expansion. i don't think that means stocks can't go up. it's just going to be choppy. be careful. you have to manage the volatility. >> that was 20 seconds. >> wisconsin race will be interesting. new polls show it's a tighter race, even though trump has had a terrible two weeks. the republican party is using ted cruz as a battering ram to damage donald trump and get paul ryan as the candidate. >> thank you both. >> ain't going to happen. >> join us on monday. right now, time for "squawk on the street." good morning. welcome to "squawk on the street," it is april 1st. no fooling, i'm brian sullivan, he is jim cramer. carl and david are off today. your friday road map starts with what else? that big jobs number. the march jobs number coming in a bit better than the consensus forecast. the government says we added 215,000 jobs last month. unemployment rate ticking up a notch to 5%. futures not liking it. the dow is down about 100 points. more on the jobs and your money

in a moment. also if the headlines, china's anbang withdrawing its $14 billion bid for starwood hotels. that means starwood will be owned by marriott. we'll talk about what is next. and an interesting story around the mysterious anbang. tesla shares higher this morning. elon musk unveiling the new model 3 in los angeles last flight. he says preorders are already red hot. welcome. good to be back with you. lots to do today. we have to start with the markets, all of the viewers and listeners following that jobs number. not a great number, pretty good number. stock market doesn't like it. >> the market is torn. i think the most important thing left out of all the discussion, new york and california raising the minimum wage big. that's how wages go up now. it just shows you you have to push them up. the supply of labor force is so big, in part because of digitization. ge talks about it. in part because of the loss of

manufacturing. these jobs are not high-paying jobs, unless you have a minimum wage to lift them. that is not a healthy thing. but at the same time, look, the markets had a big run. this is a number that is far less important than usual. because janet yellen told you don't look at it. i don't know. markets had a big run, something we have to the talked about in days. oil down 10%. >> thank you. >> oil is key. >> i know the jobs number will get so much of the attention. it should. it's important. >> yes. >> but when i look at the market -- i'm just talking about the market itself. >> right. >> not politicizing anything. oil has had a crap week. is that a technical term? >> the saudis -- we were talking about that. i think it's important. once again, reiterating that the pact, the soft pact that was -- hey, listen, maybe we'll pump mo more -- that's off. there is no more opec. >> you pointed out that apple

traces the chinese stock market almost perfectly. do you believe oil and our stock market will continue to track? if so, they're starting to diverge. >> we have to watch the dollar. if the dollar goes weak, obviously we have to -- oil purchased in dollars. that does matter. but what i keep thinking about, we'll go back into a world where weaker oil means people think the economy is too weak. i don't necessarily correlate that. there's so much supply. we have to live with the stock market that pays more attention to oil than we do. that's a mistake. we have to focus on oil more. >> the price of crude oil down 3.5%. down 6.2% for the week. they talked about this output freeze, they wouldn't cut production but hold it where it was in january. saudi arabia has come out and suggested they are unlikely to participate in a freeze unless iran does. i can tell you from my reporting, iran is highly unlikely do that. america's welcoming them back into the economic fold. they need the cash flow.

>> yes. 77 million people. they have to rebuild their infrastructu infrastructure. from 26 last week in january and february period, the whole increase was short squeeze, guys covering, and the idea that there could be some sort of deal, russian, saudi, coming up in april. even though i never thought there was -- you never thought there was -- oil will slip. we'll have to start focusing on that as a reason why we go down. >> you referenced april. for viewers and listeners that may not be familiar with oil ministers schedules, on april 17th there's a big meeting of all the oil ministers, a minor opec meeting. not official. april 17th, qatar. if you care about oil, that -- circle that with a red sharpie. >> so right. the market has been creeping up because somebody thought something substantive would happen. these saudi comments are no, no, we're pumping because the iranians are pumping.

united states, we're not even exporting oil. nobody needs oil. let's go back and put it front and center. it's either yellen or oil. yellen or oil. the dollar in between. that is determining stock prices. >> as the great sara eisen knows, i do not like to talk about currencies so much because they're so liquid, so big, so much going on. today we'll have to because the dollar, 114 and change on the euro, as ben willis walked by and told us, the dollar is doing some funky things. >> the raw costs of the international companies is so good now. you will get numbers number on raw costs. numbers up because dollar is weaker. people will say unless oil stabilizes it doesn't matter because it means we're going into a decline. i heard guys debate on area yesterday, what are the chances of recession in the next two years? i was like you don't know. when oil comes down, copper

comes down, aluminum comes down. iron comes down. these were the reasons why -- why people said we don't have to worry about recession. >> you don't need an expert. i know the answer to your question. the odds of another recession are 100%. >> because that's what happens. >> i don't know when. could be 25 years from now. but the odds are 100%. >> we need oil and digitization. i keep thinking about the internet, how it keeps costs down. the manufacturing decline. but the health workers and service, they cannot be digitized. you need people who work at the counter of heome depot. >> i did something which is completely unacceptable these days. i tweeted out something positive about the u.s. economy me. >> are you out of your mind? are you out of your mind? >> it's not cool to be optimistic, but when we talk about -- everybody talks about

wages. i get that. here's the best -- >> i'm blocking you. >> cramer blocked -- i don't know if you follow me. average hourly earnings did tick up. 73 months in a row of jobs gains. construction jobs up 301,000 year over year. >> marginal workers, discouraged workers down big. >> part-time workers. but they say no big increase. the shift economy, the uber economy, guys working five hours here, seven hours there, two hours here, healthcare costs going up. rents going up. this number makes it so we're kind of okay. >> i agree. listen, you can always take any number and find negatives. what do jobs pay? job growth in 36 states, somebody could come out and say that means the other 14 states did not have job growth. agreed. all i'm trying to point out, there's no denying the trend of things has been better for four or five years. >> i agree. >> the market has gone up.

