that story straight ahead. it's friday, april 8th, 2016. "squawk box" begins right now. good morning, everyone. welcome to a special edition of "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. this morning i'm live from north carolina. we have a huge lineup for the show this morning, including the co-chairs of president obama's debt committee, former white house chief of staff erskine bowles and farmer senator alan simpson. the two will be sitting down together. we'll be talking taxes, politics, where we stand in the debt situation, and a lot more. we'll also be joined this morning by duke energy ceo lynn good and carolina panthers head coach ron rivera. if that wasn't enough, we'll also be hearing this morning from former treasury secretary hank paulson and honeywell chairman and ceo dave cody.

economist john silvia will be joining us to kick things off. first, let's get to the guys in new york. joe, my heart is breaking. i was traveling yesterday and out last night. i missed all of the masters disaster, been reading about it this morning, checking this stuff out. 11 inches? missing? >> ernie ells. becky, i'm telling you -- >> yes, not you. >> right. i read what he said this morning, and my heart really went out to him. after being so great -- you know what he said? he said, i got up to that first three footer for bogey. number one is a really hard hole, and all the greens are really hard. they're so fast. the holes are cut so sharp. they're very scary. what he said really got to me. he said, i couldn't pull the putter back. i know that feeling so well. it's because he's still got the

right hand low. i can tell you that ernie is going to be -- i don't think he's clawing yet, but i can't say for sure. but he's going to have to do something called the claw. that's the only way. also, what i found -- >> did you use that for a while? >> no, i've been using the claw. i can't use the belly anymore. even though i have a great belly now. but you can't use the claw. we're going to talk a lot more about that. where are you down there there? is that studio where you are -- can we rent that studio? >> no, this is movement mortgage. it's a brand new building that's just been put together. check this out. the lighting is gorgeous, right? >> your lighting is spectacular. you look beautiful. your lighting is spectacular. >> thank you. >> if we had that lighting here -- doesn't she look gorgeous? >> she does. >> could you ask them to call our lighting guys and just say, listen, we're down here, we just jury rigged this in 15 minutes, but i look like this.

then show them a side by side. >> it's a gorgeous building. wait until you check this out. movement mortgage is a great story, too. i can't wait to tell you about it. it was founded by a former nfl player who played with the carolina panthers who started this business in 2007 right before everything fell apart with the housing industry. this was his second career of sorts. he started out with just ten employees back in 2008. now they have massively built things up. they had $8 billion in mortgage originations last year. by the way, when he first sat down to figure out how to start this business, he had to google how to start a mortgage business. here they are from that beginning. >> nice. wow. i just had an idea too. you're down there with simpson and bowles, which has a nice ring to it. what if we just change the whole thing to bowles-simpson, send it back to president obama, and maybe he won't remember and try

and do that. >> like the fedex guy. >> bowles-simpson. maybe that'll pass muster. maybe not. >> andrew, i want to ask you one thing before you jump off. i heard this morning you talking with sara and wilf, and you're going to join them every morning for the tease. >> i was invited. it was a nice invitation. i wouldn't want to take the opportunity away from both of you. >> that's awesome. congratulations. >> i know how much you enjoy it. i was invited to do the morning papers with them. i love the show so much. >> you do such an awesome job. >> i'm going to send them e-mails every morning with suggestions so you guys can talk about it. >> you know you can't do the tease for their show at 6:10. >> no, i'm going to send them the e-mail and you're going to do it. that's what i'm saying. i'm going to suggest the articles and you guys can talk about them. >> suggest their articles. they always pick the most progressive -- it's usually

right out of paul krugman. >> but thank you, becky, for picking up on that. >> what time is it? let's see how much trouble we can get into. >> i'm going to send the e-mail early. >> sara asked him to. >> you know they say camera time is like oxygen. i didn't want to take it away from you. right now we split it evenly. i think it's important we keep it that way. let's start with the markets this morning. stocks looking to rebound after yesterday's selloff. the dow had its worst daily performance since february. the s&p fell more than 1% and is now negative for the year. take a look at u.s. equity futures at this hour. what you're looking at there is green arrows. dow looks like it would open 96 points higher. s&p looks to open 12 1/2 higher. the nasdaq at 33. let's take a look at crude. wti is 38.54. a lot to chew on last night because some comments coming out of fed chair janet yellen, who

said the u.s. economy, she says, is on solid course and still on track to warrant further interest rate hikes. she pushed back against political talks, saying a bubble is ready to burst. >> we think it's partly transitory inflaunss, namely declining oil prices and the strong dollar, that are responsible for pulling inflation below the 2% level we think is most desirable. so i think we're making progress there as well. this is an economy on a solid course, not a bubble economy. >> yellen was speaking last night on a panel. it was streamed live on cnbc.com. former fed chairs ben bernanke, paul volcker, and alan greenspan also on that panel. steve liesman has more from the event. he'll talk to us later in the hour. also, a bit of corporate news this morning. bill ackman telling cnbc the embattled drug company won't

butt bausch & lomb on the block. quote, it's a core asset and we're only considering selling noncore assets. ackman's pershing square fund has lost about $1 billion on valeant since taking a stake in 2015. but on an investor call yesterday, he says he expects to make back his losses on the drug company. that may take some time. >> let's get a check on the global markets. looks better many europe this morning, even though asia, as you can see, the shanghai is down. just under 3,000. now let's go to europe, which i thought might have the hangover from our rough session. it's not too bad. i think that shows you we sort of responded to the selloff in europe yesterday. europe sort of leading us back today. as a result, we're up pretty nicely on the session. let's check out the ten-year note, which is still below 1.8. yeah, 1.7. almost ready to breakthrough there.

the yen has gotten stronger. the euro has gotten stronger. suddenly now everybody is talking about the dollar depreciating and that being problematic. we never know what the heck we want in terms of currencies. take a quick look at -- is that harwood? i think i just saw harwood out on the street. good looking guy. there's gold. 1234.90. looks like it's trying to consolidate those nice gains it made so far this year. finally, almost triple-digit rebound today in the dow jones, up 98 now. up 13 on the s&p and 32 on the nasdaq. couple of stocks to watch this morning. retailer gap disappointing investoring as same-store sales tumbled in march. also warning the profit margin could struggle this month. the banana republic division saw its sales dip the most. and starboard value has taken a nearly 7% stake in the drug maker depomed.

starboard saying it intends to nominate a slate of directors to that company's board after raising concerns about its decision to reject a takeover from horizon pharma. a couple more comments about the masters. we do like it a lot here. i think productivity in the entire country between 35 and 55-year-old males just stops. jordan spieth was out early. that sort of helped. he leads the field. didn't have a single bogey after day one in augusta. he shot 8 under last year. started with a 64 and led wire to wire. then you know what kind of year he had. he started with a 66 this year without a bogey. the buzz of the tournament is what happened to veteran ernie ells on the first hole. the 47-year-old from south africa had a short putt for bogey, a three footer. i want to the see his grip. i think he's still got the conventional grip. i'm trying to see it. has he got a left hand low?

see, that already shows you he's having some right-hand problems. unfortunately, andrew, age -- something with the small nerves or the small muscles comes with age. it almost is impossible to pull the putter back at times. the claw works for me. i'm not a good putter by any stretch, but this was frightening to watch. there was one where he tried to tap it in, and the holes are cut so sharply. did you see this one? does this one finally go in? no, this is the one. there are so many of them. i think there were six. he did one just sort of real nonchalantly from like -- this is it. that's the one that's just killer. that was from about eight inches. six putts is what he needed from point-blank rage. he ended up quintuple bogeying

the hole. ricky fowler had an 80. jason day had a 31 on the front nine. then got hurt on the back nine, on 15, 16. he went 31, 41 for 72. here's a look at the leader board after day one. spieth shot 6 under. didn't have a bogey, despite wind gusts. the greens get hard and the wind continues. it's going to be fun down there. in his career, he's played nine rounds at this tournament and has never been over par on any one of the rounds. he's never shot worse than 72. at this point, you'd have to think he's the favorite. bubba had a rough session. people thought he was going to do well. it's tough. it's a hard course down there. i think it starts again this afternoon, 3:00 this afternoon. >> you've played it from experience? >> it's a great honor and privilege to ever walk on those hallowed fairways.

it is. my scores were -- my nine hole scores are similar. >> as you know, mine would be way worse. i can't say a word. when we come back, we'll get down to becky, who's got big guests. also, republican candidates making a push for new york voters ahead of the state's primary on april 19th. our chief correspondent john harwood is in town. the latest from the campaign trail. back in a moment. hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. vern from voya? yep, vern from voya. why are you orange? that's a little weird. really? that's the weird part in this scenario? look, orange money represents the money you put away for retirement. save a little here and there, and over time, your money could multiply. see? ah, ok. so, why are you orange?

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welcome back to "squawk box." if you've ever ridden the subway in new york, this may be a familiar scene. hillary clinton, while campaigning in the city yesterday, couldn't get her metro card to swipe at a turnstile. it took her five swipes to finally get through. there's no bit of information that we're not going to somehow criticize a candidate for in this election, but it does remind me of the first h.w. when he goes, holy smoke, wait a second, how's that working? at the supermarket where they were scanning him. presidential candidates -- i

don't think miss clinton has driven in a long time. i don't know if they necessarily carry cash anymore. my problem is the idea of, hey, i'm just a normal person. i take the subway all the time. two stops on the subway. on for the photo op, messes up the card, off two stops later. they got to do it. such crap, john. >> i want to defend 41 a little on that supermarket scanner thing. different people had different reactions to that episode. i was on that trip. >> were you really? >> covering bush 41. it was not obvious to me that he was so unfamiliar with the technology. so there were some -- i was at "the wall street journal" then. we did not make a big deal out of that. >> i've watched hillary's so-called coughing fits. it's like, you got to write about that, really? because someone needed some water after stumping for how much and you have a little bit -- it's just everything is blown out of proportion.

