live from new york, where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. right now you can see the dow futures up by close to 100 points above fair value. s&p futures up by over 11. all of this fueled by what janet yellen had to say yesterday or what she didn't say about potentially raising rates any time soon. overseas in europe, they've been following our movements. the dax is up by about 1.6%. the cac in france is up by 1.7%. the ftse in london up by 1.5%. in asia, the hang seng and shanghai composite both rose by over 2%. japan's nikkei fell by about 1.3% after factory output in japan fell by the most since 2011 when a devastating earthquake disrupted the supply chain. take a look at oil prices.

they were down yesterday on the weakness on the dollar. you can see this morning they're back up by 1.5%. wti sitting just below 39. u.s. crude stockpiles grew last week by 2.6 million barrels. that's less than the 3.3 million barrels analysts had expected. >> a couple big stories this morning. the economical dar. a lot going on. we're going to get an early read today on friday's job numbers. economists expecting an increase of 200,000 private sector jobs for march. following that data, chicago fed president charles evans is going to join us here on the set in a cnbc exclusive interview. also, an update on the fight between apple and the fbi. it ain't over yet. a california judge has officially vacated the order asking apple to assist the fbi in hacking into that iphone of the san bernardino terrorist. nbc now reporting an israeli

company is the firm that provided the tool. the fbi now owns proprietary rights to the method used to get into that device. also reports out that they signed a contract with the fbi for $15 million. there are now questions of whether they actually have the source code for apple, which creates other questions and exactly what this tool is that they've now provided the government. apple is saying, please, tell us how you did it. the government is saying, not yet. also, the man who hijacked an egyptair flight yesterday appeared in a cyprus courtroom today. the 59-year-old egyptian surrendered peacefully after diverting that flight to cyprus and holding pag ing passengers members hostage with a fake explosive belt. authorities e described the hijacking as a family feud with his ex-wife. >> on the cover of "the post" too.

who's the guy that the got the selfie? >> a hostage? >> selfie with the idiot. that's the dude right there, i think. over here. camera right, camera left. anyway, that's him with the fake explosive belt. some stocks to watch today, boeing planning to cut about 4500 jobs by mid year. most of the cuts will come in its commercial airplane division. the rest from a unit that conducts flight and lab tests. boeing will use a combination of voluntary layoffs and by leaving open some positions -- leaving them unfilled. and taiwan's foxconn has agreed to buy sharp, but it's cutting its original offer, following a month of talks about the potential liabilities that raised concerns about the deal. this marks the largest acquisition by a foreign company in japan's tech industry. shares of takata falling nearly

20% today in japan. reports say the auto parts supplier could face up to $24 billion in costs to recall its air bag inflators in the worst-case scenario. that would far exceed estimates that had been 3.5 billion if it's found to be liable for the defective parts that have been recalled so far. >> let's get one more check on the futures this morning. as we showed you, there are some strong gains this morning with the dow futures up by about 98 points above fair value. s&p futures up by 11 1/2. the nasdaq up by 28 after the fed yesterday or at least janet yellen made it look like the fed would not be moving any time soon. talked a lot about concerns and things that could disrupt the economy if you want to see what's been happening in the treasury market, take a look. the ten-year note looks to be yielding 1.84%. the yield has come back down. the dollar yesterday was incredibly weak after janet yellen spoke. you can see it's now sitting versus the euro at 1.1318.

dollar/yen is at 113. the pounds is at 1.4391. gold prices, finally. up barely, 1,237. we now know who's in charge, at least, at the fed. i know you're familiar with -- i mean, she's in charge, right? >> she's in charge. >> we have five guys saying we need to raise rates. the market does nothing for a week and a half and is stalled. the minute she says -- i mean, that was really dovish. >> remember the piece that said there was no division on the board. >> she told those guys to get in line. >> there's division, but there's someone calling the shots. >> it's totally warped. europe surging. anybody anywhere in the world

that's easy, any bankers promoting easy policies will rally here based on japan. >> we've seen this happen before. it's oftentimes been a day or two blip. not a straight line. >> you saw the chart yesterday. unmistakable. the minute she said we're going to look globally at the possibility -- >> which basically means she can't raise rates until the bank of japan and ecb come out of negative interest rates. >> that's a problem. someone yesterday was writing in you can use that for putting toothpaste back in a tube. i like uh unskrmable an egg. that's a good one. some others that aren't for air. anyway, we have two guys here that know so much about this. we scoured our guest list to find the two greatest guests to talk about janet yellen and the fed. the dow and the s&p 500 closed

at the highest levels of the year. let's get more on the markets and the economy. we're joined by the chief investment officer of concentrated u.s. growth at ab. and covering the economic angle, michael gapin. you have beautiful eyes. i know i've told you that before. chief u.s. economist at barclays. they're like steel blue. is it hereditary? >> my mother, yes. >> do you thank her? >> i do. >> okay. you still expect june and two rate increases. maybe it will be cuts by the time they come. but june and when is the next one? >> december. >> that's still going to happen? >> i think risks are skewed to one and maybe even later. we're still saying june and december. as you mentioned, it was a dovish tone yesterday. it's not entirely clear that all of the stars would align for her to be ready to move in june. >> do they plan that? in the past, i've seen good cop,

bad cop type stuff at the fed. these other guys really think we should go and she really is more dovish? >> yes. so i think what you said in the lead is exactly right. when there's a division on the committee, the chair has to exert the leadership role, whether you agree with it or not. she decided and that was the message yesterday. >> like i said, i'm familiar with that. it's not a democracy. >> as a married man, you say? >> i wasn't mentioning that. >> in my home, it's not. >> it's not a democracy? >> nope. i'm like a serf. >> what do you think? >> if you look at the u.s. economy, the u.s. economy is okay. that would argue we should go and rates should be higher. i think when you look at the dollar, the dollar was so darn strong over the last year or two, and that's problematic for the u.s. economy and the global economy. so i think yerl season trying to balance both of those.

>> we were 108. we're 113 again. the dollar hasn't been a factor. it would have been a great time to be raising rates, i would think. >> i think it's at 1.13 because we've pushed it out. dmpbl >> did that market reaction yesterday make sense? >> i think it did. ing with ities should be higher. >> even with a below 2% growth rate again in this quarter now forecast. >> i think when you look past the first half of this year, you get into much stronger earnings growth in the second half. then again much stronger growth in 2017. >> not gdp growth? >> gdp is going to be in the 2% range. >> that would be above where we are in the fourth quarter. >> it would be. >> you think we're going to do 2 1/2? >> 2 to 2 1/2 is reasonable. the second half story would be

to say that manufacturing has to stabilize somewhere. trade has to stabilize somewhere. two-ish now. then maybe closer to 2 1/2 in the second half of the year. i think that's reasonable, something more than that would be difficult. >> is it something we're doing here, holding us back, or in a world reich thlike this, we're get to -- >> i think we're lucky to do 2 1/2. >> heck, look at 3m. it's a great company. they looked a the a five-year forecast of 2% to 5% organic growth. it's just a tough world out there. >> it might be as simple as if we've got major areas of europe with negative rates and asia with negative rates, it just seems like you can't really be going the opposite direction. but is that really what the fed is supposed to be focused on? is inflation now above -- you know, is it at a point where we should be higher than where we

are? we're looking at the rest of the world and basing it off that, yet we're missing maybe inflationary expectations rising here. >> we're certainly getting to that point. you look at wage inflation. that's ticking up. some of the minimum wage legislation in california and soon to be new york is just going to push things higher. i think in isolation the u.s. should be higher, but you have to look at this from a global perspective. >> can you have the worst of both worlds where the global economy is holding you back and you can still get hit with inflation internally? is it just a different world right now? >> absolutely. >> i think that's what you want. i think that's the point right now. what she said was, okay, we've had some improvement in core goods prices. i'm not sure if that's durable. what they need is to see labor markets tighten a bit more. >> participation rates going up. >> that's her panacea. that's what she's wanted for years, a stronger economy to induce participation. it's really going to be tough for her to be aggressive on the rate hike front as long as the participation rate is ticking

higher. >> yeah, but it's still -- our guest host for two hours is going to say that the real unemployment rate is like high fives, not high fours. based on, you know, temporary jobs and just all the other -- >> right. we don't see the participation rate rising steadily over time. i still think flat to a little lower. >> you think we're at the real 4.9? if it was, we should definitely be above 35 whatever. >> there's always a little bit of cyclical mismeasurement in the unemployment rate. this isn't a new story. no matter where you are in the cycle, it's never a perfect measure. i think we're close enough to full employment where you can declare victory on that front. there's some slack but not a tremendous amount. >> so a stable rate environment and better earnings in the second half. >> i think everybody has been so focused on $120 of index earnings. let's dream a little bit. let's look forward and say 130,

135 next year and a 17 multiple. that gets you 2300. versus 2050, that's upside. >> people are tweeting i've never mentioned your beautiful eyes. that's implied. >> what about my eyes? >> your eyes i'm still trying to figure out. it's that cool thing. the guy from "walking dead" wants your -- wants that. he thought that was the coolest thing. >> i remember that. >> michael shay htrahan is runnn a beach with his girlfriend. know what his girlfriend's name is? kayla quick. it's like a hybrid. >> but they look alike? >> they don't look anything alike. she's running in a bikini. i don't know.

anyway. >> which is a nice segue to politics this morning. making headlines at a town hall event last night. john harwood joins us now. more on what took place. >> brave of you, andrew. don't know how big the audience was for that. they're usually not quite as big as the debates. no big bombshells in the town halls with the three republican candidates. cruz, trump, and kasich. donald trump defended his campaign manager against charges from the jupiter police department that he had committed battery on a reporter. he also defended himself for the exchanges he's had recently with ted cruz over each man's wives. take a listen. >> i thought it was a nice picture of heidi. i thought it was fine. she's a pretty woman. >> come on. you're running for president of the united states. >> excuse me. i didn't start it. >> sir, with all due respect, that's the argument of a 5-year-old. >> no, it's not. >> the argument of a 5-year-old is he started it. >> you would say that. that's the problem with our

country. >> that's the problem with our country. among other problems for the republican party, donald trump did not reiterate his pledge, which he signed earlier in the campaign to support the republican nominee if it's not him. for their part, ted cruz and john kasich did not commit to supporting donald trump if he's the republican nominee. so this muddle is going to go on. we have the next contest a week from now in wisconsin. that's going to say a lot, guys, about whether or not donald trump can stay on the path to getting 1237 at convention maurchty. >> that to me was the headline. i was fascinated by how they approached that question when they all did agree originally that they would support the nominee. and then for them to say they wouldn't. i thought that cruz kind of did. he sort of hemmed and hawed, went back and forth about it. i thought trump was explicit. he basically said i won't. >> but he's in a position where he's leading. >> he didn't say i won't.

