it's monday, april 30th, 2012. "squawk box" begins right now. c people's home networks. it's monday, april 30th, 2012. "squawk box" begins right now. good morning. welcome to "squawk box." i'm andrew ross sorkin. along with joe kernen. becky will be back tomorrow. michelle caruso-cabrera is with us today. let's run through some of the morning's headlines. the most interesting ones that are out there over the weekend, joe mentioned google. a company engineer wrote a computer program capable of collecting personal data from people's hopes wireless networks and fcc report now finding that the staffer told at least two other google employees about it. although the company says it does not know. here's the interesting twist. the fcc left this little piece of information out when it actually release that had report two weeks ago. google released the report itself over the weekend after saying it had cooperated fully with the agency. so we'll have to watch this one. a you new report says that apple

subsidiaries in ireland, netherlands and other low tax nations legally side stepping billions in taxes. a study by a former treasury economist saying that apple paid 3.3 billion in cash taxes globally on here's the big number, $34.2 billion in profits last year. a tax rate of only 8.8%. hope will any we'll talk about that. and phil falcone facing a deadline to reach a debt deal. if not, the wireless telecom faces possible bankruptcy. holders of light squared roughly $1.6 billion in debt including article icon and hedge fund manager david tepper. and they have given falcone until 10:00 a.m. today to strike a deal for restructuring that firm's 96% quit i roll of light squared. so we'll keep an eye on that and a lot more. >> let's focus on the economy

now with a busy week ahead. today we get personal income and spending. chicago pmi and also the dallas fed survey. tomorrow ism manufacturing. construction spending and auto sales. wednesday, the adp employment report also factory orders. thursday we get weekly jobless claims, productivity and costs. friday as joe mentioned, that eat big kahuna, the april jobs report. and as joe mentioned, goldman sachs is you wering increasingly bearish on that report.firm now looking for a gain of only 125,000 nonfarm payrolls. there was a time when that would have looked great. now that's not good enough. that forecast is far lower than the reuters estimate of around 170,000. three has been an average of about 177,000 jobs created every month from december to march. goldman suggests the jobs report will be a further sign of a he can with aening economy where

inventory accumulation has accelerated. o one more stat. u.s. small business hiring slowed considerably this month. employees also saw a reduction in hair hours, adding to signs of weakening in job market conditions. let's get a check on international markets so par this morning. the u.s. markets will open lower at this point. dow by 17, nasdaq by 3, s&p 500 by nearly 3. oil is lower across the board. wt it wti down 59 cents. ten year yield rising. yield at 1.92%. as for the dollar and what it's doing against all the other country cit current citiieieies currencies e world. and let's show you the price of gold this morning.

time for the global markets report. ross westgate is standing by. >> ahead of the u.s. hope, european stocks are down near the session lows at the moment as you can see. ftse 100, we're weighted will terms of decliners versus advances stoxx 600 by somewhere around about 3:2. cac 40 down 0.7%. ftse mib down 0.3%. it's been like friday. we got the confirmed recession in spain. the first quarter gdp growth contracting. forecast around 0.4%. so slightly better. s&p down grading 16 spanish banks before they're all weaker. but it's been like friday of

course with the s&p down grade of the country with a negative outlook in two notches, not massive response for the rest of european investors to the spanish growth story. by and large nearly every investor should know what is going on in spain. we also heard morning that between them, spanish italian and french banks bought around 51 billion euros worth of government debt this march and in spain, 20 billion, italy, 23 billion. and those were record amounts. so some of that ltro may have been recycled back into government debt. yields nevertheless here today slightly lower. spani spanish ten year. so no big impact. last week of campaigning with hollande and sarkozy for the french presidential election. hollande still forecast to win and he came out with comments

over the weekend suggesting that france isn't any old country in the eurozone, they were the founders of the you're eurozone. so eye has gone story. and i want to reiterate one thing in the currency markets. sterling-dollar 1.6260. we did get to eight month highs. dollar weaker across the board with the potential qe. >> all right, thanks, ross. other headline, murdochs are bracing for what is expected to be a damning report on phone hacking. findings by a committee of uk members of parliament due you at 5:00 a.m. eastern tomorrow. a source close to the committee tells cnbd.com which is a different outfit that after embarrassing revelations about -- you said something about three that made for sense. >> a couple typos this morning.

>> you got to read the prompt toe even if it makes no sense. none of the mps want to be perceived as soft on the media tycoons. >> did you think that jimmy kimmel jokes about the hacking were funny? we were he white correspondents dinner. >> those were my least favorites. >> but i thought he was hilarious. >> he was tough on the president, tough on everybody. it tough on kim kardashian. >> what did you think of the obama dog commercial? >> i didn't have a problem with -- i out it was funny. >> i out putting a dog on top of the air force one at the end. >> he can do stand up in a couple years. he can sing, can he can do come. >> did you see the karl rove over the weekend? being the celebrity president. >> do we really --

>> they think he's a good comedi comedicam comedi comedian, but maybe that's it. >> bill clinton was a celebrity president. and reagan was the ultimate celebrityrd. >> this is the first -- clinton was a celebrity. this is the first democrat celebrity president. because clinton obviously was not a democrat at this point. >> no, in the current context, he's starting to look like a raging right winger. do you want me to read? >> you're going to step away from the prompter. >> and one other question, you you read the story which we talked about earlier, apple taxes. global tax rate 9.8%. >> whose fault is that? >> no, look, everyone's going to look for the lowest rate possible. >> what is the moral of the story? that we need to change the tax code. >> we need to change the tax code, but i've been thinking a lot about this and my question is if their global average rate which includes by the way the

u.s. rate, outside of the us is closer to like 3%, 4%. and we always say we want to be tax competitive. my question is -- >> do we need to go to that level? >> how can we ultimately truly be tax competitive assuming the part of the goal of being ax competitive is bringing revenue back home. >> on the way this here, i was thinking about you and i was thinking that because there are parts of the world that try to suck in capital because they don't have that much, they're going to put hair tax rates lower than they really should be and i was thinking you might propose some kind of basel iii global tax rate that we can all coordinate or tax rates at like 80% in every country. >> and then for where to run and hide. >> my question is given apple's managed to get their rate down under 3% outside of the u.s.,

how do you compete against that? therefore what is the right rate some because i'm thinking even about we go down to 25%, 20%, whatever, does -- is apple still running around doing the double irish. >> double irish with the denmark twist. even on cable we can't talk about that. >> when corporations pay taxes, do you know who is paying them? we are. there should be no corporate -- zero corporate tax. >> in a world where all our domestic corporations are competing with around the world, we do want the jobs here. my point to you is i don't think there's a single entity individual or corporation that actually says, you know what, i'm going to pay more than -- >> nobody wants to pay more. >> warren buffett has never paid more than -- he does every single hinge will can he to pay

less. barack obama was 22. he didn't say, okay, i'm going to pay -- >> one more thing. the idea of repatriating that money. apple, it's not like they are setting up huge factories in ireland or in all these other places. they're opening a drop box there. and that's the other concern which is how do you create jobs out of all of this. >> tech companies because of their dependence on royalties for patents and thing, it's the a lot different the way it's done. for me, what gets me about the "new york times" is they can do a piece on frozen planet and say why did not you say it's global warming? and just cry the entire article about -- you but when they do the apple piece, they don't come to the conclusion that we need to change the law here.

and when they do the piece on all the southern european engineers moving up to germany, they don't do the piece on why they're moving up to germany. they've done a lot of strublgtsth structural labor reforms that had to happen. there was another piece about apple moving something to reno to from california because -- so they don't connect the dots there that, wow, money avoids -- none of that comes out of the "new york times." all they do is -- >> no, no, no. >> the whole point of the apple piece was to blame -- >> i actually thought the piece was pretty fair. but let me say one thing on the reno. >> and we know how you like fairness. >> reno, nevada issue. >> nevada. it is not nevada in any way shape or form anywhere.

>> okay. in that case again, though, it's not that they're moving -- this goes back on moving people. they're not moving the people to nevada, right, they're moving like five people to nevada so they can get the better tax rate. >> but california is not a good place to do any type of business p. >> i agree. and yet automatic of the ds all last week said i have to do business in silicon valley. >> do you agree tax competition is a good thing? >> i think i do. >> tax rates are gone down over the last 30 years. >> are you following me on twitter? so you didn't see -- you know

what happened to me. there was this dude in disguise and it was so obvious it was a disguise, he had a big yankee uniform on, dark glasses, and i looked at him and i said that's like rushdy. and i tweeted it out and he said this is like the seinfeld episode. except what's different is this time it was me. seinfeld, it was not. >> why is he still in hiding? >> he has to be. >> i saw him saturday night after. >> so you know that he was there. i saw kim kardashian, also.

coming up, your national weather forecast as we start another workweek. plus a live report from washington. we'll talk about the race for the presidency and that white house -- see, i like that, the white house correspondent -- cute. they correspond with each other. white house correspondents dinner. ? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar... great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice. [ barking ] appears buster's been busy.