>> bernie sanders still thinks you need subway tokens. he was asked about the subway. he didn't even know. >> that's why hillary clinton was on the subway. she was trying to demonstrate that she was down with the new system. >> metro card, my friend. metro card. >> presidential candidates -- we're going to intro john here. john harwood joins us now with the latest from the campaign trail. i will say there was a lot of scuttlebutt this morning. the tone has gotten gop-like in the democratic race. it's almost as nasty as what we see in a gop debate. >> they most definitely didn't want that to happen. let me go over the main things going on in each race. first of all, on the republican side, you have donald trump who's doing a bit of a reset of his campaign. he has hired and is elevating a veteran of republican politics. that's because this delegate fight is getting very granular

now. look at the delegate count. donald trump is a couple hundred delegates ahead of ted cruz, but this is a one by one fight to get to 1237. nate silver, the election forecaster at 538.com, projects now that based on current tren, donald trump will fall about 55 delegates short of 1237. he needs to hold on to what he's got, try to fight for that extra 55 in order to get to 1237. that's what paul is doing. on the democratic side, you do have an escalation in the rhetoric from bernie sanders and hillary clinton. i think that stems from the fact bernie sanders has himself a little bit stuck in no man's land. he's been a message candidate. he's been effective in making her focus on issues he considered important, especially income inequality and some of the financial regulation issues, but he's just short of where he can truly threaten her for the nomination. when you're not one or the other, when you're not really on track to win the nomination but

you're more than just a message candidate, that can be a frustrating place for a politician. bernie sanders after saying hillary clinton was not qualified went on seth meyers last night and did a little bit of a makeup to try to repair some of that frazzled tone. >> hillary clinton verse a republican nominee. >> oh, come on. on hillary clinton's worst day, she's 100 times better than any of the republican candidates. >> so i think that said it all. >> yeah, maybe so. the enemy of my enemy, i don't know if i want a vowed socialist endorsing me. i would rather have him say, no, she's way too -- >> you wouldn't, but hillary does want him to. >> she needs the base. but i think that "daily news"

piece was so damaging to him. >> it hurt him. >> which "daily news" piece? about guns? >> no, the editorial. >> the interview he did where he talked about breaking up wall street and he had no idea how. >> and the foreign policy stuff. >> here's where i think he got a little bit of a bad rap. he was getting grilled on the process that exists under dodd-frank. he's talking about a different process. he's talking about a new pre-emptive authority based on size alone as opposed to systemic risk. so he got caught up in, well, is it the fed, the treasury? >> either way, he did not do a bang-up job of articulating why he needed to break up -- not why, how, implications. >> most people don't care about that. it's more about the foreign policy. >> i take your point, andrew. there were some flaws in the interview. >> given that's a central part of his campaign, it's complicated to not then be able to articulate in my meaningful fashion how yo u do it.

>> he should have brought kashkari as his wing man. that would have done it. >> my point is entirely different. we live in different worlds. for me, hillary clinton has been tacking a little more center recently. she's actually said a couple things where i went, wow, maybe she understands some things, even better than the current occupant. >> what are you talking about? >> i don't know. i just heard some private sector stuff. her husband definitely understood the jobs come from the private sector. if i want a good legacy of trying to have the middle class raised and narrowing income inequality, you need to be a partner with the private sector. not, you know, constantly at on suggestion. i'm thinking maybe she could, you know -- i don't know, maybe she'd be like her husband. >> i knew it. >> of course she's going to be

like her husband. >> well, then, you know, he'll be there too. i like the stuff he's saying. >> in truth, her husband, her, and barack obama are very close together. >> oh, that's crap. i don't buy that. >> let me ask you about the democratic socialist. if sanders ran on a ticket with kashkari, would he have a chance of wink you over? >> why, you think i'm a big kashkari fan? i'm certainly not going to let him manage my money. >> why? >> he had no idea how to manage money when he went to pimco. >> he's a fed president. you don't think fed presidents know what they're doing? >> i certainly don't think they know how to manage money. anyway, simon and garfunkel's ballad "the sound of silence" is back on the billboards thanks to a viral video of ben affleck. a reporter asked them to respond to the bad reviews of their new

movie. the video zooms in on affleck's sad face while the ballad plays. that's amazing. a cover of the same song by disturbed hit number three on that chart. i think ben should leave well enough alone. i think the movie did 800 million so far. >> which is sadder, that affleck video or ernie's seven putts? >> that was weird. he never did decide just to stand there and take the time. >> i don't understand it. >> the feeling, especially on greens like that at augusta, the feeling of not being able to pull the putter back on a three footer, i know so well. it's something that happens as you get older. >> it's never happened to me. that's just because i don't play golf. >> and you don't age either.

uh-oh, here we go again. >> we got to go. thank you, john. oh, we don't have to go. >> i know we're talking about something that's not interesting. but go ahead. >> this is going to pass affleck. >> this might, yeah. >> that is sad. here, watch the sadness. >> no, no, it's okay. this is the one that got me. >> this is going up the charts very quickly. >> there it is. okay. john, thank you. >> who gets the grammy? coming up, janet yellen speaking with some of her fed chair predecessors at an event last night. we're going to show you what she said about the pace of rate hikes next. as we head to a break, take a look at yesterday's s&p 500 winners and losers. playing for the usual phil?

always stacy. at kpmg we've always believed leadership is about vision and integrity. confidence. inspiration. and passion. pitching wedge. thanks, phil. and always having the courage to take your best shot. kpmg. continuing our commitment to the next generation of women leaders.

ump batching at home, i understand. >> i was. >> some people turn on the bauble game. >> live steaming on cnbc.com. >> it was. it may still be there. >> you go straight -- >> this has never happened before. the three former and current fed chairs never appeared at the same event before. we're calling it fed all-star night. we had janet yellen joined by

ben bernanke, volcker, and greenspan joining by satellite. fed chair janet yellen said this is not a bubble economy, that it's weathering the foreign weakness with decent strength, and that the fed remains in a gradual hiking mode. >> we indicated that we thought the path of rate increases would be gradual, and that remains our best guess and expectation, that if the economy continues on the path it's on of recovery, that further rate increases will be justified. >> all the chairs agreed with the recent emphasis on fed policy being mindful of global risks, including alan greenspan. >> it would be foolish to believe that we can act in an isolated manner from the rest of the world. there's no way that can happen, especially in recent years where the integration globally has

been so extraordinary. >> couple other points. volcker sounded a little more concerned about short-term borrowing that don't increase productivity. bernanke said in the next recession, you can't rely only on the central bank. the fiscal side has to step up to the plate. one more thing, andrew. a little bit of a push back from neil kashkari on too big to fail where yellen said, i'm not so concerned as my colleague in minneapolis on too big to fail. >> and therefore, by the way, as we've now noted, once janet yellen has a view, it's not clear that everyone else's view -- not that they don't matter, but you can talk about it publicly. >> have you read the criticism about him, by the way? that he doesn't know the law and hasn't read the law. >> i haven't read that. >> there's a lot of people who say there's stuff in dodd-frank that ends too big to fail. paul volcker said it to me.

i did an interview with him within the past year or so. he said people don't realize what's in the law. it gives them the authority to shut these things down and make shareholders pay for it. >> you haven't seen the whole conjecture that he ran for office. >> no, i've seen the conjecture that it's all political and this is part of a march back towards washington. >> don't need details like these. >> details. not these days. we're going to give them all coverage. >> stick around because we got to get back to becky quick, who is in south carolina. >> fabulously lit. >> the fabulously lit becky quick. >> thank you, andrew. thank you, guys. john silvia is here. he's been listening into this. he's the chief economist at wells fargo securities. great to see you on your turf for once instead of remote or at our house. thank you for coming. >> sure. >> what do you think about steve was just talking about snb one thing that jumped out at me is

what greenman is said in terms of thinking, yeah, we have to understand this is a global economy, pay attention to the dollar and all the other forces at play. greenspan was the original guy who said don't worry about the dual mandate. all we ever focused on under his watch was inflation, unemployment would figure itself out. >> there is a big change. ever since the taper tantrum, there was a since that when the fed changes policy, it has an impact on exchange rates, but particularly the cost of capital for emerging markets. now with some focus that the imf is going to lower its economic projections once again, you kind of get the sense that the fed will be very gradual. not just gradual but very gradual in raising rates. >> is that partially because we can't fight the current of all these other central banks that are now in negative interest rate policy? >> it is part of that challenge

because that gap opens up even more, and it becomes more of an exchange rate issue. >> having said all of that, yellen last night said we're close to the congressional mandate of maximum employment. she says the slow inflation we're looking at is transitory and that we're making progress on inflation. we're on a solid course, this is not a bubble economy. does that sound like a fed that might move, let's say, as early as june, maybe not april? >> it does sound like a fed that's going to move as early as june. it's hard to argue about the transitory. it's been transitory for quite some time. you kind of get the sense that this is a lower inflation environment for a longer period of time. they probably won't get to their 2% mandate by the end of this year. i think they've got time to be very gradual. >> what are your odds at this point in terms of them moving in june? where would you put it? >> i'd say 50/50 at best. the problem we have, becky, right off the bat is first quarter gdp is going to be less

than 1%. it's going to be hard to walk into that june meeting unless you've got some pretty strong pr april and may numbers to argue for a move with a thesz lane -- a less than 1% gdp number. >> is this a less than 1% economy? >> it's hard. you're talking about the first quarter being less than 1%. it pretty much is a 1% economy, unless we really see some pick up. >> we've heard from people who have come in recently, you know, business leaders like a david rubenstein, who's looking at company results, saying there's been a significant turn in the last month or so. is that something you've picked up on in any other numbers? >> oh, absolutely. if you look at the profit numbers, they're negative again in this first quarter. that's pretty significant challenge. business investment has not picked up. despite lower interest rates, business expectations are pretty moderate in terms of where the economy is going. we're not really investing very much. >> what's wrong? what's the problem?