it's doubled off our march 2009 lows. i just wonder now what the next thing is going to be. >> i would say we've had a very big run. look, think about the turn, the pivot from february ' ''10 february '11. the best in 83 years. now we'll rest. we'll rest until we get quarters. >> on the seventh year the market rested. >> i always liked biblical. the w chain of hotels and westin will now be owned by marriott. marriott winning the bidding for starwood after china's anbang withdrew its $14 billion offer after initially coming in over marriott, forcing marriott to raise their bid. marriott's ceo, arne sorensen was on "squawk box" this morning talking about having to pay more for starwood due to the bidding

war with anbang. >> we would love to have this company for a billion dollars less. but they were real with their first bid. they came in at $78 share, 10% 11% 12% more than the deal we had on the table. fully financed, fully credible, essentially no conditions. we got a notice from starwood that we were out. >> there you go starwood would no longer be, assuming the deal closes, marriott gets bigger. your thoughts? >> anbang's a communist chinese company. >> don't get me started on anbang. >> they play with any money they want. i think they got too high profile. i think the communist chinese starting to get worried they're being talked about too much. when i say all that, why? the excuse was "due to various market considerations." i mean, the hotel business is doing better. we saw that from the unemployment members. biotech, trying to become public? that's nonsense. they just feel like they have become too high profile. >> i've been semi not critical,

because that's not my gig, but who is anbang? anbang started 12 years ago as 60 million in assets, insuring cars and car companies. they now have a purported 250 billion 12 years later they did a billion dollar deal for a u.s. insurance company last year. they bought the waldorfs astori. eunice yoon said something interesting about anbang this morning. everybody was focused on the deal and she casually mentioned this. i e-mailed her and said is this what you said. anbang, a giant corporation. she had placed multiple calls to the company seeking comment. it's not that she didn't get a comment. nobody picked up the phone. wait a minute, nobody picked up the phone. >> no voicemail? >> nobody picked up the phone at

a gigantic -- >> i've done a lot of work behind the scenes on who anbang is. the way this deal came about was some people went back to the chinese communists and said, look, these guys are stealing it. could you please raise your bid? the chinese communists -- they are communists, they control every aspect of the economy. we treat them as if they are somewhat capitalistic. the chinese communists said we'll take it. >> you're not opining. the guy who started anbang and runs it is married to the former premie premie premie premiere ping. >> he's part of the gang. the chinese communists don't play by the rules. they didn't have a board of directors meeting. there's no activist meeting. starwood has no anbang. >> they may turn out to be the greatest company in the world. all i'm saying to anbang is this, if someone calls, answer

the phones. >> anbang is bigger than ackman. >> my mind is blown. that's why valeant has another hard day. >> tesla getting a boost. they introduced their model 3 last night. stick around. >> i'm in line right now for a tesla. this is a simulation you're looking at. i'm in line at a tesla store. >> we'll take a short break. back with more that is the hologram, jim cramer. mfs. that's the power of active management. 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. so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

well, jobs not the only big piece of information that matters to you and your money today. big auto sales numbers set to roll out. ford releasing its numbers for march. phil lebeau has those numbers. >> march sales a little lighter than expected for ford. coming in at an increase of 8%. the edmonds.com expectation was an increase of 9.1%. one again sales driven by trucks and suvs, up 11% for truck sales. up 13% for utility sales. suvs, crossovers, et cetera. what's interesting to see, we don't know it from this release, we'll find out from the sales call later on, what percentage

of sales were to fleet companies. daily rental, corporations, et cetera those are the lower quality sales. retail sales were high in february. let's see what they turn out to be in march. ford, an increase of 8%. shy of the expectation of an increase of 9.1%. >> we can't let you go without talking about tesla. i don't know if you slept because they had the rollout in l.a. of the new model 3. the stock is up 17% in the model 3. elon musk saying preorders were spectacular. >> incredible. 150,000 people, at least 150,000 people worldwide have given tesla $1,000 and said hold a place in line for me when you start delivering the model 3. guys, brian, you know this from the auto industry, it's not uncommon when a new model comes out to raise their hand and say i'm interested in the new

mustang or camaro. it's another thing for people to say here's $1,000. you hang on to this for a couple years. i don't care what industry you're in, that's unusual. that speaks to the power of the tesla brand and the anticipation of the model 3. the base will start out at 35,000. we know model also sell for 55,000, 65,000. >> i love the point, people are putting down the cash. what is the manufacturing capability going to be? if i'm number 115,000 in line, when would i get my car? >> you're not getting it until 2019. let's be honest. they'll start deliveries at the end of next year and slowly ramp up production. i would expect, if you're number 150,000 right now and you're putting in an order, you won't see that until at least 2019. that's my expectation. >> phil, how much of ford decline could be because the stock market? i only say that because when i talk to mark fields the

beginning of february, he was saying there is a kind of depression, you know, mentality. some of it was the stock market. i'm wondering what he was worried about is guys like us being a little down. political environment being down. he was saying that housing is good. employment is good. those are usually the controlling factors. and consumer confidence. nothing is a better indicator of auto sales than consumer confidence. while, yes, it dips occasionally, generally speaking it's strong right now. that's why we're seeing strong auto sales. by the way, jim, for the month of march, the expectation is a sales pace of 17.2 million, 17.3 million. decent, not super strong, but decent. >> look, this is not the problem with the economy. i just -- it does explain ford's stock has been stuck. it's up a bit. these stocks are just saying. this is an okay business. people are not buying cars the way they used to when they're

20, 21, 22. is it a lift uber situation? is that the tipping point? >> i think that's part of it there's also an aspect of people saying when do we seek consolidation in the industry? when will that happen? you and i know it won't happen soon, but that's the next big catalyst. >> you're on the story, thank you very much. >> you bet. all right. up next, jim's mad dash. we'll count you down to the opening bell. futures indicating a decline to start april, despite a jobs number coming in a bit better than expected. more "squawk on the street" from the nyse's post nine straight ahead.

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time for jim's mad dash. let's talk tacos and washing machines. >> not jarring stories today about chipotle. goldman, which has been supportive the whole way goes bias to neutral. they say risks are mounting. worried about concerns, higher expenses. can't put the bad news behind them. webbush, hold to sell. >> you have a double downgrade on chipotle today. >> yeah. i still think between 450 and 400 you can buy it i believe the brand comes back. that's what i've been saying. the company seems to have bought a lot of stock at 400. i'm not giving up but the analysts are. that's important. here's one they're starting to warm up to. bank of america does a terrific job on whirlpool. they raise the price target. here's something people should be thinking about. the real --

>> the brazilian currency. >> has had a big move. whirlpool never left latin america. >> huge in brazil. number one or number two. >> they are. this is about the idea, north american appliance very good. no more dumping. consolidation in the i industry. brazil turning around, home going up. home depot, look at those labor number numbers. >> has this been a latin america trade? >> yes, it has been. i like this. it trades harshly. so people don't go crazy on the call. they don't report for a while. but i've got to tell you, i like this the real has been a hidden story. the comeback of the real has destroyed a lot of hedge funds that were betting endlessly against brazil. >> yesterday you said if you own apple or think about owning apple, watch the chinese stock market. if you own whirlpool or think about owning it, watch brazil

and their currency. >> in 1982 i owned whirlpool when it used to trade for myself. i owned it and i had no idea how bad brazil could hurt whirlpool. i'm telling you, people have no idea how great brazil can be. >> this is the brazil -- >> i got crushed in '82. u.s. was doing good. post reagan. brazil was falling apart. brazil is doing much better. the currency trades good. >> mad dash, chipotle double downgrade, decent news for whirlpool. we're back from post nine with the opening bell. looks like a down open. just jason furman coming on. we'll be back after this.