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dow would open lower he by 17, nasdaq by 4. humana reporting at the top of the hour. four cents short of estimates. revenues beat the street. now to the national weather forecast. skoth wi scott williams. >> good morning. of course we're keeping tabs on some colder air across sections of the northeast and new england morning, but dry for now. scattered showers and storms into the ohio river valley as well as sections of the south plains. toward the northwest, we'll track clouds and showers, also soggy conditions in south florida. st. louis, miami, moderate airport delays expected. take a look at the numerous frost advisories across new england. currently 44 new york city, we have 34 in hartford. 24 degrees right now in watertown. with you take a look at the satellite and radar. dry conditions across parts of the northeast and new england.

high pressure still in control. low 60s today morning cimorning. by tuesday, we'll need the rain gear from boston to new york city, louds and al s clouds an. 80 degrees wednesday washington, d.c. take a look at the heavy rain around st. louis toward tulsa. as well as oklahoma city. numerous flood concerns here. so if you do have travel plans along that i-44 corridor, watch out for delays. a few showers this morning around the great lakes. and take a look at the tropical moisture around south florida. heavy rains expected in south florida for today. we have the threat for strong and severe thunderstorms from wichita to amarillo and also around the ohio river valley. we'll watch out for damaging winds and hail and we can't rule out the possibility of a few

isolated tornadoes. so that's certainly something that we'll monitor especially in oklahoma and also kansas. now, for today, we're looking at that frontal boundary bringing clouds around little rock as well as sections of the upper ohio river valley and then by tuesday, it makes its way toward parts of the mid-atlantic, northeast and new england. so for today, we're looking at those upper 70s in raleigh, 90 degree heat toward the atlanta area. so really hot toward the south plains and southeast. 89 in the big easy. looking at temperatures in the low 70s today around minneapolis and then toward the seattle area, clouds and wind, 53 degreeses for the high today. min 90s in the phoenix area. guys, back to you. >> all right, thanks, scott. we're talking politics morning. after attending the annual white house correspondents continue they are weekend, john harwood joins us from washington.

even though there's so many ribbing of both sides, it's done in such a bipartisan way and everybody is in the room together. cantor is there and the president is there. and for one night you will almost put a lot of the real deep acrimony sort of goes away. i saw austan goolsbee. you see everybody. and it's festive. >> my favorite was when the president said people say i don't like events like this. i actually like them more than you think. i had a lot more material, but i got to leach to help the secret service to make its new curfew. >> my favorite was i thought jay carney barely delivered the line about turn on the president's mike. but the president is back there saying why do i have to do this? geet geez, i could use a cigarette. that was the funniest thing i

heard him say. he's good. and then the wink with my mother's born this kansas, my mother's born will kenya and i was born in hawaii. and then he winks. >> i thought the kimmel line on kim kardashian was a high point. >> and also there's a term for the president. probably not a second permanekc there's a term for him will. president laughed at all will stuff. >> you said everybody puts aside the acrimony, but a couple years ago they had passed health care reform and he mentions it, and the whole room, do you remember, cheered. it was so obvious that everybody in that room -- >> didn't happen that time. >> clearly perfect example that the press core is generally liberal. >> less of that this time. sdwr that's nice to hear.

>> michelle, are you saying that joe became a little more left by going to that dinner? >> no, i hope not. >> i passed by the fox table. bret is scenes as like, i don't know, the objective guy over there. anyway, i see that gdp number 2.2, the friday number some people are talking about 120, 125, even though we're still at 170,000 consensus. but it's going to get interesting if the economy does slow down a little bit. >> a lot of concern in team obama will that. >> and in your pollsters. >> yes. absolutely. and every time i've talked to obama strategists over the course of this year as their political situation has mostly

been improving, you talk about what are you concerned about, what could go wrong, what could get you beat. and a lisadown in the economy, a reversal in the economy is precisely that thing. now, i don't think anybody right now is predicting that we slip back into recession. it's not about double dip. it's about does slow down so much that people have a sense of like we thought it was getting better before and didn't. it's very problematic. i talked to austan goolsbee at the after party and that was his concern. >> he said the same thing to me. >> who was the musical entertainment? >> there was none. >> kevin marsh's piece was interesting, too. we talk about uncertainty in tax policy and health care. he talked about dodd frank favoring the too big to fail

institutions. didn't way to bring gretchen up. that sticks in your crawl. >> they all look alike. >> this is some weird, i don't know, co-worker problem. but -- >> angry gretchen. >> anyway, his notion is that you need a lot of the small business loans from the small to medium sized banks to get people to hire in the shawl business sector and that's-will-he says i'm not surprised at the tepid hiring because dodd frank is actually -- that was a new take i thought with dodd frank, it hasn't solved too big to fail. what's wrong now? >> setting aside the too big to fail part, there is a question about the state of small mid-sized community banks.

a i talked to tim geithner about this, the sig tarp report faulted treasury for not doing more to help small and medium sized banks get out from upper tarp it oig and lend again. and he reject that had saying we're doing a lot, we're doing what we can. but that's front and center in the debate over what are the effects of the legislation, what's the aftermath of t.a.r.p. and how do we get things going again. >> sorkin was on bill maher. did you choose a curse word to use since it was hbo? >> i out about it. i was going to use the s word. >> we got to go. john, i told you to use one of the curse words with a dash. ones that -- those are the ones that you -- >> you go on that show and use a curse word, that will stick with your image. >> i know. thanks, j thanks, john.

breaking news, energy transfer partners agreeing to acquire sunoco for $5.3 billion. we'll talk about some of the details when we get back. coming up this morning's top stories and the picture from the futures pits. more than 150 million professionals are connecting here. linkedin connects with the big board.

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i have a career that speaks to that passion. thank you, mr. davies. welcome back to "squawk box." breaking news just crossing the tape. barnes & noble announcing a strategic partnership with microsoft. microsoft going to invest $300 million, they're going to spin off the nook business along with the college related business, so this is about digital and bricks and mortar. there will be the bricks and

mortar stores on one side, the old b and n if you will, and then they'll join forces with microsoft and create a digital and college business. this business on its own, the 300le million that microsoft is investing values the entire company at $1.7 billion alone. that's just the spinoff business. remember, today b and n's market cap in total is a little over $800 million. so whatt we're talking about is the bricks and mortar business worth nothing and this spinoff business worth everything. they don't say it in the press release, but the implication is this could be an ipo very soon. so you could see the nook business, the the college business get spun off, that becomes sort of the growth business if you will and then what happens and how do you value -- but there's another component to this, which is microsoft jumping into the book

business. also puts them in position to compete against amazon and its kindle, puts them in a position to compete against apple and it ipad. windows obviously the windows 8 platform coming out on the tablet, puts them in position to try to get competitive footing along those lines. but it doesn't look like it's an exclusive deal. so could you still see the kindle and other software on those tablets. >> so barnes & noble shareholder will get at this point -- a lot of hope? >> a lot of hope. >> bidding 16 already. >> you can see here just going through some of the -- >> doesn't it seem like some of the valuations of the old world businesses got below what -- i think of even aol, you write some of these thing off and people sell the stock down to probably barnes & noble was worth more than 800 and how we're seeing that. >> this is like an aol day. >> that's what i'm saying.

>> when they announced the sale of the patents. >> all right. what else, andrew? but given the price fixing -- books are very important to you and your income. >> i should also say that william lynch the ceo of barnes & noble will be joining us first on on cnbc in just a few moments. so we're not only getting the news now, but we'll be able to talk to the ceo. >> is it possible the bricks and more arrest -- remember when bloomberg bought business week? i mean, didn't they pay a dollar? probably was worth recent than zero. >> and that will be the interesting question. >> is the bricks and mortar actually a liability. >> and the second component this 1 pp $1.7 billion valuation, is that

real. will the market accept that as a real valuation. they could say they're overpaying and that no for microsoft this is just strategic decision and they can spend this, this is free money to help. so we have some questions for the ceo. will is goi will is going to be a very big deal in the publishing business and tech business. and today we're introducing the new "squawk box" book club starting at 8:00. this news could not come at a more opportune time. >> they almost did it for us. >> who did it for us? >> barnes & noble. >> i see. >> we're having our book club today, they decided --

>> it's early. >> we can start calling it the mook bo took book club or ebook club. >> let's get a check on the markets. chief derivative strategist joining us. joe, good to see you. >> very nice, three authors. >> that's right, we all have books. for got about mine. but thank you for bringing it up. joe has one, too. so spain is in a recession and our averages don't seem to care all that much. once again it seems more and more like we're focused very much here on u.s. domestic issues and the economy. can we read that into it even as the news gets worse and worse? >> i think you can a little bit. and actually i think if you look at some of the earnings calls and the first one that comes to mind is mcdonald's where they talk about the domestic economy is very good, the eurozone seems to be a bit of -- i've heard people say a dead zone and may be for a few year. but there is an interesting

conundrum in the market and the fact that the bond market looks on pace to enjoy it's best month sense last september. and at the same time, the vix is trading down at under 16 1/2. so it would seem that something has to give here a little bit. we can't continue spain announcing that they're in a recession, we can't continue on this path where europe is completely disconnected for what's happening in the u.s. so it does seem that this week especially with unemployment coming out on friday we're going to have to have some type of reckoning one way or the other if the market believes that spain will have a major effect or if the earnings are going to be the overshadowing, hey, the u.s. is healthy, the u.s. is healthy, the u.s. is healthy. >> i don't know if this is con sp conspiracy thinking or not, but is there anything in there related to yet another chinese dissident seeking asylum?

does that even matter at all? >> i love conspiracy theories, but i don't know that that necessarily has a major effect on this one. >> so gdp -- employment report later this week would be the big thing. >> yeah, i think that's what everybody will focus on all week. we do have quite a few numbers today which will have maybe a temp temporary blip effect. >> okay, joe, good to see you. coming up, the ceo of barnes & noble on his big deal this morning. right back with that and a lot more. arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz. the world needs more energy. where's it going to come from?