>> well, i think it's, again, people lowering their overall expectations, thinking that all that central bank easing around the globe really hasn't picked up the economies as people had expected. there's still some uncertainty about the china slowdown. quite frankly, brazil, russia, major economies are still in recession. >> in terms of how you think we fare, this debate still goes on. look, we're an economy that's always managed to kind of lead the way. can we continue to do that when you're looking at slow overall growth, especially when the imf says yesterday that they're very likely going to downgrade global growth for the year. >> yes, key. absolutely. we're still a leader, believe it or not, but at a slower pace. >> what do you think about the corporate profit situation? you touched on this a moment ago. as we get into earnings season, that's been the huge question on wall street. what would surprise you? what are your expectations? >> our expectations are actually that corporate profits are

negative in the first quarter. again, a real challenge because your top-line revenue is pretty modest at best, but labor costs continue to rise. and for some companies, as we know, especially in the high-yield area, interest rates are rising. they have picked up. so there's a squeeze going on in corporate profits. i think you have to be cautious on this whole situation. >> well, john, thank you for joining us today. again, it's great to see you in person, in your neck of the woods. >> thank you, becky. >> again, that's john silvia. andrew, back to you guys. >> thanks, becky. we should tell you shares of yahoo! are on the move this morning. sources saying verizon plans to move forward with a bid next week. other potential bidders include time, inc. and alphabet's google. if you invested all your money in forever stamps, your portfolio is about to take a

hit. the price of a first-class postage stamp will decrease from 49 cents to 47 cents on sunday. a temporary rate increase granted in january of 204 14 is expiring. the postal rate fought the decrease, saying it accounted in $2 billion annually. did you see that total number cumulative that the post office has lost in the last 20, 30, 40 years? >> yes, very sad. >> it's like 50 billion. >> i used to collect stamps. >> you did? i collected coins. >> and baseball cards. but stamps. i don't know if we'll be doing stamps. >> did you flip them? >> the cards? >> yeah. >> yeah, but we used to do them with baseball and basketball cards. >> one day i lost it all. i i lost pete rose. >> i have a michael jordan rookie card still. >> i have a pete rose rookie

card. >> you do? >> not anymore. i lost it. >> when we come back, a housing summit from carolina. we're going to talk real estate and the markets with the ceo of movement mortgage and a top executive at fannie may. later, erskine bowles and alan simpson will be joining becky. "squawk" returns in a moment. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.

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welcome back and good morning, everybody. "squawk box" is coming to you live from the brand new headquarters of movement mortgage in fort mills, south carolina. this is just outside charlotte, north carolina.

right now we're going to talk about the state of lending, the housing markets, and the future of mortgage rates with our two guests this morning. casey crawford, the ceo and founder of movement mortgage. he's also a former carolina panther. also, fannie mae executive. thank you, both. i should thank you, casey, for hosting us this morning. >> we are pretty excited to have "squawk box" here live. we've been raving fans for years. >> and joe and andrew, i have to tell you guys, guess what i had for breakfast thanks to these guys? grits, eggs, and sausage already. >> a little southern hospitality. >> it's working. you guy with your muffins back there, happy friday. >> most important meal of the day. >> it is. they're doing me well today. andrew, i want to the start with you this morning and talk about the state of the mortgage market overall. just how healthy are things, how healthy is the american consumer? what do you see in housing? >> if you look at all major indices, hole sales, housing

starts, home prices, they've all gone up over the last several years. but there are still challenges in the marketplace. one of the surveys we didn't recently, 62% of consumers want to buy a home, but 45% say it's a great time to sell. it's not a great time to sell. you have this imbalance which could lead to a supply issue in the marketplace, which could lead to some challenges in the market. >> i think we're having problems with your microphone. we're going to work on that for a minute. don't worry. not your problem. our problem. casey, let me ask you just what you're seeing. you may have picked the worst time possible to start a mortgage company. >> the worst or besting right? the opportunity of a great crisis. >> so you were googling how to start a mortgage company. >> we really saw a massive opportunity in the midst of that when people were leaving the industry. we thought fundamentally, americans are going to continue to purchase homes, and somebody needs to be there to provide

mortgages. a lot of guys were focusing on refinancing. we focused on the purchase mark. that served us well the last seven years, growing to almost 14 billion originations this year. >> every week we hear from the mortgage bankers association. so many mortgages have been done. we hear most of the time it's re-fis. why go after that first-time home buyer instead? >> historically, the market hack made up of 80% of purchases. it was about 80% refinance. we wanted to focus on the part of the market we thought was sustainable and part of the market we thought we could bring the most value to. at that time, the purchase transaction was miserable. it was a really tough process to purchase a home. we put together a seven-day process where we could process your loan in seven business days, close it on the eighth day, which is as fast as the federal government will let us. >> and as fast as god created the universe too. >> for those of us who have been through the process, yeah. we brought that to the marketplace. really, that's been our driving catalyst for growth in the last

seven years. >> andrew, let's talk about your relationship together. you guys do a lot of work together. what is it, 1 out of every 75? >> that's it. we do about 1 out of every 75 mortgages with fannie. they're phenomenal partners. i've been amazed to work with fannie mae. it's a great example of a public-private partnership coming together to serve the people. fannie does a phenomenal job of helping me extend credit to americans across the united states. we work hand in glove with them to bring those loans to communities. >> andrew, it's been a tougher situation. how does that work? >> sure. i think working with lenders like casey and the rest of the industry, i think the exciting thing right now is some of the advancements in technology and really focusing on the home buying experience, and especially using technology and maybe even mobile for this next generation of home buyers, the millennial generation is what's really exciting.

i think fun for the industry to focus on. >> how do you make sure we don't get back to the problems we ran into in 2006, 2007, 2008 leading into that crisis? how do we make sure we're not lending too much or lending to people who really shouldn't be buying homes? >> so we all learned a lot of lessons in the industry. we've carried those forward today. today's eligibility and lending standards. you know, so today if you think about how someone gets a home, we need to document their income. >> that seems like a basic. >> yeah. >> we actually have an income before we're going to do it. walk me through the process today versus what was happening in 2006, 2007. >> sure. i think that was the biggest one. we need to document they have income and assets. if you're going to come to the table with a low down payment, we're going to look at other risk factors. >> what's a low down payment? can i still get 3%? >> you can still get a 3% mortgage today. >> there's questions about that. almost sounds like you're a renter at that point. >> there are discussions about that. i think today we can do that safely. we're going to look at other compensating factors within the

borrower's mortgage and their credit history. low down payment, you're either going to have to have a higher credit score or better payment history and also more assets in the bank in terms of reserves. >> casey, that's been something you've been focused on not only for your customers but your employees, trying to make sure consumer debt is something we focus on to drive down the numbers. what do you think somebody should be putting down? you're looking for people to buy less house, which is kind of crazy. >> we want to encourage responsible borrowing. that's one thing we've seen with millennials. a lot of people have been talking about how they've been putting off the home purchase. we don't think that's such a bad thing. they're saving up a little more money. a lot of these kids were 16, 17 years old when the housing crisis hit. they watched their parents if not get fore closed on, come very close. they want to be very sure they don't end up in that same kind of situation. we just rolled out an internal program with our 3,000 employees. the lose a million dollar

challenge. >> in debt, not actually a million dollars, right? >> that was the hashtag. that's what got the headlines. yeah, we wanted to challenge them to lose a million dollars in consumer debt. after 90 days, with 2,000 employees, we lost over $2 million in consumer debt. they saved a million dollars. that's really what we want to see for our borrowers, responsible lending and be thoughtful about their total financial picture. >> andrew r the millennials actually going to buy homes? >> we believe so. one of our recent surveys, 90% of the millennial generation say they will want to buy a home. it's just a matter of when, not if. like all the other life decisions they're delaying, whether it's getting married, having kids, or buying a home, it will happen. it's just a matter of when. >> gentlemen, i want to thank you both for being with us today. casey, thank you for hosting us. congratulations on the new building. >> thank you so much. love "squawk box." >> thank you. great to see you guys. joe, back to you and andrew. >> all right, becky. you know what, coming up, i can tell you this from experience.

sorkin, you know too. personal trainers are not for everyone. you got to be tough. but boutique group exercise classes are on the rise. i don't know about that. they're attracting both the super fit and the super rich. diana olick will tell us about new york's fitting room next. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here.

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that's weird. you want to work for ge too. hahaha, what? well we're always looking for developers who are up for big world changing challenges like making planes, trains and hospitals run better. why don't you check your new watch and tell me what time i should be there. oh, i don't hire people. i'm a developer. i'm gonna need monday off. again, not my call.

deep fitness studios seem to pop up on every corner. making up 42% of the 50 million fitness users. diana oleck has more. >> reporter: andrew, the 6:00 a.m. class here at second wind cross fit is still going strong. seems they are playing out in boutique fitness studios across nation. it's big business. what exactly is boutique? >> it's an interesting question. for us specifically boutique, we really take the best aspects of a personal training session and we combine that with the best aspects of a group exercise class. >> reporter: boutique is code information attention. classes often catering to the schedules of a working clientele, with all the amenities and even private shower rooms.

a class is $38 compared to $20 a month at a big chain gym. nationally of the 54 million americans who claim to have fitness memberships last year, 42% said they go boutique. that's up from 22% barely three years ago. now, unlike major gyms that are open sometimes 24 hours, boutique fitness caters to the before and after work set. then they have lunch time classes at the fitting room because the famed martini lunch has turned out with a work out with a client and then juice. if you want to get a behind the scenes look of the new corporate headquarters, that's going online on cnbc.com right now. andrew. >> thank you, diana. we're a barry boot camp family.

you'll be embarrassed. >> they will say like when i kid around about my trainer. >> oh, yes. yes. right. i forgot about that. > jessica alba's company considering a sale. women's wear daily say it's due to the continued coolness of the public market. we talked about how the market seems to have been shuttered. that company valued at a billion dollars, jessica alba's stake itself, talked about her -- >> this sell steaks too? you're young still. i expect something like this from you. >> what's that? >> you got everything else going on. something like that, skin products. >> skin products thing. >> think of what else -- >> i'll tell you a funny story during commercial break. about a decade ago i wanted to

do -- just like that. >> i'm not kidding. >> you know. >> i do know that. you're king of gig comedy. skin care is a gig. what about underwear. >> i can't compete. >> how about wine spritzer. coming up, a summit on debits debt, taxes and politics in carolina. erskine bowls and alan simpson join becky for the next hour and it will being a great. "squawk box" will be right back. thanks for doing this, dad.

