxes equivalent amount for high speed rail, do you think it would pass? if it wasn't done at the federal level? >> for high speed rail? >> they said no, they don't. >> you have to do it for bridges other infrastructure that exists. >> did you see the geiseling uy the town for wyoming? that appealed to me. vietnamese guy and he was a veteran. he lived there -- he wasn't alone. it was population of one, buford, but 1,000 people come through every day. >> have you seen the ebay listing for greece some last time i checked, it was like $1200 or something.

>> greece as a country, their option was -- >> what happened to my obama administration? >> you had some obama administration. >> about fannie and freddie. >> the big question this morning, how are the markets going to react to friday's jobs report. he wil kelly evans -- >> is she here? >> apparently she joins uses now. so look into your crystal ball and tell the world what you you think will happen when the markets open this morning. >> i think the futures are telling us it will be a negative reaction. the question is whether the data that we get out does something to turn that sentiment around or not. we can't speed forward time. it would be great to know if the next jobs report and the one after continued to go back up to the 200,000 level that we saw or if this slowdown is more substantial. if we start getting day a saying

maybe will was some sort of aberration, things could turn around. but i think bernanke is speaking today. he'll be the one to watch because when those minutes came out last week, even though the meeting was a month old, people read them us a hawkish. so does he walk some of that back, talk about what else the fed could do. that will be the main thing to watch. >> the employment numbers weren't bad, but they weren't good. if they were bad, the traders would have said the window to qe-3 is much wider. the number wasn't bad enough. >> it was pretty bad. >> courtesy of our friend ben white, morning money, who is then court he is city of hamilton play strategies, will this is on the election, he says that the unemployment rate, if you think the 8% is key for

obama, if the participation rate stays where it is, 63.8%, president now needs only 176,000 jobs a month to get below 8%. >> this would be back to where it was when he took office. >> obviously that nt would woul for you -- >> that's why it's so critical. there's something about march that was a one off. is this year different from 2011 and 2010 or not. >> maybe it was something about the weather. >> we don't know. >> about we get $4 a gallon gas tax, we should be able to get that down to about 20,000 a month for unemployment. but we'd have nice bridges about. >> or if we did a major government austerity program. >> why don't they have austerity over in europe where obviously that should make things slower. we should double their credit

card. >> up these freshman house republicans taking credit for what's going on in the which i. ha economy. have you seen that? quotes all over the place from the freshmen now taking credit for the economy getting better. because they pushed back on all the government will -- >> what's moore redick could yo lugs, you're fully prepared to let the obama administration take credit. >> no, that's ridiculous, too. >> concern says please don't mistake a great american economy and great american citizenry in what we can do with government programs. to actually attribute the

recovery that we're seeing to government programs -- >> that's why i'm saying it's ridiculous for the republicans to take responsibility, it's deck could you wlus f -- could you argue that you could maybe give credit to bernanke. >> i don't think anyone should get credit for where we are four years later. we're still missing 7 million jobs. >> but you're not the worst of -- >> we'll have john taylor on. it's the worst recovery in the history of recoveries. most tepid recovery that we've seen. there has to be a reason for that about. >> and was in the worst crisis that we've ever had? >> you could argue that. 80, '82 was pretty bad. >> i would argue it was a different kind of bad. there was a lot of supply side bad in the '80s. i'm not sure that's the main problem. >> when you get a misery index of 22%, that's pretty bad.

a lot of misery. joining us now -- >> i'm really helpful, aren't i? >> joining us president at heritage capital. paul, what's on your mind this morning? >> well, besides bubba watson winning the masters in dramatic fashion, good morning, joe. i think the job numbers are so volatile. pre-crisis, they were volatile. and they still are. we're making way too much of one number. we made way too much of one number last month. we're doing the same thing in the opposite direction this month. the recovery is tepid at best. the fed has thrown everything but the kitchen sink. the kitchen sink will get thrown at the market. when qe 1 was launched, we'll have five qe 1s, we'll have a $5 trillion balance sheet. i still think we're headed in that direction. >> so we've been back and forth on just like with the jobs numbers on whether the fed -- we had bernanke who sounded like he

was going to talk qe-3 and the market wen160 points. a couple other fed guys said no way for qe-3 and the market was down. stimulus is drying up. then one jobs number and we're back to qe-3 again. it's almost like i'm getting whip lash. >> the big problem is don't forget you have a really divided fetd. probably the most divided fed in the last 10, 20 years. that's problem number one. last week we were almost to the point where good news is bad news. remember those days when good new was supposedly so good, we had to worry about the fed raising rates. thousand one number, we're back to, okay, maybe we'll get a little worse news and the fed will come in and rescue us. at what point do we say, all right, let's let the economy stand on its own two feet. the government can't rescue every single bad number.

let's let things work themselves through, get private sector hiring, let's continue to reduce the government's long arm. let's hopefully get a little less stringent regulation because we swung the pendulum from no regulation and now overregulation. everybody should calm down and let the system work over time. time will cure all that ails us. just like in europe. ten years from now, europe will be lean and mean. it will be a tough slough to get them there, but people are way too dependent on the government to rescue us. >> you want europe to keep spending. >> no, i -- i'm skeptical that europe will be lean in ten years. i'm not sure that being significantly worse off five years from how will ultimately turn things around for them that quickly. >> are you making reference to the idea in a they'll do a lot of reform there, finally saying the unions are not control more than 50% of all the salaries in

the economy anymore? >> listen, the way europe is going as joe has talked about many times, we've run out of painless solutions. take your pain one way, take your pain another way, you'll have pain in the next two, three, four, five, six years. i do think you'll have labor reform. to me greek r greece is the no not the issue. you're looking at mainstream, you're looking at germany, france, italy. people have had enough and it will take time. look how far we've come. corporations are sitting on $3 trillion in cash. you can argue that they've done it because they don't like the current administration or the way regulation is going, but the bottom line is our companies are leaner and meaner than they've ever been. i think europe and the

governments are going to get take way. it will just take a longer period of time. in the short term, u.s. stocks are on fine footing. i think we get a look at all-time highs in the next three to nine months. >> all right, we'll see. we appreciate your time this morning on a monday. we'll give a bit back this morning, but we'll see where we are on friday. >> coming up, if you're looking for nfl ticket, you'll want to hear our next story. first as we head to break, got to watch this will. bubba watson on his amazing finish at the masters. >> got in those trees and hit a crazy shot that i saw in my head and somehow i'm hear talking to you with a green jacket on. zap technology.

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take a look at u.s. quequit futures. red arrows across the board as markets try to digest the news of the unemployment numbers. making headlines this morning, hunger games winning a third straight weekend he box office. the movie raising its domestic total to $302.8 million. easily outearned two returning favorites, american pie sequel and a 3d version of the blockbuster eye tannic.

ticket master extending its agreement with the nfl. michelle. >> now today's national forecast. scott williams joins us from the weather channel. >> good morning. i want to start with some interesting statistics from noaa. the month of march, over 15,000 record highs making it the warmest march since 1895. also the first billion dollar disaster occurred during the month of march, that was the tornado outbreak around the ohio river valley. estimated at $1.5 billion. a fire danger across parts of the northeast and new england. we're looking at dry conditions, but also gusty winds. that will likely cause airport delays. we'll find those winds gusting up to 40 miles per hour later on this afternoon. boston, that gualouisiana guart

philadelphia. otherwise as we look at the temperatures hour by hour, by 12:00, upper 50s morning city. clouds and showers for you northern sections of new england. and by 5:00, low 60s morning city, upper 50s in boston with windy conditions. sunshine expected across parts of the southeast. temperatures looking nice. by 5:00, orlando 82 gldegrees. 76 in atlanta. so the overall perspective as far as your air travel, we'll watch clouds, a few showers across parts of the upper ohio river valley toward the pacific northwest, as well. boston, new york, watching out for those windy conditions as we go in time. that will likely cause some airport delays. back to you. >> if you're just waking up, u.s. equity futures are under pressure following friday's jobs report. we'll get the early read from the trades pits in chicago next. first, easter monday, that means it's time for the annual white house easter egg roll. children from across the nation

will take part in a white house tradition that is in its 134th year. this year's theme is let's go, let's play, let's move. it encourages children to lead healthy and active lives. >> look how cute. >> as we head to break, a look at last week's winners and losers. [ horn honks ] hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important.