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as we reported, barnes & noble and microsoft announcing a extra teenlg and i can partnership involving the nook. joining us exclusively with more of the details,morning, appreci being here. >> thank you for having me. >> so this is very big news. we were dry to go di trying to some. you're splitting off the college and nook business, microsoft investing in that and then the bricks and mortar remain. how are you thinking about the different valuations? i know in the press release you suggest that the nook business, college business, that's worth $1.7 billion if you extrapolate out the 300 million that microsoft has invested. but then how do you value the bricks and mortar business? >> we place a substantial value on the brick and who are tar business. if you look at how it's performed this year, we are growing revenues.

we've salted we'll grow ebida and you're talking about a business that delivers with 260 and 300 million this year. we haven't given the specific number. so we think there's special value in the retail business. what we're talking about today microsoft as a strategic partner and the objective is to go after the big global opportunity we see in the exploding market for digital content. and we're really excited to have microsoft as a partner and we think together we're well capitalized with new code to be a big player in that market. >> and let's talk about will partnership and what it means. how did the deal come together, where do you seel ththis hingth going in terms of the nook and how will it develop in terms of

your relationship with other operating systems, the nook beyond the technical device, the software obviously operates on other systems. >> yeah, that's right. it's a good question. nook reading technology and our mook reading software can be read across all the major platforms. apple, google, android. but specifically to your first question, we think microsoft's the ideal partner. but look at how people are consuming content now a days, more and more of that is happening on screens. if fact ebooks will go from 5% of the overall book market to 30% globally within the next two to three years. and no one will own more screens in portable form factors than microsoft. we've seen windows 8, we think that will be a big hit with consumers. and we can bring substantial value to in-windows 8 with our expansive and vast e content

catalog and our nook digital platform. >> microsoft is contributing $300 million. is there any additional revenue or monies that they will be paying in terms of royalties going forward? >> not in the form of royalties. there's payments going into new co over the five year term of the deal. but we're both putting in r & d money as well as investment to expand the nook platform international internationally. to date we've driven explosive growth, but that's been focused on the u.s. market and what we want to do is seize the incredible opportunity we see to distribute and manage digital kept in international marketmar as well. >> should we expect an ipo, how do we value it for the current shareholders? >> when we announced we were exploring various options for unlocking value in will fast

growing digital asset, we said we would pursue all options. today is obviously a big step in unlocking the value for barnes & noble shareholders. we're not disclosing any definitive other steps at this time. we're focused on today and clearly this is yet another step in the vision we laid out january 5th. >> as you know, there is this antitrust case going on against the publishers, against apple, changing the pricing. how are you thinking about that? >> well, we haven't commented on the doj investigation. we were not a subject of that investigation. we're very aligned with the publishers short mid long term. and we fully expect to enjoy attractive variable economics on the selling of digital content while offering consumers competitive prices. >> let's talk real quick just

about the nook itself. i know last week you released a new one. i read the reviews. it's now a glow in the cashing, nook. for you, joe, you were talking about how you can't read an ipad at the beach. this nook, you can read it at the beach and it lights up. >> both. >> it does both. nobody's ever done that before. has that gone on sale yet? >> it has. it's temporarily sold out. it's been a big hit. you probably read some of the favorable reviews. it's the most controversial e reading product developed. yet another evidence of the innovation we've been driving in the category. it allows you to at that time e paper-like experience outdoors so that as we go in to spring and summer you can read on the beach where you can't with the ipad or kindle tire or the nook tab head or lcd product is not as good for reading out doors. but it also has a glow so that at night if you're reading with your partner, wife, whatever in

bed, you don't have to have the light on. you're not disturbing them. so you you don't have that big argument that i have with my wife. so it's a hit product and we're excited about the launch. >> i've always been told that when it comes to the book buying business, it's mostly women that buy books. with theed a vent of all the ereaders, has the demographics shifted at all. >> no. in fact, a good point. 57% of books in this country are bought by women. if you look at the segments that really fuel the growth, genres that fueled the growth of e reading, it was primarily romance. some of the women readers want to read conspicuous will you and ereaders afford that opportunity. you don't have the book jacket out in front of people. so women continue to be the majority. >> before you go, there was one line that caught me eye and it goes to patents. last time we had a big announcement on a deal with

microsoft, tim armstrong from aol was here and they had reached a deal. it says they have settled patent litigation and barnes & noble and new co will have a license. i didn't appreciate how big a deal was that in terms of getting this will deal together? >> it wasn't the strategic underpinning for the deal. the strategic yubd pinning fkr both companies have been in developing reading technology and we think the market is up for grabs. and we think together we can be a leader. market. so that was the me sis for the deal. settling our patent litigation just made sense now that we're partners. >> william, thank you for being here this morning. it's also congratulations on the news and a special day for us here because we're launching the squawk book club which we could call the ebook club or the e

squawk or -- >> i like that branding. >> as he mentioned, we're rau h launching the book club. it hands out blue chip book awards to the hoths talked about titles. so we'll begin to build a library of classics that are must reads for any investor. this morning at 8:00 eastern, one of my all-time favorites, jane stewart, den of thieves. fabulous read. and later this week, sir richard branson, tim farris, michael lewis. coming up next, the business of sports. darren rovell brings us a first look at the new nets from their brooklyn home.

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after 35 years in new jersey, the nets have packed their bags. they're headed to brooklyn and that's where darren rovell is to unveil the team's new logo for the first time live with us this morning, of course, only on cnbc. darren. >> yeah, thanks, michelle. we are here at barclay's center in brooklyn, which will open in september. but today, i'm hear with the

brooklyn net ceo brett yuermark to unveil for the first time the brooklyn nets logo. tell me about the design for this and why you made the decisions that you did. >> we're extremely excited about the design, darren. thanks for having us this morning. jay-z is the author. he's the creator. very happy that he took the time to really think about the bold move wanted to make with respect to our move to brooklyn. >> getting rid of red, traditional red. and you'll be the only nba team that will have just black and white as the colors. >> absolutely. and it's a big departure from where we were with red, white and blue. we think black and white is simple, traditional, bold, it's all brooklyn. >> it's almost like brooklyn is taking over from the nets part. there is a big brand to the city itself. how important is this process and the logo? >> well, i mean, the logo change, obviously, was a big part of our future. we're going to unveil it here in

a moment. but you'll notice we have two primary logos. the nets shield, which is black and white and has a b in the basketball in it speaks to the past, but in a profound way speaks to the future with the bold b representing brooklyn. brooklyn is the brand. the name nets connects us with the history of the franchise. 35 years in new jersey. but it is all about the future and it's all about brooklyn. >> what do you think sales are going to be when it goes on sale at 8:00 today? >> off the charts. vair ages of the logo got out last week. but it goes on sale today throughout new york and the metropolitan area and we're very excited about it. >> mikail told us he's stil sticking to his five-year plan of winning an nba championship. i'm sure you've heard that directive. tell me how business is in

brooklyn. >> business in brooklyn is terrific. sponsorships are great. suites are 75% sold out. our general nonpremium season sales start tomorrow. we've got a huge database to go after initially, but we're very, very excited. people are voting yes for brooklyn and they're voting yes for the brooklyn nets. guys, i've gotta say, spike lee, as mars blackman wore some brooklyn stuff in that famous nike commercial even though he's a nicknicks fan. you might want to get some of this stuff. >> yeah. he definitely is not -- >> i love those commercials. >> i was thinking it's cool, brooklyn, that's cool. but i thought, you know, it is sad for new jersey, though, right? being a new jersey guy. anyway, rovell -- >> you have to cheer for new jersey. i get it, joe. i understand. loyalty. >> right. coming up, we're going to welcome guest host bill ackman,

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staying to the move, ahead of the next big deal. what activist investor bill ackman has in store. >> getting cp rail back on track. we're going to talk to two former railroad insiders as the company's proxy fight heads to a crucial vote. and it's almost here. the launch of the "squawk box" book club, less than an hour away. the second hour of "squawk box" begins right now.

good morning. welcome back to "squawk box" here on cnbc. here are your morning headlines. you heard it here first. barnes & noble and microsoft announcing the formation of a strategic partnership. the new subsidiary is known as nuco. its will bridge together microsoft and barnes & noble. barnes & noble will own approximately 82.4% of the new subsidiary. hedge fund manager phil salcone faces a deadline to reach a deal with dead holders of light swear. if not, they face possible bankruptcy. the holders of lightsquared faces approximately $1.2 billion in debt. falcone has until 10:00 a.m. to

strike a deal. hollywood maybe seeing a turn around in its seven-year decline of home video sales. consumers spent $7.5 billion on home entertainment in the first quarter this year. an increase from 2.5% a year ago. it's the second quarter of growth income and spending. blu-ray disks, online and subscriptions to services like netflix. the futures right now are looking at slightly higher than negative opening. today, squawk newsmaker and activist investor, bill ackman. always great to have you in. how are you? >> thanks for having me. >> you're very welcome. barnes & noble, i have to ask you about that first thing, right? makes sense? >> okay. i have to give them credit for trying.

>> you were a former owner of borders. >> and barnes & noble. >> bad experience. tough business. very hard. >> so is the bricks and mortar business -- is it valued negatively? >> what's interesting is people still love their bookstores. we always thought there was room for at least one bookstore. we just got the bookstore wrong. barnes & noble has done a better job. >> like theaters. you're never going knot going to go to a movie. >> people get really upset when their bookstore closes. we thought of a bookstore as like a little shopping mall. the book is the anchor. >> a lot of the old sort of school businesses have been sold probably below what they're worth, right? i mean, i was going to -- even mentioning the "new york times." that probably at this point has

more assets than the stock price. how about aol? >> it's up a bunch and it should be. >> it's at 18 bid now, barnes & noble from 13. and the ask is up in the mid 20s. so what happened? people just sell it beyond where it should be sold. >> it will take a lot of skepticism about what the nook is worth and now you have microsoft putting in $300 million. >> should we believe microsoft? >> that was my question, when you see microsoft putting $300 million, you can extrapolate out, you understand how they get to 1.7. but i remember when microsoft first invested in facebook, people said that was a strategic deal, that wasn't a real valuation. though, obviously, facebook's value today is much higher. i think it's real. i think it's real. i think they believe this is a valuable edition to their platform and they can sell our product through it. >> and does microsoft bring enough to barnes & noenl and the

nook? >> i think it's a very smart deal. i think it's good for barnes & noble. but i still think it -- you know, when i look at the price i paid for the stock five or six years ago, i wouldn't have made money even at 18. >> and the big winner here, malone. >> he really figured this one out and bet on the nook in a way other people were not -- >> although i don't think it's a profitable investment for him yet, not at net 18. but he's a smart guy. >> anything new you're thinking about that's not out there with you? >> i wouldn't say a lot in this proxy time. >> we will talk to hunter. >> and, actually, burger king. >> burger king? >> i don't know if we have the video of it. do you remember when i saw you in tulane, we started up a conversation. >> we did. >> at the very beginning of the interview, it wasn't even supposed to -- do we have a copy

of the tape? we don't. at the beginning of the interview, he starts talking about mcdonald's and you're talking about -- >> business. >> i said to you, are you doing anything in the space? and i don't remember what your answer was, but it was definitely not yes. and two or three weeks later, dow this deal with business king. >> great new management team. they're doing a great job. >> burger king, it's not on my radar at all. .i'm a fan. wendy's and mcdonald's, we alternate. >> that's good. more opportunity. >> but you have some work to do. you have to get that -- whatever that taste is, that chemical taste in the burgers. >> like mcdonald's. you're confusing us with -- >> no, i'm not. the fire grilled -- it tastes like it's burned. >> no, no, you've got it wrong. 18 months ago, they chaengd the french fries. new management. it's a complete restart.