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. fixes the debt to grow the

economy. paving the road to a better future. they are the dynamic duo, tom and jerry, no, bat mapp and robin or hans solo and chubaka. they are determined to put america on a better path. alan simpson and erskine bowles are our special guests for the hour. wti making a run back towards $40. we'll get you up to speed on what you need to watch at the open with wells capital cio jim paulson. jordan spieth races to an early lead at augusta national. no bogeys. the buzz about the big blow up by ernie els. a look at the leaderboard as the fight for the green jacket heats up. second hou of "squawk box" starts now. ♪ >> announcer: 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 joe kernen along with andrew ross sorkin. becky is in fort mills, south carolina with twopecial guests fo the hour, erskine bowles and alan simpson co-founders of fix the debt campaign and co-chairs of the president's commission on fiscal responsibility. great to see those two gentlemen. we'll get to becky in just a moment. but first let's check on the futures right now. 91 points of upward pressure expected at the open for the dow jones. the s&p is up nearly 12. and the nasdaq up just over 30 points right now. oil at this hour is part of the positive reasons for the market going up. oil goes up and that gives equities a boost. oil is up about 3.5%.

>> let's get you caught up on the corporate headlines. yahoo! shares are on watch. verizon may, let's just say may put forth a bid for yahoo! next week and there's reports of interest from other companies. the deadline is next week so we'll see who ends up showing that interest. the government will appeal a judge's ruling that removed met life's designation as a systemic phil mickelson institution. if the decision holds met life will have less oversight than before the financial crisis. we haven't even talked about that decision which is fascinating that a company would win against a government. you always say a government will beat back a company and they did win. >> mostly on the other side they settle. they don't admit guilt. >> amazing thing. i read the decision. i do think it will be hard ultimately if the government wants to win they could. they clearly made lots of

mistakes along the way. >> the government? >> in terms of how they designated met life. it sounded like from the decision if the government had done certain things potentially difrply they could still get there but also -- >> how about ge? >> well, i think what will happen met life may try to potentially break itself up. who knows. so that the designation -- i love jamie's annual letter. it's pretty spectacular. >> what was it the moral decline of the united states caused by general electric. >> that was bernie sanders line. >> so we bring good things like tom ed son, ge, dow component is one of the bad things about america? this is a guy who might whoin has won seven out of eight primary contests. that's where we are.

>> for certain people. in the meantime let's get over to fort mills, south carolina just over the border of charlotte, north carolina and that's where we find becky quick with two special guests. >> we have a lot of time this morning, andrew. thank you. this morning we have two very special guests. erskine bowles who served as the white house chief of staff during the clinton administration. he is also the former president of the university of north carolina and he currently serves on the boards of several companies including morgan stanley, facebook and norfolk southern. he's a southern adviser at bte capital partners. alan simpson is the former senator of wyoming. he chaired several committees including the nuclear regulation and committee on ageing. president obama appointed erskine and alan as co-chairs of fiscal reform. they crafted the simpson-bowles

debt plan which hoped to reduce the country's deficit over a decade. thank you for being with us. >> thank you for having us. >> very nice. >> this conversation is one i felt was picking up a lot of steam. 2010, 2011, 2012, you sat down with us in 2012 but one that seems to have gotten lost in this presidential campaign cycle. i wonder if you can tell us where we stand now, if things have gotten better or worse since you first start this crusade. >> he can tell you. >> he does the numbers. i do the color. >> and the jokes from what we remember the last time. >> i want to say one thing to joe, i'm convinced joe didn't come down here to north carolina because he's afraid to play fwofl with me and i was going to play even. >> i'm afraid to play golf against anyone, actually. competition -- i just like taking on the curve, the course

itself. i don't like playing against people for money or things like that. which course would we play? >> we were going to play quail hollow where they have the wells fargo in a couple of weeks. >> i played there, erskine, and that thing kicked my -- you got to drive the ball well. i love that par 5 with the creek that runs through it. i hit it in four or five times on one hole. >> it's tough. but it's a lot of fun. i wish you would come. >> don't push my arm too hard, erskine. >> so, erskine, what do you think? where do we stand versus, let's say, four, five, six years ago just in terms of how big this problem is? >> from an arithmetic viewpoint we've done between half to three-fifths of what we proposed. >> it's progress. >> it's progress. the problem is we've done the

easy stuff. we've done the stupid stuff. >> what's the stupid stuff. >> the stupid stuff is the sequester. it's really stupid, stupid. it's stupid first because all the cuts are in the discretionary part of the budget where arguably you can make the best case and we should increase our investments if i want to compete and win in a knowledge based global economy. stupid second because the cuts are all across the board. and there's no business that's listed that make their cuts across the board. you make your cuts surgically. the three reason it's stupid none of the cuts are in entitlement programs that's going at a faster rate than gdp which we have to bring under control. we have to slow the growth of health care spending. been that health care cost curve and make social security

sustainablely solid so it will be there for the people that need it. like it or not social security is between 800 and $900 billion cash negative over the next ten years. that's why it's stupid. >> in terms of making progress that's the good news. in terms of coming after the harder stuff do you feel better or worse that we're going to resolve this before the bomb kind of blows up in our face? >> i think any time you make progress he feel somewhat better. but i still believe at some point in time the markets will wake up and they will look at the country and say we have a dysfunctional government. you know, you're addicted to debt. the fiscal path we're on is simply not sustainable. and we have no plan, i mean no plan whatsoever to deal with it. most of the time we don't even have a budget. can you imagine any business that you study or look at, you

know, trying to operate without a budget and we're operating the largest economy in the world without a budget, without a long range plan? what makes it even crazier to me is every couple of months, you know, we'll go through one of these debt default crisis where we threaten to default on the full faith and credit of a country. that's crazy. if we default it's catastrophic not just here but across the world. a plan we got to have. >> the thing that makes it tough is that the deficit is going down and it's about 1.4 when we started now it's 400 something. the debt is on automatic pilot. it's unsustainable. it can't possibly exist this way. and all this budgeting stuff they are going through, all the anguish and the horror stories, they are not dealing with two-thirds of the american budget. the two-thirds of the american budget has eaten our lunch,

health care and social security solvency. as long as people -- the sad part of it is my colleagues in congress in the olden days and maybe the same now, if you put a balance sheet and profit and loss statement in front of them you would think it was written in egyptian. >> which is dangerous when you consider the finances of the country being decided by people who can't read those statements. >> that's right. >> what do you do about it? >> go elect people who know. you got to go into the congress and educate. they have no time to do anything in congress but raise money. that's a whole other subject to go into. you got to have some kind of campaign finance reform. they are on the phone all day raising bucks. they win a race and get on the tube and they have their super p.a.c.s. they don't pay attention to legislation except how to do it without alienating your base.

if you can keep your base together you can do anything. >> let's talk about the politics surrounding this right now because we are in the middle of a presidential election cycle. this topic hasn't been touched on but if you look at the plans thrown out by the presidential candidates, donald trump just gave an interview to "the washington post" where he talked about paying down the deficit in ten years and at the same time not touching any. entitlements. is that a realistic plan. >> no. if you look at donald trump's plan -- look none of the fiscal plans out there hold up to a lot of scrutiny. but his is, is one that's, you know, is especially troubling, at least to me. if you look -- it's been looked at by everybody from the tax foundation on the right to what is it, to urban brookings to one of them on the left and all look at his revenue plans at reducing the revenue the country takes in

over the next ten years by 10 to $12 trillion. he's not going to touch entitlements. the arithmetic just won't work. >> he says that this will inspire growth in the country and that we'll get back to gdp levels we haven't seen in quite some time. we can grow our way out of it. >> we can't solely grow our way out of it. we can't solely tax our way out of it. raising taxes doesn't do a darn thing. health care is growing at a faster rate than gdp. as much as i would like to say we can solely cut our way out of it we can't of which i consider a frag gill economic recovery or hurting the truly disadvantaged or making such deep cuts in things like education, infrastructure and research that we won't be able to compete and win in what is a knowledge based global economy. >> alan, you agree with that? >> when you have a rate of

growth of 2.1 or 2 point whatever and you hear guys talking about 5% for ten years, that's in the vapors. that's crazy. that can't possibly be. anyone that you hearsay you grow your way out of it really, that's impossible. you could have double digit growth. you can get up to 10% and take you 20 years to dig out of this hole. you'll never get there on this fantasy of growing your way out. not when everybody who does books can tell you it's going to be 2.1 or 2.3 and in 18 years i was there i never heard a correct figure on the rate of growth. one is going to be 4% then down to 2.2. madness. >> we know that the political situation has gotten a lot tougher. in an election year you hear a lot of things that people throw out in stump speeches. they talk some stuff back. they get in office and look at things differently.

the political scenario has gotten very complicated in washington on both the right and the left. and really with a lack of people who are willing to compromise or join each other in the middle. we have grover norquist on earlier this week and i asked him what he thought about the plan that you all had laid out. i think we got a sound bite from that if you want to listen in to what he had to say. >> the challenge with simpson and bowles they tried to do it with a massive tax increase. reducing marginal tax rates but their plan was a $5 trillion tax increase in the next decade. that's why it was a nonstarter. they talked about lowering the rates. numbers in simpson-bowles run the numbers. they talk in generalities but when you got down to what they wanted to do it was a massive tax increase. they didn't tell you where the money would come from. >> gentlemen, your response.