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all right. getting set to count you down to the opening bell. 2 1/2 minutes. are indicating a

open. we have people from calabasas, it's really malibu. fancy town. hello, los angeles. >> i have to tell you, tesla is the story of the morning. >> tesla? >> tesla. i'll tell you why. this is the stock that's impossible to value. we are now valuing a company based on lines. based on lines. when is the last time that happened? apple iphones. tesla will be -- i don't know how to value the thing, but it's a loved, loved, loved car. >> it is i don't know if it's still true. i did an analysis last year, everybody picked holes in it, it's not real analysis. it was never meant to be real analysis, i was trying to make a point that tesla is valuing every car sold at $1 million. >> how much do they lose per car? >> gm, it would be $30,000 value per car. >> they make money. >> it's rudimentary fun stuff. tesla is over $1 million per car. >> and they lose per -- what do

they lose per car? it's an amaze statistic. >> you've said this a billion times. it needs to be said over and over again. i love the cars. i love what elon musk is doing. you can love the company. because you love a product doesn't mean you have to love the stock. >> that's right. it's the only stock i'm watching that's up. the rest of the stocks are valued like traditional stocks. i feel like if you're in the car business, you hate tesla like the retailers hate amazon. >> they hate tesla because of the selling model it puts the dealership model at risk. i wanted this on twitter last night, if the model 3 will reduce the value of the margin s. >> i would like to know used car sales. that could be a telling number. >> you can tell by the clapping it's time for the opening bell. we do it every opening day.

there's your opening bell. there's your nasdaq on the right. at the big board, verizon communications and united war veterans council highlighting vietnam veterans day. thank you to all veterans, including my dad, u.s. navy, 1960, 1969. over at the nasdaq, viewray celebrating its recent listing. >> i'm going down to the fantastic national world war ii museum next friday to see my father's brick. everybody should know this. if you have a veteran -- my father received a bronze star. it says ken cramer, bronze star. i'm going to see it unveiled. >> new orleans. >> yes, road to tokyo just opened. go find out about your parents. they have my father's unit the whole way going to kyoto. >> that's awesome. >> i cannot wait. great museum. >> if any viewers or listeners out there were on the uss james

c. owens in the '60s, please reach out. i'm sure he would love to reconnect. general motors march results are out. let's go back to phil lebeau. >> general motors like ford coming in less than expected for march sales. increase of 0.9% for march. the edmonds.com was an increase of 1.8% from general motors. so gm and ford coming in shy of expectations. it sets up the question of whether or not we see the sales pace which we will find out late their afternoon for the month of march, whether it will be substantially higher than 17 million. gm says it expects the monthly sales pace to be 17.1 million. i mentioned earlier that many analysts say they expect it to be 17.2, 17.3. let's see if it's closer to 17. >> all right. phil lebeau on gm. ford and gm maybe just a bit

disappointing. this will bring out the we're doomed voices. >> i know. i have to go back to your tweet. look, jobs are okay. cars are a little short. stock market moved a lot. earnings coming up. we're in a consolidation period, what can i say? no freakout consolidation. >> may be a good time to reset. if you're at home and looking at your portfolio, looking at your investments, 401(k), mutual fund, etfs, a good time -- like to the having a lot of volatility is not always a bad thing is my point. i agree with that. the stock that's most interesting to me now, marriott. marriott gets the great -- they get the great starwood. but the chinese made them pay up so much. i mean -- >> you think they overpaid? you wonder if they overpaid. >> yeah, chinese made them overpay. wow. capitalism -- communism one, capitalism zero. >> as critical as i have been of

anbang, you have to believe the offer is real. if they make an offer of 78, they accept it, you have to pay it. >> what a card game. >> anbang does a lot of things. some of their products offer a 6% annual return. 6% in this day and age? that's good. >> never bid with a company named anbang. >> how do you get a 6% return in this market? you mandate it. >> can we talk about marvell technologies? >> not until we get the financials. >> when we doing that. >> i don't know. ask valeant. >> you made a point last night on the twitter machine which was basically -- we're not talking about marvel, the movie company, but marvell, delaying the release of the financials. you made a brief point, which i think said a lot. accounting delays or issues means don't buy the stock. >> valeant down about 125 points because we don't have the

financials. all the way down people reiterated the buy until they had to suspend. when you don't have films, you cannot make a judgment. people at home, as soon as you see there's no financials, you have to sole. we don't know what the company is worth. we don't. what's the real cash flow? what's in the bank? that's why valeant always opens up and then people realize i don't know what it's worth. >> we talked about it the other day. you are -- you're guessing at what will come out. >> right. >> they could marvell or valeant could come out with almost no change to their financials. >> some people think it's trading at one times earnings. two times earnings. >> they're guessing. >> you're not guessing if you don't buy johnson & johnson. triple a balance sheet, 18 billion in cash. >> you love johnson & johnson. >> has anyone ever got hurt

recommending j & j? i've been recommending it since 1983. >> back when it only had one j. >> when bosh johnson was in there. >> the labor department reporting that 215,000 jobs were added in march, but the unemployment number ticked up to 5%. joining us with the first reaction, jason furman, chair of council of economic advisers. jason, this election seems to be about how bad job growth is. job growth is good. how do you change the narrative? how do you make it so people don't keep talking about how bad job growth is. >> you're right, job growth is good, 73 straight months of our businesses adding jobs. this month in total, 215,000 jobs. the participation rate is phenomenal. this is the fastest growth we've

seen over a six-month period since 1992. wages are above expectations. this is what you want to see in a report. we're getting reports like this every month, month after month after month. >> jason, what's behind the very big growth in service? particularly hospitality? again that would signify that people are more optimistic. going out more. taking trips more. what's behind that optimism? given, again, the back drop of politics saying that america's awful? >> yeah. i think people -- if you look at consumer surveys, consumers are optimistic. consumers are spending money. consumers are seeing faster wage increases than they've seen earlier in the recovery. we're not all the way there yet. people have had difficulties with wages for decades now. a lot of reasons to want more from the economy. the president wants more.