>> look at the 3 gs, right? these are the three guys that have done -- you find them impressive? >> first glass people, easy to do business with. arguably, the best operation in the world. they've done this in breweries, railroads and now fast food. >> out of the public market, two years ago? >> 18 months ago. >> turn around in 18 months smp. >> yes. it's not done yet. >> and this is actually -- i always wonder about these types of deals. >> remember, they're still going to retain 70% of the category. >> did they want to do this? they didn't want to do this, right? they were going to try with the ipo. >> i think their plan was to keep it private for another year. and i said, look, do you really want the distraction of an ipo? we could offer them an instant ipo, keep management focused. >> you were part of one of these blank check companies.

spak. so blank check companies historically have had a bad name. >> right. >> people looked at these and thought they were scams. >> correct. >> sole purpose acquisition corporation, yeah. >> actually, the old ones, you didn't trust the investor. this one was a real trust. >> how did you get convinced that you wanted to get into this? >> actually, to martin franklin nicholas did this once and did it successfully. >> it was very successful until i guess the top guy left. but i think they had a pretty good track record of all of the people who did spacs and they came to us and said, bill, would you like to invest? and i said, look, it's not like us to put money into investment where we have no control. they said why don't you come on as a partner. burger king is the highest

quality large ft company purchased bay spac and it's going to be a great deal. >> stop spraying something on the burgers. >> no, no, could have happened in the past. but one of the things they did is look at the quality -- the quality went downhill, tu. these guys looked at everything from the ingredients to the quality of the product. they've completely redone the menu. >> and -- >> but i always liked the burger king burgers better, true. and now they've fixed the fries. and have you had the salads? seriously, the new salads are burger king are actually incredible. i'm not making it up. >> how much of your decision to invest was because spac expired? were you running out of time? >> no. we had another two years. >> my friend wants to know what you think of this. this is a bacon sundae. how do you feel about the bacon sundae? >> i haven't had it, but it

likes innovative. >> that is bacon in the sundae? >> think about what drives cop assumption. so it has fat, it has sugar. what else do you need smp. >> i don't know. how about salmon ice cream. how does that sound? >> chocolate. >> sundaes with bacon, i love bacon. i don't know about sundaes. >> i'm not making it up. the food quality -- >> it's got a lot of upside. >> they redid the menus and now they're working on the stores. >> when is the last time you ate there? >> three weeks ago. >> good. >> try the salads. the salads are fantastic and healthy. you look skinny. you eat salads. >> he is, isn't he? >> he looks healthy. >> we have a lot more to talk about, including trains. >> not planes or automobiles, but trains. >> and jcpenney, probably. >> little toy trains. >> maybe. >> comments, questions about

anything you see here, shoot us a question. cnbc.com. follow us on twitter, @squawkcnbc. dow looks like it would open down 10 points. we're going to have more with bill ackman after the break. zap technology.

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time now or our global market update. ross westgate is across the pond who i am sure would like some bacon ice cream from bugger king. ross. >> where we are today, we have

stocks being outweighed by advancers or advancers being outweighed by decliners around about 6 to 4. so it means we've got declines, slim declines for stocks ahead of the u.s. open. this is after spanish gdp came in contracting .3% in the first quarter. slightly better than the forecast minus .4 contraction from the bank of spain. the ftse 100 down about a third of a percent. xetra dax is up. the ftse mib down .2%. we have the s&p coming out and downgrading 16 spanish banks. bpa and bank santander relatively unscathed. similar reaction when s&p came out and downgraded the country last week. we saw unemployment jump up to one in every four of the population. yields region ten-year yields are lower at 5.6%. but it's still below that key 8%

mark. we also learned today from the ecb just over 51 billion euros was bought by italian, spanish and french banks in march alone. and those were record amounts, around 23 in italy and 20 billion of that from spanish banks in particular, as well. we've seen the dollar a little weaker. just remind you, the pound against the dollar, we hit eight-month highs in august. sterling/dollar at 132.68. >> that you can so much for that. let's talk more now with our guest host, activist and inve invest investor, william ackman. $11 billion now, right? i want to talk about trains in half a second, but what are you doing in london right now? there's talk that you might be doing -- >> we're not allowed to talk about that in america. >> not allowed to talk about that in america. >> that's right. >> rules here in america are crazy. >> that's right. >> but you could talk about it in london. >> that's right.

>> could you talk about it with ross westgate? >> i don't know who that is. >> the guy we just had on. >> thanks for listening. >> you were riveted by his -- >> is ross the barnes & noble guy? >> no. the guy we just asked if we liked bacon ice cream. >> oh, the london guy. how much do i know? >> i'm joe kernen. >> and she's becky, right? >> let's talk about the battle you're having in canada in the train business. we have hunter coming on. he's the nominee to run the company. walk through where you are in the proxy fight rye now and then you have a couple questions for you. >> sure. we're in the end game. may 17th is a shareholder meeting. votes are coming in as we speak. independent group called brennen woods, shareholder survey, we have 94% support for management change. which is an enormous margin.

i've never been involved in a roxy contest with this grade a lead, i would say. >> so explain this to me. last week, you came out and you said that the earnings were awful or a mess or worse than that, actually. >> and they've asked you to apologize. >> now i know what you're talking about. >> no. i think you suggested that there was not a scam going on, but that the earnings -- do you want to explain? >> sure. look, it's fairly typical in a proxy contest. this is the last quarter they can announce before the shareholder meeting. we have a lot of people rooting for us and we have some pretty inside sources and we got a couple of calls that say, look, bill, there's -- they didn't accrue as much as they did the year before. >> you think the earnings are

bogus? >> i would just put that as a side show. even if you take the earnings away, they're still reported. the profitability of the company is worse than it was six years ago. the profit margin, the so-called operating of the business was worse. >> but on you calling bs, if you will, on these numbers, are you prepared to walk that back or do you think the numbers are real? >> unfortunately right now we're in the middle of a proxy contest. i don't know who to believe. let's just stick with the reported numbers. by the way, if i got them wrong, i'm happy to admit i'm wrong. >> if the numbers are right, you will say you were wrong? >> sure. >> there are a number of reports where the company has asked you to apologize and -- if i'm wrong, i'm delighted to apologize. unfortunately right now, the company realizes they're losing so they want to create a side show out of a technicality. who do people want? do people want fred green to be

ceo of the company going forward? the answer is no. hunter, by the way, is the most decorated ceo in the railroad industry. >> now, i don't know how closely our viewers have followed this particular proxy contest. but this ceo that you were proposing, you almost reached a deal with these guys, meaning you almost reached a deal with the company on the other side. there's a whole crazy story involved in this. >> crazy story. so the first meeting we had, we flew to canada. we sat down with the chairman. we had a meeting with the chairman, we had a meeting with fred green, one of my colleagues was there. paul is on our slate. brian welsh from pershing who authored a presentation about the facts. the last six years has underperformed for the company. we said, look, fred is not a bad guy. we think it's time for a change. hunter harrison has agreed to come out of retirement. he's a noncompete and -- and they want hunter harrison. if you could nominate anybody but hunter harrison, they would

take joe before they would take hunter harrison. >> they might. but i think what they don't like is someone from the outside is in effect making a suggestion as opposed to this coming internally. i said, look, let us join the board. give us two seats. and like with jcpenney, we'll work with the board on succession. we won't have to go on cnbc. we'll do it inside the board room. we'll see who else is out there and we'll put the guy in place. instead, they said, look, we want a fight in effect. they completely shut us out. they offered me one board seat and said i can't offer my opinion. >> and he seems to be remarkably divisive. what is it about him as opposed to ksh. >> hunter is not divisive. you'll meet him. you'll form your own opinion. >> he'll be on his best

behavior. >> i'm not suggesting he's divisive to me. but in this industry, for some reason with -- >> yeah. is he going to come out here and say he loves that flame broiled chemical spray -- >> by the way, don't spread false, misleading stuff about my company. actually, andrew said he preferred the whooper over -- hold on. >> if i could marry the whoper and the mcdonald's fries, that would be for me -- have you had the new burger king fries? most importantly, i have to get back to hunter. because i think he just denigrated the guy's character. >> i was not denigrating the character. i was suggesting the guy -- >> we're all denigrating everything. >> by the way, you get a sense of how good the guy is if his former employer is trying to keep him from taking the job. >> and that's not cnn. >> canadian national. no, by the way, the answer is the lawsuit is also a side show. >> okay.

>> so the bottom line here is, the company needs management change. 94% shareholders support management change. 75% support hunter. >> we've got a lot more coming up after the break. squawk continues when we return. isn't major medical 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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goldman sachs is expected that the nation will have only added 125,000 new jobs in april. forecast is far lower than the reuters estimate of 170,000. according to a report by the bank's chief u.s. economist, the jobs report will be a further sign of a weakening economy where inventory is accelerated. final demand growth, however, still sluggish. s&p ratings announcing they have lowered the credit rating of 16 spanish banks. among the worst hit, santander. s&p said the negative outlook mirrors the long-term rating of spain's sovereign debt which s&p 500 downgraded last week. >> comments, questions about anything you see here on e-mail, squawk@cnbc.com. they want to know what you think about the hong kong dollar now.

in the meantime, hunter, talks exclusively about the cp proximatit fight. bill akman wants him to run the show. find out what he says after the break. >> announcer: still to come, we kick off the "squawk box" book club. and hand out our first blue chip book award. our inaugural author wrote timeless classics that every business investors needs to have in their library. james stewart, author of den of thieves, joins us at the top of the hour to kick off a new list of must-reads for the business world. only on "squawk box." it's very important to understand

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welcome back top squawk on this monday morning. we're about 5.3 billion in stock and cash. also, the big news of the morning, we had it here first, microsoft making a $300 million investment in the barnes & noble nook. also the college text unit, barnes & noble on cnbc minutes after the deal broke this morning. >> we think microsoft is the ideal partner. if you look at how people are consuming content nowadays, more and more of that is happening on screens. and the overall book market to 30% globally within the next two to three years. and no one will own more screens

in portable form factors than microsoft. >> a big jump, this new division valued at over $175 million. on friday, it wa was $823 million. so some questions about how that new unit is ultimately going to be valued. also, what kind of value do you put on that bricks and mortar business at all? >> the canadian proxy fight heating up as the clock gets closer and closer. >> he's not very nondivisive, hunter harrison. although he's trying to stir things up here because he said he loves whoopers. >> he has all these guys in mind. >> we've got some good guys that know about railroads.