>> why that rotten -- no. let me tell you about him. he is an interesting guy but he has a voodoo doll of me on his bed chamber and pokes little holes in it. this guy -- there wouldn't be a thing that i and erskine did that grover norquist would get on his white horse and put his robes on and ride like paul revere in reverse. >> he said a tax increase. >> do you think that tom coburn, you no, mike crapo, adjudicate craig three of the most conservative republican senators would have voted for $5 trillion tax increases, no. they voted for this plan. talked about no numbers in our land? we specifically said, you know, how exactly we would, you know, slow the rate of growth of health care and bend the health

care costs. we have over $600 billion of spelled out cuts in the first ten years and 2.8 trillion in the second ten years hopefully trying to slow the growth of health care to the rate of the economy. on social security we showed exactly how we would be able to, you know, make it sustainablely solid for the next 75 years. it's specifics. same thing with discretionary spending. >> what are the specifics on social security in particular? >> look people ask all the time why in the world, you know, do you have to change social security? you know, when this guy roosevelt created social security life expectancy was 63. you got social security at 65. that's a very smart guy. today life expectancy is 79. you get social security at 62. we have an arithmetic problem. the changes you have to make to remain solvent is at the margin. i'll give you some examples to answer your question. you know, probably the most

controversial recommendation that alan and i made in the commission was, you know, we're the guys that recommended that you raise the eligibility raise of social security by one year 40 years from now we want to give people a chance to get ready and one more year 65 years from now when my grandkids are eligible. we recommended we slow the growth of social security payments to people in the top 15% of wage earners. those are the kind of changes at the margin that you have to make to make the promise of social security real so it will be there for the people that need it. >> but what grover did and was very clever was get a pledge from people under no circumstances would they ever raise taxes and they signed it. then he posted it on their wall and he does all the ancient tricks but the real issue is, i think he has a bust of ronald reagan in his office and ronald reagan raised taxes eight times

in his eight years of presidency. why? to make the country run. if anyone believes this revenue neutral business can go on much longer they need help. this revenue neutral sim possible. you got to do something with all three things and that's why our 67 page report which was in english and even used words like going broke and shared sacrifice has terrified everybody from grover to the right to the left, the afl-cio -- i wonder what you're doing except for that one part their part and poke your eyeballs out with a stick before they ever get rid of that part. >> you guys have been in the trenches with this. we'll talk more about this in just a moment when we continue much more from our special guests, erskine bowles and alan simps simpson.

jordan spieth in augusta. a check on the leaderboard straight ahead. take a look at the markets. the futures have been strong, rebounding after a weak day yesterday that actually put the s&p back in negative territory for the year. we'll hear from jim paulsen. box will be right back. with booking.com's free cancellation, you could just forget the beach wedding... and the beach booty... you could just book a different resort. like in alaska. they've got igloos.

a controversial stock split

takes effect for underarmour, two for one split but shares investors will get are newly created nonvoting shares and trade under the ticker ua.c. just so you know you may be seeing quotes on our ticker and elsewhere that indicate underarmour is down 50%. hopefully it's not correct due to a technical glitch related to the split and we're working to fix that problem. >> when we return, jordan spieth feeling at home in augusta. check on the leaderboard. we'll do that straight ahead. plus much more from our special guest who are joining becky in fort mill south carolina the co-lead towers fix the debt the president's commission on fiscal responsibility, alan simpson and erskine bowles in just a minute.

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the defending masters champion jordan spieth leads the field after day one in augusta but the buzz in the tournament is what happened to veteran ernie els on the first hole yesterday. the 47-year-old from south africa missed a short putt for bogey and only got worse there. els wound up getting six putt

from point blank range. i thought he scored a ten because that's what the announcers initially said the entire time i was watching it. tough when you get up to those numbers, amateurs by then it's in your pocket after three or four of those things. you do have to put it in the hole every single time. if you have a cart if you can't do that, have some serious -- much harder to break 90 if you count ofry stroke and it has to go into the holes. look at the leaderboard after day one. jordan spieth, danii lee had a good round and i don't see rory there although he did come back. he had an eaglend at one point was three or four under. poulter plays well. shane lowry also. jason from australia, jason day had 31 on the fronts.

but he won't stay down for long. coming up check on the markets plus new mexico feeling the pinch from lower oil prices. how it's dealing with the oil glut. check out crude this morning up sharply. we will be back almost 4%. we'll be back in a moment. firstx 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. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be.

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welcome back to "squawk box". among the stories front and center this morning if you hate shrinking airline seats you won't like this next story. the senate voted down an amendment that would have stopped any further reduction in seat size. part of an overall authorization bill for faa. the price of postage stamps is going down effective this weekend the price of first class stamps dropping two cents to 47 cents because a temporary increase granted back in january of 2014 has officially expired. this one makes no sense to me. the strong dollar is taking its biggest bite out of corporate

revenue in five years. according to foreign exchange consultant. the negative effect from the dollar was up 80% 2014 fourth quarter from a year earlier. as the oil price roller coaster continues its wild ride many states are hold be on tight and the fallout is being felt in one state that you may not think of when it comes to crude. we go live to new mexico where it's still dark. hey, scott. >> reporter: hey, joe. you may not think of new mexico as an oil state but it's the sixth largest of net supplier to the nation. the state relis on oil for third of its revenues and in the town of hobbs, new mexico it's quiet you might expect at 5:30 in the morning. we were here during daylight and not a whole lot different. a far cry from a couple of years ago when crude oil prices were well over $100 a barrel. people were flocking here and oil workers and their families

had money to burn. >> worst thing during the peak of the economy is they didn't have the time to spend it. >> and now? >> now they got the time but may not necessarily have the money. >> reporter: unemployment here hit a low of 3.5% a couple of years ago. it's more than double that now. but you would think that there would be some despair here. in fact there's a great deal of optimism because they said during the boom they weren't spending money they were saving it. >> if you take that excess and put it in the bank and not spend it like you think you're going to have it forever, then it's not -- it does not create a huge issue. >> reporter: so here it's less expensive than a lot of places to drill oil. you can make oil at $40 a barrel. they are hoping that will bring oil drillers back here, bring the jobs back. but they are prepared no matter

what happens and guys, we'll be reporting all day from new mexico about how this state is dealing with the drop in crude oil prices and what they are trying to do to get themselves off of that dependency on oil. >> funny, i can remember what the controversy was, scott, but new mexico governor bill richardson once said something about new mexico and oil and everybody laughed at him like what are you talking about? there you go. the sixth biggest state you say in terms of oil. maybe he was right. >> reporter: that's right. we're in the permean basin. >> haven't spent much time but some beautiful parts of new mexico, santa fe, places like that. if you get a chance check it out. i don't know when you work and when you don't.

so maybe you got some time after this. >> reporter: yeah, you know, maybe i will check it out. it's not bad. >> he's like a teacher or professor or something aren't you scott? >> reporter: i do a little bit of everything. i'm still busy with a lot of cnbc stuff. we're working . >> good to see you, scott. thanks. happy masters tournament. the s&p 500 erasing year-to-date gains amid new concerns of global growth and strengthening yen against the dollar and more turbulence can be ahead. jim paulsen joins us now. easter is gone. are you still pushing that bunny market stuff? actually, between earlier this week and last week and then yesterday, you know, a lot of

emotion but get nothing where. kind of reminded me of what you said. >> just all the cross currents, joe, that we're dealing with here. it isn't universally is growth going to go up and that's good or growth going down it's bad. it's a mixed story we're back at full employment where the fed is in the mix. where rates have to be reset if growth is good. but, they still have to ease if it's bad. i think that does lend itself particularly when valuations are high to a market that's vulnerable to bounce around a lot but not going too far. >> we introed you by talking about fed officials. are you still hanging on every word or are there more important things going on around the globe to determine stock direction? >> i think there's a lot more important things. i refer to it as the yellen yaber. we have so many voice in the

federal reserve today talking, and they are all saying different things at the same time and it leaves you with a message that is impossible to decipher and so i think you're much better spending your time elsewhere. ultimately, joe, i think the fed, what it does will be determined by the economy and to me there's maybe three major outcomes possible. one is the global u.s. economy just simply rolls over here. that's a very scary outcome. we'll probably have a bear market and fed and monetary policy will be pushed to the sidelines as useless and we'll all focus on fiscal policy as the savior. that's a low odd probability. more likely what could happen here this year yet is probably both of these outcomes. one is we could continue to have concerns about global growth abroad, but the fed's hand in the united states may be forced

to start to raise rates if core inflation and wage inflation heads towards 3%. you know yesterday's unemployment claims number, another strong job report if that continues those wage numbers will go up. or we could -- the good outcome would be is if we have global growth pick up, which i think is, indeed happening a little bit. if you look at economic surprise indices, they are rising in the last few months almost every where except japan. eurozone, the emerging markets, china, great britain, here, canada and if that starts to become more evident then i think the fed will also tighten but it will tighten against economic strength and the market might do quite well in the event. i think we'll head higher, break to new highs. >> we hear music. you can hear that music. anyway are you feeling the bern? are you feeling the bern?

is that who you are backing this year? bernie sanders, you feeling the bern? >> no. he's a little left even for the lefty minnesota state here. >> all right. that's saying something. thanks jim. see you. o. coming up we'll head back to fort mills where becky is with erskine bowles and alan simpson.

welcome back. we're live from fort mills, south carolina with the co-chairs of president obama's debt committee, erskine bowles and former president clinton's chief of staff and alan simpson former senator of wyoming. gentlemen, we talked an awful lot about the plan, how far you got, you guys were touring the country talking to audiences, thousands of people, and there was a lot of support building behind this. what do you think is going to happen now? will this get picked up? what step comes next? what do you hear from people just when you're out and about in the streets? is this still an issue important to americans? >> it's not going to go away. it's like a stink bug at a

garden party. you can roll it under the table but it will still be there. at some point in this country there will be a tipping point and both the people on our crew dick durbin and tom coburn, pretty fascinating differences of opinion kept asking where is the tipping point? the tipping point comes when the people who have loaned us 20 trillion bucks will say we love you, you're addicted to debt, you have a dysfunctional congress and we want more money for our money and at that point inflation will kick up and interest rates will go up. anybody believe interest rates will stay where they are this is zoo land. they will go to 5 or 6 where they've gone historically and at that point the sad, sad part, the guy that gets diddle is the little guy that everybody talks about every night.