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welcome back to "squawk box" here on cnbc. we are approaching 6:30 on the east coast. i'm joe kernen along with andrew ross sorkin and michelle caruso-cabrera. becky is off today. much less hazardous pay for you. >> he's not as socialist as they were in cuba. >> that, we can say. >> for sure. >> are you sure? >> well -- >> you're talking about me like i'm not here. >> every time i met a government official and i said she's changes that you're making in the economy -- do not misunderstand us. the state will always be firmly in control of the economy.

>> as should be. >> and speaking of that, making headlines, the obama administration wants fannie and freddie to start reducing loan balances for troubled borrowers. but hud secretary shaun donovan says there must be safe guards to prevent the gses from purposely defaulting to obtain relief. the fhfa is evaluating whether financial incentives will be enough to cover the cost of fannie and freddie writing down mortgage debt. >> is this principal write down? or through reduction on interest rates, extending -- >> a lot of things you could do. this isn't going to happen. >> you wish they would have said -- do you wish dodd frank had something in there? would that have made any sense? >> if you forced fannie and freddie -- >> dodd was the biggest -- he

got more money from fannie and freddie. and then you had -- >> would it be possible to have that conversation without it being political? >> how is it not political when the reform is dodd frank and you have barney frank says i'm willing to throw the dice. >> how about it we approach the issue of what to do in the context of what would be best. >> that was the spirit of the renlg question. if you were trying to solve the financial crisis, how come fannie and freddie weren't involved in. >> and i would argue it should be addressed in some meaningful way. >> instead of sterilizing the government's complicity in the whole -- >> denying it in fact. >> and you had like -- >> as you both look at me as if i am the government. as if i am the representative. >> five minutes ago you were the cuban government. >> so this is a step up.

this is really something. i got an e-mail from barack, i got to go. >> someone gave money in my name -- i mean, plouffe messages me, every other second i look down and i go, oh, no. john kerry messages me. >> somebody really gave money in your name, could you take three days off. >> i could get in trouble. someone could see that and -- i give no money. >> neither do i. a wonderful excuse. >> but you can't go to fund raisers. in corporate news, sony reportedly cutting 10,000 jobs. their new ceo trying to bring the electronics giant back to profit after four years in the red. this is a company you never really thought would ever be talked about in the past tense. japan nikkei newspaper reports seven execs may be asked to hand back bonuses. they will consolidate small and

mid-sized lcd operations. roche may be willing to boost its bid for al lum inillu. roche had bid $44.50 earlier in the year. and then bumped the offer to $51 at the end of the month. but it is still not enough. and in a much smaller deal action today, appal low raising its cash off to buy great wolf resorts by 35% to $225.7 million. private equity firm outbidding rival ksl capital partners for north america's largest operator of indoor water parks. i know both of you like to spend time in indoor water parks. offer now at $6.75 per share in cash up from the $5. >> a bunch of people, strangers,

thousands of strangers all -- i don't know. >> i like them outdoors in florida. they're nice. >> a swing like that looks cool. i'd love on do that. >> you're perfectly able if you so choose. >> i absolutely have. >> you've been to a water park? >> many times i've been to water parks in maine, new hampshire, florida. maybe new jersey. love it. love a good roller coaster which is a separate issue. but love a theme park. >> all the common people around you? >> all the common people. i'm actually against -- there are now at disney world the vip passes that you can get. i'm against using those passes. >> and why do i think you'd be surprised that that's not pair. >> that's not why. because i'm going to get this trouble for saying this because i have friends who watch the show who use those passes.

but i remember as a child waiting in line for hours upon hours to get on the rided and i thought that almost made the experience that much more exciting if i could just get on all the rides whenever i wanted, it would feel less special. >> that was the worst experience, all those kids fainting in line for the dumb bow ride. no way. and it's not very important people. just if you pay a higher ticket price. >> someone that we both know, hedge fund manager, he has a very interesting policy with his children. they go for three days and the first two day, they have to wait about will line with everybody. and then the last day they buy the passes so that you can actually go on all the rides that you loved the first into days but -- >> he also makes his kids sit in the back of the g 4 on the way down. they're not allowed in the front of the private plane. is that the same guy in. >> sore does he make them fly commercial 1234. >> they fly commercial.

man after my own heart. now to the markets. jeeves would have something to say about that. good morning, scott. look at scott. he is so tan. and tan against we should say against that jacket. i mean, really -- >> raids cattle. >> i know he does. but, you know, it's pretty incredible. so jobs report comes out on friday. what's going to happen today and what's the fed going to do about it? >> or not. >> well, i think the specter of qe-3 is definitely back on the table. if anybody's got an answer to this, i'd like to hear what they have to say because we're now accused greece of kicking the can down the road. that's exactly what we're doing here. we have four years of trade dollar did he ever sits. we've thrown hundreds of billions of problems at will this problem. we have qe 1, qe-2 and now the specter of qe-3. if i told you that was the case, you might guess we're growing at

7%, 8%, but the best we can do is 2.5%. our tax revenues can't cover half of the deficit and now student loan debt at $1 trillion a year which we're now writing off a quarter of that. so i think that we've got an issue here where we can't find true growth and it's starting to show up in the jobs numbers. >> so let's just walk through today. is it a disaster? >> no, i don't think so. for some reason, and i don't want to be chicken little, as long as you have the government in the game and equity market, and the government's done a great job of inflating the quit equity prices, it will mute the down side here. also i think you'll start to see the ten year rate which is around 205 up to -- it was up

around 240 a little while ago. that will probably make a good run at something under two. i think that you can see we're going to have our bond market telling us now going forward for the rest of the year i think, that will be the truth serum. it's telling us that i think thises really aren't as good as we would like to think they are out there. i'd like them to be good, too. i don't want to be the bear ir of bad news, but ultimately i don't see an answer for what our issues are. we haven't solved jobs and housing. >> i was thinking about this over the weekend. i've heard from some people how great corporations are doing and how you can be negative, how you can criticize the administration for its rhetoric against business when you look at the dow and you look at how well corporations are doing. and it made me think there still really isn't the hiring that you would expect from a really vibrant corporate sector. and i don't know why that is. because we hear that people say if the demand was there, the companies really would hire.

why is there not better hiring if the corporate sector is so flush right now? has to be partly uncertainty about whether they can really bring on people with all the future obligations it they'll have to take on. >> and i also think the last three years technology -- i was in fargo, north dakota a year ago and i checked into a hotel that doesn't have a check-it in desk anymore. like getting on an airplane. you put your credit card in and you get your two keys. so we have in-know straighted ourselves and a lot of people have been displaced and will hasn't been a wholesale retraining. so that's one. technology. but number two is being an election year, we're not going to have any great policy going forward that will give people that great feeling. and number three, i've got friends that own law firms and say they had 130 people in 2005 and now they have 100 and things are getting better for them? >> what about health care costs, what will happen to them? >> that's another overhead that businesses have to suck down and that won't give them any comfort going forward.

they will hoard cash until they get a better feeling. >> scott, appreciate it very much. i'm a little worried going into double dip territory here. >> similar to the pattern of the last two years, right, where we went into up ser and things really did slow. >> but what does that do to your 30%? >> the move on the dow. >> i'm less worried about the s&p. i think stock prices don't always move just based on on the economy, right, because if the economy weakens, then you have the fed back. boosting stock prices again. you have to decide what's this first 30 that we got from october. is that due to the improving economy or due to the fed largess? >> comments or questions, e-mail us, squawk@cnbc.com. coming up, it is a political hot

potato. health care. the cost of it. but scott cohn may have solved a key part of the problem. his discovery of billions of dollars in waste coming up next. [ mujahid ] there was a little bit of trepidation,

not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids.