he said i won't commit to supporting. the question was, are you bound by that pledge? he said, no, i'm not. >> we've been making the point. i've made it like ten times to republican establishment types. did you not hear -- because they're all trying to take it away from trump. they never thought trump would get very far. so they all signed it. all of the sudden he's leading and they're the ones that are like, whoa, we got to stop this. there's a stop trump movement. there's super pacs. they're meeting in sea island. he just said he didn't start it. he didn't start this either. they started by not, you know, deciding not to support him. at this point, if i were trump, i would do the same thing based on saying they're not going to support him if he's the nominee. >> well, look, guys, the rubber hits the road when we have a nominee. we don't have one. it's easy at the beginning of the process to make a pledge

when you're courting all republicans to say, of course i'm going to support the republican nominee. republican voters think that's great. but when you get to the end of the process and you either have a convention vote and somebody is bound on the first ballot, and if you're john kasich, you say, do i get behind this guy. then he's got a decision to make. if you have a convention fight and ted cruz somehow is able to overcome donald trump by getting supporters from marco rubio and john kasich on a second ballot, then donald trump faces the decision. i do think that given the contours of the race, it's more likely that donald trump is the one who takes his marbles and goes, runs third party if he doesn't get it. then the republicans have a real problem. but we're in the abstract phase right now. this summer we'll find out. >> kasich will not. we had two people on the other

day -- >> kasich will not what? >> support trump. but cruz always has sort of been -- doesn't want to alienate the base that trump has. with the wives thing, he pointed and said you're a sniveling coward. we had two people on the other day, i think one was a cruz supporter, one was trump. kelly ann conway. they said there's still hope for a trump/cruz ticket. they said can that happen now with all this acrimony? i wouldn't doubt it in current politics. just like ben carson said after he dropped out. oh, yeah, donald said that stuff, but i didn't take it seriously. >> i agree with you. people say a lot of stuff. i think ted cruz is quite possible as a running mate for donald trump. some people talk about a

trump/kasich ticket. i'm not sure john kasich would do that, but if it does, then we've answered the question. >> what happened to your word is your bond? >> oh, come on, man. this is politics. >> everyone just straight up lies and that's okay? >> he's pretending. >> no, i'm not pretending. i don't understand this. >> poor naive andrew is so confu confused. >> are you really that innocent, honey? >> yes, innocent and naive. it's terrible. >> joe? >> yeah, go ahead, john. >> andrew is play acting with us. don't take that. come on. >> absolutely. >> all right. different question. >> he's not even denying it. >> no, i am denying it. an open letter to trump voters from his top former strategist turned defector. did you see this thing online? >> yeah. >> what do you make of that? she said that she got involved

in the campaign with him a year ago. >> oh, this was a different one. >> the idea he never wanted to win, he wanted to always be what he called a protest vote, that her goal -- she was assigned to make sure he was number two in the polls. the goal was never even to be number one. it's fascinating reading. did you get a chance to read this thing? i saw it making the sort of twittersphere overnight. >> look, this is a break the mold, unusual candidate who has an unusual cadre of people around him. the saga around roger stone and sam nunburg. this is not the normal set of political players, so you're going to get people saying things that are crazy or way outside the norm of what we've expected. the idea that somebody would run

for president not wanting to win is not something that we've seen before. now, i must say, there are a lot of people, including me, who thought that donald trump was not as serious as he's turned out to be. fair enough. but the idea that a candidate would enter the race plotting not to be the actually winner is something we just haven't seen before. >> hillary -- bernie sanders, he better tone it down if he wants to have another debate with me. better be nicer. he's saying bad stuff about me. i'm not going to debate a guy saying bad stuff. that's the most ridiculous -- you know what it is? it's rope-a-dope. she's going to win. >> when you're a front runner with a big lead, you can set the terms. >> right. >> john, great to see you. >> you bet. >> when we come back, technology stocks outperforming the broader s&p. we have an analyst to take a closer look at some of the winners and losers in the sector. later today, a cnbc exclusive

interview with former lehman brothers cfo erin callan. she'll be talking about her new memoir "full circle," a memoir of leaning in too far and the journey back. that's today at 3:00 p.m. on "the closing bell." ests and as a vested investor in vests, i invest with e*trade, where investors can investigate and invest in vests... or not in vests. this is my retirement. retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade.

plan ygreat time for a retiring retireshiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business.

quarterly numbers just out from lululemon, reporting a profit of 85 cents per share. same store sales rose 5%. however, its full-year earnings forecast does fall mostly below street estimates. we'll see where that stock winds up. at the moment, a little up over 1%. let's talk about the fast d -- nasdaq getting a boost, rebounding more than 13% since what we're calling the dimon bottom. alphabet up over 8%. recode reporting the company might have a ceo crisis. joining us now is internet analyst at mizuho securities. how much of this do you agree with, this talk of a crisis at google? stock hasn't performed all that badly. >> i think it's a little

overblown. these alphabet, other companies contributed about one half of 1% revenue last year. significantly more in terms of operating losses. i think it's a little overblown. we worry on the margin that if they are really losing a lot of employees from these, you know, startups that are within alphabet, what could that potentially do to the growth runway for some of these companies. >> i've always looked at alphab alphabet, or google as i still think of it, that all these additional companies are just incubators. you might hit a lottery ticket, you maight not. >> we do a sum of parts evaluation on google. we think of these as pie in the sky, hopefully one day these will it urn into public companies and drive shareholder value. until then, it's going to be loss generating for google. >> here's the question. i raised this and everyone thought i was crazy. google clearly told me i was crazy.

i remember speaking with them. my worry once they decided to turn this thing into alphabet was it exposed the boston dynamics and all these little guys. now you could actually see them in a much clearer fashion. it was going to make it much harder, not easier, to invest for the long term because in the old model, everybody was effectively hidden away. google could do its thing. everyone had their chance to do what they were doing. this was supposed to give everybody the opportunity to sort of shine. everybody get a nice ceo title. all this seems to happen, but are you sure that's what's ultimately going to happen here? >> yeah, it's added more transparency from a shareholder perspective, which i think is positive. whether it's good transparency or bad transparency, it's more transparency. the fact that these issues are coming to light -- >> but that's a function of t transparency. >> it is. but we can actually see what's happening now. hopefully shareholders and others outside of google can

maybe put a little more pressure on the company to take care and do more. >> does that mean they're going to jettison some of the longer term projects that could turn into the lottery ticket. >> i don't think so. google has a lot of long-term visions for these companies. they have some ceo issues where they're micromanagers. i think once they work through those issues, they should be okay. it's still a very long-term play for google . these companies aren't ready to go public for many years. >> alphabet shares are at $745. where do you think they should be? >> our price target is 1070. we think there's a big runway to grow. >> over 12 months? >> at least over 12 months, yeah. >> so lottery ticket doesn't imply all the other ones are absolutely worthless? >> no, i would think google is trading just on -- or alphabet is trading just on google alone. >> because lottery tickets, as we know, are worthless.

all of them. >> and there are probably some inside there. >> maybe it's a long shot you get a payout on one of them. >> a long shot? a lottery ticket is not a long shot. >> while you're here, do you cover yahoo!? >> i do. >> what do you think is going to happen? >> i think we'll get some offers. i'm skeptical. >> at what valuation. you've heard them bandy about 10 billion for a business. >> that's like pulling a rabbit out of a hat. i think this company it fully valued at 8 billion for the core asset. 10 billion gives you about ten times ebitda. i was looking at the numbers yesterday. you could roll out pandora, yelp, etsy, and zillow for about 8.5 billion, and you could roll out pretty much half of small cap internet for 10 billion. that's kind of a dream scenario. i think 8 billion is fully valued. >> neil, thank you for coming in today. coming up, the one word the

bank of america is telling its senior staff not to say. we'll tell you what that is. plus, masters champ bubba watson leaves the green and hits the basketball court. the video of his half court shot straight ahead. as we head to break, here's a look at yesterday's s&p 500 winners and losers. tment manage, we believe in the power of active management. we actively manage with expertise and conviction. so you can invest with more certainty. mfs. that's the power of active management. the first stock index ♪ (musiwas createdoughout) over 100 years ago as a benchmark for average. yet many people still build portfolios

with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks.

at ally bank, no branches equals great rates. it's a fact. kind of like bill splitting equals nitpicking. but i only had a salad. it was a buffalo chicken salad. salad.

welcome back to "squawk box" here on cnbc, first in business worldwide. u.s. equity futures after gains for the market yesterday are showing even more positive action this morning with the dow futures now indicated up by 119 points above fair value. s&p futures also stronger, up by about 15 points above fair value. the nasdaq up by 36 after those dovish comments from yellen yesterday that surprised the markets with the breadth of their dovishness. we're going to talk more about this today. check out what's happening in europe. you can see a lot of those gains being picked up there as well with the dax up by 1.8%. the cac in france up by 2%. the ftse up by better than 1.8%. other markets also higher. and take a look at the price of oil. on those comments yesterday, the dollar was weaker. that put a little pressure on oil prices. coming back up this morning. a gain of about 1.7% for wti to

38.94. >> wow. if we do 2% here, that's pretty good. i love the fed. really. >> europe is getting two days' worth of reaction. >> she's awesome. time now for the executive edge. bank of america is warning senior staff not to use the word brexit when talking to clients. sounds like censorship to me. according to the financial times, the bank is telling managers not to provide opinions or to influence voters in the run up to the june 23rd vote on whether the u.k. should leave the european union. why? >> maybe it would be bad for them. >> they have international contacts in the u.k. >> they do. >> i thought it was bank of america. there's already a bank of england. >> they own something called merrill lynch, if you remember. >> so they shouldn't even weigh in? we probably shouldn't either, you know, because we have cnbc europe. we don't want to be seen as

anti-eu. i know for a fact, though, that we don't want to because we put guests and stuff on. >> another hacker story. this one might be a little freakier than just the iphone situation. hackers have now infiltrated the computer networks of some big u.s. law firms. that's according to "the wall street journal." federal investigators are looking to see if confidential information was stolen for insider trading because the law firms represent wall street banks and large companies. beyond that, there's so many things the lawyers have that are traditionally treated as privileged. once that gets hacked, you talk about what's on the network, what's on the cloud. this is when it gets serious. if you're a big company and your law firm gets hacked. >> or a financial firm. >> a lot of times -- like, i'm very innocent like you, as we

now know. there are times when defense attorneys know that their client is guilty. do they ask them that? >> sometimes they don't ask, but they have documents that might suggest. >> if you watch any of this o.j. thing -- >> we're on episode -- i think there's two more. nine and ten to go. fantastic show. >> schapiro not cast in a great light throughout the episodes, but he says, okay, we're alone here, and he's asking o.j. just, you know, tell me. it's not going to change how i feel about you or how i defend you. just make me a better lawyer. >> why would you ask? >> because you want to be able to provide the best defense you can, even if the guy is guilty. johnny cochran, he knew full well. he knew exactly what he was doing all along. >> they do portray o.j. as being guilty. >> oh, you kidding me? i know. believe me, i know. i didn't know that all that was really happening in the back of

the bronco. he was just, you know -- >> what about all those mentions about the kardashians? >> that was the greatest thing i saw yesterday. i don't want to bore anyone, wouldn't be the first time, but he says, write to kim, fame is nothing unless you have a pure and virtuous heart. fame is fleeting. your grandparents taught you, you do not seek fame for fame itself, it's only what you can do for other people. she's looking around and rolling her eyes. they did that on purpose. she's rolling her eyes. >> they have more kim kardashian references. they said it was one of the other girl's bedrooms. he changed it to kimmy's bedroom. >> kris was in it a lot. >> more kanye. >> swimmer is pretty good too. >> it's really well done. >> still don't know about cuba. needs to wear some lifts or something. >> he's doing a great job. >> but he's this tall. o.j. is a big, intimidating guy.

>> you're not trying to do a parody version. >> they have a marsha clark clone. >> they sure made travolta look like schapiro. anyway, check this out. nasa is planning to test an inflatable test on the next trip to mars. it will be delivered as part of spacex's resupply mission. if you see this inflatable house, it looks like what you've already seen from "the martian." blowing up like marshmallows. >> that's cool. >> i would not go to mars on that thing. >> you wouldn't go to moon in a lunar landing module either. >> no, i don't have the stomach for it. >> it's just aluminum foil. two-time masters champ bubba watson tries his hand at a half court shot at the orlando magic, brooklyn nets game tuesday night. didn't see it. where'd it go?

he was looking for a hole in one. came close to going in but no luck. let's see. is that still falling? wow, that is close. rngt right on the back board. >> the shot ended up lodged between the rim and the back board, which you see happen once in a while. that's pretty good for a first try. got to be some skill there. how far is that from half court? a good old chip shot for him. >> when with e come back, has the economy been overhyped? a new report showing more job growth is coming from traditional contracts. we're going to talk to one of the ceos of those app services. you're an at&t small business expert? sure am. my staff could use your help staying in touch with customers. at&t can help you stay connected.

am i seeing double? no ma'am. our at&t 'buy one get one free' makes it easier for your staff to send appointment reminders to your customers... ...and share promotions on social media? you know it! now i'm seeing dollar signs. you should probably get your eyes checked. good one babe. optometry humor. right now get up to $650 in credits to help you switch to at&t.

i am a technological breakthrough. this morning i read over 4000 articles on leukemia. in less than a second. (speaking japanese) i can understand euphemisms, idiosyncrasy and complex metaphors. i know every detail of every public quarterly report in the last 20 years. and i'm just getting warmed up. hello. my name is watson. together we can outthink the limits of what's possible. welcome to the cognitive era.