both sides of the aisle they are leaving him bereft. the money guys will always take care of themselves. >> do people come up and ask you about these issues still? is it still front and center? >> yes. interesting i was flying in here the other day and reading an economic report from the miller center at uva. and it asked a random sample of american people who did they hold most responsible for the lack of good high wage paying jobs in this country. they were trying to get though poll, lack of economic mobility, is the american dream still alive. and amazingly almost 70% of the people responded that the people they held responsible were those politicians, those elected officials in washington who wouldn't work together. you know, i think the american people -- this is what we saw when we talked to, you know,

groups of business leaders, labor leaders, liberals, conservatives, huge town halls with thousands and thousands of people. and we got up there and told them exactly what was in our plan the good stuff and tough stuff. without exception at the end they all gave us a stand ovation. first of all, i think they liked seeing a republican and democrat together who actually like each other and enjoy being with each other and respect each other. what they want is these politicians to put this ultrapartisanship aside, pull together rather than apart and make some of these tough decisions. they want to see what al and i call principled compromise and al always says if you can't compromise without compromising your principles you darn well better never go into business because you'll never do a deal, never be a legislature and for god's sake you better never get married. >> i remember that very well. it is the saddest thing to see

somebody -- they say compromise is a four letter word. and especially the 100 percenters, i say do you like the constitution and bill of rights. they flap their chest. well, you know, both those two documents came from months and months of compromise. you got to see the original copy of the del of the declaration of amendments jefferson wrote, like today would be whatever. he was so tired of the way they messed around with the document. but it's so sad to think that compromise is now an ugly thing because that's how america was built. >> in 1997, you know, president clinton brought me back to the white house to negotiate the bipartisan balanced budget agreement. and, you know, here you had a

democratic president and a republican speaker and speaker newt gingrich and those guys, you know, were willing to put their partisanship aside and do what they thought was right for the country. and they did put america's fiscal house in order. when we were given responsibility for this national commission on fiscal responsibility and reform nobody thought it could be done. they thought we couldn't get, you know, two votes, our own votes. but we got a majority republicans, majority of democrats, a supermajority of a commission. we had six sitting u.s. senators on that commission and what we were proudest of five of the six voted for it. all three republicans, two out of three democrats. everybody from dick durbin on the far left to tom corbin on the far right. they did it because they knew it was the right thing to do. >> did we miss our opportunity by not pushing it with the

moment and at that point are you frustrated that it wasn't a higher priority in this administration? >> yeah. >> everybody walked away from it. the president. the leadership. don't forget it never would have come to the appointment of the two of us because it was to be a legislative commission and hit to have 60 votes or they wouldn't have brought to it the floor. when it came to the floor seven of the sponsors voted against it including mcconnell and mccain because i thought they were doing it just to stick it to obama but they said they did it because they didn't want to see a back tax added to an income tax. give me a break nobody was goofy to do that. >> there is somebody face-offy enough to propose it now. >> i believe one of your people. >> ted cruz has a 10% flat tax and 15% back tax.

>> i'm an old senate guy. when you have a member of the senate who calls the leader of his own party a liar and that's what ted cruz did to mcconnell, called him a liar on the floor of senate, asked me to define ted cruz i said he's probably as rigid of the fireplace poker but without the occasional warmth. let me tell you that guy is, he's something else. and i don't know how anybody can work with him. they only had one senator that came out for him of all the republicans there. he's just a tough cookie and looks like he's going to be the guy now that's going to carry the banner. >> donald trump is still the front-runner. >> well yes. donald trump i got in trouble there too. i said that with trump you could give him an enema and bury him in a shoe box and that didn't go well either. so, no one has asked me any

questions about anyone. i give some thoughts about bernie. >> let's not stop with the republicans. >> no. but, anyway. it's madness. there's only one way to look at it and keep laughing. it it isn't funny. it's going to be a very disruptive, disembowling thing of the republican party. >> it's got dirtier and nastier on the democratic side. this is not what you were talking about in terms of working and crossing the aisle. >> no, no. look, i think what we need in washington as president is someone smart, thoughtful, is intellectually curious and willing to listen to people from center left, center right and even far left, far right and be

twoi willing to as ronald reagan take 80% of the loaf. make these tough designates. >> then why is partisanship so in vogue. i would agree most america is moderate. >> it's easy-to-understand. look, the way the districts are divided today, nobody is worried about the general election, they are all worried about being primaried. the democrats from the far left the republicans from the far right. as an example if i find a democrat and there are policemen of them out there that believe we have to reform the entitlement programs, we have to make social security sustainable solvent site will thereabout for people that need it, you know, i can guarantee you as soon as they say that you'll have people from the far least the aarp swoop in, they will finance somebody to run them against the left. it's an off year election that

person will probably win. if it's a republican who will vote for any kind of reform of the tax code no matter how pro growth it s-other than revenue neutral, you'll have grover and those guys swooping from the right, and they will run somebody against him. so you end up having the far left and the far right and there are not many people left in the sensible center willing to make decisions we have to make in order move to the country forward to put our fiscal house in order. >> how do you change that, allan, after watching this for decades? >> people ask you what should we do? what can we do? i said i'll tell you what can you do, instead of just bitching, get in the game. my wife and i were precinct men and women in park county, wyoming when we were 25 years old. then came some nuts. they weren't nuts but they had

like get rid of the income tax. get rid of the irs. get rid of everything. get rid of the epa. get rid of the education. we got a bunch of people together and we got the precincts lined up and we all ran and now ann and i are preing singt committee man and woman of precinct 25 which we did when we were 26. if you don't like what's going on don't just babble and bitch get involved and take out the guys that are doing things that are so extreme and not common sense. people don't like that. they don't want to work. these other people who are digging into the thing like about yo burrowing through a peach orchard these people don't quit. >> maybe this is what people want if people actively in and have extreme views.

>> the people you're talking about, the middle people are sitting there. how did it happen? it happened because they were sitting there and not paying attention. that's how it happened. tea party is not even a party. it's just a bunch of people. they are not organized. they don't have a party. but they are p.o.'d because the guys on the right and left don't do nothing sitting on their butt taking care of themselves so they can worship the god of re-election. >> the vast majority of the people are in what i would call the sensible center. i don't think the vast majority of the congress is in the sensible center. look, here's what i've suggested. i've talked business groups. i said look this is the political season you're going to have politicians running for congress, running for the senate, running for the presidency who are going to come to you with their hat in hand and they are going to want your money, they want your influence, they want your support and the support that you can generate

because you're a person that has some influence in your community. i want you to ask them one question where do they stand on long term fiscal responsibility reform. if they give you that song and dance i'll get rid of waste, fraud and abuse, foreign aid and nancy pelosi's airplane, just laugh at them. tell them you want somebody to go out there reform the tax code in a matter that will make us more globally competitive, produce more revenue, reform these entitlement programs that will end this health care cost curve and slow the rate of health care spending and also somebody to go out there and do something about social security to make it sustainable solvent so it will be there for people that need it. if we do that -- i think if politicians see you got their back, then i think they will do it and then i think the future of this country is so bright and we can compete with the best and brightest wherever we are. if we don't we'll face that most

predictable crisis in economic history. what i hate our generation will be the first generation of americans to leave the country worse off than we found it. >> let me ask you two while we're here, we're joust outside of north carolina in south carolina new legislation was passed into law by north carolina recently that says it's okay for businesses not to serve lesbian, gay and transgender people if it offends them religiously. what do you think of that? >> well, i tell you. that's very sad, you know. i think north carolina is a marvelous place. our university president came here to the university of north carolina charlotte. a wonderful guy. the matthew shepherd issue happened in laramie, wyoming. people of wyoming were offended by that. and marched to show their support. i don't understand how people

can, who are christian people, that's one good christians, well the good lord was quite a guy. he dealt with the down trodden, the prostitution, the treehieve. it's awfully mean spirited to use religious freedom as some kind of a marker to really discriminate. it's nothing different than the civil rights law which was so tough to pass. i want to be sure i take care of who i want in my business, i.e. i don't want any blacks in here. that's an argument that's a failure forever. i think it's a tragedy. we all know or love somebody who is gay or lesbian, all of us do. we know that. they are related to us. we know them. and oftentimes you find the guy the true homophobe has a link in their own family but can't deal

with it. >> allan is right. it's just plain wrong. discrimination is not right in any form. not only is it wrong for all the reasons allan said, economically it's wrong. the jobs that we're going to lose in north carolina, you know, we've already had paypal come out saying, over 1,000 jobs with two companies that will leave north carolina and come down here to south carolina or somewhere else. >> gentlemen i want to thank you so much for your time today. truly a pleasure. we thank you for bringing all these issues to our attention and any time we get a chance to sit down with you again we would love to. >> you've been very patient with us. >> senator, you've been wonderful. erskine will stick around for a little bit longer. andrew, back to you. >> thank both gentlemen for us for that great conversation. when we come back a final hour on "squawk box" and. i want keeps on going. we kick things off the break with hank paulson and then

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a morning of news makers on box. >> the danger is it's on automatic pilot. it's unsustainable. >> we're not slowing down any time soon. up next former treasury secretary hank paulson on set. china, inversions, politics no topic is off the table. ceos speak out. business leaders meet with members of the bristol-myers administration to talk trade, the economy and much more. david cote takes us inside room straight ahead. go long we'll hit the gridiron with carolina panthers head coach ron rivera as final hour of "squawk box" kicks off right now. ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box".

welcome back to "squawk box" here on cnbc. fitting that's how we feel about many of our viewers, we want to be with you. we did say many. most. not all. i'm joe kernen along with andrew ross sorkin. becky quick is in south carolina today with special guest erskine bowles. more from them in a minute. erskine, i think you should come down sea island in georgia. that republican governor vetoed that bill. i'm not playing quail hollow. come further south where they vetoed a bill like that, all right? >> absolutely. in fact i'll be in sea island in two weeks with hank paulson who is coming on next. >> we were just talking about it. it's so great. it should be legal down there, little saint simons. what a great place.

it is. heaven. first today's top story. fed chair janet yellen said the u.s. economy is on a solid course, still on track to warrant further interest rapist hiebs. we'll see in 30 minutes we'll hear from bill dudley, one of the leaders of the doves i would say at this point. new data from lipper shows investors poured money into stock etf's. stock mutual funds posted 28 million in outfloss. short interest is $20 million. if this starts moving that would be a short squeeze. >> talk to this man about that. >> u.s. futures up 89 points after one of the worst sessions yesterday. we should say this week american businesses have been under attack in a big way. doj trying to kill a major energy deal, treasury department

attacking inversions. here to weigh in on this and the china challenge former treasury secretary hank paulson author of "dealing with china" which comes out in paper back on monday and if you want to understand what's going on in china this is the book to read. great to have you here this morning. >> good to be here. >> he'll talk fwou the shortages. before we get to china i want to understand your take on what the treasury department did this week on inversions. >> well, i guess to say i'm troubled and disappointed is an understatement that the -- i think we all know that the root cause here of the problem is this antiquated, outdated tax system that puts u.s. corporations, multinationals at a competitive disadvantage with their foreign competitors.

and that this hurts the economic security in the u.s. it hurts our economic competitiveness. and obviously we need to go into a territorial system and have u.s. companies pay their taxes, you know, whatever the going rate is there and then not penalize them for bringing their money back. so tax reform which is what you've been talking about today with these two heroes, erskine bowles and alan simpson, that's what's baddeley needed. >> in such a polarized world where it feels like congress can't get their act together to get to that place you say okay you're the treasury department is it worth putting that band aid on and is it more damaging to do what they've done than to leave it alone. >> yes, it is. i got to tell you we're a nation of laws and rules. you can't change the rules, shouldn't be changing the rules after the facts and changing them and changing them and changing them again.