it's my world. that's my world. ♪

at the heart of the debate over health care is costs. a topic at my passover seder this this saturday. all we can it was talk about health care costs. and paul ryan's plan and other things. but one thing we didn't talk about and this is one thing i imagine most are not paying enough attention to is one of the keys of all of those high costs is fraud. it is rampant and at least 10% of the costs of medicare and

medicaid, this $80 billion health care hustle is the subject of the latest cnbc investigation. scott cohn is in new york with a preview. scott. >> why is will this night different from all other nights? that was a different seder i bet. it is now a huge factor in the cost of health care as you mentioned. and we are in the third year of a federal crackdown on health care fraud. the good news, it netted about $4.1 billion last year, that was a record in the amount recovered. the bad news is there's probably $80 billion, $90 billion at least where that came from. we spent about six months on the frontlines with the people fighting this and they are treating it like the crime wave that it is. 6:00 a.m. and we're on the move toward the gated community that's home to gilbert and elaine kim. mrs. kim is just getting ready to leave for work. there's a slight change of

plans. her husband is just upstairs. 7:30. the kips are in custody. two of nearly a dozen arrested on this day alone. the kims ran this facility, uri medical in queens, in the heart of new york's korean community. the kims have pleaded not guilty along with the others who were arrested that day, but at that facility, authorities say that they found that patients were being given cans lessons and massages billed to the government as physical therapy. you'll hear about that tonight in the health care hustle. also you'll hear about the alleged fraud ring in puerto rico, ten involved in durable medical equipment, a doctor in dallas signing up homeless people for home health care all billed to you, the taxpayers, tonight on the health care

hustle, 9:00 p.m. eastern on cnbc. >> 10%, do you believe that, scott? >> what's 10%? >> that 10% is fraud. only 10%? >> that it's 10%, some say 20%. it's a huge a money. there's $800 billion that are budgeted for entitlements for medicare and medicaid and the like and conservatively 10% of that. so $80 billion. >> conservative live. got to be double that, i would think. >> and some say that. but it's a huge problem and the thing that we found out is that -- the more they tackle this, the smarter the crooks get, it's a huge pile of money, so they're trying to outwit the crooks and prevent some of the fraud before it happens. but a lot of people are actually getting into this, 20,000 providers every month signing up to be able to bill to medicare

and medicaid and a lot are just getting in to this because they want some of will money. >> it's the whole key to the whole discussion, scott. it's like if there's no accountability and no profit incentive, then that's no one to watch the store. doesn't really matter, you can spend as much as you want. but then the other side says when you have to enrich shareholders and you have to pay for profits, you're using all that money that could have been used administratively or for giving care. it's a question that we'll deal with during the election. which is the right way to handle things. >> and we talk about some of that tonight in our documentary about do you turn more of this over to the private sector which plumbb presumably would be better at fighting fraud. but what is the cost of care and a are the wafbasic things at th heart of the fee for service system which incent advises people to make money. >> like brokers.

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doesn't have a swing coach, hear all about tiger. >> a swing coach, they write a book about you. >> there you go. the less people you deal with, the better you are. >> there you are. i like your masters. >> they had me wear green. >> his club head and the way he moves the ball, he is phenomenal. >> as you you know, early in his career, it's always been that bubba watson can win a long drive division. he's won -- >> you heard how many times he said he's twitchy and he's not

going to make those short putts. >> talk money ball with me. how much is this guy going to get in terms of sponsorship? >> well, he does have some openings. peng had one, two, three. he has a ping driver. ping said they have no plan to release pink drivers. come on. in a limited capacity, he has to do that. but he has some openings. >> define that for the nongo nongolfe nongolfers. >> lee westwood wins, it's like nascar, it's over, he doesn't have any openings. >> he wears the $25,000 watch, a richard miele -- >> bubba does? >> yes. >> he's got a marquis --

>> is the whole girl question over? >> girl question? >> can she get in? >> no. and abm is not talking. she was there and she wasn't wearing a green jacket. >> she's a scuba diver. >> i looked her up on ghin, the golf handicap site. he has not logged a round of golf. >> coming up, squawk market master john taylor. we're going to talk jobs, the fed and the economy. much more. stay tuned. ♪ why do you whisper, green grass? ♪ [ all ] shh!

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. it's a "squawk" masters hour that's on par with this newly crowned master. >> another watson is wearing a green jacket. >> first up, former treasury insider john taylor. >> then blackrock's bob doll takes a swing at how the markets could react to friday's jobs report. >> look at this action on two. >> yeah. >> plus a round of money and politics. we've got experts from both sides of the aisle to zero in on what they need to do to win in november. the second hour of "squawk box" starts right now.

good morning. welcome to "squawk box." i'm michelle caruso-cabrera along with joe kernen and andrew ross sorkin. sony is to cut 10,000 jobs. 40,000 at&t union workers remain on the job, even though the deadline has expired. following friday's march employment report, the futures are not looking good this morning. there was only 120,000 jobs created, that was less than expected. the s&p would open lower by 1.3% and the nasdaq would open lower

by 1%. >> i'm watching aol announcing it's selling more than 800 patents for $1.1 billion. the news just crossed wires. microsoft will license more than 300 additional patents as part of the deal. i'm going to conjure up tim armstrong. joining us on the set, tim armstrong. >> this is amazing how quickly you got here. almost like "star trek"ish. we have to be fast. that's our job. >> this is $1 billion. the entire market cap is $1.7 billion. bidding 19.75. this is big for aol. >> it's significant for a couple of reasons. one is this is an asset of the company that people didn't recognize within the value of the company. and, two, the deal is tremendous. it gives us the ability to sell assets we weren't using, still

maintain a very clear and distinct ip portfolio and leverage our tax and cash or buybacks. >> 50/50 on that? >> we would like to return as much of the cash as possible to shareholders and i think we're going to make a clear decision about what to do this week with our board. >> do you want to mention avon real quick in. >> they do have a new ceo, sharon mccall of johnson & johnson is going to take the position. but of course the big sort of larger context is there is a fight going on over whether avon will remain an independent entity and coty is continuing its fight. this may change the dynamic.

>> this was an auction that -- word did not get out at all. >> we ran an auction offer the last few weeks and had some of the largest players in the world in our space involved in it. the outcome of the august did not leak at all. >> who else wanted them? >> look at the bid now? >> it's a remarkable situation. >> it was up 1 point -- these were things you were not using? >> we were not using. >> wachtel was a great adviser for us. a lot of these things get a lot of noise and attention but we did a great job of keeping it quiet. >> how does this change the dynamic? starboard had been trying to press to you sell these assets, it was part of the proxy they were pursuing. >> i think for us our board started last fall looking at

selling these. we went through a vigorous process to do this. we bought back over 10% of the company. >> a year and a half ago if i said to you there's a billion dollars of patents sitting in a drawer somewhere, did you know that? >> yes. one of the things i looked at when we were exiting time warner was the patent portfolio. it's a great transaction for microsoft, they're getting tremendous value but it's a point where the market is strong in terms of buyers and sellers. >> they fond that billion in the cushions of the couch. but there's 300 patents that you're not selling. it's a nonexclusive. how much of the billion was for them to be able to license nonexclusive -- >> about roughly $100 million is for the license.

>> licensing shows the values of the patents we're keeping. this is a tremendous deal. this is not a home run. it's a grand slam for pus. >> h-- for us. >> the 800 are above the nortel auction beech reta-- we maintai keep portions of the patent. >> the "you've got mail," did you sell that? >> one thing we're excited about is this allows us to focus on core respirations, turning brands into businesses. >> the money that doesn't go back to shareholders, what do you with it? >> i think that -- we keep some

cash and assets on our balance sheet. fred reynolds and i have been spending a lot of time with this, as long as the rest of our board. we're going to have a specific program in progress. it likely the transaction will close by the end of the year. at that point we'll have an nonsment more shareholders. >> the $15 pro forma, what does that mean? >> if you put this deal into our earnings, we would have the equivalent of $15 per share in cash. you look what the we're trading at our current share price, you think about $15 of that being in cash. aol is an undervalued company. >> how does this change your longer term outlook for the company? there was a view almost about a year ago when there were lots of questions about yahoo! that you guys would seek to merge with them that is correct you might want to take the firm private.

how do you think about the firm now and does this chang your calculus? >> one thing the minute i leave this desk, i'm going to go back to operate the company. we want to increase the operations through smart unlocking of value. from the company standpoint and industry standpoint we have a clear competitive path in a swim lane and we're going to swim really quickly to aol's advantage. >> to think a lot it have is going back to shareholders, this could be viewed positively or negatively. i always thought you should buy drudge just to even off that huff post. when you read huff post day in and day out -- >> i think huff post does a tremendous job of covering the news. >> but why not buy drudge.