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business.

welcome back. u.s. equity futures at this hour are nicely higher. triple digits. 2% gains on some of the boerses in europe. it was a turnaround tuesday. i love when we can do that. today it's going to be a we keep going wednesday. >> well done. >> thanks. meanwhile, general electric, a dow component, continues to dispose of financial assets. just agreed to sell its ge asset management unit to state street corporation for up to $485

million. that deal is expected to close during the second quarter. ge is now above 30. it's been a while. and it's been trading above 30, you know. you can see it got there, then the entire market sold off, went down a little, then came right back above 30. five was the low of the financial crisis. when the commercial paper market was frozen. as a ge employee, that got your attention when it got to five. meantime, let's talk about the gig economy this morning. is there too much hype around the gig economy? is it cooling perhaps? online companies that use apps to connect workers, outside of uber, proof of that revolution is getting harder to find. growth in alternative work has happened largely offline in traditional jobs and industries through contract arrangements. joining us now is the founder

and ceo of task rabbit, an online marketplace that outsources household chores, connecting you to freelancers that will help with anything from repairs to cleaning. i use it myself and like and enjoy. we talk about the gig economy really changing the way work is done in this country. some of these new reports are suggesting maybe it's not as big as we think and directionally may not be getting there faster than we think. am i wrong? >> well, i think it's still early days, to be honest, andrew. i read another report that 34% of americans consider themselves freelance workers today. now, that's not just online platforms. that's offline as well. but i think there's certainly a trend that we're seeing around the future of work and how that's changing. people are looking for more flexible ways of working. they like being entrepreneurs and having sort of more control

in their own hands. so i think it's early days, and i think we'll continue to see the trends grow. >> what do you think about what i call a straight gig, meaning i'm going off to do something, for example, through task rabbit, and contract work, where there's perhaps even a limited contract for several weeks or for a month or for six months? >> yeah, well, there's certainly quite a big difference. at task rabbit, what we really focus on are smaller sort of one-off jobs. they might be lower skill based, so you don't need to be a licensed contractor or plumber, electrician. we really focus on things like house cleaning, deliveries, heavy lifting, moving help, those sorts of things. i think there's just a wide range across the freelance economy as well, and there's just thousands of different categories to consider. >> what is the percentage of

people who work on task rabbit and do that effectively as their job? meaning, this is where they're making the bulk of their money? >> we see about the top 10% of our work force doing this full time. they're picking up two to three jobs a day. they're making upwards of $7,000, $8,000 every month. every month we see about 15,000 applications from people that want to become taskers and make money on our platform. that number is also always growing as well. >> in terms of the type of work, as you described it, and in terms of the services i've used, they've always been physical things. moving things, picking something up, that kind of work. we've had other people come on who talk about trying to create the task rabbit of something at higher levels, different types of service businesses, sort of research on demand, things like that. is that -- are those businesses you'd ever want to get into? >> you know, we certainly see some of those jobs being posted

on the task rabbit site as well. i think a great example on task rabbit is the fact that we are so localized. say you're traveling to a new city on vacation, you want some local expertise and local help, we're really good at connecting you with someone in that new city to do research, make dinner reservations, whatever it is. so i think there's a difference, too, between local expertise and sort of this broader based online research platform that a lot of other companies are focused on, like upwork, for instance. >> last question before you go, what's the coolest thing you've used task rabbit for yourself in, i don't know, the past month or two? >> well, i think the coolest thing i used it for is to plan my daughter's second birthday party. i'm a busy ceo, but i love my daughter, and i wanted her to have an amazing party. so i had actually a bunch of taskers help me pull that off. i felt like a super mom.

so that was great. >> very cool. we appreciate you waking up early. i know you're in san francisco on the west coast. thanks again. >> thanks for having me. when we return, a small business resurgence in motown. kate rodgers is in detroit with a closer look at the influx of entrepreneurs from several industries. "squawk box" will be right back.

detroit is making its way back from a historic bankruptcy, now small businesses are helping to drive a comeback in the motor city. recent data shows that small business spending is up 10% year over year in the metro area. our kate rodgers is live in detroit this morning and has more on the story. kate, good morning. >> reporter: hey, and that influx of entrepreneurship is due in part to the myriad of resources available to small companies here in detroit, including tech town, where we are this morning. now, this used to be a chevy building where the corvette was first designed. today it's still an innovation hub. it helps you accelerate, mentor, and incubate small companies. after the decimation of the auto industry here in detroit, the new work force is trying to diversify its skill set, and

technology has played a big part in that. tech town has ep hadded more than 1600 companies create more than 1200 jobs and raise more than $120 million in capital in the last eight years. >> we're sitting here in a building that used to be a general motors building. there are now hundreds of workers in here doing social media, i.t., biotech, lots of things that aren't manufacturing. that continues to be important here. >> reporter: now, beyond technology, the nonprofit is also helping to rebuild brick and mortar traditional retail operations with its program aiming to revitalize the outskirts of the city literally block by block. one of those successful businesses is april anderson's good cakes and bakes. she's become a local hit thanks to her organic baked goods. tech town has helped her out with her marketing and accounting. while we're on the topic of small business, cnbc and "ink" magazine are hitting the road for the iconic tour

weap we have a fantastic lineup of speakers. back over to you. >> all right. kate, thank you very much. that's our kate rogers. coming up, we're going to talk more fed. that body in focus again after janet yellen signaled more caution, same caution, no changes really from her, even though the other guys sitting on the fed, we thought thiey might be moving more. coming up next, richard fisher. "squawk box" will be right back.

the first stock index ♪ (musiwas createdoughout) over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks. something we'll show you.. through small things. big things. and spur of the moment things.

sheraton. ♪

thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business.

this is what it sounds like when doves cry. >> i consider it appropriate for the committee to proceed cautiously in adjusting policy. >> markets rallying to 2016 highs after fed chair janet yellen's dovish tone. we have reaction to the speech as we await more jobs data this morning. stanford professor and former council of advisers chair ed lazear joins us with former fed chair richard fisher. ed royce will join us to talk about the war on isis and how america needs to change its act. and a special night for cnbc. >> if you can't get laid in this bedroom, there's something wrong with you. >> we take you inside the lives of america's super rich and show you a bachelor apartment in l.a. like no other. the second hour of "squawk box"

begins right now. live from the beating heart of business, new york city, this is "squawk box." welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. the futures this morning up sharply again after the market closed at 2016 highs thanks to janet yellen's comments. we're going to have more on that story in a moment. you can see there's sernlly triple-digit gains for the dow futures today. it's been up by about 115 points. right now at 99 points above fair value. the nasdaq up by 31. also, take a look at oil prices. yesterday after yellen's speech, the dollar was under pressure. that put some additional pressure on wti. this morning it's back up by 1.7% to just under $39. >> we got some headlines --

stories, rather, making headlines this morning. just over an hour away from the latest snapshot on the march adp report. that's out at 8:15 eastern time. it's expected to show the u.s. economy added 200,000 private sector jobs just this month. also, an israeli company provided the tool that allowed the fbi to hack into that san bernardino shooter's u phone. that's according to nbc news. the fbi refusing to comment on that report. of course, apple asking to find out exactly how the fbi did it. so we'll find out whether they share that information ultimately. in the meantime, music streaming service spotify has raised a billion dollars in convertible debt from investors. the participants will include goldman sachs, tpg. they'll get the opportunity to convert that debt into shares at a discount when spotify does, if it does, decide to go public. interesting that startups now taking on debt as opposed to equity, which is a new phenomenon as we get farther down the cycle. >> these are some of the headlines making stories this morning.

no one would notice because you say these are the stories making headlines. try it. no one at home would have any idea. change it up. these are the headlines making stories this morning. it doesn't matter. i understand what you're saying, right? the headlines are making stories. we make stories of the head lines. >> it's like a walk in the cake. >> you were going to let me go? >> i like cake. i like you to change things up a little just to keep things fresh. >> i change people's names all the time. just to keep people on their feet. >> let's intro liesman. he has the most unbelievable tie on that i have ever -- are you kidding me? >> it's similar. it's not exact. it's similar. but when i woke up this morning, i told you, joe, i was going to be wearing the red tie. >> all right. were you at the thing yesterday?

>> no, i was -- as we discussed -- >> oh. >> steve liesman is here to talk about what janet yellen had to say yesterday. >> i'm going to go right into it instead of dillydallying. >> headlines making stories. go ahead. >> the reason i'm going this report is because the commentary is so terrific. check out this commentary here. she exceeded a dove's wildest dreams yesterday. expressing doubts around the reasons to hike in the future, including rising inflation and a tightening labor market. steen stanley writes, she took the partially full glass and dumped most of the water out and defiantly declared the glass mostly empty. at jeffries, they said yellen carpet bombed her audience with possible downside caveats. here's just one example of the kind of comments that the street reacted to yesterday. >> the baseline is some negative

effect from slower global growth, essentially unchanged financial conditions, a slightly more gradual pace likely of increases in the funds rate. but continuing risks attached to fwloebl developments in both directions. >> all right. global, dollar, and china used more than 20 times, more than she had in her previous three speeches combined. the downside risk included skepticism that the recent rise in inflation wound endure. at sgh, they said yellen seemed to cede little to her federal open market committee leagues. the question is whether it all amounts to a policy regime change. the fed had embark ed in decembr on a normalization process of raising rates back up to normal and doing so somewhat pre-emptively so it would have

to do so more quickly later. but a sharp decline in yields yesterday. take a look at this chart. five or six basis points on the two year. raises the question if the fed is any longer in a rate hiking mode. i would add this. a tightening central bank that doesn't raise rates over many months can considered to be a central bank that's no longer tightening. >> the market read it as such. >> powerful. >> was it worth it, joe? not worth it? >> it's just a lot of -- >> too much? >> just a lot of words. >> if you want to edit it. >> no, no. basically, she was very dovish. >> i'm wondering if it goes beyond that. are we any more in a normalization process? what did you think? >> i thought maybe they pick -- remember greenspan how he used

to talk? after ten seconds, it didn't matter what he said. i think they might pick the fed chairman based on the ability to just finally say, i don't have the energy to figure out what you're saying. >> i'm going to submit this at 5:00 in the morning for edits. >> i was thinking pink. going to paint the ceiling pink. all right. let's bring in our guest host. ed lazera, former council of economic advisers, chairman of that group. and richard fisher, barclays senior adviser. no kidding? that's nice. and former dallas fed president. holy cow. you got the barclays gig and the cnbc contributor gig. >> cnbc is big time. >> you're buying. >> i'll buy you a cup of this water. >> you're going to be here for two hours. >> sorry. >> you were channelling some of

richard's comments last time he was on. >> i always have channelled richard for a very long time. >> were you surprised yesterday? what about these guys that were off the reservation? >> the continued application of lithium to the marketplace . >> that's like one of those things you read from jeffries. >> no, the key to the whole speech was near the end where she talked about the asymmetry of risk. what she meant was if you have headwinds, which she did explain -- i don't understand them fully the way she explained them, but you have headwinds, then you lay off a little bit. if you have tailwinds behind you, if the data that's domestic is proceeding well, then you have scope to tighten a little further. the problem with her argument, with asymmetry of risk is she points out the real a symmetry is they're zero bound. they only have 25 basis points to give back.

i would counter that by saying, well, you have a lite more to give back. they're living in constant fear of a market reaction. this is not the way you manage central bank policy. it just puts you further out on a gangplank. again, i thought she had a very good speech, very reasoned analysis. but this asymmetry of risk issue is a big deal. what that means is they don't have a whole lot to give back. the nice thing is, as i said before, no mention of negative interest rates. >> what's happening on the committee now, richard? you had five guys. >> they're all doves except for kansas city. >> john williams. you had dennis lockhart. all out there saying april is a possibility. we know in the committee there's a debate. they get to go out afterwards and move markets by giving speeches. if you don't have your people on board, you create tumult. does it matter that she's over

here and the other guys are some distance away? >> i think the commentary you had was way too harsh. there's not a regime change. there is caution. whether it's the chairman or members of the economy tee, even if i were on the committee today, you don't want to be the trip wire in a globally weak and transitioning economy. but if you look at -- she also referred to the dot charts, which i love. actually, i don't love. i think they're a waste of time. we would be at 0.9% by the end of the year. well, we're now at, what, 0.25. how are you going to get there? how are you going to get there in an election season where you don't really want to tamper with things close to the election, say in september. you're going to have to move, if you're going to move at all, once, at least sometime before june. by the way, the market loves it, the give me more, give me more. >> i want to know, when you're in the room, does the word election come up? do people talk about that?