>> and burgers. >> they both like the whooper, i heard that. but i don't want to speak for them. >> founder and seek egg of $11 billion. >> were your ears burning, hunter, because we did talk about you earlier. you're the most dpsh fe-- >> fearful. >> if people don't like you -- >> well, you're the not wanted in the industry and yet people say you're divisive? >> no. >> all this material we were sent said customers would be mad if he becomes the ceo. >> that's coming from cp. >> that's are about directors who want to keep their board seats. it's not about whether hunter would be the right ceo, unfortunately. >> and cnn, your former employer, is suing you. >> they are. >> how big a deal is that and

how should shareholders of cp think about that? >> well, i think counsel has described it as pretty frivolous. my noncompete ran out the end of the year and they are going on a new theory which is a shot in the dark. >> and i appreciate if cp is putting this out, but why would they prefer a different ceo? i think you have to look at the source, andrew. that's all coming from cp. i have not heard one customer identified who did not want to buy from us. our track record said at canadian market, we gain market share. we were able to raise price. we were very successful. >> what would you do to this company? you've talked about sticking with the current plan and

executing the. >> i didn't say necessarily sticking with the current plan. i said the problem with the company is not the basic plans they've had. >> the strategy of the company is okay for you? >> basic strategy is fine. it's the execution. >> this is your execution guy? >> he is. >> what does he have that the other guy doesn't have? >> we have a model and a plan with a track record that's worked effectively with two turn around stores with illinois central first and canadian national second. our operating performance has been 12 to 14 points better than them year in and year out. obviously, the company is saying the right things. >> so you get put in charge of this company, what's the first thing you're going to do? >> i'm going to take that model of presigsz schedule railroad into calgary, fine tune it, makes adjustments that need to be made .execute, execute day in and day out and that's what this business is all about. >> do you keep the management team? >> i think if you look at the track record, i like to play

with the hand i'm dell. there some talented people in calgary, i'm sure. might we have to make some changes? possibly. if we do, there must be a couple of discards that we have to draw. either way, we'll put together an effective team. >> you were a board nominee. >> correct. >> you would be one of seven if all seven are voted in. in this case, it's interesting because it's what they call a universal proxy. so all the shareholders don't have to vote for everybody on your proxy. they can vote for four people, if you will. what would you do on the board that would change the game? >> first of all, i'd make an observation. i've worked around hunter for 30 years. hunter is not -- >> not divisive? >> hunter is direct. so that is given, i'll answer your question. i think as a board member, i would bring 40 years of practical operating experience from the ground up to the board, to members who don't have a vast

operating background in railroad operation. i think i'd bring an understanding of what the people on the ground sense and feel and what they go through every day because i've been there, much like hunter has. and i think that's, at this particular stage for this particular company, invaluable. >> all right. >> i wanted to know. >> it's a fair question. >> if you don't vote for all seven, who do you take and who do you leave off? >> look, i think that we're not seeing the majority control the board. there are 16 directors. there are really only nine of the current directors that are going to stay. so we're only seek ago minority. i think likely we'll get all seven for that reason. if we went for 16, i think we would pick and choose. but going for seven, i think it's a pretty easy decision. >> great. thank you, gentlemen. really? whooper, really sfp. >> or a fish sandwich. >> you like the fish sandwich. >> at bugger king?

>> absolutely. duh. >> the bk broiler. >> i love a whooper. >> fast chinas on the upper east side or something. >> delivered on a bicycle. >> and your kids don't eat it yet. it's not that they'll ever be allowed. >> you don't think she's going to allow -- >> no. no. >> i want to talk about railroads. do you want to talk about railroads? >> so i guess my question to you, hunter, is i think the proxy contest at this point is a side show. so it's may 18th. board gets together. we do a search for the ceo. let's assume that we decide you're their guy. day one, you're in the seat, what do you do? >> we get a body together and let them know what's expected of them. they're familiar with this model. they're familiar with the track record there. let them know what we're going to do and why we're going to do it and be sure they want to be a

player, they want to be part of this organization going forward. the foundation of this model is to provide first class service to the customer, a product, control the cost while we're doing it, which is that fine balance we've talked about. make the assets, don't get anybody hurt while we're doing it and recognize the contribution that people make to the organization and that's really what it's all about. it's a people's game. season it with a little passion and integrity and it's a pretty simple formula and we're going to go execute and it's worked very well in the past. >> the thing that i find stun sg what attracted us here is you've got a railroad that has half the operating profitability of its direct competitor and the only we could figure out is basically the people running it. i guess my question would be -- >> can we do this after the break?

>> we had our inaugural "squawk box" book award. winners received a beautiful plaque and knowing their book is part of our currently library of business must reads. futures right now are suggesting a slightly negative open, but not much. "squawk box" will be right back. [ barking ] appears buster's been busy.

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welcome back to "squawk box" here on cnbc. checking the futures right now, slightly lower open. doe lower by 19. s&p lower by more than 2 and the nasdaq lower by more than five. watch shares of scholastic today. the children's publisher is raising its today. the hunger games trilogy after the release of the lion's gate film based on the book. so the stock has been flat roughly for five years. if you get what you want, what happens to it? >> tell them what stock we're talking about. >> pacific. >> we expect it to double over the next three years. that's a lot of money. we have to rely on growth and we've got very little embedded growth in the model. all about this running, running it more efficiently. this is a cost story more than it's a revenue story.

but the economy recovers and the company is projecting dramatic increases in volume. if that happens, it's going more than double. >> are you going to raise prices? you mentioned you will raise prices when you ran your last business. >> i think it depends. it depends on the markets. they are predominantly a -- franchise. 60% of their business is bulk coal, potash, grain. there will be some modest, potentially price increases. >> where do you make the big money? is it in cost savings? >> no. clearly, it's in cost savings. management's plan is pretty aggressive on the revenue side like in the 70% range. ours is more on the 2%, 3% side. ours is on the cost side, theirs

is the revenue side. >> so the strategy is different. >> i think it's more the projections are different for us. hunter knows what he can achieve from a cost point of view. if you're buying a business, it's easier to predict what the costs are going on be than what the revenues are going to be. so hunter has a more conservative number of what the revenues will be. i guess i will just ask, you know, steve, he's bias because he's our ceo candidate. what is your view? the companies have a remarkably different operating performance. tell us what you did at norfolk southern. is that applicable? >> very simple. first it was safety. second it was customer service and what includes ensuring that you have worked reliability into your scheduled operation and you truly execute a scheduled operation, putting predictability into it. that translates into a better

lifestyle for the folks that operate the trains and support them. all of that comes together and formulates under a growth opportunity. >> we appreciate you both coming in, gentlemen. bill is going to stick around. good luck with your proxy contest. we will see where it goes. >> we need to have mcdonald's on, too. >> and they could actually bring some product. >> i didn't know we would be talking about bugger king. burger king has a lot of product. >> today is the big day. we are unveiling a special new series that is sure to grab the attention of readers and investors. it's the "squawk box" blue chip book award and we are compiling

some of the best read news-related books and keeping them in the squawk libraries. authors join us to discuss their books. some will be strictly authors. others will be ceos or fund managers. they will walk away with this cou costed plaque. we'll be unveiling this week at our website. check out "squawk box".cnbc.com for a complete list of who is in the club and their book. we're going to kick off things today with james stewart, one of my favorites, "den of thieves" is a great classic that you have to read. .check out the lineup for the rest of the week. we have some great names to kick things off.

so a lot of book authors. >> today's book is "your bunny has a good nose." >> that is a great line. >> we'll see next week, arthur brook. >> cool. >> "road to freedom." >> loved that. >> i don't know. you love the road to surfdom. have you ever been there? it's not a good place. coming up, final thoughts from bill ackman. and next hour, the wait is finally over. our final "squawk box" book club inductee will joins, james stewart. [ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial

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you can become mark zuckerberg today. the problem is, not everyone can become that in the way they could have, not that, or the way we could have moved up the ladder a decade two, three decades ago. >> that was andrew on hbo's realtime with big mahr on friday night. did you yell at him about the cuban thing? >> no, i didn't. >> oh, come on. >> i'm curious because we have bill ackman here and we're talking about the american dream and what the american dream means today, whether it's that you can be steve jobs or mark zuckerberg, which i believe you can. but the idea of upward mobility -- >> but who asks the questions?

who is saying that you can't be mark zuckerberg? he's only 25. we had all those guys on last week. all those disrupters. all those guys are saying you can be that and no one is saying that you can't. >> the entire generation is moving upwards in the ladder. not just the stars, not just the shoot for the moon approach. and i'm curious where bill comes out on that. >> we have a bit of an educational divide. mark zuckerberg, he left harvard, but he had a good education before he got that. if you think about the last 20 years, i think what's happened is technology has made -- there were very good jobs that paid well that didn't require a college degree. and there's less and less of that now because of changes in technology. you're a charter school guy? >> charters schools can be a option. >> charter schools fail in areas where public schools do not. >> it's more of a pay for performance. >> you see hard it is, randy

wine guard mer. any type of accountability is the chafe. they're so resistant to -- >> the charter school moment, the best school about it, i think, charter schools are not going to solve the educational problems. >> why do you think teachers wouldn't want to be evaluated? and why do you think, you know, automatic ten year and three years, no matter what you do? >> imagine if you ran a business and you had to tenure employees? >> it would be europe from day one. >> tenure is auto problem. >> the knee jerk progressive reaction is more money needs to be thrown at the problem and don't even touch the public schools. >> and the same thing is true in the university system. i think tenured positions don't make sense. it's not -- it's the only place where we do it. >> but in the university system, there's a lot more competition. it's where you have the most free markets, not enough, and that's where you see the gatest desire for people to come from overseas. >> explain this, though. higher education costs have skyrocketed in crazy ways and it's supposedly a competitive

market. >> no, because it's overly subsidized by the u.s. government. >> that's an interesting answer. there's a big debate about student loans last week. >> when you subsidize things that people desperately want, they get more -- >> i think part of it is board and universities are in a competitive -- up until now, they haven't thought about the costs. although i think it's starting to change. >> how about getting a law degree online for, you know, ten grand where i've heard it positive that you don't even need the investment. if you're tested outside of, you know, the -- if you go to a place where you need to be tested, you can learn everything. >> actually, it's start to go happen. >> why aren't you going to invest it? do you know if you follow the khan academy where you can download lessons on youtube. if you think about a world in which you get a smartphone that costs $100. it's a google android smartphone. as long as you have bandwidth, you can educate yourself. stab ford, by the way, offered a

course apparently, they offered it for free. i think it was on -- whether it's software engineering or whatever. 150,000 people signed up for the class. >> real quick, hong kong dollar. that was your big call. hasn't come true just yet. how are you thinking about it? >> i think it's still a good bet. we still have it on. every time i mention it, someone in hong kong tells me i'm going to lose a lot of money. but what we like about it is if you own the options, it's a 50 to 80 to 1 payoff, right? so even if you renew the bet every 18 months to two years, one day you're going to be happy. but i think it's actually -- you know, i think the hong kong dollar is a good place to put some money. so instead of keeping your money in a u.s. treasury mope market account earning zee rob one you can earn a higher yield. i think it will appreciate. that's a lower risk way to make that. you won't get 80 to 1, but one day you'll wake up and get 30%. in the meantime, you'll get a little interest. >> thank you. >> thanks for having me.