why give the money back to shareholders. if had you something really good to do with it, seems like you would do it. >> we have spent a lot of time and resources building aol. our plan is to orgiven beganically grow. but this is a lot of money compared to the market cap of the company. we want to return a lot of it to shareholders. >> you're in shock from this, aren't you? >> this is a huge deal. in the media space -- >> are you glad i brought it? >> i'm so glad and he was right here. this is serious m&a reporting. among media watchers, you just got a new deal. you're going to be staying with the firm through 2016. but others watching and noticing our ann huffington getting increased responsibility, taking over more and more of the

business side of the company. what's going on? >> let me just clarify one thing. i think the "new york times" article that came out last week, when i first saw it i thought we probably could do a better job with the accuracy of that report because i think what we're doing with ariana is having her focus on the huffington post and drive that. it's gone from being a blog into a global brand. there's a lot of other executives at the company. i think this patent is a great example of the management of the company. you have julie jenson, you have arnie jenkins. we're in a position where we can have a set of superstars focus on different areas. the article said something about power consolidation, those things. this isn't "dallas." this is a company where we're operating a lot of assets that are valuable and we're going to continue to have lots of strong

executives in different areas of the business. >> can i ask you one last question? >> sure. >> you mentioned you had goldman sachs as your banker. it's rare we have goldman on the set. since the greg smith letter a couple weeks ago. over the past year and a half, all those questions about being a client of goldman, what it manse, are they conflicted? i'm just curious. >> i think the banking business, especially when you do transactions that we just did is about trust and getting the right outcome. we had anthony noda and roger altman, who is on this program a lot from evercore. i've been a customer of goldman sachs for many, many years and they have always done a great job serving our business and i think that they did a tremendous job on this deal. >> excuse me for being cynical, but we have a lot of deal people on, right? and you were right there within

the first minute announcing who your advisers were. you're not getting like a 1% cut in your fees, nobody asked you to endorse? >> there's so much rhetoric and criticism of the firms but when you talk to the clients, they're not leaving and staying. when you have a ceo with a deal like this on a day like this it's worth asking the question. >> he said in his piece it's going to come home to us. until it does i'm not willing to take his side as anything other than one person. until you lose clients -- you can't stay in business if you're not client centered. >> they've been in business for a long time. >> this is the most sensitive deal we have done as a company since the spin-out of time warner. the fact we put our trust in certain advisers tells us a lot -- >> for me to get wind of this. this was so quiet. for me to sniff this out, i'm telling you. >> final, final question, we haven't talked about it at all.

from your perspective, what does this do for microsoft? how does this chang for the game for them? >> i think it does a couple things for microsoft. i think microsoft is one of the best people in the world at recognizing ip. they clearly saw the value in this. number two is they have licensing programs for patents. steve is excited. his team did a great job. of all the groups we worked with, his team was the most professional, the fastest in doing this deal. >> even your old employer google couldn't get -- they weren't the fastest? they couldn't get their angt together to do this? >> we put up a big fair, fast auction that had a lot of dynamics to it and a lot of interest -- >> was google in there? were they trying? >>. >> if larry was not in it, i would have been shocked. >> thank you. >> thanks for having me. >> tim armstrong.

and john taylor, so excited to have you on today on "squawk box," he served as undersecretary of international affairs for the treasury department, teaches economics at stanford, he's author of the book "first principles, five keys to restoring america's prosperity." this was -- i saw you listening intently to tim as well. it's an interesting idea and you understand you would have been right at the top of. seven as eminent as you are. but you had to wait a couple of seconds. what should we begin with? should we talk fed? should we talk the recent unemployment number? is it a harbinger of good things or bad things? >> i'd say it's consistent with the lack luster recovery we've had for three now. this is more consistent with what would i call a very slow

recovery, which is disappointing. >> it's such a politically charged season now because there are really two narratives. and what is that the reinhart-rogueoff thesis that it was such not on a deep recession but it was kwaqualitatively different. so we should expect it to -- and the other side is it it was so deep that if it wasn't for these government policies holding this evenings back, we'd be in a better position. >> i'm in the second camp. if you look at the history, reinhart-rogueoff doesn't apply here. we had a deep recession in '81/'82 and we came out of this one so much more rapidly than this one. 6% growth, this one is 2.5% growth. we come out of deep down trns more rapidly than slow down turns. >> you implied to me that aep 82 was almost like a blip compared

to -- but this is much worse in your view, is the point you were making? >> i was arguing 2008/2009 was significantly worse than '81/'82. >> unemployment guy goth higher -- >> did it not hit 11% in one quarter in that -- >> absolutely. the average was 6%. we haven't had one quarter above 4% in in recovery. >> you contended there were greater structural problems that were created as a function of the financial crisis. >> remember we had the s & l crisis, we had slow international trade because the dollar was so strong. this is by any definition an american history of i'd say the worst recovery we ever had. you want to try to look at the reasons for it, it seems to me it's policy. that's what i try to write about in this book. it's policy.

>> flip it around. if the policies were perfected in your mind, the unemployment rate today would be what? >> it could be at 6% at this point. if we had a recovery like we had in '83, '84, unemployment would be about 6%. and you wouldn't have had so many people dropping out of the lab force. the evidence for that is history. the evidence for that is we know that a lot of the actions did some damage. i thif these temporary policies, one little stimulus after another and people doesn't know what's the future weeks have a big tax increase that people are talking about, all these regulatory changes. so if you go down the list here, there's a lot of things to drag the economy and we didn't have that. >> even if you can see that this was a worse recession, look at the response. this has been an unprecedented do -- between the 800 stimulus and

qe and twice, the response has been unprecedented and we're still above where we were in january of 2009. we're at 8.2. >> i'm curious what the credit markets were like in ale 81/'82 and whether that piece of it, which is so central to all of this was as difficult as it was in tween and 2010. >> a 21% prime rate. >> coming out of the 70s we had double digit interest rates. we had double dej it inflation. it was tough times. >> access to credit was different. >> you want to pay 21%. >> getting a mortgage in those days is quite different than getting within now. >> and isn't there a fat line to be drawn between fiscal response and monetary response. how do you fight the idea that

the government has to do something and the government did a lot. they've done, they've done, they've done. >> it's the wrong approach. they did that in the 07s and that's how we got to where we were in the 80s. go-stop policy, we saw them in the 70s. >> if we had done nothing, you think things would have been better? >> to me it's not nothing. it's an alternative. my alternative when woorp debating was to have a commitment not to raise taxes. if president obama came in and said i'm not going to raise tax pez. >> by the way, he didn't. >> with a lot of pressure and always the urn certainty saying we need to. and also if he came in and said the middle-class tax cut, i'm going to make it permanent. >> so you didn't help kevin

write this piece. >> were you cheering -- >> kevin is a former student of mine. i respect him greatly. >> i keep hearing it, thank god we've had this government that allowed to us get back to 2% growth that orchestrated 2% growth. and this is the crux of the issue for this election, the counterfactor that we'd be better off or you give the government credit from bringing us back from the abyss. >> you have a really good budget plan that romney is on part of it and you have this other budget plan is that doesn't deal with our exploding debt. at least we can have a debate. let have a serious debate about which is the right way to go. i think i know what is the right way to go.

>> we have to kill some other people. we have some lesser guests we have to -- i knew it was coming from -- >> you were sniffing out the deal all weekend. >> started on friday. just work, work, work. >> i heard thing about man upstairs is going to give you a new title. >> chief m&a. >> absolutely. >> david already has that. david is, our real m&a guy. >> i'm sorry. >> up next we've got reaction to friday's job data and gdp revisions from another squawk master, john doll will join us. john taylor will be here to discuss equities and much, much more when we come back after this. [ horn honks ]

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back on this monday morning. wall street's best and brightest puzzling over the jobs report. steve liesman joins us with the latest. >> i don't consider myself one of the best and brightest but i do consider myself a reader of some of the best and brightest. as far as the market is concerned, the recovery is guilty until proven innocent. not so with economists. they all are disappointed with the jobs number but see it as an outliar and payback from weather

related gains earlier this year. here's what was said, we expect a 200k trend in private sector job growth in coming months. . >> jp morgan: we view the weaker payroll growth in march as a low side outliar following a strong of high side raeadings. >> which past are we going back to? we bumped above 200,000 last spring. there were several months more than 200,000 jobs below the trend. that's are what you see on your

screen. mark moran says march employment results probably increase the likelihood of a fed action but only moderately so. goldman saying there has been a shift in the fed's reaction function -- we'll talk about that -- back to the hawkish side. it means the feds bar for coming in is higher than it was before. it's going to need a toe a string of things. we've got claims coming up this week, we have income and spending. john taylor, if you were in that situation right now, what would you make of this? would you say this is the true color of the recovery or would you say this is more a single month's worth of data? >> it's a single month. it's crazy to see the fed's reaction to a single month. that's one of of the problems

with our policy, is it seems to be reacting every which way. don't overreact. >> i'm going to speak for michelle caruso-cabrera and say it's a moral hazard issue, ben bernanke has trained the market to respond this way. >> unfortunately it's the case. a few weeks ago 40% chance for qe3, now it's coming back. >> for the record, i'm not as strident on monetary policy as i am on fiscal policy. >> i leave the monetary policy to you. >> bob doll, you heard steve. he gave a rundown of wall street's opinion of the unemployment numbers, what it means and what the fed may do. what is yours? >> it's a reminder the u.s. economy is not having spectacular success.