>> no, but there's a reality of you don't want to be viewed, particularly this fed, which is i think in the marketplace. the people that i talk to constantly, and that's what i do for a living, realize that it's heavily democratically biased. b janet had that unfair article written in "the new yorker." >> it's not a joke. >> i don't think you screw around during an election because you don't want to be viewed as interfering or helping, aiding, or abetting. if they're going to move at all, and that's an open question, steve -- >> you said i was harsh. >> you are never harsh. it's the commentary. >> okay. but the idea of regime change, if you say they're going to move at all, that's not a regime. that's tightening. >> the regime is just to engineer an exit and do it with as little turbulence as possible. again, go to that paragraph near the end of the speech.

you talked about the ai symmetry at risk. that's the entire speech. there's very little to give back right now. at the same time, if the numbers work out better f we have a place where we're approaching 2% and employment is doing better, then you have scope to tighten. >> let me take the other side of this for a second. i'm with you on this. so are my colleagues. >> so we're wrong. >> so here's the question i think that janet would ask you. she'd say, look, you know, you guys have been telling us this for the past three or four years now. the economy is not overheated. we don't see high inflation. we've been engaged in a loose monetary policy, and what's the problem? so she might argue, you guys are concerned about something that isn't there. you suffer delusions of grandeur, thinking you're more powerful than you are. what's the answer to that? >> not me. >> well, we, the fed in general.

so what's the answer to that? >> the answer is that you're sustaining a misallocation of capital. you've done it for such a long time that you're disporting the marketplace pricing things at reasonable levels. >> so many defenders now. >> sure they do. >> cramer, kudlow. >> because they profit from it. >> it's a bad place to be, but they had no choice to be put where they are right now. they're doing the right thing. you said they're doing the right thing by not raising right now. >> here's the thing. if you look at investment, look at capital expenditure. i take your point on the distortion. there's not a lot of evidence that we've been overwhelmed with too much capital accumulation as a result of low interest rates. again, if i were taking the other side of this, that's what i would say. now, it's true, the markets are up, and they have bounced back. again, i go back to the solutiosolution delusions of grandeur. i don't think the fed is the

thing determining that. >> you and i are on the same wavelength. >> you guys are both forgetting -- >> one thing about capex, by the way. i'm on the board of at&t. we're investing enormous amounts of capex. what does that go to? driving greater efficiency. it doesn't mean more jobs are being created. >> there was a reason why they moved in december. there was a reason they said, we don't belong any longer at an emergency level. the idea was to take -- was to still remain accommodative but take back some of the emergency cuts. regardless, essentially, of how bad it was in the sense of, well, we're still going to grow, maybe we'll grow a little more or less, but we still have an argument to take it back. if we're wrong, we're still going to be accommodative. that argument seems to be gone. that was in addition to the idea that we want to do this a little earlier. that argument seems to be gone. >> that's a good argument.

i think that's the right argument. >> which one? >> the one you just made. >> but the fed has abandoned it. so that's a regime change. >> i don't know if it's a regime change. >> i didn't hear that in the speech. i'm sorry. >> i think it's abandoned inappropriately. even if they had engaged in moving along the original trajectory or one even steeper, it would have almost no effect on the economy. i think that's the problem. they can go back and say, look, we've had loose monetary policy, it hasn't had any negative effect, but even if there were tight monetary policy, there wouldn't have been much of a negative effect. >> then you would have something to give back and you wouldn't have the asymmetry of which she spoke. >> i'm on the same wavelength. >> as we always are. >> thank you, richard. ed is with us for the rest of the show. when we come back, the nasdaq up more than 15% since bottoming out in february. is it too late to try and take a bite out of the f.a.n.g. stocks?

and later, the chairman of the foreign affairs committee challenging the president's approach to fighting isis. plus, we go inside the ultimate bachelor pad. the creator of "full house," jeff franklin, has a $29 million apartment with a secret feature. we'll reveal what it is in just a little bit.

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business.

welcome back to "squawk box." tech stocks leading the markets higher this week with the nasdaq up almost 15% since bottoming out in february. while the f.a.n.g. stocks have mostly fall into the red for the year, the question is, could now be a good time to get in on the action? kathy wood joins us, she's the ceo and cio of ark invest. so there it is. would you invest in the f.a.n.g. stocks at this point? >> absolutely. we think that the they're getting bigger. the winner takes most. we're seeing that time and again. we're seeing google last week at its developer conference saying we're going to overtake amazon with machine learning as a service or artificial intelligence as a service. that's the big new wave. we think the f.a.n.g. stocks are leading that wave. >> facebook already announcing they're doing this ai bot store. >> yes, and amazon has echo and alexa. so taking over even more of

retail. >> but how far are we away from any of the ai actually creating true value yet? >> i think if you own echo and you're talking to alexa and ordering whatever you need just on the spur of the moment or when alexa starts ordering for you, i think it's going to become seamless. we're already seeing it on our smartphones. they're telling us how far we are from our destination, the weather. it's already happening. >> one of the questions we asked in the last hour, there was news, headlines on google, or alphabet, and some of the pieces of alphabet. things like boston dynamics and smaller groups that haven't necessarily worked out as well as planned. the question becomes, the new structure, does it allow for long-term investing, which is how they talked about it early on, or does the transparency make it more difficult? >> i think amazon has taught a lot of people a lesson, and that

s you have a big idea, you have to tell investors about it, invest heavily against the opportunity, and you'll be rewarded for it. so -- >> but amazon hid web services, aws, for a very long time. >> but those of us who were watching it when they launched it in '06 knew they were on to something. >> but you didn't get to see -- they didn't give you the numbers. >> no, but you knew. you knew if jeff bezos said this is going to be as big as retail, what he didn't tell you is it's going to be five to ten times more profitable. those watching the cloud understood what a huge call option that is. back to google, the robot division hasn't really taken off, except if you think about autonomous vehicles. those are robots. we think that's a $500 billion opportunity and a winner take most in a networking effect kind of way. >> you think they're going to be the winner versus a traditional car company? >> we think it's going to be a

technology company, possibly paired with a traditional auto manufacturer. yes, the technology companies are in the lead. >> if i gave you $10,000 right now to pick one of the f.a.n.g. stocks, which one would you take? >> so amazon has been punished here a bit. i think it's selling at two times sales, which is not more than the market. there are so many call options there. amazon with artificial intelligence, google may think it's going to overtake amazon. joe -- >> no, i think you'd say go back and save your money, come back in five or six years. >> when you have more than 10,000. >> if he said $10,000, you'd say put that -- >> no, i'd be investing in stocks. >> come on. >> i absolutely would be investing in these stocks. >> $10,000? >> i have to tell you, we have

some of the first active equity etfs. $10,000, bring it on. >> you would say amazon for sure is the one you would take? >> we like them all. we really do like them all. but amazon has been punished here because fwoog l has been making waves about competing against amazon. so yeah. >> can you weigh in on netflix real quick? >> netflix we love. one of the things we love about netflix is if you look at the price or the cost per viewer hour of hours watched, it's less than 20 cents an hour. cable is more than 60 cents an hour. what's beautiful about these technology models is amazon's cost per hour viewed is going down and cable's is going up. we love netflix. >> we got to run. where does apple land in all of this? >> with its new iphone, it's

going to broaden its reach. it's becoming more of a recurring services model. it has 90% of its customer base updated to the latest ios, android is only 10%. >> thank you for deknocktizing and taking my $10,000. >> can i buy 15 shares of amazon, please? i think that's what it is. is it 15 shares? it's a $600 stock. >> it's an expensive stock, yeah.

trolling for a gig with braindrone? can't blame you. it's a drone you control with your brain, which controls your thumbs, which control this joystick. no, i'm actually over at the ge booth. we're creating the operating system for industry. it's called predix. it's gonna change the way the world works. ok, i'm telling my brain to tell the drone to get you a copy of my resume. umm, maybe keep your hands on the controller. look out!! ohhhhhhhhhh... you know what, i'm just gonna email it to you. yeah that's probably safer. ok, cool.

when we come back, the fight against isis hitting home. congressman ed royce is going to join us. we're back in just a moment. ok team, what if 30,000 people download the new app? we're good.

okay... what if a million people download the new app? we're good. five million? good. we scale on demand. hybrid infrastructure, boom. ok. what if 30 million people download the app? we're not good. we're total heroes. scale on demand with the number one company in cloud infrastructure.

welcome back to "squawk box." among the stories front and center at this hour, mortgage applications falling 1% last week. that's according to new figures from the mortgage bankers association. it was led by a drop in refinancing activity. also, the adp report for march now less than an hour away. economists think the report will show the u.s. economy added 200,000 new private sector jobs during the month. and we're watching shares of lululemon this morning. that's because the yoga maker topped estimates on the top and bottom lines with same store sales up 5%. however, they did give a lower than expected forecast for the current quarter and full year. so the stock up about 4% in the premarket. we'll see where that lands when things open up. okay. republican presidential

candidate john kasich is rescinding his pledge to support the gop nominee regardless of who it is. during a cnn town hall last night, kasich said he was wrong to make the pledge so early in the campaign. i'm chuckling like you. but that's an honest chuckle. this guy is a piece of work. he says the actions of cruz and trump have him questioning his commitment. >> i got to see what happens. if the nominee is somebody that i think is really hurting the country and dividing the country, i can't stand behind them. we have a ways to go. let's see how this all folds out. >> he is also continuing to say that he's got these guys right where he wants them. the other two should drop out at this point. he's sticking to that baghdad bob comment as well. got them on the run. meanwhile, ted cruz says he would have a hard time supporting front runner donald trump unless he was vice president. no, if he wins the nomination. >> i don't want to see the white house given over to hillary

clinton. i don't want to see us lose the senate and the house, lose the supreme court for a generation, lose the bill of rights. i think nominating donald trump is a disaster, and so the answer to that is not to scream and yell and cry and attack him. the answer to that is to beat him at the ballot box. that's what we're working every day to do. it's what we're campaigning every day here in wisconsin to do. >> you remember when rubio -- it was the night before the florida primary. he insisted absolutely that he was going to keep going because you lose all the polls that day, and you lose all your donors. he had a speech that he had been working for three weeks on to drop out. i guarantee you -- and these guys, when it's all said and done, they'll show cruz that -- look what you said about all these things. they all have the same answer. you know what -- >> it's politics. you have to read between the lines. >> i like kasich though. kasich is now -- don't you? you got to admit, got him right