vote the blue proxy, though. >> it's like a blue pill. >> it's like a blue pill. >> you don't know what i'm talking about? >> i don't know what you're talking about. >> vote the blue proxy and watch the stock. it will be very important. >> i think nexium is a blue pill. >> where they show that stomach dance smp. elite authors in the world of business, "squawk box" inducts james stewart in our inaugural segment. his blue chip book award is just ahead. you can feel it. steve, there's going to be tears when we present this to him. "squawk box," coming right back.

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>> i like this cover. it is much better. >> than the original? >> you know, never mind. >> he does it and he has no interest. i'm joe kernen along with andrew ross sorkin and michelle caruso cabrera. we had a good week last week. it was the back drop of -- >> walmart. >> spain and the 2.2% gdp and worries about this friday's employment number. it's not easy for the averages to advance. and the vix got close to breaking its 50-day moving average or might have broken it in terms of volatility. >> on the up side.

>> yeah. >> on the down side, wow. nobody is worried. >> right. exactly. >> microsoft is making a $300 million investment in barnes & noble's nook, digital book business and college text unit. the ceo of barnes & noble talks to us this morning. >> the strategic underpinning is both companies have been involved in developing reading technology. we think this massive market for the distribution of global content is up for grabs. it still makes sense. we think together we can away leader in that market. >> holy smokes. look at this bid and ask in the wake of that deal. so barnes & noble, close to $13 on friday. the bid and the ask. >> barnes & noble on friday, a little over $8 million. the valuation of the spin-off along, nook and college together, $1.7 bl billion.

>> barnes & noble will only about 80% of that business. microsoft is going to own -- i think it's about 17%. it's about an 80-point slit. >> i can see with the "new york times," a deal book. >> you would see "new york times" go from 900 million to 1.8 billion like that. >> double. double. >> in my view. >> thank you for that, joe. >> unfortunately, you wouldn't -- >> you invented deal book, right? >> yeah. >> but you wouldn't participate at all if that were a -- >> i think i may be a stakeholder. >> but he's got so many assets, it's hard for him to remember. >> all right. >> angry gretchen. goldman sachs. goldman sachs is turning increasingly bearish on the economy. it is expected the u.s. to add

125,000 jobs in april. according to a report by the bank's chief u.s. economy, the jobs report will be a further sign of a weakening economy where inventory accumulation has accelerated, but final demand growth remains sluggish. >> we are now very proud to introduce the "squawk box" book club. today is the day. this is an exclusive group of books that drive the conversation in the business world. we're kicking off the club with some classics that belong in any business library books like poker, barbarians at the gate, and accidental billionaires, which is the book that spawned the movie "social network." let's present our first blue chip book award. it goes to one of my favorites, "den of thieves" by james stewart, your bunny has a good nose. it nearly brought down all of wall street. james stewart joins us for the rest of the hour. good morning to you. he is a "new york times" columnist in addition to "den of thieves" he's the author of

"disney war" and tangles webs." congratulations and thank you for helping us kick off the "squawk box" book club. >> if you haven't read it, when i think about it, nothing ever changes. right? >> img at the very end of the book, i thought about can this happen again? dare i say in 20 years. >> what's amazing about it. >> that's true. >> it mirrors what happened with the crisis in so many ways. it's really fascinating. >> so 20 years later, the classic, would you write it or change anything in it, you would do what? >> as an author, i have never

gone back and read anything i wrote that could be a little shorter. >> but, you know, what i still like about it, to me, it wasn't about insider trading. it's about people. and delves into the characters. why are these people who are so successful do this, risk everything, hand off suitcases of cash. >> this was an amazing story. >> what was it, 750,000 -- how much was in ta suitcase? >> i don't remember the exact amount. but there were many times when they handed it off in the lobby of the plaza. like it's a big secret. is that where you go? >> the big, hot book back then was merger mania. and it was written about how to figure out what the next -- was going to be. but it never mentioned you needed $750,000 in a briefcase and then you can figure it and then they pulled the book.

i remember realtime when it happened. he got totally busted, right? and it was a ridiculous book to pretend you could figure it out. >> at the time this book came out, the other person that was very upset and frustrated by this, in fact, it's interesting timing. today is the beginning of the milk and global conference. you're rolling your eyes. you know where i'm going with this, trying the on shut this whole book down. >> yeah. and he ended up -- well, his lawyer sighed me for lible. and it went on for years. and the insurance company who was dvenlgding me, thank god, always wanted to settle. but mikkan would never accept any deals. >> you were willing to accept a

deal. no. but under the rules of the insurance company says you will accept it and you say no, you have to take over the tab. >> am i wrong, what bothered him was he was painted with the same breath as dennis levine and i always thought parking stock didn't rise to the same level as -- i always thought milkan was ruthless and he was -- you know, as ruthless as you can get. but he was smarter than anybody else. >> but i don't really know whether parking stock is. >> but that's the virtue of wanting -- >> but people say it's not the same sense. they're not the same. >> he could have done it without having done that. it wouldn't have become the bubble that it did. it wouldn't have gone the way it

did. but he would have been a great financier. >> there was a time where how many companies at that time could raise money through debt? it was like there was a handful of blue chip companies that could raise money. >> it was a highly competent letter. >> before that, no one could. >> how do you -- >> look at the growths in the 80s. >> how do you look at michael milken and in terms of the way corporate is structured? prosecution had a huge deterrent. wall street was so much cleaner and the crime didn't start back again until the next bubble came around. >> that is the follow-up i was going to ask, which is this the is a book about crime. and this is a book about crime during a bubble. and we just had a bubble and a financial crisis and thus far, people say nobody went to jail. was it different this time? >> i can't believe that it -- that history is ever that

different. first of all, we had the tech bubble and then look what happened in the wake of that world come, enron, we had all kinds of illegal behavior related to the stock market. and you're right, there are no household names. >> why do you think that's the case? >> is it a matter of time or is it not going to happen. >> i do think that the mortgage backed security thing was more diffuse. there was a finite people of running it. in some ways, i think the task was difficult. but i personally, i wish i could work for the attorney general for a year or two. >> did you look or do you think you would be bringing cases? i think i would be bringing cases. >> he's saying is it policy that got us to the crisis or -- >> is it fannie and freddie? >> i mean, really, it's actually an interesting question, whether it's a policy issue or whether there was legitimate fraud taking place. >> well, they go hand in hand. well, in madoff maybe you do,

but that's a special case. when you have something as systemic as the mortgage-backed process, it is a combination of everything. >> you had the bear stern guys. you're not going to be chuck prince, richard fold, most of those guys you're not going to be able to show criminal cause or fraud. so it's fundamentally different than when you've got almost a societal push towards increased home ownership for everybody. and you've got the fed at 1% or whatever and you've got china buying all of our bonds. >> i don't want to put words in jim's mouth, though, but i think in other columns, as well. >> who? >> that washington has been less aggressive broadly speaking about prosecution webs not just about the financial crisis. i've been reading a lot of his columns, for example, about bribery. and he looked at the walmart thing this weekend. just the whole approach to all of this is less aggressive.

>> and when you look closely at these things, the people who they are prosecuting, they're relatively small fraud. you don't have beg companies paying all of their legal bills. i think so that's very unbecoming of our government to pick on the weak and the middle class. >> what is your buddy's name, fabriceo -- well, no, in the entire -- >> what was the name of that? >> reese torez. he is a real person. >> any of those people, do you think could do time? >> as far as i can say, no. first of all -- >> that's the most egregious case we have. that's the one thing that carl evans' demagog until it was rammed down our throat. >> i read the whole book about this crisis and i never found something that i thought you could prosecute. >> that was a totally -- >> look, right at the very beginning when he sat down, i said it's a suitcase full of

cash, it's fundamentally different than seeing that you can get a aaa piece of paper with a bunch of junk in it because aig didn't put any insurance reserves on the credit default. you can get a aaa with crap because of aig. >> i just read that the lehman brothers thing is still under investigation. and i'd have to delve into that. we don't want to spend five years looking at it. but you can find some false statements in this financial crisis. it very well might be civil. >> have we ever had a starbucks guy go to jail on finding things that were -- >> no. >> somebody had to sign something. >> and that is where you start getting into the chuck princes part of the world. i'm not saying he's guilty of anything. i think it fries people that these people who are responsible, they kwloo multibillion dollar bonuses. as you were saying last weekend,

they're hauling down huge amounts of money as corporate directors. i know guys who talk about the predator ball every year. >> yeah. i remember actually getting in one year. i sneaked in and i was in there for about ten minutes looking at him face-to-face and then the security guards were on me, grabbed me by the collar and i was literally thrown out. >> that's a great story. you'll be bringing us more stories throughout the hour. have you run into any of the characters since the book sfp. >> yeah. >> and it's been a good or bad experience? >> mostly good. and there's an interesting phenomenon where some of the children of characters of these books called me out of the blue and said, can we talk? and i did one or two of those and then i said this is a mistake. i'm not a psychiatrist. >> there's a lot more to talk about. >> you bet. >> you get an award and you're going to hang that up, right? >> >> i didn't know i was getting a

plaque. >> you get a plaque. we used to have the executive leadership award. >> the elbows? >> yeah. and i remember once we honored alan greenspan with this. >> it's lucite. >> but i remember, he really tried to act like he was moved. >> by the end of the hour, jim is going to cry for us on camera. >> if you were oprah, i would cry, believe me. >> well, when you see what this book club can do to book csales you will cry, happily. the dow was up nearly 200 points. can the bulls extend the rally heading into may? ethan harris will join us next. in the next half hour, professor marvin goodfriend is a member of the shadow open market committee. that may sound like a mysterious caval of super villains, but it's a team of advisers who make policy decisions.