i think the truth is probably somewhere in between. 120 i think is a little low for what the economy is doing more broadly but 240 that people were expecting, i don't think that's sustainable unless we're way off the mark in terms of what we see for real gdp. 2%, 2.5% is gdp, that says 150ish job. >> as you worked over the weekend and i imagine on easter you were working thinking threw the positio -- through the positions you were going to have this morning, how did the gdp affect that? >> zero. the 240 people were expecting was on the high side, the 120 was a disappointment but the average the numbers out we're getting in the mid to high 100s. i think that's better than the pay we were on. better than a year ago but not where we need to be. >> how risky is this earnings

season? >> i think there arish ushs michelle. where are margins going to be, what does top line look like? >> don't we need really good numbers considering the rally we saw? >> i don't think so. we need decent earnings but they're not going to be the driver i don't think. >> bob doll, thank you so much. appreciate it. >> among the stories we are following this morning, the price of gasoline on the prize again. the latest surveil, up to $3.97 a gallon. the parent of outback steakhouse is planning to go blook. bl -- public.

joe? >> i think that comes from bloomin onion, doesn't it? >> their name is derived from that -- they are good. smear dressing on that. >> it's -- how can you not like deep fried onions? >> this was a very visceral reaction. this was a get for you. you can combine the two. coming up, the politics of jobs. check out the shares of illumina.

roche said it may consider a higher bid if it's given an opportunity to enter into discussions with illumina. time now for today's aflac trivia question. what george lucas film made for $750,000 is considered the most profitable movie in hollywood history? the answer when cnbc "squawk box" continues. isn't major medl enough? huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at aflac.com. plegh!

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now the answer to today's aflac trivia question. what george lucas film made for $750,000 is considered the most profitable movie in hollywood history? the answer: "american graffi graffiti." >> aflac! >> let's check futures right now. dow looking like it would open 127 points lower, nasdaq off 32 points, s&p off 18 points. of course that aol stock is going to be up and up big time after that interview we just did with tim armstrong of aol and more importantly the news that they are selling that patent portfolio for over $1 billion for microsoft.

up next, cbo director douglas holtz-eakin. more than 150 million professionals are connecting here. linkedin connects with the big board.

friday's disappointing jobs report is popular discussion between political prognosticators. good morning to both of you. david, let me start with you. let me read something to you. this is hamilton play strategies put out a note that says this: despite a weak report, the threshold for getting the unemployment rate below 8% by election day may have become easier for president obama. hee estimates the president onl needs 176,000 jobs per month to get below that 8% unemployment number. is that 8% a magic number?

>> no being i don't think it is. i think the trend line is the issue here. barack obama is going to ask what looked like the economy looked like when i came to office, losing 750,000 a jobs for month, now we're beginning 100 tuesday to -- 100,000 to 200,000. i think the trend line is what matters and people who are considering joining the labor force actually when they see positive movement, they may be inspired to join the labor force and that could have a dampening effect on the unemployment number. that doesn't matter. people are looking in the future, are things going in the right direction or the wrong direction? that's the trend line that will get the president reelect. >> who is going to get credit

for what's happening in the economy? there's an op-ed in the wall street journal with the headline who gets credit for the recovery? the "new york times" has an on the opposite side saying how could it be that freshman members of the house are taking credit for the quote, unquote, recove recovery. >> the president gets the blame or credit for whatever happens on his watch, fairly or unfairly. the important thing to recognize is that while the president remains popular, his policies or not. did you like the recovery act, the answer is no. did you like obamacare, the answer is no. he's got severe head winds based on his policy record if nothing else. there are two things in the data worth watching. when you talk about jobs, jobs, jobs, it's the young voters,

they were an important part of his election last time. they've suffered from the recession and whack recovek -- recovery. i don't think they're going to be there in the election. and gas prices, high health care premiums and high food prices are such a politically important factor in this election. >> doug, this is john taylor. good to hear you guys debate. >> hi, john. >> i think the recovery is so weak. people can see it's weak, unemployment is above 8%. you'd have to make the case or your opponents have to make the case it has to do with current policy. what do you think about the idea going forward which is the right way to go? not so much the blame for the past. you have two alternative perspectives there.

>> could i grab that question? i'm sorry, doug, go ahead. >> i think there's the larger battle of philosophies. we've seen the republican primary focus on very tiny issues. we're now see the large battle emerge between the presumptive nominee mitt romney and the president. very different approaches to economic policy. they want to have that debate and it's important but it going to be focused especially because immediately after the election, the congress have going to have to move on the sunset of the bush tax cuts, sequester that affects national defense. there are going to decisions that force that right into the present. i don't think they're going to favor big tax cuts or favor cuts in national defense. that's exactly the battle that the republicans want to have. >> doug, i want to jump in on that. there is a battle looming but it's really about whether or not we're going to try the tired policies of the past that

clearly failed under george w. bush or take a more successful path. if you look at the romney-ryan budget and i can call it that because romney has embraced it. it is going to double down on tax cuts. it would balloon the deficit. what's counterintuitive. even my friend here would say deficits and long-term debt are damaging to long-term growth. i find will there's a little bit of cognitive dissidence between republicans here. they hate debt but they're willing to add on top of it, just like george w. bush did. i don't great get. >> but the key is the voters get

it. if you look at the booj, they contain tax and title reform. those are two key issues at the moment and that's miss beiing i action from the president. you've got to have not just budgets, but budgets that take on big problems. >> david, under clinton you did pretty well within employment, you averaged 5%, 5.4. i know what you said about bush but interestingly same unemployment rate, 5.4%. >> what happened to the debt? what happened to the deficit? >> i'm talking about january of '09. the president came in, the unemployment was 7.8. if we don't get down to 7.8 by the time of the next election, his entire presidency is going to have an employment rate above where he took office.

i know you said it went from losing 750 to gaining 170 but that's going to be hard to hide from, that the entire presidency was above 8% for four years. >> doug, here has mentioned polling. when people are asked whose fault is it, they point directly at the republicans and george w. bush. i don't believe barack obamain hair it's t-- inherits the bad s from the previous administration. if you look at what the president has done in terms of adding jobs, doug is absolutely right, presidents get more blame and more credit than they should. but it's an election. let's assume the president gets all the blame and all the credit. the president has added more jobs in his first term than

george bush added in his entire eight years. so as employment goes, this president wins. as trend lines go, this president wins. it looks to me if we're going to carp about deficits and deficit spending and debt, the president -- >> david, so good to see you. doug and david, great talking to you. >> doug doesn't know what to do. >> i'm sure he's got an answer for that. >> we're going to have both of these gentlemen back. >> on net he's going to lose employment over his first four years unless he gets another 750,000 jobs. it's hard to read that as a success. there is no president that's run up more debt. >> sooner or later at some time it becomes not bush. >> the president should do what david said, ask yourself if you're better off than you were

four years ago. thanks, guys. >> coming up, lawrence lindsey joins us at guest home tomorrow starting at 7:00 a.m. more of a republican love fest for andrew tomorrow. >> it's crazy. absolute crazy. >> why? >> you're blaming the president. it's like you burn the guy's house down and then you give him the job and say it's his fault. >> four years he gets it back to 8.2. [ male announcer ] this is lawn ranger -- eden prairie, minnesota. in here, the landscaping business grows with snow.

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welcome back to "squawk box" on cnbc, the show in between the show is really good, too. i'm michelle caruso-cabrera. today's guest host, john taylor, former treasury department undersecretary. you have this wonderful book out about the five key principles and one of them i want for you to help articulate for us. trust in the power of the markets. >> absolutely. >> the markets have become beaten and battered and so many people say the markets were the problem. can you help us fight that? because -- >> the markets weren't the problem. the fed took the rate so slow slow in 2003, 2004, 2005, we had

the interventions early on with the fed, which made things worse for a while, though they did some good things, too. winking a little bit at some of those high risks it and at the commercial banks, a hundred regulators of the new york fed on the board the citibank, et cetera. a lot of things the government did incorrectly that led to this. the message that government has to do more is wrong. >> that has become the consensus thing that the government has to do something. how do we beat that back and do you see any republican candidates articulate it well? >> we beat it back by showing it doesn't work, not only this time but in the 70s it didn't work. they it h all these interventions and inflation rose. and recently. we had slow recovery.

you have a philosophy, romney getting close to the ryan budget plan, which is to get spending back to where it was before the crisis in a nice way, it's not destructive to the economy, it's quite positive, reducing the role of intervention in the economy. on the other hand you have a very interventionist approach, the president's budget. so there's a contrast. that's the good thing about an election year. >> how do you explain the financial crisis in that some people argue there wasn't enough regulatio regulation. >> it wasn't so much there wasn't enough regulation, it was that the regulation weren't enforced. we had good rules. they took the risks in the full knowledge of the regulation. >> should there be less regulation?