where he wants them. >> i don't know about that. >> he's got like four delegates. >> let's talk about the terror attacks in brussels. it's been raising fear levels a the home that an attack on u.s. soil could be next. house foreign affairs chairman ed royce has harsh words for the obama administration and says that americans will continue to be a target of terror attacks. the congressman joins us this morning with more on this. mr. chairman, thanks for being here today. >> thank you, becky. >> we have heard time and time again from many of the people, the experts we've talked to since the attacks in brussels that brussels was a unique situation. they were not prepared. they were not coordinated. there were massive holes. and we're in a better situation. you're not convinced of that. >> what i'm convinced of is as long as there's the ability to train in bomb making techniques and recruit out of raqqah and the islamic state, there are going to be new recruits coming in and the ability to get on the internet and direct attacks, the ability to bring people into

that -- into isis territory, whether it's in north africa and beyond. so obviously we are at risk. >> if you listen to some of the administration officials, they'll say that we are starting to win, at least in the middle east, against isis. isis is stronger in europe now than middle east. >> isis is continuing to expand. it's now represented in some 20 country rus. i'm back from africa where isis and east africa, north africa is now a major security concern. i see exactly the opposite. i see, you know, for three years now, we've called for a strategic plan and for hitting isis when they were leaving raqqah out on the open desert road. the administration went 12 full months without even using air power against isis. we don't see any strategic plan here to arm the kurds with the kind of weaponry they need for

the fight. 30% of those battalions are fighting out there with 40-year-old weapons. we don't see our special ops people called in to help them take their villages back. what we see is isis gaining supporters from around the world. >> what would your plan be if you could put a plan in motion today? >> i named a little bit of it. i passed legislation to have us arm the kurdish soldiers. obviously we should be doing more with the sunni tribes that were pushed out of that area. we should have rules of engagement like we saw out of the french the day after paris was hit. they said, okay, where are the training camps? we hadn't hit those four training camps in raqqah. where are those, they said? the next thing you saw was bam, bam, bam, they took them out. then where's the tankers on the open road? getting the hard currency for isis. you know, the administration has said, well, there might be an

environmental consequence to hit that, or how do you know the guys driving the tankers aren't just working for isis? bam, bam, the french took that out. that's more the rules of engagement necessary, along with four deployed special ops personnel that we have in the region that frankly could be very helpful, very, very helpful, to those who are actually doing the fighting that we want to do the fighting. the sunni tribes and the kurdish forces. wouldn't we be better situated today if raqqah was overrun by allied forces there, arab forces that wanted to see isis extinguished? until we have a strategic plan to do that and offer them the support and direction as to how to do it, this thing is going to grow. >> there were some gains made recently, though. >> on the ground. >> unfortunately, a lot of stuff happening in europe is growing while their actual base of

operations -- i've read some of them are not great fighters when the going gets tough. they're turning around and running the other way. we got the number two guy with those unbelievable guys in those black helicopters. there are some gains being made, but not enough. >> here's the thing, joe. they've had the opportunity to show they could stand their ground now for, what, three-plus years. as a consequence of that, you've had 5,000 foreign fighters come out of europe, and many of them, at least 400, go back into europe in order to carry out attacks there. so now they've replicated this model. around the globe, they're setting up their own little operations and training centers across north africa and other failed states. so in this capacity, what they can do is continue to message that we can't be destroyed. as long as they've got that message going on the internet, the virtual caliphate on the internet, we're losing this in

terms of the perception of young men. they need to see the destruction of isis in raqqah. that's what the enthusiasts need to see so they know this is not some manifest destiny where isis is going to continue. >> some of those foreign guys go in and run the place. someone's beard is not long enough, some local guy, they get in an argument. i think there's some dissension in the ranks there as well. the foreigners are more zealous than some of the locals. >> to give you a quick example, we had a young yazidi girl testify before our committee. the individual who took her captive was an american who had been recruited four years ago on the internet and as a foreign fighter went there to fight with isis. he felt it was important to explain to her why -- he was an apostate, and why he was killing christians and taking yazidis captive. so this belief system, as long as they can recruit others into

this by showing you're going to get money, we've got money here for you, you're going to get concubines, girls like this, you're going to be able to lord it over the locals. no, this is not the messaging we want to see out there. >> you just mentioned the foreign fighters from america. i know it's about 5,000 in europe. we've heard reports of 200 to 300 americans who have gone over and fought. does that match what you've heard? >> that is correct. >> how concerned do we need to be about any of them making their way back here? >> these are the reasons we've passed the legislation on the visa waiver program to make certain that the europeans have a harder time to get back here. they can't do it automatically. we can check the passports. this is some of the legislation we've passed into law now to set up additional insurances that our security is higher. >> ed is not allowed to talk politics, but i think you are, mr. chairman. a quick question. you're a conservative. you must be from orange county. >> yes, sir. >> you have to hide out down in orange county.

do you ever leave? i wouldn't suggest that you go, you know, much north of there. who's your guy? cruz? >> oh, no. i haven't endorsed. i'm giving advice to any candidates that will take it in terms of foreign policy. >> who has the best -- is trump out of his mind with his comments on muslims or his comments -- where are you on that? >> i think that the thought that we could have a religious test would be unconstitutional. >> but we need to vet the people that come in here. >> we need to vet people who come in. we've passed legislation to do exactly that. changing this automatic visa waiver program and other steps. so yes, we need to address the problem in terms of, you know, foreign fighters who might come back. >> will you sign something to back the eventual candidate if i send it over to you? would you sign that? >> i intend to back the republican nominee, yes. >> whoever it is. >> yes. >> can you give us something, some ray of optimism?

is there anything in the middle east that's more stable than it was under the much-criticized bush administration? >> well, i think that one of the observations i would make is that the sheer excesses of isis and iran running the table on the united states and these negotiations have created an environment now where the jordanian kingdom and the gulf states and others in the region are now much closer, actually, to the u.s. position. they're concerned about radicalization. we've got their undivided attention on that. it's just we need to seize the opportunity to do something, both about the growing influence and power of iran, which is the number one supporter of terrorism, and second, this growth of ideology. that would be my point. >> chairman royce, thank you for your time today. >> thank you, becky. the futures this morning are

strong and have been all through the session. presession, i should say. dow futures up by triple digits. nasdaq up by 34. when we come back, from "full house" to full pad. robert frank goes inside the secret lives of the super rich. sitcom creator jeff franklin made enough money to build a $29 million bachelor pad that will allow you to do something you've probably never done before. how is that for a tease? let's just say this, you will really enjoy the view. the big reveal is next. check out the futures. every year, the amount of data your enterprise uses goes up. smart devices are up. cloud is up. analytics is up. seems like everything is up except your budget. introducing comcast business enterprise solutions.

with a different kind of network that delivers the bandwidth you need without the high cost. because you can't build the business of tomorrow on the network of yesterday.

because you can't build the business of tomorrow the first stock index ♪ (musiwas createdoughout) over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals.

and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks. ♪ cnbc's secret lives of the super rich has given viewers vip access to some of the most over-the-top properties in the world. tonight's series premiere is no exception. robert frank joins us now to take us behind the doors of one of l.a.'s most extravagant

bachelor pads. >> morning, andrew. welcome to the empty house of "full house" creator jeff franklin. he took us inside. >> i moved in during the first season of "full house." lived here over 20 years. >> jeff tore down the original house he lived in on this property to build his dream home to his exact specifications. >> i love the shower. the glass walls retract, and it's wide open. you are just taking a shower basically in front of los angeles. >> downstairs, there's a pool, a bar, and a movie theater. everything a hollywood player needs to entertain, even the ten-car garage was built for a party. >> i thought, this could also double as a nightclub. the disco light circle is already built in. it's a great space for a party.

>> but jeff won't be throwing any all-nighters here. while this place was under construction, jeff decided to buy an even bigger mansion down the street. >> more mansions and a lot more yachts and planes and everything else. >> that wasn't enough for him? >> he lived on that property in that previous house that we showed that he tore down for 20 years and had a lot of very famous parties there. he then tore that down, and while he was building his dream house found an even bigger house down the road that he preferred. so this house that he was originally going to build as his own, he's now selling. he said even i can't have a winter house that's five minutes from my summer house. >> do we know what the cost of building it was? >> we don't. clearly less than $29 million. it's an half an acre. >> do you know if bernie sanders has spent the night there yet? >> i doubt it. we go through a lot of people that -- you know, a lot of these guys, they will build a house

and suddenly in the middle just change their mind and see something they like instead. they end up with two or three properties. they love projects. they always want to do projects. he's one of these guys. >> where is it? it's above sunset strip, but do you know exactly where? >> it's calling wood place. his real home is in benedict canyon. that's where his house is. >> does this house have any shades? >> no, you're just right out there in front of all of los angeles. >> nobody can look up. >> i could see a lot of places. if you've got binoculars, you can see in. >> tough binoculars. that shot, is that a helicopter shot or a crane shot? >> a drone. >> that's what i was thinking, a drone. >> drones have changed luxury real estate. >> a lot of these real estate things are done with those now. >> a lot of the top-end brokers, you have to have good drone footage. >> that's a cool spot. i've seen less for more money.

>> if you're a bachelor in hollywood, to live right off sunset, that's pretty convenient. to say the least. >> i don't know. you'd die. the whole lifestyle, you'd end up dead. what's want point? >> you would. yet, here he is with "fuller lous house." still alive and still a bachelor. >> that was the theme song for "full house"? i'd never heard it before. >> it was after my time as well. >> did you ever see the patty duke show? >> no. >> there you have it. >> catch more of this on tonight's premiere of "secret lives of the super rich." robert, thank you. >> thank you, guys. >> andrew came in today and said, can you believe sean aston's mother died? >> andrew didn't say that. >> no, i did not. >> but you know what i'm saying. >> i have no idea what you're saying. when we come back, a list of stocks to watch ahead of the opening bell. later, the banks are back to their prefinancial crisis ways of trying to make money.

what it has to do with your home equi equity. we'll be talking to a top home economist. (patrick 1) what's it like to be the boss of you? (patrick 2) pretty great. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you... (patrick 1)than me. i mean, you...us. (vo) go national. go like a pro. before the band separated over unknown creative differences. [ crash ] and reunited three decades later for a tour that sold out in three minutes. and your cisco hybrid cloud handled millions of ticket orders without breaking a sweat. before all of this, [ crash ]

the experts at cdw orchestrated a cisco hybrid cloud solution. scalability by cisco. orchestration by cdw.

great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. let's take a look at some stocks to watch this morning. valean pharmaceuticals says it has not identified any additional issues affecting its financial statement. seems like it would get more of

a bounce than that. it also says it's positioned to meet all its obligations, also asked for an extension of filing of its annual and quarterly earnings reports. >> that's the complicating part about that. >> i thought it was part of the debt obligations. >> does it ever happen? >> they will eventually report. >> really? >> maybe. >> okay. boeing plans to cut more than 4500 jobs as it tries to reduce production costs for its jets. a little over half of those cuts are expected to occur through attrition. and two-time masters champion bubba watson tried his hand at a half-court shot. he was looking for a hole in one, and it came close to going in. no luck in the shot. you know how it gets lodged between the rim and backboard? that's what happened all the way from half court. >> when i miss, that's not what happens. >> right. >> i tried to just shoot from

the three-point line to see what steph curry is all about. if i hit any part of the rim, that should count. >> if i take the backboard, i would take that. >> any part of the rim for me should count for three points. it should because it happens about -- >> you're going to have to do a granny shot to get it that far. >> it's hard. almost did a will chamberlain. ed lazear is our guest host this morning. how's the jolt stuff coming? >> funny you should ask. >> explain what it is. >> it stands for job openings and labor turnover survey. i've been bugging you guys for years to pay attention to it. harass you, whatever. but to me, it's one of the most indicative numbers that we can look at in terms of what's actually happening in the lay -- labor market. last year it was down considerably. actually something to watch. my guess is one month, of

course, you don't get too excited about it, but it is low. by the way, you know, that's on top of what i interpret as quite a negative jobs report last month. you guys kind of missed that. i was surprised you missed that. you're usually tuned into that one too. there were two-tenths of an hour drop. that's the same as about 800,000 jobs. 800,000 jobs wipes out three months of gains. so, you know, while everybody was talking about the wage side of the thing, which of course is noteworthy, the hours really indicate that there was some softening in the labor market. something to watch out there. >> what about the higher participation rate? should we feel good about that? >> the higher participation rate is kind of the supply side. i view the hours and the wages as kind of indicative of the demand side. >> what do you mean by that? >> the idea is, you know, when you have people coming into the labor force, that's basically more labor supply. that's good.