>> announcer: all this week on "squawk box," we're kicking off the "squawk box" book club with timeless pieces that belong in every library. this week, we'll talk to sir richard branson, michael lewis and we'll present barbarians of the gate and the wisdom of crowds. your summer reading list just got a lot longer. i bathed it in miracles. director: [ sighs ] cut! sorry to interrupt. when's the show? well, if we don't find an audience, all we'll ever do is rehearse. maybe you should try every door direct mail. just select the zip codes where you want your message to be seen. print it yourself or find a local partner. and you find the customers that matter most. brilliant! clifton, show us overjoyed. no! too much! jennessa? ahh! a round of applause! [ applause ]

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welcome back to "squawk box." >> it is really important. >> yeah, i know it is. we're going to talk about this week and it's all building up to friday. i can't believe that again. >> it says in the prompter, the big kahuna. >> it was never the big kahuna. there was a big kahuna murder, but then it would be a cultural moment, it would go over your head and then it would be an awkward moment. it's from pulp fiction. why don't they call it the rt kwaer pounder in europe? the fed is in wait and see mode. joining us now is eatan harris. ethan, what is most fascinating is the disconnect between what

we see a lot of times, whether it's spain, europe or even our own gdp numbers. the market seems to march to a different drummer sometimes. how do you explain it? >> i think the markets are expecting weak earnings quarters. we're coming in above those expectations. the markets have been aikt look through europe, look through some of the softness in the u.s. numbers. >> think about how long we've been looking through stuff. we've been looking through stuff since october and it's about 35% now in the averages, isn't it? >> but remember why the markets are. the markets are basically priced for a bad economy and bad outcome. we've got very low multiples overall. the corporate sector is in great health and when the macro story gets a little quitetter, they calm things down there, when the u.s. looks okay, the stock market has a tendency to do a

little better. i don't think this is going to last. i think the macro back drop will get worse going forward. right now, markets focus on earnings and earnings are going to do okay. >> i think about the lpros and i think about all the banks that bought on the sovereign debt. i wonder when that comes home to roost. is it china or ur own economistic slowdown if it happens here? >> it's very much a domestic story. people haven't put it into their forecast yet. if you look at the consensus view, it has growth picking up in the second half of the year. in fact, the late eft consensus survey is people revised up their forecast for the year and next year. but the fiscal clip is a big deal. you're talking about a government that is threatening to -- a fiscal you a tearty

package in an election year where there's no way to preannounce a solution. what they're doing is putting this major piece of uncertainty in front of the average investor, the average company, the average household, it's almost inevitably going to cause a slowdown as people look at the clip and say, hey, you know what? maybe something bad is coming here. >> so, eatan, as warm as the winter was and as accommodative as the fed has been, what do you attribute this latest weakness to or bumpiness in the jobs number and gdp to? what is that from? >> well, the gdp number was a weird report. you had a weakness in some of the things you don't pay that much attention to. it was a bad quarter for government spending. the government is contracting, but not as fast as the day has suggested. there's a very weak nonresidential construction number. again, not something you read a lot about on a daily basis. so the dae data -- the report

looks a little weaker than the first quarter really was. i think of this as a 22.5% to 3% quarter. the weather story, on the other hand, was quite real. there's to question that when you have the mildest winter in history wieb history, it's going to inflate your economy. we've already seen signs of a slowdown. that's likely to continue as we get the big numbers like barrel, ism reports, retail sales. we're going to get a pay back for all that activity drawn into the winter. the second quarter is going the to look soft. >> so i thought 2.2 would be the low, it would be revised higher. >> it could be revised higher. the first quarter, it should be a mild winter. we expected a 2.3% on it. that's because of the way you add up gdp.

you look at most data, you look like a healthy quarter. however, that's passed. now we're looking at the second quarter. in the second half, i think the fiscal clip is the challenge for the economy. >> we've been out of the recession for a while. 2% is just -- what are we, europe? is this a new normal? what do you attribute it to? >> i call it the rehab recovery. when you have a banking and real estate crisis like we had, you always get very weak recoveries. it can go on for many years. there is some healing going on. we're getting to the end of the housing recession. but it takes a long time. along the way, we are not only facing these structural recovery problems, but then we're having really dumb economic policy. no government would ever do what this government has done and put

six major controversial decisions in a lame duck session of government. it's just awful policy in washington. >> i like hearing that. well, i don't like it, but i like it. ooith eatan, thanks. see you later. >> bye-bye. coming up, more of today's top stories and at 8:30 eastern time, we get personal income and is spending. ales, you skip the lots... and pushy sales people... it's a fast, easy way to buy a used car. three days to try. zero pressure to buy. it's just another way you'll be traveling at the speed of hertz. if you made a list of countries from around the world... ...with the best math scores. ...the united states would be on that list.

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welcome back to "squawk box." we are seconds away from the personal income and spending data. rick san the teleis standing by. expect sayings, 0.2% gain for income, on 0.4% for spending. rickster, what do you think? >> and the survey says that expectations were a little on the light side. it's a little better than expected on the income. up 0.4%. on the spending, up 3 cents. so somewhat close to expectations, a little stronger. i hear somebody off to the side is happy that income is outpacing at least for this month on spending. but also caution, up .4% relative to what some inflation has. the fed might have metrics that garner it very close to 2%. many would look for it to be closer to 3%. it depends on what met rec you're using or how much stress you put into other metrics. preevidence by the dow futures

are down about 20. i think they were down 23 or '4before the number. we are under and challenging. well, we were under 310. we were at 309 and a 30-year bond. lowest yield since the beginning of march. but the ten-year note continues to push its comp back towards january, early february, and it's challenging 1.90 at the moment. >> we're showing spanish yields here in the wake of gdp data that came out over there. thank you very much, rickster. >> excellent. both of us saw rick in washington. >> at the white house correspondent dinner. >> rick, can you -- oh, i stopped going. i don't like it. rickster, do you enjoy it? is he gone? >> what's that? >> the white house correspondents dinner. >> you know what? to me, any organization that invites me, i'm more than happy to comply. i really find it interesting to

be there. being from the midwest, i never really had this feeling of how in our political class, the media, the press -- >> there's the rick i know. >> they're -- behind closed doors than they are outside. >> exactly. >> i sat next to joe. >> you don't get that feeling that rick is talking about at this event? >> rick, i like visiting the growth capital of the world. things are humming in washington. >> absolutely. >> what do you think okay? >> i had no idea andrew ross sorkin was so tall. andrew, you're a great guy, by the way. it was fun spending time with you. >> now let's spend time with our guest host this morning, jon stewart, author of "den of thieves." we had this big story this morning, microsoft putting money into barnes & noble. we had the ceo exclusive i on the show. then we also have this big anti-trust case going on with all the publishers and apple,

but not amazon. is this good for people like you writing these books? >> this is incredible. it's like somebody took the pieces and threw them up in the air and is waiting to see where they land. so i'm an author, yes. and i'm sort of like why all this craziness? i'll just make a few points. the justice department sued not amazon saying there's some kind of conspiracy in trade. let my sea, you have to obey the law. you can't be meeting in fancy dining rooms and -- >> which is what the publishers were doing. >> well, according to the complaint. we haven't heard their side of the story yet. number two, why is amazon driving the business? they're charging so little money for some books that no one in their right mind is going to buy the hard back. and the justice department looks as books as this huge, amorphous thing. you have to look at every book.

i have a number of books. you don't write a list of the books and say, it's thousands. from my point of view, amazon should not be allowed to sell individual looks at a loss just because they're -- >> if you were the ftc, would you bring a case against amazon? >> i'd certainly be investigating them. so i think amazon is a real problem here. finally, the news, somebody has to step into this and provide some competition. the digital book world can't just be amazon if we're going to have a healthy publishing industry and a healthy exchange of ideas that that represents. we need competition in that field. if microsoft or google wants to provide that competition, if apple wants to do it, great. come in here. they've got the muscle, they've got the resources, let's compete. and hopefully, you know, authors will be able to earn enough to survive. and, you know, we're not talking about hedge funds kind of money. most authors, they can't afford to just write. they have to moonlight, they

have to do all kinds of other stuff. they're barely making ends meet in the new system. >> let's talk about bribery. you've been writing a lot about bribery. we've debated on this program, joe said that mexico is like cas casablanca. what do you think? >> i think bribery is bad, it's bad for people paying the bribes and people receiving bribes. >> it's good for the people in walmart to have walmart, right? >> yeah, but they shouldn't get it because of a bribe. in any event, bribery is illegal. it is a felony and it has to be stopped. it's not going to stop in the u.s., where is it going to stop? we have to set the tone here. and we're hardly prosecuting anybody for this. we let the companies come in, get a slap on the wrist, pay

their fine. and then no individuals are held accountable. >> but i've heard the argument that the contractors doesn't make sense. we talk about it. here on this show, it doesn't make sense because you go to these countries and bribery is so rampant in the culture, you can't do anything about it. how do you think about that? >> you just don't do it. then others eventually have to follow the line. if we set the tone for it. it's not an excuse. it's something that we've made illegal. you can't say, oh, everybody is doing it. there was a lot of crime that everybody is doing. that doesn't mean it's okay to do it. the fact of the matter is, it is a crime, it is a felony. it's treated seriously. if it's not treated seriously, it's never going to go away. it's not happening everywhere. it has had an effect. germany, europe, it's spreading to other countries. as this spreads, it is going to become unacceptable, even in countries like mexico to keep bribing. and by the way, the united states will have done a very great service to the world if we can help curve this problem.