things are getting better. >> why to jim's point is every candidate of any political party saying everything is terrible and getting worse. the data suggests everything is kind of okay and slowly getting better. why the disconnect? >> i'm not one of the ones running for president. i'll tell you what i think of the data and how i read the data you see people right now are also unpleased with the preside pleased with the presidt and the work he's done. you see that vote of confidence in the economy. the link between policies. not a lot of it is policy, a lot of things contributed to where we are today. >> jason, when you see only moderate plus -- 0.3% wage growth, do you think that's because of the digitized economy? is that because of how easy it is to off-shore jobs? we have two states that are

taking minimum wage big. california and new york. it's like the only place where they get big wage increases is when it's mandated by the government. is that something to be concerned about? if we got 0.3% a month, we would get 3.5, 4% a year. at this inflation rate we would be happy with that. the key is making sure we continue to see these types of wage numbers going forward. we've seen a trend of increasing inequality since 1980. that trend is still with us. it's caused by a lot of didn't factors, technology, globalization, the erosion of the minimum wage. all of those have played a role. it's why we need more productivity groewth, raising te

minimum wage. >> productivity has come up, and many take the word productivity to mean a computer steals somebody's job. four guys get fired so a robot can come in. >> we've had enormous productivity growth over the course of our economic development. most people who want jobs have jobs. productivity creates new jobs. it creates new higher paying jobs. it can create some challenges and dislocations, it's important to take those seriously. people with more education have done a much better job coping with those and making sure they land in better jobs. like the president's proposed two free years of community college could make sure people are benefitting from that productivity growth. productivity growth is great. we need more of it. we need to make sure it works

for people and they can prosper. >> jason, thank you very much for coming on. always easier to see you on a number that does brighten the faces. thank you very much, jason furman. >> thank you. >> productivity has become kind of a bad word. honestly. >> look, i -- i will go back to something you said at the beginning. you tweeted that this was a good number. and, look, i've been here when it's bad. when it's bad, it's very contentious. there's not a lot to be contentious about visits the political backdrop which would seem that everything is awful. it's not. yes, i actually want to see higher wage growth away from minimum wage. >> nobody -- there's a lot of problems. you can always find holes in the economy. wages need to go up. the middle class, in the middle part of the united states. i own a home in wisconsin. i spend a lot of time in wisconsin. it's struggling there. that's why it matters so much to the election. >> that's true. i like to see construction up. rents are up. not a lot of cheap homes.

1.5 milli$1.5 million in the ba. >> a joke. >> healthcare costs are up for the middle class because the affordability act has hurt a particular group of people. gasoline does not offset that. when you get that small wage growth, people are still getting squeezed. a lot of people are angry. >> my only point was that things are better than five years ago. >> thank you. >> that's it. >> we need the stock market to go higher. >> bob pisani is on the floor with more -- where are you in this mob? a lot of people here today. >> they are i tend to stay away. >> sharp elbow pisani. >> wonderful education as people ring the bell and come down and talk to the designated marketmakers. learn how the markets work. a lot of fun, but i'm off to the side here. what we've got today is great general report from the non-farm payrolls. decent headline number, no major revisions. we do have one problem, that's moving the market, that's the strong dollar.

look at the sectors here today. the three sectors most sensitive to the dollar, energy, industrials and materials, because their commodity influences on them are all the three weakest. you can see what stronger dollar did. that came in on the non-farm payrolls report. energy is the weakest sector here. we have a double whammy with oil today. first we have the strength in the dollar and the saudi arabians coming out saying they would only freeze output if iran and others would freeze output. that's been affecting oil. then you throw in the strong dollar, you see what you have. fairly high beta energy stocks. the whole energy complex down roughly 3%. same with materials. another group that moves in line with the dollar often. global demand. on days like today, it moves along with the dollar. there are the mosaic's, alcoa,

freeport. the weaker dollar we've seen has been good for emerging markets. there's the eem, the largest emerging market etf. a terrific quarter overall, outperforming. it's down today. that response directly in response to the stronger dollar. >> simple metric to use, look at autos. bmw and daimler are high beta stocks. if there's a risk on or risk off, will you see that immediately in how autos react. you can see they're down today. you can see how oil has reacted, total and eni, two of the highest beta stocks in oil in europe, they're sensitive to the price of oil. they'll move quick limit you can see those two stocks. oil and autos to the downside. while yields are remaining low, the country still has a love affair with utility stocks.

that i don't expect to change. you can see we're at new highs. these are new highs on a down day in all the classic names, your duke's, pg&e, american let trick, ameren, they love these stocks because there's no place to get any decent yields. yields are 3% to 4%. finally april is usually an up month, has been for a long time. interestingly so is the first trading day of the month usually. not at the moment. we asked our friends at kenshow to look at that. it's up 66% of the time, and the average gain is 0.21%. right now dow down 106 points, sitting essentially at the lows for the day. we'll give you more update as we progress throughout the day. >> thanks, bob. oil at the lows of the session, 36.78. breaking news now on anbang. we were talking about that earlier.

remember, anbang told the market that it pulled out of the starwood deal because of "market considerations." now headlines are crossing from the financial times citing sources that anbang pulled out of the starwood bidding war because the chairman of anbang, who is the grandson in law of the former premiere of china, his wings were "clipped" by regulators. that the problem with the deal was regulatory and that anbang failed to demonstrate it had the financing in place to back up the all cash offer. and that a well-respected magazine reported the chinese insurance commission planned to block the deal. so, anbang saying we're bidding up. no, we're out. market considerations. we've been -- i've been -- not critical but questioning anbang's growth. apparently some chinese regulators are also concerned and wondered if anbang, jim, actually had the money.

>> i think the chinese got way too public here. it feels like unical when they got too public. they have to be under the radar screen because of the political environment. in some ways they don't want trump. they don't want trump. this could be about trump. >> you bring that up. a blast from the past, unical was going to be bought by the chinese, the u.s. government put a kibosh on that because of top secret stuff. that was like 15 years ago. >> chinese don't want to be public, not in an election year. >> i'm sure more report willing go out. i go back to eunice yoon telling the guys on "squawk box" saying she made multiple calls to anbang. >> any chance she had the wrong number? >> no, multiple calls, the main number, nobody picked up the phone. rick santelli in the bond markets, rick. >> jason furman was on talking

about the jobs report. cramer had a great question, why is everybody in the political sphere talking like the economy isn't great? his answer is politics. have him ask janet yellen. if the economy was great, they would be raising rates, wouldn't they? if the fed had confidence that the economy and the jobs report were as good as advertised, would we be in our seventh year of virtually zero? that's the question. let's see how that political sphere reacts with janet yellen. let's look at a one and two-day of twos. this is a number looked at via the fed with regard to the marketplace. on the intradays of twos, it popped. on the two days, it's firmer. the curve is now flattening, but steep most of the week. if you look at a one and two-day of 30s, you see what i mean. look how much mlower those chars

are the dollar went with the near-term. the reason the two-year popped, this data makes it more cloudy. not too weak, not too strong, it keeps the fed in play, but we don't know what in play is. maybe the best thing that summarizes the week is the part of the curve that's the most stubborn. anything with the fives, 30 minus 5s seven basis points steeper on the week. that's part of the dynamic the market is grappling with. sully, it's all yours. >> rick santelli, thank you. i will pick up the phone for you as well. some stocks going up here, like general mills going up. netflix. some of the stocks that are like grow no matter what the environment is. >> can we talk about regeneron? >> dermatological. >> ceos of john deere, u.s.