>> you wonder why business leaders are afraid to do anything. you don't know if they will pull the rug out from you in the next week. >> i don't accept we can't get that done. that's so obvious. the idea that we can't get a simple reform like that done. we tend to be so u.s. centric. >> for the last eight years it was obvious during the bush administration, obvious for quite some time. >> what was the answer you got the other day? >> which one. >> you asked why it wasn't done. one side want a trillion dollars of net revenues. >> the other thing that i found out which is here is business doesn't always play a constructive role because you talk about reform at 100,000 feet they all want it. but our system is so terrible that there's -- there's so many preferences and loopholes. >> but there's a big piece on

that how the corporations don't want it. then -- >> they all, when they get into the nitty gritty they fight for their individual preferences. what could to be done and should to be done, you don't have to reform the whole code to go off the territorial -- to go to a territorial system and so anyway that's what needs to be done. >> one more question in the rulemaking world. the other news this week, met life which had been designated too big to fail institution fought and won against the government on that designation given that you oversaw this world and associated with this whole idea of too big to fail and also the reform what do you think of that? >> i'm not close enough to the details of that to comment on that particular case, although i really do -- i am supportive of the committee and the work that they are doing in terms of

identifying systematically and important institutions. so i think all those that to say gee, we shouldn't be going down that road in general, have forgotten very quickly what we went through a number of years ago. >> okay. you want to ask your question. >> let's talk china. you have this book that's coming out. it's the paper back version of the book. you look at china now and you look even, just even last week at anbang coming to try to make this deal in the united states for starwood, and speculation that maybe they were blocked from doing that and worries about companies like anbang because of the financial products that they have. you look at sort of the shadow banking world in china right now and you think we're on the precipice -- you talked about this before as a possible crisis. >> yeah. what i had said, and which i still believe is we have a

situation in china where debt had been growing faster than the economy and municipal debt, largely corporate debt, state-owned enterprises. that's not sustainable. i think the biggest risks though still are in the future and that if china does the right things now which is really speeding up the reforms they can avoid the worse possible outcomes. that's a matter of political will. so china is a complicated situation and, you know, an economy with as big as they are with so many difficult issues you know that any volatility, any problems are going to be magnified and this will spill over into the broader economy. >> you look at what donald trump has said when you think about trade wars, you speak to the folks in senior leadership in china. what are they thinking right now? >> what are we all thinking?

who could have dreamed this up? and so, i think they have never really understood our political system, just like we have a hard time understanding theirs. so to try to explain their political system today is particularly difficult and it's not just, you know, we've got an extreme case with donald trump. but what's even harder to explain is a situation where you have really all the candidates -- >> on all sides. >> four candidates against trade. and, you know, here we are, a country that's 4% of the world's population and the idea we can put a wall around the u.s. and not do business wither to 96 that we can abrogate u.s. economic leadership is hard to explain anywhere outside of this country and in china we have, you know, this is a troubled difficult relationship and it's a very, very important bilateral

relationship, and so we've got some real differences, but we've got some common interests and one of the biggest common interests is driving economic growth in both countries and working together and i'll tell you the economic links between our two countries are the important links, and -- >> they are looking at bernie sanders going oh, what -- this man needs a socialist. we're going to free market capitalism. united states moving to socialism now. they are scratching their head more. no one is a hero on trade. everybody is picking on trump. the president can't get it through his own party to do tpp. had nothing to do with donald trump. >> i've seen things in both parties that shock and surprise me. >> let me ask you about this tepid rebound since you had so

much to do with keeping us afloat. did you at the time think it would be eight years of sub 2% get. we would be at zero interest rates eight years later. >> no, i didn't. the reason i didn't the ten years before the crisis, the bubble years, amassed some of these really profound powerful economic forces that we're seeing. the american people, the ten years before the crisis were doubling their borrowing while their median income, average income was flat. so a lot of the jobs we had and we're not really sustainable jobs. people were buying homes they couldn't afford. product they couldn't afford. look what was going on with europe, the monetary union, italian, greek, spain, portugal, again bore roger much more than they could afford because they are propped up by a single currency. china exporting in to that

bubble. >> all those things. >> so i look around -- so the kind of forces i'm looking at which is you look at what technology is doing the labor markets and how it's disrupting the labor markets, it's a wonderful thing in terms of making all of our lives better but you name the industry where technology isn't taking out more jobs than it's creating. if your job can be routinized and it's changing so quickly it's hard for the american people to fathom. >> you look at the last eight years and you think we're better or worse? self-inflicted or meant to be? >> i would say two things. first of all, we are much, much better than we would have been if we hadn't stepped in and stopped, you know, a huge

disaster. we would have gone into the abyss if we didn't do the things we did number one. number two, i think it was a huge accomplishment the fed policy that let us grow at roughly 2% from the third quarter of 2009 until today while we delevered. i think those days, you know -- i am now troubled by these interest rates that are almost zero and talking about whether they are going to be a bit more than almost zero but we're seeing that all over the world because the good news for us, but i guess the good news and bad news our economy is in better shape than almost any other economy it's got less problems. so europe, china, japan, u.s., brazil, that the economic policies that worked in the past aren't working in the future.

political systems, politicians are having a hard time dealing with this and so it's all been left to monetary policy. of course if the solutions to all these problems is having interest rates at zero people would have discovered that a long time ago. so you need structural change and it gets back to the issues -- i thought, i sat in the green room and listened to that discussion with, you know, with erskine and allan, and it just reminded me, these are the issues that you've got to deal with. debt, entitlements, tax policy, government spending, working together. >> erskine is still on with us and he has a question for you. erskine. >> look, basically what i want to say is you two guys, andrew you and joe are lucky to be sitting next to the guy who really did save this country from the abyss. if we hadn't had hank in the treasury then, i don't know what we would have done. i thank god for it every day.

for me, you know, you talked about china a minute ago. going from an export driven economy to a consumption based economy is tough to begin with. but i too worry about the build up in debt. i think in the last seven years we've gone from bank debt in china, from $9 trillion to $30 trillion. what i've seen from your analysis of it is as much as 22% of that will be nonperforming by the end of the year. that's 6.6 trillion. that's a big concern, i think for the future. you know, i was with, traveling around the globe the other day, hank and i was with global financier and he said it's a crazy, crazy world. you have trump, oil, china, negative interest rates, brexit, bank bashing, isis, syrian

refugees, liquidity squeeze. he said it's no wonder, you know, that the markets, you know, lack direction and the consumer, you know, is cautious, is concerned. you can see why the consumer is not spending the money they've spent. you know, as i think about it, there are a lot of good things going on in america today. we do have relatively full employment, although employment is going at kind of a modest pace, our economy is in relatively good shape. we've had the first signs of wages increasing. we got oil starting to bump up. i guess best of all china is heading for a soft landing. but there are a lot of dark clouds out there that i'm curious as to what you think how we deal with it just in this country. you know the consumer is cautious. i think probably rightly so. housing is kind of mixed. >> i tell you, you went through

all those crazies that i was talking about the other day and wendy said hank you're starting to sound like a grumpy old man. i don't want to be too negative. the u.s. is in better shape than virtually any other place. and so to me, i think the only way we can deal with all the issues outside of the u.s. is to fix our own situation. i talk about dealing with china. we got to deal with our own situation, restore our own economic competitiveness and this things we need to do are pretty clear. >> neel kashkari, we've been talking about too big to fail and he used to work for you. what do you make of the comments he's been making and the proposals and effort he's looking at to try to break them up. >> first of all, i have a very high regard for neel. he did great work for me at the

treasury when we needed him. number two, i believe our banking system is better regulated, better capitalized. i think we have the best banking system in the world. i think it's a competitive advantage. i believe that dodd-frank imperfect as it is gives us tools that i wish we had and gives people tools to deal with. i agrees it's a misunderstanding. people misunderstand too big to fail because no bank is too big to liquidate but believe me in a crisis any bank of any size is too big to liquidate immediately. so all those that think you'll wind them down neatly when they fail without hurting the economy are wrong. so ask me is it a mistake to study this issue? it's a good time to china a light on it and stew it did but what i think you'll find is what i believe and simply this.

we have a very big financial system. and we borrow much more than we save. and so the lending is much greater than the deposit, we have wholesale funding. so risk when you regulate the banks and have more capital in the banks which i'm all for, you push the risk out elsewhere. i think the places to look are other places. shadow banking market. what's happening to these bond funds, with lower levels of liquidity in the wake of volcker rule. the other thing, i believe, and i know it's unpopular whenever i say this some people wince, banks don't cause financial crisis, flawed policies do. from the beginning of time, i don't care what the government is, how it's structured -- >> write that down. >> you can have flawed government policies, they create bubls, manifest themselves in the banks, banks make big

mistakes. banks are punished. we should correct mistakes. we want to focus on the core issues. the core issues we're not dealing with. we can spend time on all things we need to do to restore our economic competitiveness. the simpson-bowles issues. >> 90% of millennials living at home on snap chat all day long. no savings. 90% behind a socialist and you're called a grumpy old man. there's a reason to be a little bit grumpy. >> there's a big reason. this brings us back to the big banks again because they are easy targets for populists. easy, easy targets. >> as far as bernie goes you work for a criminal and ran a criminal went terrify price. >> these are big easy targets. easy to scapegoat. much more difficult to deal with and say how are you going to

deal with these massive and rampant changes in the labor markets driven by technology and globalization? how are you going to deal with these other issues? a lot easier to scapegoat and say it's big business, it's the banks, whatever. so they are an easy target. >> hank if you can stick around we should have you for the rest of the hour but i think you have to run. the book is called "dealing with china" out in paper back on monday. i want to ask you about the fbi and apple. he's not grumpy. we hank hank for being here. a lot of problems. can't just snap chat all day long. still ahead much more from becky and erskine bowles and duke energy ceo lynn goodwill join us. stay tuned, "squawk box" will be right back.