>> but they only come in if there's demand. >> in part, they come in to look for jobs, but the question is, which jobs? so you can always have jobs. the issue is what wages. so if you flood the market with labor supply, what's going to happen? you're going to get jobs, but you're going to get jobs at low wages as you push them down. that seems to be what may be happening right now. so if i were going to be nervous about the labor market, that's what i would be looking at. >> will you keep an eye on this experiment in california for us? tell us what happens. >> oh, my gosh. yeah, right. why do i live there? >> i don't know, but if this works -- i made this point yesterday. i don't know why everybody can't make a million dollars a year. if this works at $15 an hour, i want to immediately go up to a thousand an hour. then everybody will have a lot of money. the consumer will do better. no income inequality. >> it's stimulative, good for everybody. >> let's do it that way, andrew. come on, man. >> the slippery slope upwards in this instance. >> it's not a slippery slope. it means nothing. no effect on hiring. >> when we come back, breaking news on the jobs front. we're now just minutes away from

the private payroll data from adp. the numbers and market reaction straight ahead. and then chicago fed president charles evans is going to join us. his reaction to fed chair janet yellen's speech yesterday. that's straight ahead on "squawk." we're back in a moment. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis and a $200 savings card

stop taking cialis and get medical help right away. something we'll show you.. through small things. big things. and spur of the moment things. sheraton. ♪

breaking economic news and a cnbc exclusive. the adp employment report is just minutes away. plus, chicago fed president charles evans on the battle between the the battle between the hawks and the doves. turning your home into a piggy bank. banks pushing hard to get consumers to tap into their home equity with lending reaching pre-crisis levels. is this trend pushing the financial system into the danger zone? and it's national pencil day. yes, this is a thing. there's national prom day, national bunsen burner day, national goofoff day, there's even a national joe day. >> whoa. look at that. but while it sounds ridiculous, we'll show you the money behind this. the third hour of "squawk box" begins right now.

>> welcome back. i'm joe kernan along with becky quick and andrew ross sorkin. we're less than 15 minutes away from adp employment report. economists expect the creation of 200,000 private sector jobs down from 214,000 in february. that's at 8:15 a.m. eastern. i thought they were telling us 243, that must have been the previous one. >> there's two different consensusest ma estimates, too. >> ahead of the report, futures are trading higher, picking up on where they left off yesterday and mirroring what's happening in europe to some extent. after fed chair janet jeyellen' speech, she made it clear she isn't on the same page as her hawkish colleagues. >> in particular, developments abroad imply that meeting our

objectives for employment and inflation will likely require a somewhat lower path to the federal funds rate than was anticipated in december. given the risk to the outlook, i consider it appropriate for the committee to proceed cautiously in adjusting policy. >> we will talk more about yellen's comments and the future of interest rates with chicago fed president charlie evans. that's at 8:30 a.m. eastern time. let's tell you about a few of the other stories investors will talk about today. an update on the fight between apple and the fbi. a california judge has vacated the order asking apple to assist the fbi in hacking into the iphone of the san bernardino terrorist. nbc is reporting that an israeli company called celebrite is the firm that provided the tool that enabled the government to unlock the phone. according to cbs, the fbi owns the rights to the method that was used to get into that device. boeing plans to cut about 4, 500 jobs by mid-year. most of those cuts will come

from a unit that conducts flights and lab tests. that i'll use voluntary layoffs and leaving positions unfilled once they are open. also, general electric has agreed to sell its ge asset management unit to state street corporation for up to $485 million. the deal is expected to close during the second quarter. and let's start with lululemon, the yoga wear maker reporting a profit of 85 cents per share. revenue estimates are beating forecasts. same store sales rose 5% in the pre-market. but bad news, its four year earnings forecast falls below street estimates but investors seem past that. also restoration hardware's fourth quarter profit falling 22% with adjusted results missing forecasts. the retailer cutting its earnings outlook for the current quarter citing shipping problems and additional lines of modern

furniture. you're looking at that stock down. sonic second quarter profit rising 41% topping forecast on continued strong sales as the drive in fast food chain. sonic saying core menu items along with limited time offers drove results and helped it gain market share. earnings season kicking off in less than two weeks. deteriorating corporate fundamentals could be painting a bleak picture for profits. we're joined with dom on that story. >> reporter: if you're looking at the fundamentals we're talking about, if you thought the previous ones were bad, it could be worse at least at the beginning of this earnings season. according to thompson reuters ibis, they track these estimates and revise them up until earnings season, we're slated for earnings growth in the s&p 500 of down nearly 7%. on the revenue side of things, we're expecting declines 1% to

the down side. energy has a huge part in this because if you strip out the energy sector we're only doing it for perspective, look at this, though, earnings growth goes to just down 1.8% if you strip out energy and revenue growth turns positive by 2% as well. now, the sectors that will be a huge focus, like i said, energy for sure, but look at this, consumer discretionary stocks in the s&p slated or expected to post 14% earnings growth, telecom stocks 5.5%. let's turn our attention to this side of things, materials down 19% and energy a huge drag, expectations are for a 99% drop in profits at energy companies in the s&p 500 so a few of the sectors to watch. i've put the rest of them on twitter so check those out but, guys, this will be a huge deal ahead of corporate earnings season. certainly something to watch for. back over to you. >> is that down 99% from a year something that what are we talking?

>> down 99% from the same time last year. whatever profits or maybe not profits, energy companies made as a whole in the first quarter of 2015, analysts are expecting almost all of it to be gone this time around. so, again, year over year comparisons from first quarter 2015 to first quarter of 2016. >> so it's like we're trying to figure that out. if they had a loss last year you can't do a percentage for how much more they're losing. >> so if they lost a million dollars last year, they'll probably lose close to two million this year or if they made a million dollars it will be like a hundred dollars this time around. >> just looking for chevron. chevron last year in the first quarter earned $1.07, now a loss of nine cents. exxonmobil looking for 32 cents down from $1.17. >> this is also important, these expectations kind of change throughout the season, right? we got a couple weeks left as analysts update their targets and their forecasts.

that number fluctuates a bit but the idea is that even if it gets a little better, a 99% drop in energy earnings is not something we want to look forward to. >> and if they make ten cents a and a dollar the next year, you'll be with us -- >> that's up 900%. >> you'll be with us a year from now saying energy is going up 900% and you'll be hyping it. >> easy comps joe. >> is that what it's called? keep in the perspective. you always do, thank you. >> you got it. let's talk about the mortgage market right now. with the broader market in the doldrums, banks are back to their pre-crisis financial levels ways of trying to make money, ramping up the push for customers to tap into their home ec. with ity for cash. lenders extended $186 billion in home equity according to core logic. that marks a 24% increase from 2014 and a 138% spike from 2010

when new approvals hit a low point. joining us from washington with more is the deputy chief economist at core logic, our guest host today is the senior fellow at the hoover institution. should we be happy about the numbers going up this way, sam? >> sure, it represents a recovery in home equity values. home prices are up 36% since the crisis that's led to an increase in home equity values of $6 trillion and expanded the pool of available borrowers. so it means that homeowner balance sheets are improving and repairing. >> that's the good news. should we be anxious about people dipping into that? >> so it represents a recovery from artificially low levels of home equity lending unlike what we saw in the mid-2000s, there has been no deterioration in underwriting for those borrowers. credit scores are 40 points higher than before. the bar of the income -- the

income of the borrower has been 20% higher so there's been no deterioration of the credit or income of the borrower unlike last decade. >> if you look back at the financial crisis and say what was the most telling statistics, it's that credit spreads fell dramatically in the leadup to it. so as long as we're not seeing that behavior undertaking risky loans as a result of getting cheap money i don't see the same problem. do you see it? >> i agree. i would add that we're not seeing the piggyback lending which led to incremental increase in leverage. this is based on quite a bit of equity in the borrower's home. >> sam and ed, not to be an alarmist but the trend line if it starts here it potentially may get better to the degree sam will say, but ultimately the

pendulum swings too far? >> it can. but the issue you want to look at is whether florida's a tendency to undertake risky investment primarily because it's cheap to do it. markets are rational in this sense. the money was cheap and cheap to undertake these risk withy investments. that's why they did it. so i don't think you see the same thing happening as you saw back then. i think you're wise to be cautious but right now i don't see it. >> what are people using the money for? >> primarily to remodel their home which is different than what last decade which was more along consolidation of loans. i would add to ed's point the growth rate in lending slowed down in if second half of 2015 so the growth rate was very strong in 2014 and the first half of 2015 but it began to decelerate in the second half of 2015. >> and when you look at the

banks behind this, all the big traditional names? the big four, primarily portfolio lending. >> sam, we'll leave it there. >> >> thanks for having me. when we come back, we have breaking news on jobs. the adp employment report will be released after this quick break. also at 8:30 eastern time, an exclusive interview with chicago fed president charlie evans. "squawk box" will be right back.

you're down with crestor. alright! now there's a way you can get crestor for $3. adding crestor, along with diet, lowers bad cholesterol. crestor is not for people with liver disease, or women who are nursing,pregnant, or may become pregnant. tell your doctor all medicines you take. call your doctor if you have muscle pain or weakness; feel unusually tired; have loss of appetite, upper belly pain, dark urine or yellowing of skin or eyes. these could be signs of serious side effects. ask for the crestor $3 card. ask your doctor about crestor.

♪ sweet home chicago ♪ one and someone two, two and two is four ♪ move that heavy load, baby, so come on ♪ of course, that's a pro blow for charlie evans, the chicago fed president who will be joining us in about 15 minutes time. we'll talk to him about janet yellen's speech yesterday. charlie has been dovish himself but we'll see what he think cans come from here and what rate hikes might be expected. welcome back to "squawk

box." we're a few moments away from the adp employment report for march. yesterday after yellen's speech it turned the markets around. this morning markets continuing with that thought. dow futures up triple digits, s&p up by 10, nasdaq up by 29. the adp employment is out and steve leaseman has the number. >> private sector reporting payrolls were up 200,000 in march, right in line with expectation. they were revised down the prior month by 9,205. look at the details here. >> exactly 200. >> it makes you skeptical. >> did he make that up? did he do any work at all on that? >> did i do work or he? >> no, he took the consensus work and ran with it. >> exactly, exactly. it's great to have a guest undermining his trustworthiness just before he comes on. well done, joe. february revised down 9,000. goods 9,000, services up 191,000. non-farm payroll estimate,

government and private sector 213. i will say the street won't be adjusting their forecast based on this because it came right in line. let's go to mark zandi before we get to the details here. mark, joe wants to know if you made the number up. >> i knew it. i knew it. i knew it. i checked those numbers four or five times. >> why didn't you just make it 201? round it up. >> 200,000. >> it's a nice way to make money, mark, bill your client and wait for the consensus. >> 200 i think is good. i knew this was going to happen. >> mark let eat get to what i consider the big issue. we have a gdp number. mark zandi calculates our cnbc wrap it up day, the only median forecast on the street. it's down below 1% now, it fell 0.5% on one piece of data. the personal income number is running weak but we have strong jobs, mark, would you square that odd circle for us?