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very good morning to you. welcome back to "squawk box." friday morning on cnbc. i'm simon hobbs with sara eisen and mike stantoli. market down about 80 points on the dow at the moment.

a lot of that has to do with oil trading at $36.87. >> more breaking economic data. let's get over to rick santelli with that news. >> sara, ism, the march read, 51.8. better than expected. on expectations 49.5. unrevised. 51.8 is the best headline number since july of last year, when it was 51.9. let's look at the february read for construction spending. that is not a good number. 0.5 down. it equates to tieing what we had in november. you have to go all the way back to june of 2014 to find a bigger number down 0.7. what's looked at the most, university of michigan sentiment, a final read for march at 91 that compares with the pre -- the mid read at 90. but has to compare with february's final at 91.7.

so sequentially lower. how does 91 stack up? we were at 91.7 the last month. i have some more nitty gritty. ism manufacturing report, the employment was 48.1. that's 0.4 lower than what we were last look. we already had what looks to be a porridge perfect to many jobs report. sara, it's all yours. >> rick, i want to highlight the fact that the manufacturing index is above 50 for the first time in seven months. so we have on the data we have manufacturing expanding for the first time in seven months. >> no. that is good news, simon. of course the big story has been whether manufacturing was recessionary or not. we know the service sector is firing much stronger. >> rick, thank you. rick santelli with better manufacturing data, better jobs report on the headline number.

215,000 jobs added during the month of march. the unemployment rate remaining flat, 5%, ticking up a bit thanks to higher participation. joining us now to discuss it, steve liesman and david kelly, chief global strategist at jpmorgan funds. the dow is down 77 points, yield is lower. is this all about oil today? >> it shouldn't be. the -- these are good numbers for the economy what we've got is slow non-inflationary growth but steady growth. this ism number confirms stuff we've seen all over the world the last 24 hours with good and better manufacturing numbers coming out of europe and asia. global manufacturing after a weak spot in february has picked up in march. meanwhile the employment report says we have more labor force participation so we can grow at a steady pace for longer without

igniting inflation. this is a good set of report force reports for equity markets. >> let's pick up on the manufacturing point. >> yeah. >> it was a good number, back in expansion. best since last july. during the month of march manufacturing sector lost 29,000 jobs. 18,000 in february. i wonder if that is starting to bottom. >> sara, i wish i was wearing a hat so i could tip it to simon hobbs. he was absolutely right to make that point as you just did. these manufacturing numbers and the ism are quite strong. the production number went up to 55. and the backlog also increased. you did have a decline in the employment numbers, but it could be with this rising backlog and rising production, that what you're seeing in the jobs number is the old story and maybe they cut back a little far. i want to read you some of the commentary that is in this report. unemployment rate is low in our

county, we're understaffed, running lots of overtime. business in telecom is booming says a chemical products person. fiber plant is at capacity. capital equipment sales are steady. requests for new equipment is very strong. the tenor of this report belies the headline number and some of the internals. the construction spending, we forgot to report an upward revision from last half, so this falloff is about even. still strong construction. i'm seeing a bit of a feel of stronger growth today than i did yesterday with the strong jobs report, decent construction numbers and perhaps -- perhaps a rebound from the lows in manufacturing here. it's very significant as simon suggted. >> it all sounds good. we have two manufacturing ceos coming up later. david, let me ask you this, that growth foundation, whether you look at it in jobs or manufacturing now, enough to get

corporate profit growth back? >> yeah, i think it should be. but we're just going to have to wait. there's a lot of noise in the corporate profit picture. it's been held down by the actions of the dollar and oil prices last year. despite oil falling off a bit today, it's still does seem to have stabilized and is gradually going to move up. the dollar, of course, has been moving down. by the second half of this year, we should see much better year over year numbers in corporate profits. i don't think profit also boom but they will fully recover. markets may want to wait for that. we will get that profit recovery unless the u.s. economy falters. as steve said, nothing in the numbers suggests the u.s. economy is faltering. >> one thing the market has not wait ford is trying to sniff out a revival in the u.s. economy. january 25th, 3m had a good profit report. earlier this week you had

analysts saying maybe we're turning the corner on manufacturing. have they priced in this is the economy we thought we had four months ago environment. >> i think we have repriced that in. we had a moment of weakness and doubt in january and february where we said let's look at high yield spreads and oh, the u.s. may be headed for recession. nothing suggested that. i think this has been a recovery from an unwarranted collapse in the market earlier on this year. >> it's interesting to see the market coming back. there's been a lot of talk about the influence of oil. the influence of the dollar. all of these sort of internal financial matinations. we have more people working, a rebound in manufacturing. the one big negative, i just did a calculation, we lost 70% of the 233,000 oil and gas and mining support jobs that we gained since november 2009.

if you got stability in that, i'm not saying you are because i can't predict the oil price, but if that were to stop subtracting from job growth, you could be doing much stronger job growth. plus you have very strong retail job growth which belies what's going on with the retail data. >> another 48,000 jobs added in retail in march. not bad. guys, we'll leave it there. steve, we'll talk productivity another time. another problem people are bemoaning. steve liesman, thank you, david kelly, thank you. in corporate news, marriott shares are trading down eroding the effective value of its stock and cash offer for starwood to about $75 a share. that's in addition to the existing almost $6 from the timeshare spinoff. the higher, 82.75 all cash offer from the chinese, of course, collapsing last night. the ceo of marriott putting a brave face on the fact that countering the first bid from the anbang consortium still

caused him to raise his offer by $1 billion in order to win. >> we would love to have this company for a billion dollars less. no doubt about that. but they were real with their first bid. they came in at $78 a share, which was 10% 11%, 12% more than the deal we had on the table. fully financed, fully credible. essentially no conditions. we got a notice from starwood we were out. >> arne sorensen speaking on "squawk box." eunice yoon have from beijing. why did the anbang offer collapse in this way? >> it was really a surprise. we heard that anbang had pulled out. anbang had really caught everybody off guard because it really looked as though anbang was getting closer to clinching this deal and then pulled out.