>> i was there last week. look, i agree with a lot of what you say. what i find is that one of the ourmts that never gets put forth is one of the reasons you have so much bribery in countries like that is they have too much government. they have so many layers. they can monetize their power for one moment in their life and the temporary tear is too large. if you didn't have as much government, you wouldn't have as much bribery. >> well, what can the u.s. do about that? we can't solve the problems of over -- >> no, i'm talking about it's an overlooked aspect. >> okay. are corporations really people? you know, that's fashion. that's a fiction. and by the way, it's individual people who commit these crimes. the little people -- i don't want to say little people. the people on the other end taking the money, that's a separate issue. the united states law applies to u.s. corporate officials who are doing it. and by the way, they're not just

doing it. i can sooi see going in, getting self-confession. but walmart, the evidence suggests, the first reaction of the company is, let's cover it up. or in the tyson case, let's find another way to make the payments that doesn't look quite as blatant. and then when a whistleblower comes forward or a "new york times" reporter calls them and they say, oh, my god, we better get ahead of this thing. that does not call for leniency. >> probably if you were a mac veil yen walmart shareholder webs you add up all the hits accused, the fines, and it's probably going to come out in your favor because the growth that they were able to build in mexico, being first in market there, you know, as a big box store. >> but you're suggesting that -- you're suggesting the only way that walmart could have done what it did in mexico is by

paying bribes. i don't believe that. >> i'm not so sure. >> the growth would have been -- i don't know where they would be right now. not just slower. it would have been -- >> let me accept your premise. i don't agree, but let's accept et. they meaded to pay the bribes. >> and the smart thing there is that's the way business is done. >> you talk to -- >> that's it. if i'm a shareholder, i'm occur furious that after paying the bribes that they decided to cover it up and hide it. that's why the stock is down. they could have gone in and gotten a nice deal and they could have had their bribes, they could have had their growth and -- >> it's not down as much as it would have been if it's a growth story. >> you're so cynical. we have a major problem in the world. i'm proud of the fact that the united states comes in and -- >> what if walmart comes in and says, we're going to donate $150,000 to this community. is there any difference? >> that is a big difference. that is no tied to a specific action or specific --

>> oh, you don't think they're going to a town right -- to build whatever and that's not tied to the town being more accepting to walmart? >> i'm sure it is. >> hold on. just relax. did you think the jenkins piece? >> so that's okay? >> which one? >> coming up, he's a member of the shadow open market committee, a group of fed watcheser that evaluation opportunities and choices. marvin goodfriend will join us. "squawk box" is coming right back. [ male announcer ] this... is the at&t network.

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welcome back to "squawk box." the fomc isn't the only voice weighing in on fed policy these days. our next guest was a member of the shadow open market committee. is making a push to get congress partnered with the fed. joining us now is former senior vice president and policy adviser to richmond fed, professor marvin goodfriend. that would be nice. we haven't had a whole lot of fiscal help. it's been a big onus of the fed recently, hasn't it, professor? >> well, yeah. the fed has been asked to do just about everything that the congress isn't willing to do or can't do and i think we have to put an end to that. >> and, wow, how are we going to do that? >> well, you know, the fed in january announced for the first time historically, although a little bit under the radar screen given the other information out there that it would abide by a 2% inflation target over the long run. for people like me who have been watching this, i was in the fed

over 20 years, trying to push for this, it was kind of amazing that the federal open market committee itself agreed to hold itself accountable for 2% inflation target over the longer run. but that's not enough. it's up to the congress now to partner with the fed for price stability to limit the if i had's responsibilities, at least to make a priority for price stability with the congressional legislation that does that. and that's what the shadow open market committee was about a couple weeks ago to try to get the congress on board. and we had as our guest congressman kevin brady who was sponsoring a bill in congress to do just that. >> we've had sitting fed officials on the air say that the double -- the dual mandate that we ought to change that. do you think? >> well, yes, absolutely. the shadow open market community thinks that and the federal open market committee thinks that, as well. it's not that the federal reserve should not care about up employment. it's the more subtle issue than

that. it's that in the days before the stabilized inflation rate, and i think many of you may agree with that judging by the show, back in the early 1980s, you know, the federal reserve under paul volcker effectively made low inflation a priority and we've had low inflation ever since. prior to that, we had what we called the great inflation period, which had -- wound up having inflation at 10% and unemployment about two percentage points higher on average than after the inflation rate was stabilized. so that experience and some other practical thinking has told us that the federal reserve should put a priority on low inflation and we get two for one, low inflation and longer business expansion and lower unemployment on average and that's exactly what's happened since paul volcker stabilized the inflation rate. >> well, i guess just reading between the lines and everything, you're saying the fed has done way too much this time around, in your view, over the last couple of years? >> well, wa we had in the recent

crisis was something quite unusual. and in order to tell that story, i'd like to key off what i just said. prior to the disinflation, the paul volcker disinflation, business expansions were much shorter. they were shortened by the fact that the fed was excessively inflationary and brought those expansions to an end prosecute maturely by raising interest rates and deliberately creating inflation to control recession. once the fed learned to put inflation first, we got both longer expansion and lower inflation. at that point, the fed essentially lengthened the life expectancy of business expansion and made possible death by another means. in this case, the asset price problem, extreme asset price fluctuations became more expansive. now, do i think the fed did much or too little in this particular expansion? under the circumstances, we've not seen anything like this before. i'm not someone to criticize the fed for what it did initially.

but what i will say is i think history will judge whether the fed did the right thing this time around by whether it gets out of this without a rising rate of inflation, it's essentially something much higher, something closer to a more serious rate of inflation. >> both sides are -- i moon, this is another one of those things where we can't get any type of consensus. andrew, over the weekend, was it in the "new york times" magazine or something? it said that the fed's mandate was for unemployment and they haven't done nearly enough. >> this was in that article, earth to ben bernanke. >> yeah. not nearly enough. the fed has been sitting on its hands, not doing nearly enough, it hasn't done one thing for the unemployed worker. and that shows you, i mean, if someone can say that with a straight face and someone on the other side can talk about, you know, you just see the entire world printing press printing, printing, printing, which is right? where are we? >> well, i would use a bit of evidence, you know, the tips,

the interest rate that tips securities with getting these days. people are willing to get inflation protection at very near zero real rate of return. in fact, i see a couple of days ago the treasury is considering allowing auctions of negative interest rates on tips. that indicates to you that there's a lot of people worried about inflation and willing to give up substantial real yield to get inflation protection. to me, that's an embarrassment for the government and for the federal reserve and it says everything to me. i also think that the fed cannot be accused of literally doing nothing. it pushes us in all sorts of ways to do what's necessary to keep us out of deflation, out of a much, much serious recession. so that's why i said i wouldn't criticize the fed for doing too much. i would criticize the fed for dealing with inflation. and i want to come back to congress. the issue is, the fed has put an inflation target on the table. and the fed is a bipartisan institution. there's a lot of talk in

washington about how things don't work and nobody is making the following point. the fmc has on it prominent members appointed by the bush administration and the obama administration. they agreed to make low running inflation a priority over unemployment. there's a nice discussion in their press release from january saying, the best way to get the best of both worlds is to put a priority on low long runningen flagz. effectively, and i think i'm the first person to say this with any prominence, they have taken inflation out of the targeting issue in the sense that janet yellen, for example, ben bernanke are from different political parties and they've agreed on this thing, inflation targeting. >> professor, we have to go. thank you. i appreciate it. coming up, the view from wall street. we're going to head down to the new york stock exchange with a look ahead at the trading week.

we're back on this monday morning. let's get down to the new york stock exchange. carl and melissa join us now. what do you make of that microsoft b & n news? >> great interview on "squawk" this morning. it's probably the buzz of the exchange this morning, if there is a buzz. >> definitely. you have to think about what this might mean, what microsoft

gain with it with the release of windows 8. it has 100 apps or so compared to apple's hundreds of thousands of apps. does this move the needle at all for microsoft? >> where did you leave cramer, carl? >> cramer eers on vacation this week, well-deserved. >> i figured he's in d.c. in a gutter after on afterparty. >> you might have been the last one to see him. >> where did you leave him? the last time you saw him? >> the last i saw him was at the dinner himself. >> i saw him at the msnbc party. i think i saw him there. >> nobody's seen him since then. he's okay, i'm sure. >> joe, i thought you were taking care of cramer. >> was it my night to watch him that night? that's a big job.

>> i think that was what was on the calendar. >> i didn't go to any parties. >> all right. >> sounds like a great show, guys. >> we're all going to wonder where cramer is. >> if you could tweet that he's okay. >> he has a place in mexico. >> next to walmart. >> we'll see you guys in just a few moments. coming up, final thoughts from our guest host, jim stewart. "squawk box" is coming right back. tomorrow, the inaugural week of the "squawk box" book club continues with authors sir richard branson and burton mollkil. we'll talk to robert zoellick. and it's trump tuesday, the donald is ready to sound off on politics and the economy. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. zap technology.

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we want to thank jim stewart for being the first recipient of the very prestigious blue-chip book award. we'd like him to sign a copy right now. do you have a pen? >> i do. >> and then we're going to -- >> who do i address it to? >> your bunny, your bunny has a good nose.

it has become a cultural reference to those in the know as a way of saying, you're right. when you got that quote, do you remember thinking, this is the money quote of the book? >> no. but i thought, this is a good quote, i thought, this is colorful. but there are other good ones, too. i also thought it was filled with mystery. like, who was this money character? there was a guy on wall street named bunny lasker. i love the way it caught the vernacular of the time of the way these people talked to each other. >> we have the camera ready to go to watch you sign. >> to "squawk." >> i can write to it "squawk." >> come on, he hasn't cried yet. >> this is like the nobel prize. >> what would you be if you were a tree? we're going to get mac to put it

on the bookshelf. mac, check out mac's belt. where did you get that thing? banana republic or something? i love the michael douglas glasses, too, from "falling up," remember? >> he played that character -- >> boski gave the commencement speech and he said to berkeley students, greed a good. and they all clapped. >> you've been moralizing the entire show. anything you want to -- >> you've backed me into this corner. i can't believe i'm debating whether bribery is a good thing. no, it is not. >> as i said, if you were being blocked in