>> the regulation should be enforced. if you ignore the rules, give favored treatment to certain individual, you can make things worse. that's the kind of thing we saw, fannie may, freddie mack and some of the commercial banks. >> you would not say the bush tax cuts caused the financial crisis, right? >> no. >> i look back, i can find some blame. >> have you heard anybody say the bush tax cuts -- >> which policies are you talking about then? a specific bush policy that caused the financial crisis. >> lack of enforcement, housing -- you want to go housing -- >> regulation started? >> do you want to deal with how fannie and freddie were dealt with? >> we got music. >> fannie and freddie are part of it, that's for sure. >> they are part of it. >> i could give you medicare,

not paying for that was a mistake. you can argue about two wars and not paying for it. but the bush tax cuts, that's -- >> our week-long ipo series starts right after this. test any to get you into your car. it's just another way you'll be traveling at the speed of hertz.

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>> coming up, "squawk box" master of the market, stephen roach. and then proto labs is hot, hot,

hot. we'll talk about that coming up. what the world wants to know and share is here. demand media expands on the big board.

you know, typical alarm clock. i am so glad to get rid of it. just to be able to wake up in the morning on your own. that's a big accomplishment to me.

i don't know how much money i need. but i know that whatever i have that's what i'm going to live within. ♪ ♪ . markets reacting to disappointing march jobs numbers. stephen roach will join us to weigh in on the employment

report, former chairman of morgan stanley asia and a squawk master of the markets. >> and it's report card time for recent ipos. >> have you seen your mid term grade yet? >> they're not posted yet, sir. >> i've seen them. >> we're going to kick off our ipo report with the ceo of proto labs. >> and the natural gas industry starting on the transportation sector to drive demand. >> i hate those guys. >> rick santelli is getting his hands dirty today at a shop that convert gas loon engines to take natural gas. the third hour of "squawk" begins right now. ♪ i am a passenger and i ride and ride ♪ >> welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with andrew

ross sorkin and michelle caruso-cabrera. our guest is john taylor, form are treasury official. we are indicating lower as the markets respond to that lower-than-expected and really weak jobs report. we did get 8.2 but more people gave up looking for work. it was much lower than the 200 than we had been getting for the past three, four months in a row. >> aol announcing it is selling more it and 800 patents to microsoft today for about $1.1 billion. microsoft is going to license more than 300 additional patents as part of the deal. aol ceo and chairman tim armstrong broke the deal here. >> it gives us the ability to sell assets we weren't using,

maintain a very clear and distinct ip portfolio and leverage our tax attributes. >> shares of aol getting a nice pop after the announcement. take a look there. it's a big one. a lot of people had sold mr. armstrong short. he's come through a big number. the portfolio only worth $250 million and a $1 billion meet. >> they found 800 lying around in like a drawer. >> he said the patent market is like the real estate market and the patent market seems to be good right now. >> i did a little reading previously bus he talked about the patent market before and he referred to his patent portfolio as a house in the hamptons.

>> so were aware of these -- >> i know you were all weekend. >> andrew was bidding on them. >> if you missed it, joe broke the story, not andrew. >> it came out on the wires. but could we did have him here. >> avon naming a new chief executive officer, sherry mccoy. she had been at j & j. we're going to keep an eye on this because of the news that coty is trying to buy this company. curious, did coty come out with their proposal ahead of this announcement knowing that they were getting close with him and what that timing was really about? >> they must have known they were close to something, right? the board was going to have to do something with the ceo, weren't they? you could argue why is she still chairman of avon?

>> but they took an opening. had avon made the announcement, it might have been harder for coty to walk in -- >> i don't understand the difference. they're going to have to deal with a new ceo anyway. >> the yes question is just the timing wonder if there's a mole inside of avon. >> do we call her andrea young or jung? >> that's because you did this to me. i was saying -- >> i went with young. >> i think it may be jung. >> that's why you did what you did with the eye? >> that's amazing what you did with your eyebrows. >> i've been doing that to you and you've been doing that to me. i'm going to talk to you after the show.

>> two squawk masters are here. steve roach, the form are chairman of morgue and stanley asia. and our guest host, former treasury undersecretary john taylor. you've been talking about this so much. for a while you must have been wondering whether you had been a little bit bearish but here we are coming back into your camp again with this latest jobs report. >> joe, you said it earlier in the earlier hour you wondered why companies weren't hiring. you came really close. people tell me deband but i still don't get it. it is demand. the growth rate over the last four years, 0.5% as an annual rate. you're going to be cashes in

adding to the job count or expanding capacity and that i think is still a very operative concept going forward. >> and it gives some -- both sides it gives grist for both arguments. what i was trying to figure out was i keep hearing the dow is up so much. and i keep hearing, wow, if obama is so anti-business, why i corporations record profits? why are they doing so well? it's been pretty good for u.s. companies. but then i think about how many jobs have not come back and why these jobs are not hiring. if it was that easy and they saw the demand and needed to to make product and grow revenue, they would be doing it if it were in their best interest and it is not. >> i think the demand head winds are very stiff and the discussion earlier was also talking about technology, the

replacement of new labor saving technologies for labor. and not introduced into the technology was the globalization bogey, the apple supply chain story where apple, our greatest company, is a leader in innovation but creates most of its jobs offshore in places like china rather than in the united states. you put it all together, you have a tepid employment outcome here and that then tends to reinforce the weakness in underlying private consumption in the united states. >> steve, don't you think the weak demand itself is due to the policy so there's really not two different stories, they're one in the same? you think there's uncertainty so firms reluctant to hire, there's less demand for labor, consumers are unwilling to put out so much of their earnings so that's reduced demand? it seems to me they're one of the same story so focusing on demand doesn't mean policy

uncertainty is not the problem. >> i think i'm surprised you didn't pond the table more on the policy mistake that your work argues were made in the precrisis story. sitting right next to you, joe and andrew and michelle, is the man who invented the taylor rule which shows that the fed monetary policy was a major contributor to the precrisis excesses and there's huge payback from the damage done from easy money. >> it's not as easy to blame on an administration here, steve. >> so blame it on the fed, joe. >> i do. and also on your experties, i blame it on china to enabling us to -- >> you always want to blame it on china.

>> well, then it's our fault because we need to buy these cheap things from china which gives them the zero to put into our interest rate bond. it was one big story, steve. it wasn't goldman sachs that caused the financial crisis or the banks, right? >> i think in a globalized world where you have massive imbalances building from the deficit side of the equation, the u.s., surplus side of the equation, china, can you pull all of this into the story. >> who should have been regulating the fed? who should have told them you can't stay at zero, you're going to build an asset bubble? >> the last time i checked isn't there an congressional oversight function where the chairman of the fed comes in front of the congress twice a year -- >> the questions those guys ask tell me again interest rates go up and bond prices go down? >> and you used to work at goldman sachs, right? >> well, the fed played a

critical role in creating an era of excess in the three to four years before this crisis. again, john taylor's sit being right next to you guys. he's got the metric that calibrates how easy money was and what it led to in terms of these massive credit and property bubbles that we're now paying an enormous price for. >> to divert a little to asia, what's your assessment about whether or not gdp growth in china will slow to a growth that it's going to be be problematic here. we talk about whether it going to be a hard landing or soft landing. what do you think? >> it's soft. >> does it fall below 7%, 7.5%? >> it depends how you get there. if do what you did three years ago and you go from 13 to 6.5% in a few quarters, that's a very disruptive outcome from china.