late yesterday the company said it made a decision because of various market considerations. and during the day in china we got a little bit more insight. one of the funding partners, a private equity company called primavera said the reason why anbang pulled out is because it didn't want to get caught in a long drawn out battle. it said anbang is strong financially and has enough funding in order to fund an acquisition of this size. at the same time it has got to be at the right terms and at the right price. now, there have been longstanding concerns among share holders and investors about anbang's ability to fund this deal. the chairman of anbang spoke to the chinese press in a rare interview this week. basically saying that the company has in excess of 1 trillion renminbi. many are concerned about the murky financial structure that

the company has. also one of the concerns that people have is that this is a very well -- politically well connected company. the chairman of the company is married to the granddaughter of the late leader, and even so regulators could come into play. i don't mean the regulators in the united states, but the ones in china. foreign investment for chinese insurers is limited to 15% of total assets. just to give you a sense of how murky this company is. we called the company several times today, all day. multiple calls, no one answered the phone. >> frankly, if you've trying to get through to the starwood press office the last several months, it's not a dissimilar condition. a lot of questions as to why it failed. you have this report that maybe local regulators didn't want it to go forward. reuters suggesting they didn't want a protracted battle.

financing wasn't in place. >> i'm interested in this combination, marriott/starwood, 1.1 million rooms around the world. good for marriott. will it be good for consumers? that's a powerful combination. >> i don't know that it -- for consumers, i think what's most interesting is the degree in which they can use the loyalty schemes. arne was saying this this morning. the power of the loyalty schemes run in parallel. that is the edge that hotel brands now have. the reason to be a highway tell brand is the loyalty scheme. because of the way you can market like the online travel agencies would do or like goioge is doing. they're following what the airlines have done. there's been priceline and everybody else who can have people priced against each other. the loyalty is that much more important. 1.1 million rooms in a global hotel industry --

>> sounds like a lot. >> isn't it number one? that makes it number one. >> it will be. up next, an exclusive interview with the ceo of deer. we'll get his take on the state of manufacturing in the u.s. whether he's seeing a bottom and how we stack up to the rest of the world.

breaking news within the last 15 minutes. manufacturing in this country expanding for the first time in seven months. the ism manufacturing index

rising above 50 to 51.8 after separate news that the economy added 215,000 jobs in march according to the employment report. here exclusively to assess the state of the economy is sam allen, ceo of deer, joining us from the council on competitiveness in washington. welcome back to the program. >> thank you. good to be back with you. >> how do you see the state of the economy? is it improving in your neck of the woods? >> well, overall, yes. the economy is improving. i think we would say it's -- there's two pieces to it. the industrial part is certainly not improving. it's much more challenged. the consumer-facing parts of it, like our turf business, we are seeing improvement. >> so, we are faced today on financial markets with an ism manufacturing figure that's strong. it's the strongest for seven months. it indicates expansion.

you are challenging that from your point of view? >> no. i would -- we just came out with the council on competitiveness, deloitte and touche survey of america's competitiveness. in it it shows that ceos believe the u.s. has become more competitive today. and as we look out towards 2020 we will be more competitive vis-a-vis the major countries. the overall sentiment is that it's improving. however what i would say is that it's not on a very solid footing. it's still tenuous from that standpoint. it wouldn't take much to create a shock that would cause the economy to move backwards. >> we had a very strong rally over the last few weeks which has taken the market above positive for the year. if i look at your stock price, since the scare on china and just before that last august you were about $100.

your stock has not been able to recover from that you are still down 20%, 25%. i wonder therefore whether for you china is still front and center and whether you resolved the problems we were talking about then. >> china is still very much in the forefront. but not so much from a manufacturing standpoint. but rather as the chinese economy, if it would improve some more, that stimulates further demand for commodities. and especially agricultural commodities. that stimulation of demand for agricultural commodities is what would trigger things to improve again for us. our largest business is the ag equipment business. it's very, very tied into the price here in the u.s. for agricultural commodities, specifically corn and soybeans. where we need to see improvement in those prices, changes in the underlying demand for our product. >> sam, it's sara.

i wanted to ask you about something that donald trump said about you. he's a big fan of your company. in his victory speech after the big super tuesday wins, he said this about his plans for the wall he plans to build in mexico he was talking about the great wall of china built 2,000 years ago. they didn't have caterpillar tractors because i only want to use caterpillar, if you want to know the truth, or john deere. so would you help mr. trump build his great wall with mexico? >> well, i would put it this way. if you're asking would i help, the answer is no. would -- if he wants to buy -- or the government wants to buy john deere equipment, we'd love to have that happen. but we're -- it's a free market enterprise. we'll let them buy whoever they believe is the best qualified, best equipment to help them do whatever. >> what about his point on manufacturing? the numbers today show he has a

point when he talks about the loss of manufacturing jobs in america. is the reason because china, mexico and japan are ripping us off? >> i think that would be a little too short of an answer. there's a lot of things that go into our job situation. there's a lot of policies that have very long-term impacts. the more that we can change those policies that are favorable for manufacturing, that clearly is a positive. that's what the council on competitiveness tries to emphasize. i don't think solving this problem is as easy as just saying we are going to have to get a better deal with a country. we're all connected. we're going to have longlasting policies that help reinforce the need and encourage to stimulate the growth in the united states and in manufacturing. >> in fairness to the council on

competitiveness where you are, you mentioned the report earlier, it says in four years this company will overtake china to have the number one spot. a lot of that has to do with technology. for your part, you actually have a lawnmower app that is now available and people can track the mowing of lawns and what their machine is doing. i'm assuming this is not a game changer for you, but does it move -- i was going to say move the needle, and i see the needle moving, but what difference does this make to the business? >> i wouldn't say a lawnmower app would do it but whtchlit. but people are surprised to learn we have 2300 software developers in our company. we're doing a lot to create the technology from a data standpoint that will help us plant every seed in the soil, track it, individually nurture is going forward, which is a key

for growing productivity in the agricultural side. that's all about technology. all about intellectual property protection. and those are things that are very attractive here in the united states. that's why we keep all of that r & d here in the united states. it is the best place for that type of technology and to maintain it and attract the talent to support it. >> good to see you, sir. thank you very much for your time. sam allen joining us there, ceo of deer e. >> when we come back, huge lines and hundreds of thousands of preorders for a car that's more than a year away from production. what the model 3 means for tesla's future after the break.