>> look, steve, we can count jobs. the errors in counting jobs are very, very low. both adp, bls, we're not the same over a month but we are exactly the same over two years. we are creating a boat load of jobs, another month, another 200,000 jobs, that's the best single measure of how the economy is doing and the economy is doing well. the gdp numbers, i don't believe them. you've done great reporting here on residual seasonality, the big revisions and i don't think we're catching a lot of gdp in the tech sector. so you know i wouldn't pay any attention to gdp. it's all about jobs. >> i want to bring in ed. >> i don't have quite the same optimism that you have for a couple of reasons. one is i don't think these numbers are really indicative of what is going on in the labor market. i think the unemployment rate is

a percentage point higher than it looks, closer to 5.9% when you take hiring and demographics into account. so the other thing i would say is that, you know, one of the big problems is we're hiring people, we're adding people at best but productivity is low and that's the reason. we're substituting growth and productivity with people. what's your take on that? do you disagree or do you think something else is going on? >> i disagree. first of all, in unemployment the u-6 measure, the broader measure, is about a half point above where you would expect it at full employment. at the current rate of job growth is sustained and every indication is that it will be given job openings are near record highs and layoffs are near record lows, we'll absorb that half point by july, august, september. we'll be beyond full employment by this time next year, i feel comfort. and my point about the gdp is the same as with the productivity numbers, i don't believe them. i think we have gdp growth,

productivity growth that's probably a half point higher per annum. even if you throw in a half point it's low by historical standards and i think there are cyclical forces that are way on productivity but they'll fade as we move to a full employment economy. i feel very, very good about the economy. >> you don't look at the employment rate? you don't think that's the most indicative number? most labor economists take that as the holy grail? you don't buy that? i would say even correcting for dem graphics we're still down a point and a half. >> you've had this big influx into the jobs market recently, you've had over two million workers come back to work in the past year. >> and it's 59.8 which is better than it was at the trough which was -- >> but it ain't as good as it ought to be? >> it ought to be 61.5. >> zandi, you just undercut everything yellen said yesterday. she's doing the wrong thing? >> she's running the risk of overheating the economy. i think she's too dovish.

>> so everything we talked about all morning long, how she's very measured and cautious, now you're saying she's completely behind the curve on that? you think that? >> let me say two things, joe. if i were in her spot i would probably be doing the same thing? >> because you want to elect hillary? because you want to elect hillary because she's a democrat? why? >> no, it's asymmetric risk. if i'm wrong -- not likely, but if i'm wrong -- and we go back into the soup, we're in a world of hurt. >> never seen it happen before. >> you would err on the side of overheating. but the risk is the economy overheats so a year from now we'll talk about an economy beyond full employment and a fed trying to catch up. that's the rising growth. >> address the issue yellen brought up yesterday which is that she doesn't believe the rise in inflation. i looked at those numbers and said i'm checking another box on what it is the fed needed in order to hike one seven on pce? how price can you be in terms of

landing an $18 trillion economy on 2% inflation? you're running 17. is she right these numbers are not trustworthy? that they'll go down in the future? >> maybe in a given month, steve, month to month. but year over year, no. it feels like we're headed back to target and we'll be beyond target a year and a half from now. you have accelerating rent growth because vacancy rates are record lows. health care cost growths are accelerating because the affects of obamacare are fading. and if i'm right about the labor market, wage growth is picking up. the adp data shows an acceleration in wage growth for loots of different reasons so everything points to stronger inflation. you can argue oh, we have a stronger dollar and low oil prices and that's what she was arguing yesterday in her speech but that seems like an increasingly strained argument because the dollar stopped rising a year ago and oil prices are rising. >> i think the fed has more confidence than it used to in terms of fighting inflation but

it's paying interest on reserves which is an easy way to suck money out of the economy. and i think they view that as an important tool, it has been important. the only issue with that is it becomes increasingly costly to do it when interest rates rise so while they have the power to do it, it's not without its cost to the economy and the federal deficit. so we'll see what happens in the long run. >> all right, mark, i want to thank you for joining us today. we really appreciate it. >> thanks. ed and steve are both sticking around and chicago fed president charlie evans will join us on the set in just a few minutes. >> microsoft's artificial intelligence bot is having a freakout moment days after the company pulled it for being racist and offensive. it was trying to sort of mirror the normal twitters here? what did they expect? today is national pencil day and tomorrow is national clams on a half shell day. and i'm reading right now on drudge that vet targetarian die

cause cancer. jane wells will tell us about the national days. we're still waiting for national "squawk box" day which is everyday, as far as i'm concerned. we'll be right back.

the adp employment report for march coming in at 200,000. not 201,000, not 199,000.

zandi thought it was a nice round number, let's use it. the futures up almost -- see, even that, it's not 100. if it was up 100 i would say something is wrong. it's up 98.89. that's the real world. >> wasn't it just last week when the market was senate fair value was unchanged? >> microsoft's latest artificial intelligence project is having technical issues again. this is so funny the stuff this guy said. the online robot tay was designed to interact with users on twitter but the bot seemed to be stuck in loop replying to itself saying "you are too fast, please take a rest." dozens and dozens of times. freaking out. >> with that accent? >> yeah. tweeted it was smoking marijuana in front of police. it also had other crazy stuff. >> it's been racist before. it said terrible things this bot. >> and also said trump is the only candidate that can save america. it said the weirdest -- it's

reflecting viewers. >> people knew how to hack it. but twitter is so filled with vitriol that it's repeating these crazy things. it was saying things about nazis and this and that. just crazy >> all feminists should go to hell or something. it -- but twitter itself is portending the end of days. people are in their basement looking at facebook and twitter. this is not natural. >> the vegans are not natural, causing cancer for themselves. >> you want to talk about that? >> no. but it's a cornell study that populations that have had only vegetables -- >> just when we thought -- >> it causes colon cancer. vegetables. >> when are carbs going to be good for you? >> that's what i want to know. >> i'm waiting for that study. >> when he says steak is good for you, they rethought it after -- >> they rethink everything. >> banana cream pies. >> when are they going to add cake to essential food groups.

>> that's what al gore wants to know. coming up in the meantime, a cnbc exclusive, charlie evans will join us next and set the record straight on what's going on inside the central bank and what's ahead for interest rates. we'll those a break. take a look at u.s. equity futures. back in a month. ♪ okay, so you launched your bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road,

so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be. our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. we're creating new platforms across channels so customers can effortlessly invest, borrow, lend, transact-wherever-whenever they choose. and we're digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. digital works for banking and financial services. lets talk about how digital works for your business. ♪

is our partnership with habitat for humanity. pg&e is committed to clean energy and part of that commitment our mission is to build homes, community and hope. our homeowners are low-income families, so the ability for them to have lower energy cost is wonderful. we have been able to provide about 600 families with solar on their homes. that's over nine and a half million dollars of investment by pg&e, and that allows us to provide clean energy for everyone here. it's been a great partnership. together, we're building a better california.

welcome back to "squawk box." here are the headlines make stories this hour. i like that. here are the headlines making stories this hour. adp says the u.s. economy created 200,000 private sector jobs this month. that matched consensus forecast, however february's number was revised downward by 9,000 jobs. mortgage applications fell 1% according to new figures from the mortgage bankers' association led by a drop in refinancing activity. shares of valeant pharmaceuticals are rising. they were rising a bit, maybe not as much as what you would expect from positive news. now it's up almost 5%. the drug maker said it's found no additional problems in its scrutiny of its prior financial

statements. it has asked for an extension in the deadline for filing its annual report as well as its report for the current quarter which is problematic and we'll talk about that a bit. it's down from well above 200. and if you're long, you feel like you here in a vice grip right now. it's got to go up ten times in value to get back to where it was, basically. . >> well, look, they'll try to hire whatever -- the pharmaceutical version of lee iacocca, that's what's going to happen. then it will take them if they get there like a four or five-year process. >> there are people that say -- >> they told us the last guy was that. >> i'm just saying that's got to be the strategy. >> there are some people in the business of managing money that say two words -- stop loss. there's a final when you put it in. now, he could have sold -- i don't know if he could because he owns so much but you could have easily sold when it's down from 260 to 150 or even 200 and

then you can buy back four or five times as much. you cannot really rationalize or justify -- >> i'm not rationalizing, i'm saying you have to try to -- >> if you're a genius hedge fund guy that knows anything, you can't justify just riding what the down. >> a lot of them got caught up in it. >> the value act people had about as perfect transparency as you could. they were on the board, involved in this company since 2006. >> and they still road it down. >> smartly they sold about a billion dollars of the stock last summer. >> at what? above 150 or so, right? >> easily. easily. but i don't -- that was to balance the portfolio because they almost owned too much of it at that point. >> a lot of hedge funds own too much. look at sequoia. >> look at sequoia. that's not an apology for anybody else but let's talk economics. steve leaseman is back with us and he has a special guest this morning. steve? >> very pleased to introduce joining us on set chicago fed president charles evans.

thanks for joining us. >> good morning, steve. >> let's talk about the chair's speech yesterday and overall fed policy. do you still consider the federal reserve to be in a tighteni tightening mode? is this a normalization period right now? >> i think chair janet yellen laid out the right issues. going into the march fomc it seemed like some of the risk factors increase add bit, there was more financial volatility but global risk is higher and i think in that environment the -- you know, the funds rate dot chart, the expectation in december i think expected four rate hikes in 2016, now it's down to two, that's the median. that takes on board the global risks and, you know, the fact that accommodative policy continues to be appropriate but it haas an upward slope to it. median is for two hike this is year if the data come in the way we're expecting. if they come in stronger everybody would adjust upwards. >> but the markets right now just pricing in one, and it's

consistently been below. the guidance seems to be, you know, you start a normalization process which makes people think that you're heading up towards something that's higher than zero and perhaps higher than the 37 base points where you are now but right now it seems like all bets are off that you could be in this permanent neutral here. >> well, so look, the dot charts give the current best assessment of what we think the economy is doing and the appropriate monetary policy. you're right. we've used the term "normalization, renormalization" to kick things off and we want to get the funds rate up to a normal level, that 3% rate, but i thought the chair was terrific yesterday when she said, you know, the dots aren't set in stone. there's a lot of conditionality that will depend on how things play out. we used this term normalization, that's still correct but that doesn't mean we're going to get there tomorrow. >> let me just do an informational interjection here -- >> it's going to depend on the

data. >> the dots are the members of the fomc, their forecast for where rates will be. and if you look at the chart, it's a bit like, i don't know, a bad 1970s video game, right? i got a boat on the right, an alien just to the left of that and a nice sailboat and then maybe an aircraft carrier or something on the left. >> this diagram provides a tremendous amount of information. if you've ever wondered what an fomc meeting is like -- [ laughter ] >> -- when we go into the big room and have robust discussions and then afterwards you hear the commentary and you hear different views expressed. these assessments of appropriate monetary policy put on full display our agreements and disagreements and what's very interesting about 2016 is it showed movements towards more agremt. that discrepancy isn't very large. as you go out, yes, there's more of a spread and then it depends on where you think things are going. >> it looks like brick breaker. >> it looks like light bright.