but the chinese economy is slowing much more moderately right now and i think their growth rate will probably at some point have a 7.5% to 8.5% handle on it but it's not knoney as disruptive as it was for years. unlike other economies like india, they have ample scope to ease policy because inflation's come down and their property bubble is also moderating. >> what about political unrest? how worried should we worry about the dead britt who was supposedly murdered, and this tussle -- >> i think the current premier of china has been very clear in emphasizing the combination of both political stability and the aftermath in the dismissal of the party secretary and in his

recent statements of saying we've got to introduce more competition in the banking sector to keep these market-based reforms under way. it is a big debate. you're right in focusing on that in china and there's a lot of talk. i was in china just a couple years ago. a lot of talk on the state of enterprises versus market reform. this government along with the new government i think is very much going to focus on more pro market rather than pro state directed government activity. >> the fed's action precrisis and i look at post-crisis and the growth of the balance sheet, what fed was more profligate in total? is this okay now because we needed it or are we building a big are bubble than we built the first time? >> that's a risk, joe.

they got us into this met, they've gotten great credit for getting us out of the they and now they're creating a bigger one. they tell us repeatedly we've got the tools to unwind these asset purchases. it's not a question of tools, it's a question of political will. that was the story precrisis. >> they do have the tools. there's like 12 or 13 of them on the board, aren't there? no, i'm kidding. >> i actually think it's one and the same, what they did in '03, '04, '05. >> isn't this bigger? >> bigger. and we have a much more interventionist fed than in the past. it causing damage. >> is it an apples to apples comparison to do balance sheet growth? >> no, not even close. >> what can we use to see whether this was actually a bigger -- more money printing than was done precrisis? >> how about the taylor rule.

steve was talking about that. we have not necessarily bad strategy. there's others that worked well, 80s and 90s we stopped following it and it's been a mess. you don't need to focus on one. we have so much evidence of what works and what does doesn't and what they're doing now doesn't. >> back then the fed had basis points. now neff don't. they have to go to qe 1, 2 3rks, operation twist. it is apples to oranges. the fed has lost and kwaundered its ammunition in terms of its ability to build traction in we are in risky, unchartered territory. >> coming up, we're going to dig through the march employment report.

constance hunter and larry glazer of may flower advisers are going to break down impact on the numbers when squawk returns. the most spectacular experiences are happening here. imax now showing on the big board. ortho weed b gon max. with a new continuous spray wand. so you can kill invading weeds down to the root.

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u.s. equity markets are

about 90 minutes away from finally getting a chance to react to friday's jobs numbers. joining us is, it's good to see you. constance, what does this mean? you're the chief investment officer. what do you do? do you get worried about the possibility of a weaker economy? >> two things. one the bond market was open on friday and we saw the ten-year come back down below 2.5%. so when we think about what is going on for long-term rates, we have a very asymmetric situation. from the market's perspective we

had sizzle to fizzle. everybody was putting all their hopes in the jobs. in the last two quarters, jobs were staept with where initial claims are and consistent with a 2.5, 2% growth rate. and it's a volatile number. >> does this number kill that or do you just look past it and say it's an outliar? >> looking into the number and into the details, you question are we hitting a soft patch? how much was brought forward because of the retailers, hi hiring. ilt one it's one of those things we have to wait and see. >> larry, same question. >> despite that week jobs report, it's important not to overact and keep it in perspective.

it's corporate earnings. we did see the seasonal slowdown in the jobs report. how is that going to play out in corporate earnings. >> haven't estimates been coming down? does that put us at risk? >> i think the market was clearly getting frothy, getting complacent and sloppy. when you see a q 1 hilike we di investors get complacent. how do you feel about earnings, susan? >> i think from a bond perspective, we're looking at what's going on with cash flows. this is where our credit selection comes in. we look at what's going on on the real curve and interest rates. there's still amazing credits out there. it puts the attractiveness to

bonds relative to stocks. >> how risky do you go in terms of credit? >> asset quality. >> in our allocations that are high yield or short duration high yield, those are investors that want a riskier portfolio so you're very selective when you go down the credit curve. you can pick up a lot of return for your clients. >> we had been so beholden to every arcane piece of data. it feels like we've gone from being a stock market that was wondering whether italian yields would rise above 7% to a market that's dependent on whether or not chinese growth is going to fall below 7%. am i making too much of that? is that a crucial question? >> i don't think you are making too much of it. it end of the day, many areas of the u.s. market are getting a little picked over because investors were looking for that safe trade, dividend trade, high yield. i would argue you want to

confront your fears and look into abyss. if you see europe as the fear and uncertainty -- >> what about china. >> a lot of weakness in europe last week. china is the global play. everybody's looking at the chinese data. you can look at the data all you want and you can't tell anything from it because the data is so manufactured. i think investors need to have a strong stomach, take a deep breath, go for a walk around and look for opportunities -- >> how close i -- >> pretty closely. we have a big event in china, which is the leadership change. >> every ten years is a big deal and this is tumultuous. >> you have it pushing up against the u.s. change so you have all this pushing on both side. they're really trying to make a statement. but i think on balance the leadership in china really wants to keep things on a smooth

track. so i don't think they're going to be doing any wild policy moves, either tightening or stimulus. >> okay. steady policy. got it. constance, larry, thank you so much. >> i just want you to know, jung not young. i got a couple of e-mails about it. >> we're talking about andrea jung, the former ceo of avon. >> she ever write that book, "fear of flying"? >> that's a different one. >> you would like that book. >> all this week, we're taking a look at how companies have fared after recent public offerings. first up, proto labs. the ceo will join us in the next half hour. "squawk box" will be right back. how can you just stand there?

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welcome back. sony reportedly cutting 10,000 jobs, about 6% of its global work force trying to bring the electronic giant back to red.

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welcome back. we're kicking off a session series today call "fueling for future." we sent you out there to do this, santelli? >> i'll tell you, what joe. this is the coolest story i've ever worked on, ever. see this pile of interesting equipment in my hand? this is all it takes to convert this f-150 behind me to run ot

not only nat gas but regular gasoline as well. it's just amazing to me that we are sitting in such a high supply scenario for natural gas and it's this easy. i'm going to convert it. here is going to be my associate for the day, the owner of cng interstate, craig wright. so you see the equipment here, you see the truck. follow me for one second. what we're going to start on, joe, when i start this installation of course is going to be to put the tank in. here's the natural gas tank that's going to go in the back. i like playing with winches, joe. when is the last time you played for a winch? look what you can do. how creative the enthusiasts are that are all over the natural gas. here's a toyota sequoia owned by

dave brian. you converted this about a week ago? >> no, this was done over the weekend. >> the whole vehicle. >> the whole vehicle was a couple of weeks ago. >> last time you checked you were getting how many miles to the gallon? >> on that i get about 80 miles per gallon. >> 80, joe. half of 160. i know phil will be on later and tell you the probably with this, guys, there's hardly anyplaces to fill up. dave, where do you fill up? >> in my garage. >> and what does the cost per gallon equivalent, and we have all the bills to prove it, when you filled it up with gas, how much equivalent to gas was it? >> about 66 cents. >> how much? >> 66 cents. >> say it one more time. >> 66 cents. >> here's the other thing that's

fascinating, the amount of infrastructure out there, what is there, about 60 million homes in this country and probably more condos that have garages. so i give you a challenge. i got you beat. i have 65 million gas stations! everybody's garage is a gas station! we're going to be doing this conversion throughout the day and it's easy. i'm not recommending neb do the conversion, there's issue with warranty or the epa but many enthusiasts are going to do it. last i looked i think my daughter said if i took the battery out of her cell phone the warranty is voided. i'm not making any representations about warranty or anything but we're going to have this truck by the end of

the day, driving around in natural gas or gas. and by the way, you can switch it on the fly. >> i drive a vw convertible. does the tank have to be that big? >> no, they have smaller tanks. technologies are going to be making some of these tanks in different shapes and what not. but right now, as i said, it's still in the infancy of this. >> it makes so much sense you're doing this in oklahoma, right? aubrey mcclendon is down there, he's always dreamed of cars across the country driving with natural gas. the or thing that everybody thinks about is oh, my god, this zang rouse pip have this big tank of natural gas pup have a water heater, you have a dryer, you have your furnace.

emergency if f all that went away and instead of in your pipes you had liquid gasoline like in your car running through your house. how safe does that stound? come in here real quick. if we smash these tanks, hit them with hammers, drop them out of airplanes, how dangerous is it? >> it's a lot safer than gas loon. would you rather have gas spilling all over the ground or have it vent like helium? the weight ratio is similar to he'llup. it it challenging the people that run our political and regulatory class to open your minds up a little bit. but i'm also challenging myth busters. take these tanks take batteries filled with chemical and do what you want, shoot 'em up, drop 'em up. what you're going to found is these natural gas tanks are --