elon musk unveiling the $35,000 tesla model 3 last night in an effort to push through the mass market. phil lebeau is live in scottsdale, arizona a lot of excitement about this one. >> a lot of excitement. so far 150,000 people have put down a $1,000 deposit in order to buy a model 3. that's before many saw the new

vehicle, which was unveiled last night at tesla's design studio in southern california. here are a couple details we learned. fully charged, the range of the model 3, 215 miles. elon musk says he is fairly confident they will be able to deliver their first models next year. as for the base price, he's sticking with 35,000. >> it will be $35,000. and i want to emphasize that the -- even if you are buying it no options at all this will still be an amazing car. you will not be able to buy a better car for $35,000. >> and you can bet, we will hear that pitch line a lot over the next couple of years. so far tesla has collected more than 150,000 reservations for a mold 3. that's people putting down a refundable deposit to get their

place in line when they start deliveries. the model 3 won't be delivered until late next year. deliveries expected between 80,000 and 90,000 vehicles. as with the ramp up with the model 3, the model x and the model s, it's because of the giga factory which is close to cranking out the battery packs they need to make it happen. >> a combination of high volume with the most advanced technology enables us to make the model 3. it's already operational. >> it is operational it will soon be delivering the battery packs for all these tesla models. tesla shares getting a pop today, up more than 7%. >> phil, people putting down deposits are all around us. thanks, phil. see you later. straight ahead, the ceo of u.s. steel joins for an exclusive interview to talk about the state of american manufacturing. the breaking news this half hour, manufacturering expanding for the first time in seven months.

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syrian people to decide. the brussels airport will reopen tonight. but airport police may strike sunday to protest what they say were lack security measures by authorities. security camera video captured the moment when a car bomb exploded in southeast turkey. today the outlaws kurdistan workers party claimed responsibility. seven people were injured when a harbor cruise boat hit a pier while docking in san diego on thursday. the bow of the vessel was badly damaged. mechanical malfunction is being blamed for the crash. that's the cnbc news update for this hour. sara, back to you. ant to draw your attention to the market. one hour into trading here, we have seen quite a reversal for u.s. stocks. the dow is now positive, just around the unchanged line after being down triple digits earlier in the session. some of the energy and commodity names are still being hit hard after a 3% fall in the price of oil, better economic news

starting with the u.s. jobs report. and that ism manufacturing number, icing on the cake, coming in much better than expected. and back in expansion mode. >> manufacturing is good news good news. it's such a small part of the economy. while strength coming back is good for stocks, it's not enough to push the federal receive in tighter policy. >> i think the jobs number falls into that category, too. good news can be good news, after what janet yellen said this week, she lowered the stakes on what economic data would say. you can take them on face value. the markets had been paying up for an industrial recovery before we got this number. the dow turned around right at the release of the ism yields. >> if you are just joining us, the breaking news this hour is that manufacturing has expanded for the first time in seven months. the ism manufacturing index rising to 51.8 after the economy added 215,000 jobs in march.

coincidentally, during the past month the stock of u.s. steel is up about 73%. still the industry is reeling from the worst crisis for steel ever. but there has been a rush to cover the shorts there which were at beginning of the month at about 45% of the outstanding float. joining us now from the competitiveness council in d.c. is mario longhi, the ceo of u.s. steel. welcome to the program. nice to see you again. >> good morning, simon. >> the temptation is to ask you if your situation is improving. you've obviously decided that ohio, texas and alabama are plants that need to be idled as well, from a low base from a poor start are things getting better? >> well, i think we need to put the whole story into proper perspective. it seems that what we're getting right now is the identification of a bottom.

in our particular market segment we've seen an enormous amount of increase of material that's been imported. the majority of which has been dumped into the country. what we're seeing right now is the beginning of the predetermination of the trade cases that have been filed. the predetermination -- >> have you spoken -- you've spoken on this program before about the way in which they're dumping -- basically off-loading steel at below market prices or below prices, and it took so long that jobs, growth were lost before there was a remedy. the commerce department has moved. how long before it shows up? the tariffs they're talking about are potentially huge here. higher than donald trump's. >> well, very definitely the

commerce department has moved. i think we need to go back and see some of the fundamental change, is that have been implemented to the definition of injury. to the trade laws, which was a consequence of work that our company had with the support of the industry that clarified the way in which injury should be measured. when you deal with countries and companies that are receiving significant amounts of subsidies, it's very difficult to compete. our industry can't compete and succeed when do you ha you do hl playing field. i think we're seeing the outcome of those efforts that are coming to fruition. >> i wanted to ask you about what you're seeing in terms of the economy of china the market deemed things a lot better than the beginning of the year. perhaps the currency started rising, that was a big relief. what are you seeing in terms of recovery from a sharp slowdown

earlier? >> the recovery is very, very slow. again, if we roll back to our particular industry, you know, china has about 400 million tons of overcapacity. to put it into perspective, the united states consumes about 100 million. if you don't have the chinese properly address their overcapacity it's difficult for us to really see a transition. this is the first time in the history that all of the chinese companies have lost money last year and they lost quite a significant amount. the overcapacity problem they have is not only affecting us, but it's significantly beginning to affect their own economy. >> mr. longhi, let's cut to the chase for many people here. we have a presidential candidate who is suggesting that there should be a massive imposition of tariffs on exactly the markets you're talking about. donald trump with, i think, talking about 30% or 40%

tariffs. that's less than the commerce department is recommending in your case, what difference would that make if you had a president who came in and said, hey, let's just do it now? >> well, i think you have to look at the realities under a different tone. first and foremost, what we argued for is fair trade. now with the passage of the new definition of injury and trade and the passage of the enforce act, if we can purely enforce the current rule of law, i think we can create a level playing field where proper competition will be performed under a free market. i'm a strong advocate if we can just apply the rules that we have for everyone, we don't need a special measure in this regard. >> i guess the process is painfully long for many. mario longhi joining us there,

ceo of u.s. steel. when we come back, the corporate uproar over north carolina's discrimination law seems to only be getting louder. will the laws effects on big business change the governor's mind? we'll try to answer that. ♪ i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line. what's in your wallet?