>> a bench of folks stepped out last week and said that april was the time the feds should consider it but i don't hear that from fed chair janet yellen at all that april is even on the table. >> well, in fairness i think she said during the press conference well, of course we go into these meetings, april is live, they're all live meetings, we go in to talk about things. i would say the threshold for having confidence that inflation is going to sustainably move up towards our 2% inflation target is high. that hurdle is high. so i'd be surprised if we met that condition myself in april. i think moving in june would be on the basis of further improvements in the labor market like what we've had. maybe the unemployment rate moves down a bit, maybe more people come into the labor force and that gets in the way of the rate moving down adds quis quic that would be a good sign, people coming back for good wages and things like that. further movement like that would be a good reason to further

adjust gradually this rate. i just don't think we want to get ahead of ourselves. we want to make sure we have confidence we'll hit 20our 2% objective. if you look around the world and see all the different countries struggling to get away from low inflation rates with economies not nearly as strong as ours, you want to make sure we aroad is those circumstances. it's worth a little extra caution. >> i wonter if you can clarify what we mean by the global risks. if you do the accounting exercise and say how big an an effect of a recession in europe or a decline in growth rates in china be on the united states, these numbers are really small. you're talking about at most a half percentage point of gdp. if it's china for ten years you're talking about one percentage point. so i'm wondering, where does this stuff come from? by the way, europe is doing better. if you look at the g-7, with the exception of canada, they're moving back up. so i understand -- >> great question. i share your concerns, your

expertise at the council of economic advisors, you understand this stuff better than i do. i am nervous about -- you look at trade numbers, you look at exposure and every single country is a minimal exposure. i think when you put it together, the hard to truly assess is then risk aversion goes up and people start withdrawing and the banks start thinking maybe their capital is more exposed than they thought and it's that kind of add-on effect china, i'm not seriously concerned about a hard landing in china. i just look at the fact that they are in a long process of moving there double digit growth down to what we thought was high single digit growth. now we're looking at 6.5%. that transition plus moving from investment to consumer led, it's unlikely not to be -- it's going to be bumpy, you would expect. you don't have to have a hard landing to cause emerging market

economies or premised on commodity exports. europe is doing better. they can come back a long ways. that's a lot of risk in my book. >> richard fischer was here in the last hour and made the point about the upcoming election and i said "is the word election ever used in the room?" he said no but i thought i'd ask the same question to you. >> we've got a job to look at the state of the economy and inflation we're looking at the numbers, the fundamentals for the u.s. are good. the labor market improvements have been strong and they've helped support in my mind a strong stronger consumer than i would have expected without stronger wage growth i might have expected the consumer to be more challenge sod it's been very good to see that. obviously anything that could lead to more uncertainty and elections by their very nature, you don't know where they're going to come out. >> i think he also said you were loaded with democrats.

he mentioned lyle gave some money to someone. cirillo still has a barack obama bumper sticker on his -- >> i've been amazed and very pleased at my long time attending fomc meetings, my first meeting was in 1995. in that time i've seen democrats appointed as governors, i've seen republicans appointed as governors and i think people come into the room, look at the economy, they're looking to set policy appropriately for everybody. >> if you're looking at it as a keynesian than milton freedman, you're doing different -- >> i don't think keynesian has to be democrat or republican. >> there has been in the perceptions but in the past when the alan greenspan fed raised rates during an election cycle -- >> but he was a republican. >> they took flak for being accused of tampering with the election. with that sitting in the back of your mind, do you think the fed would ever not act as a way to make sure they're staying out of the fray? >> i think we had periods in

2004 we were raising rates into the election so it depends on the circumstances, the economy we're facing. look we know that our job is challenging. we -- we're constantly saying that we need to be granted some measure of independence from short term political concerns because we have to make these harder decisions. that's what the job is, we have to do that and if the criticism comes our way, we have to take it. >> charlie, give us your best outlook for what happens to rates in the economy? >> i think the economy is doing pretty well. i'm looking for 2% to 2.5% growth this year. that's above friend. i don't really think people have taken fully on board the fact that trend growth rates are lower now. we used to expect something in the high 2s, now 2% is a lot of people's view point. so 2% 2,.5% is above friend. we can drive unemployment lower. the labor market is improving and those are good conditions for the consumer to continue to

thrive. a little nervous about business-fixed investment, the decline in energy and the fact that we produce energy more now is a different type of exposure than we faced 10, 15 years ago. on that basis, i think that there's reason to believe that inflation will be moving up to our 2% objective. i'm a little nervous we might get up to about 1.8% and then there's an attractor in terms of lower long-term inflation expectations which appear to be a little bit below 2 and beyond that might be a challenge. i'd like to have confidence we get up to 2. so i think that -- my assessment is the economy will be strong enough, we'll be raising rates two times this year. it could be -- well be more if we do better. >> so you're thinking a 75 basis point 1% fed funds wrat a 2.5% economy and you don't feel like you're behind the curve? >> i don't think inflation will get out of hand. we've been under 2% for a long

time, we're supposed to be at 2%. it's a symmetric objective. half the time we ought to be above 2%. i don't think we should be concerned about going through 2% on the way to making sure we get to 2% with high confidence. we don't want it to get out of hand. i don't think we're looking at anything like that in the u.s. so i think that we have the ability to be cautious. >> i feel better. you feel better? >> i don't know. i'm still thinking about -- something about zandi. if you believe zandi. he was saying everything understates the actual strength of the economy, the gdp number doesn't take into account technological advances. he thinks we ear totally overheated. >> i hope he's right. i hope we get that strong growth. i hope it's exhibited in stronger labor improvement. >> but wages. if he were right you'd be seeing wage growth like crazy. >> i think that's an issue. i agree with you. >> you didn't disagree with him as vociferously -- you're a nice man. i thought you were going to lay into him. is there anything to the notion

that it's more global than it used to be and you can't raise rates when you have negative rates in other parts of the world in that has to come into thinking. >> i look at it this way. we're contemplating policy directions which the rest of the world is going in the other -- they're holding at a lower level and that means -- you know, if you say, oh, i think you might be behind the curve on inflation, you have to raise rates higher. given the divergence of monetary policies and the likely affects on exchange rates, those moves will be more powerful not less powerful. and that's going to have an affect. i don't think we would have to raise rates has much. >> strength in the dollar. >> we have a lot of ammunition on that side of it. >> okay. thank you, sir. >>hanks for coming in, charlie. when we come back, today a special day. it's national pencil day. apparently that's really a thing. but why is it a thing? why the need for these national madeup days? jane wells will explain it all

next. one thing that isn't made is up jobs friday. we are counting down to april 1. "squawk box" will be right back. ♪ in new york state, we believe tomorrow starts today. all across the state, the economy is growing, with creative new business incentives, the lowest taxes in decades, and new infrastructure for a new generation attracting the talent and companies of tomorrow. like in rochester, with world-class botox. and in buffalo, where medicine meets the future. let us help grow your company's tomorrow - today - at business.ny.gov

out on the town or in for the night, at&t helps keep everyone connected. right now at at&t, buy the new samsung galaxy s7 and get one free. no matter how you hang out, share every minute of it. buy one water resistant samsung galaxy s7 and get one free and right now, get up to $650 in credits per line to help you switch to at&t.

today is national pencil day and tomorrow is national bunsen burner day. jane wells joins with us a special look at these special days and how they got into exist innocence the first place. jane, good morning. >> becky, i'm beclarg this national "squawk box" day. why not? everything else has a day. i'm not talking about the 60

national days officially recognized by the federal government through congress or presidential proclamation. no, the 1200 days christened by national day calendar which started as a hobby by a guy in north dakota who wanted to celebrate, i don't know, national popcorn day, decided to become an aggregator of funny days and people wanted his site to sanction them and were willing to pay money for it. today is quote/unquote officially national pencil day. and national i am in control day, turkey neck soup day, take a walk in the park day, little red wagon day, national doctor's day and, of course, manatee appreciation day. groups pay $2,000 to $4,500 to be legit and get an official hashtag but money doesn't buy you access. national day calendar receives 18,000 applications a year and each year picks 30 new ones. >> we have a committee of four people that have go-to-go through these and it has to be a unanimous vote between these four people for that day to become a national day so you can see that we have quite a

rigorous type of litmus test, you could say, that we go through for the approval process. >> rigorous. new this year, tomorrow is national prom day paid for by promgirl.com which will use the day to get girls thinking about the dresses and help raise money and awareness for s.a.d.d., students against destructive decisions. senior vp kim collins told us national day calendar really vetted them. >> absolutely. they wanted to know more about us, who we are, why we should be declaring prom day and why it's so important to girls, so yeah, there's a process around it. >> all right, prom day also is landing on throwback thursday tomorrow so people are being encouraged to post old prom pictures. mine is in the witness protection program. guy, back to you. >> i was going to say the same thing. >> i am never, ever reposting any of those things. just imagine really big hair.

>> isn't tomorrow national jane wells appreciation day? >> it -- you know what? tomorrow the truth is tomorrow is my birthday and i am going to start a hashtag right now. #nationaljanewells day. >> that's why i said that. do you think i made that up? >> how did you know that? >> what do you mean? i'm paid to know these things. >> you're a genius. you know whose birthday? you won't believe whose birthday it is tomorrow and we were born the same year -- ron insana. we're the same exact age. >> well, yeah. you are a spring chicken, young lady. >> thank you. >> you're welcome. most people don't like to be called a chicken, yeah, i know. believe me. i heard national turkey neck day, i got mad about that. didn't you have that on there. >> that was turkey neck soup day. >> i'm gaining weight and it's

going away. when we return -- it's like my own restylane. i got my own filler. jim cramer from the new york stock exchange. later today, a cnbc exclusive with former lehman brother's cag in. she leaned in too far. someone talk to cheryl. >> it's a great book. the generously appointed es and the new, eight-passenger lx. ♪ this is the pursuit of perfection.

let's get down to the new york stock exchange with jim cramer. i was talking about you're ler. i was talking about yellenyelle. you thought there was no reason to rock the boat. >> right. i alps think she said they were talking and they deemt represent the fed. that's fine. we've been looking for that. we've been looking for some statement that foreign markets really matter, the commodities really matter. something about the general overall weakness that can happen. she seems to be the only person we recognize that, and they

crushed everything. some people come on the air and say, hey, listen, we need rate hikes to show the economy is strong and others say rate hikes are good for the stockmarket. you know, these people are funny. they're funny. i don't know. i tohought about it for a coupl of days to try to think how to put it. they're funny. not comedic, just funny. >> we had a lot of back-and-forth today. i don't know. >> we have a fed chief, you know? she's pretty good and she's running the show. it's like connecting the dots. love those other guys. they have nothing to do with what she has to say. they should listen to her. she's very valuable. >> we know about that at home. >> she's very valuable. i find the chief knows a lot more -- i'll reserve that. >> you've made that joke before. we're familiar with that.

we'll have more "squawk" and then "squawk on the street." er , our clients have relied on us to bring our best thinking to their investments so in a variety of market conditions... you can feel confident... ...in our experience. call a t. rowe price retirement specialist or your advisor ...to see how we can help make the most of your retirement savings. t. rowe price. invest with confidence.

band a parade rained onr the sales team's parade. and they still made the meeting, without actually going to the meeting. before any of this, cdw orchestrated a mobility solution, using the hp elite x2 1012 with intel core m vpro processors. mobility by hp. orchestration by cdw. which allergyeees. bees?

eese. trees? eese. xerox helps hospitals use electronic health records so doctors provide more personalized care. cheese? cheese! patient care can work better. with xerox. that's it. how was your commute? good. yours? good. xerox real time analytics make transit systems run more smoothly... and morning chitchat... less interesting. transportation can work better. with xerox. let's get a final word from the optimist. what you do need to do. >> i'm optimistic in the following sense. we always seem to find our way

out of serious messes, and we'll see what we do here. i'm not going to setting with 2% growth. we need to get going on taxes, trade, regulation, and budget, and in particular the inequality thing means the bottom half of our income. >> thank you, ed lazear. we'll see you tomorrow. "squawk on the street" starts right now. all right. good morning and welcome to "squawk on the street." i'm brian sullivan with jim cramer as always from the new york stock exchange. both carl and david are off today. you're stuff with me, world. let's look at the futures. we've had a solid day. we're told this stat, if we finish where we are now or a little higher, it will be one of the best months. there's been only two better