>> safer and better. >> any other questions, gang? >> awesome, rick. compared to solar -- i mean, solar is always going to be the thing that this administration, it's just so clean and sounds so good. for this you need hydrocarbon infrastructure and we'd like to get rid of all hydrocarbon infrastructure. there's no reason to keep adding to hydrocarbon -- it's a deadnd! >> we have 120 years of engineering experience on the internal con bustion -- -- >> you still carbon based and it's never going to get the -- >> he's saying you're preaching to the choir. >> i'm going to be conservative but it 50% cleaner. >> you need pipelines, rick. >> 88 miles a gallon. >> you need dirty epis going through the hand hels and we got

to get away pretty and we need solar. >> andrew, how do you think about the gas tank? oh, wait, you don't have a car. zlt enentire infrastructure for natural gas is in many people's houses. i'm going to tell you we could make it better. they're going to want to refine it so they can put their nickel in the the occasion. we don't need it. we're all set. i'm going to prove to today on live tv. >> i thought they sent you out there sew you wouldn't be ranting about paying for other people's mortgages and the fed. >> i don't want to pay for other people's dumb infrastructure. if you go on the ali babb ba.com or anybody who sell as lot of these conversion kits, how many enthusiasts are batting the doors down to convert their cars to battery or electric motor or

solar. do you see anybody out there? no. the enthusiasts see a natural gas line in their house, they see great mileage, cleaner air coming out of the type light. can. >> does it run the same? >> he's going to show us later. >> not on does it run the same, joe. one of the ones that we had done yesterday, you could switch it between natural gas and gasoline while you're driving. you can't even tell the difference! >> cool. do you think jeebs -- rick, i'm going to talk to jeeves after the show. >> no helicopters. >> rim, market is back on track. we're checking into companies that recently went public. the company went public in february.

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that's what we're looking at today, down about 130 points on the opening. meanwhile at&t is selling its advertising solutions in active businesses. those businesses include its yellow paging operation. it will get $750 million in cash

and a $200 million note and a stake in a newly formed entity that will operate the businesses. >> what do you do with the yellow pages? >> can't you have yellow pages online? >> they could have been they missed it. >> it's called google or yelp. it will help give a little bit of a growth profile back to -- >> it's worth something, right? what's the "new york times" worth now? it's the same kind of thing. >> oh. >> different business. different business. i would argue the "new york times" is a better business. >> we're going to take a look at the ipo market -- don't make faces like that. we're following up on recent

ipos and kicking things off with proto company. they issued share at $16 if neb. today the shares have closed at $29. that's more than 100% gain. joining us now, brad cleveland, the ceo of proto labs. i wish if you had a a time machine and wish could you have gone back and repriced it. what's going on there? >> we've been thrilled from the response from investors. not terribly surprised. i think they see the value that we bring to product developers and the time we save them when they're bringing new products to markets. it's nice to see people appreciate the value we bring. >> you think clearly at the time 16 is the number, in retrospect

was 16 the pretty now? >> well, you can't go back in time. maybe a little bit higher could have been possible but as we went around on the road show, we met with some amazingly well prepared people who completely got the story and the fact that they believed in us and they bought the stock at that price, we were very pleased about that. >> but come orange you know what andrew's asking, right? don't it make you wince? doesn't you look at that and say we left so much money on the table? >> we're focused at execution and looking forward. >> the ipo mark hat been pretty tough. the u.s. has shown a little bit of strength. i'm curious in terms of the showed show experience,beyond some of the broader themes and issues that were raised, what's your sense of the appetite out there among investors right now? >> i with konl receive -- the

question that we got has too bring -- what has our growth record been? are we profitable or not? and we had really good answers to all those questions. i think that showed and what happened to the stock after we opened. >> real quick, for the audience that may not know what pro owe lab does. >> sure. we're actually a very cool combination of manufacturing and technology. on the manufacturing side, we are the world's fastest manufacturer of custom parts made with either cnc machining or plastic injection holding. we can do in as little of one day take -- that value that we bring to product development is help them get their products to

faster dramatically faster. >> what kind of stuff are you making? >> anythings that plastic or metal. aerospace con poem ents, car part, medical devices, pretty much any market. >> the prototypes of these things as part of a development stage or you're pumping out the real deal as part of a -- for lack of a better phrase, production line? >> y, we and then many peeples come back and use us for ongoing -- >> brad, thank you for joining us this morning. good luck and congratulate on w. is there a secondary coming. >>. >> when you do have a secondary, remember going for the highest price assumanly possible.

>> brad, are you still with us by the way? >> i am. >> real quick, what was the float? what percentage of the company was made public? >> i believe about 20%. >> so that's the real value us because 80% -- >> thank you, present. i appreciate it. >> and i don't want to put you on the spot but i will. the new york citys about section over the weekend did the big la la palooza -- ceo pay. >> every year they do that. lavish is the word they that used, they showed me makes 2 $200. >> i think ford earned -- >> 29 million. >> but the company earned $22 billion. so and i just started thinking. >> started thinking?

>> about the "new york times" ." you're in a transition right now. >> but maybe they had to think flew their philosophy that ceos aren't really worth anything and it wouldn't be a $6 stock. >> what i'm going to do when this show is over, i'm going to set up a meeting between you and ponch. >> it's hit. you don't call him ponch. he's a very slender, fit guy. >> you and he should go to lunch. >> peyton manning, i'm not sure what he's getting per year. david letter man, $30 million.

no one can read that monologue better. but wouldn't a guy who has hundreds of thousands of employees and making all these far ranging decisions to try to keep a stock from going to 6, instead he wants it to go to 630, couldn't it be possible it's not lavish? >> i'm going to set that lunch up to you. >> what happened to the stock price, dude? >> pay your ceos. instead of trashing ceo pay, pay your ceo. >> interesting, we did. in fact, we paid her a lot on the way out. >> do we have any alliances with the "new york times"? >> you do. >> i wanted carlos slim to buy it and close it down. >> i was kidding. >> you were not kidding. this was a tough segment for me. >> you handled it well. >> strike price is 6.35. it's at 6.58. when we come back, we'll take a

look at some stocks on the move and look at the snang.

welcome back to "squawk box." carl, dave, and jim, what is coming up next? >> it's going to be an interesting one, jim, as we discuss whether or not this selloff that we're looking at is something short term or the beginning of something like we saw about this time last year. >> well, i think that's exactly right, carl. a the lo of people at home are saying, you know what, i'm not going to get fooled again. one of the things i heard was sell in may, go away, let's get the jump and sell in april. i don't know whether that is smart because it is about of the aol stock price. not necessarily going to bring a huge rally overall and i.p., the likes of which we saw not that far back which set so many of

those companies up. a very interesting deal as well. >> pat tents, this is the year for patents. i heard you talk about it this morning. look, i thought it was a dial of up organization. how wrong was i? >> by the way, it's still important to dial into their business or those three million people don't know that they are getting it. >> you've got mail recording. >> i had no idea they had any of it. >> you've got to work some of our sound bites into you're reporting, right? >> absolutely. i will do that. i promise. >> okay. because i was like you this weekend. i was flat out trying to get all of my ducks in a row. >> joe broke the aol story, you guys. >> i did receive that e-mail.

>> carl, you know my rate. >> looking forward to it. coming up, final thoughts from our guest host john taylor. "squawk box" is coming right back. >> announcer: tomorrow on "squawk box," we're kicking off earnings season. we'll get a preview of the major companies reporting this week. our guest host will be larry lindsay, former economic adviser to president george w. bush. and it's trump tuesday. the donald will weigh in on politics, jobs, and the economy. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. [ male announcer ] this is corporate caterers, miami, florida.

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not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪

pandora rocks the big board. welcome back to "squawk box." our host is john taylor of stanford university. should everyone -- i wish everyone would read this book, don. >> so do i. it's appropriate right now because we have a big debate about policy in this election. it lays out the advantages, quite frankly, of the more marketed oriented things in a

good way. you know, this whole show, it seems to me, a great potential is the american economy. you've got the sale of patents, ipos. in the meantime, all of the uncertainty at the top is really holding things back. fix that at the top. >> but it's not going to be settled this november. this is going to be -- we're going to have this battle -- this is going to be decades. >> no, i don't think it -- remember, in the '70s, things were terrible. we made some adjustments and '80s and '90s were good. i believe people can recognize that people can do much better faster. >> uncertainty is the issue? >> predick ta built and interventions. they are doing a lot of interventions whether it's the dodd-frank bill and whether it's health care. >> interventions are bad? >> not every one but too many is bad. >> the decision whether we go