welcome back, north carolina's religious freedom law is experiencing a backlash. executives from 100 businesses sending a letter to the state

governor asking for a full repeal. earlier in the week north carolina's lieutenant governor down played the threat. >> what ceos are trying to do is represent their communities, audiences and customers. the fact of the matter is when the state is legislating discrimination against any group that shouldn't be okay. >> this is a big fantasy. it happened in houston when houston had the same ordinances. the same cast of characters were saying they would pull out of houston. houston is still in business. >> at some point somebody will call the plouffe. then we'll see what businesses will be doing. >> joining us at post nine to discuss it is "new york times" columnist jim stewart. without the threat of a boycott or pulling out of a state its business or pulling out campaign contributions, will businesses be able to change the law in north carolina like they did in

georgia? >> i think they will. i think either the current administration will modify this, or there will be elections next year and this could be a hot button issue. you think of north carolina as a conservative state. but the latest polls show 69% of the voters oppose discrimination in employment on the basis of sexual orientation. this is not like the houston ordinance. it's not another one of these we have to keep the transgender people out of public bathrooms bill, it rolled back existing mu n municipal protections. >> your column you dive into this ceo activism. you say corporate silence has turned into a roar in a matter of years from virtually nothing. >> it's amazing. this is a change in corporate america, not just in north carolina but all over the country. the default position throughout

mir entire life is we won't go near political issues, through social issues, because we don't want to alienate anybody. four years ago no north carolina major employer was willing to speak out on the marriage issue. four years later, every major north carolina issue is speaking out. that's an amazing change. what companies have realized is that you can't take a neutral position. you will offend somebody one way or another. you might as well be on the right side. >> what else do you think is behind way companies treat this. you hear them trying to retain people, particularly younger people. they want to be identified with certain positions that are in tune with what their employees are saying. >> i think diversity is a major theme in the country. a major theme for corporations. they want a diverse work force. you take bank of america headquartered in north carolina. it has a lot of employees in new york, a lot of minority

employees it wants to keep them. how can they do that if they remain silent or seeming to sanction this law. >> bank of america on tuesday night they came forward, they fund both sides of the legislature in north carolina. i think the question is about having a diversity officer, which most corporations d immediately they have to have a view and the diversity offer argues for a diverse view. at what point does the rubber meet the road? would they walk out of the state or just assume it is unconstitutional because it's against federal law. >> you're absolutely right. you're raising several points. one sshis, it's easy to say something, but talk is cheap. i interviewed bob mitchell of -- mitchell gold of --

>> the furniture people. >> exactly. he was actively opposing this, they're headquartered there. he said woe wone won't move the company out of here. we are changing things on the ground. bank of america won't move their headquarters, but who will they fund in the political campaigns? how ma the ncaa may not hold the basketball tournament there. we'll see. this is not houston. i think there will be economic impact. is it constitutional? no question this is an unconstitutional law. it will get struck down in federal courts, certainly since the defense of marriage act was struck down in the federal court. you can't pick out one my moino group and say you can't have law prospecting you. i have no doubt this will fail on legal challenges. what businesses recognize is we

don't have to sit here and wait for the courts. there are other ways of bringing about change. companies are becoming more comfortable. it's not just starbucks which led this or apple or west coast people, we're now talking about the heartland of the south here. >> jim, thank you. >> all right. >> jim stewart from the new york times. quick market check, we are near session highs. quite a recovery for the u.s. stock market. at one point the dow was down 117. the turning point came at 10:00 a.m. after the ism manufacturing index came out above 50, above 51 signaling an expansion, a better number than expected. the dow goes positive. it is now up about 35 points. some of the groups in the lead, consumer staples, healthcare, financials, energy still bringing up the rear on lower oil prices. blackberry stock is deeply in the red in the wake of their results that they had earlier today. the ceo, john chen, will join us for a first on cnbc interview to

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john fort is here for special guest. >> the ceo of blackberry joins us. the company just reporting results. revenue came in a bit light of expectation and of your guidance. there's a bunch of positive and software growth overall. let's start with hardwareful you're still on track to meet this hardware target you'll have to sell 3 million units at an average selling price of $300 each in order to reach break even or slight profitability. given the under performance in this quarter. given that apple has come out with an iphone why are you still con fireworks den you can reach that target? >> oh, yeah, i think right now the market is a little soft. we have gotten a lot of good feedback from the customers that bought the phone. they like the phone. i think the audience are a

higher end audience that likes security and it's developing lower than i like obviously but all the feedback i got nobody is really having a problem with my phone is more like the pricing point and the peel, the number of people that want to buy the phone and needed to buy the phone and some of my distribution that needs to beef up a little bit. >> i've heard good things about the phone as well. it's just the overall market i'm questioning. you said you're determined to have that hardware business profitable or break even but when do you make the call on whether that's realistic long-term? if you just barely break even this year or if you miss it, does that mean you're going to cut that business out entirely and become a wholly software business or are you just going

to take it year by year? how are we going to know when you make this call? >> that's a good point. i made the statement i need one year to make the device profitable. i made a statement in september last year. i intend to hold myself to that. so by september we will know. i do believe we will get to profitability before then. you'll have a great question there about sustaining profitabili profitability. but let me get to it in the next couple of quarters and if by september i couldn't find a way to get there then i need to seriously consider being software company only. >> software now just shy of a third of your revenue and the profit margin on that was actually looking good. it seems like your margins came in above expectations because hardware under performed. tell me how you expect to get

from the margin levels here to the margin levels where you want to be once you reach that 80% recurring revenue target. how are margins going to look? how is the cash flow going to look at that point? >> great question. right now we're roughly, this past quarter as you pointed out, software done well, hardware under perform and actually helped my overall margin so it's in the high 40s. i do exactly what we said. hardware being profitable and software continue to grow and the subscription continue to go out from 78%. you will see our margin line trimmed up. i hate to give you a number right now but it will start going up from the point we see

today. i'm looking for a mid 40 type number. >> i want to ask you about the battle between apple and the fbi over security. last time we talked back in january, we were talking more theoretically about encryption but this got quite heated. we seem to have hit a pause though with the fbi pulling back. the department of justice pulling back from its position. what's your take on the significance of this court case that has now been pulled back and what it means for the next few months. has this opened up a conversation that wasn't happening before? do you expect to see common ground reached before this flairs up again?

and then worry about the business. my stance has never changed. i think we need to help society we support lawful assets and so does a lot of companies and we'll continue to do that. it is a continual balance between privacy and encryption security. and national security for that matter. so in my opinion, this sit down, multiple parties sit down and workout a compromise. i just stuck that position doesn't help. >> well it seems like a fire has certainly been lit. at least in the near term for that to happen. we'll see. thank you for joining us first on cnbc.

>> and john forte our thanks to you for bringing us that interview. coming up, the politically outspoken founders of ben and jerrys on why they're supporting bernie sanders. that's on squawk alley, next. si♪ the first stock index was created 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.

good morning it's 8:00 a.m. at tesla headquaters and 11:00 a.m. here on wall street and squawk alley is live. ♪ ♪ good friday morning here at post 9. kayla as also. mike is joining us and from one market is recode executive editor kara swisher. shares of tesla rallying after the model 3 was unveiled at an event last