welcome back to box, everyone. duke energy the largest u.s. utility has just completed north carolina's second largest solar form. 800,000 solar panels producing enough energy to power 13,000

homes. in the meantime if you've been watching the utilities they are the best performing sector of 2016 up over 12% just this year. when you look at the rest of the markets and joining us right now to talk about renewable sources is lynn good. she's duke energy's chairman, president and ceo and lynn thank you very much for joining us this morning. i know that you all are focused on renewables and natural gas pup don't use a lot of oil. have the fluctuations in oil business meant anything for. >> you natural gas is a bigger driver for our business and as you mentioned we've been adding natural gas to our mix of power generation. it's a game changer for our industry. >> it's huge. you saw piedmont gas. what does it mean with these prices so long and defied logic. do you expect that to continue? >> sure. the supply of natural gas in the

u.s. is quite extraordinary. there can be volatility, of course, but we see the ample supply for a long period of time. to have an opportunity to bring that low cost natural gas into our supply mix for the benefit of customers is really what we're focused on. >> in terms of the renewable energy, it's something we've seen with a few power companies that focused on things like wind and solar energy. what makes it worth it? is it government incentives to do it or is this really the future? >> it's combination of things, becky. the technologies themselves have decreased the price over yell declining wind and solar and tax incentives have been an important part of spurring investment. duke today is one of the largest investors end renewables and we brought a lot of investment to north carolina. north carolina is ranked fourth in the nation and installed solar capacity second in 2015 and new capacity being brought into the state. it's an important part of the mix. >> does it make sense with

without government incentives? >> it's getting closer and over the next five years we see that parity issue of low cost solution being more valuable. >> i'll ask you about the economy and ask erskine bowles who is our guest here this morning as well, you both must have a very good idea what's happening pup operate not only in north carolina, south carolina, florida, kentucky, ohio, indiana, am i leaving anybody snut those are tout the? >> those are it. >> what do you see right now? >> manufacturing particularly those industries that have commodity exposure, export opportunities, have been impacted by currency, been impacted by the slow down in emerging markets so we've seen a pull back in our industrial sectors. housing and housing related industries have continued to perform very well.

>> erskine, same question to you. you have a really good idea what's happening around the globe. what would you say is the u.s. economy's -- what's happening. >> i'm very positive on the u.s. economy itself but the problem is we live in a global world and when you look around the world, you know, europe is not doing so well. you know, exports, you know only 13% of the economy. and europe is only 15% of that. 15% of 13% is a big number. developing countries aren't doing so well. the bric companies are the fragile four. what's going on in china. the growth is obviously slowing there. so i think the global picture makes it a mixed picture for the u.s. itself and we have to adjust to that and be prepared for that and people like lynn are leading that charge. >> one thing that wall street is focused on is your dividend

policy. you have said going forward you're going to continue to increase that on an annual basis. what makes you so sure you can do that. how secure can investors feel the >> as you look at the uncertainty around global markets utility investment is a solid place to be and you see out performance in 2016, utilities outperforming the broader markets. so that 4% dividend represents an attractive place to put money network. as i look at duke with the investment profile that we have on infrastructure and cash flows that are predictable that underpin that dividend it gives us confidence and continue to grow it at 4% plus rate into the future. >> i want to thank you very much for joining us today, lynn. we appreciate your time. >> my pleasure. >> erskine we've been talking to throughout the morning. there's some breaking fed news.

steve liesman has some headlines. >> reporter: thanks very much. dudley in a speech backing a cautious and gradual approach to rate hikes. he says that's the appropriate way to go. speaking right now he says, he talks about the uncertainties about the effect that weak foreign growth on the u.s. and u.s. economic growth and when he looks at the whole picture he says you know what? the risks remain tilted to the down side. at the same time his forecast is one of about 2% growth. he says that's a little bit above what he thinks is trending in this economy and says that growth will be sufficient this year to push down on employment. he looks for 4.75% unemployment rate. he sees a possible decline in inflation expectations and that's really what worries him. he sees diversion signals in the economy with some soft sectors, some with only moderate growth.

consumer spending with business spending has moderated and he expects moderate growth to continue along with better housing stuff. finally he looks to the empire state numbers. he says manufacturing has rebounded. so a really mixed report from dudley, long term he's kind of optimistic but short term has concerns. becky, back to you. >> steve, thank you very much. we will have much more to come from the carolinas this morning including the panthers head coach ron rivera. first a trip to washington, d.c. and that's where kroez and government leaders are discussing the future of the export-import bank. honeywell chairman and ceo david cote well speak to us first on cnbc right after this.

it! (applause)

welcome back to box. let's take a look at some stocks to watch. gap report ad 6% drop in march cop parable store sales. the estimate was for 4.3% decline and said its margins are under pressure due to excess inventory. ultrasalon is joining the s&p 500 on april 15th, same day its

tax. replace tenet health care. vall valeant pharmaceutical is not selling bausch and l omb. valeant is only selling noncore assets. coming up, honeywell ceo david cote, his take on the global economy. that's next. this clean was like, pow!

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. welcome back. in a week where the obama administration has again being attacked as anti-business, two of the president's cabinet sex and trade rep are attending the import-export summit. to share his thoughts on that and so many other topics honeywell chairman anne ceo david cote. this week it was about the move on inversions. i know you and the president see eye to eye on a lot of things. did you think that was the way to approach that, this whole subject? >> well, i hate to say i'm not a huge fan of inversions in the first place so i find that not a great reason or compelling reason to do a deal. so it doesn't affect us all that much. i can't say i paid too much attention to it. >> even though business leaders,

mow, do certain things. you make plans based on what the existing law is for it to be changed like that a lot of other business leaders, i know it didn't affect you but just in general you can't look at that and say in general the rug pulled out from you after you're halfway through the due diligence that's not the way to do business, lower corporate taxes. can i get anything from you on that, pro business or not? >> as you know, i would much prefer tax reform. that's been part of what i've advocated for since i was on the simpson-bowles commission. we got a tax system that's evolved to chaos over the last 30 or 40 years and we need to address that. that's exactly where we ought to go. in the meantime i could say that we generally don't make any decisions, business decisions based upon what we think tax spoil or going to be because it can change just like this.

what government gives can take away. it's not a good basis for a deal in my view. >> when it's said and done do you think it will continue along the free trade path? i kind of think there's a lot of bluster and it's an election year and both sides are responding, i think, to some real concerns with working people in this country that have seen jobs go away, but we'll get back to basics and realize we need free trade events, don't you think, david? >> god, i certainly hope so. one of the thing that i said we've been learning since the phoenicians trade is a good thing and creates prosperity. you don't want to be silly for trade deals and have barriers going one way and coming down the other. by and large everything i've seen says this ends up being a good deal overall for the u.s. economy. the problem is, of course, you know, while the overall system wins and each country wins there

are people who lose in that process and that's why i think trade assistance authority and tha that sort of thing helps the transition. we shouldn't throw the baby out with the bath water and say all trade is bad because something happened over here. i'm very hopeful we return to smart business, things that are smart for the country, smart for job growth and trade does that. >> david, i don't want to relitigate the utx deal but i want to try to understand whether you think that transaction that you were supportive of doing could ever return? >> i have a tough time seeing it return. it's just -- at the end of the day a unique opportunity at a unique point in time. it made scene. they don't want to do it. i thought it was a very fair price and i wasn't ready to raise the price just to own it. like i said, i didn't want to pay for the privilege of making

other people money. >> how much of it though was what they called social issues, ego who was going to run up the company and would you have given up the role of running the company if it attracted them to take the deal? >> it was clearly all ego. but at the end of the day we never even got that far in the discussion. >> david cote's ego or gay's ego? >> never got that far. i had a discussion on friday and monday they leaked the story to cnbc and i guess we're done. >> if you tread stories and talk to some of the people around the transaction, there was the view that you wanted clearly to run the combined company and that

greg would not, and whether -- had you proposed it somewhat differently whether you could have gotten to it the table, do you think that's true? >> well, i always felt that at the end of the day i have managed to accrue a certain amount of market credibility over the 14 years i've run honeywell and that it was important that i play an instrumental role if we were going to do that. like i said we never had a chance to have much of a conversation so ended up being a moot point. >> hard to believe with your accent you are from new hampshire. i thought it was atlanta or something. who are you backing? who are you backing -- who is the smartest candidate that you're backing this year. your feeling the bern because it's just a little bit north of where you grew up? >> i would say mrs. cote didn't raise a fool. >> all right. okay. we'll read between the lines.

when a does that leave for you? we're all grappling. what's the best case scenario? >> that means i'm not giving you and answer. >> okay. oh, i thought you meant backing bernie -- you mean giving the anti-political -- okay. now i understand. all right my friend. thank you. >> great to see you. >> we appreciate it. when we come back, nfl 24/7 no real down time for a team looking to return to the super bowl especially panthers head coach ron rivera. he'll be back with the 2016 game plan. back in a moment. 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,

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coming up, carolina panthers head coach ron rivera and erskine bowles has final piece of advice for washington. stay tuned to cnbc, first in business worldwide. ♪ i built my business with passion. but i keep it growing by making every dollar count.

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welcome back. we're joined by a special guest this morning, fresh from leading his team to the super bowl, our next guest is already gearing up for the next season. the nfl draft is 20 days away. the carolina panthers will be on the prowl for new talent. we are joined by panthers head coach ron rivera. thank you for being here. our special guest this morning is erskin bowles.

>> coach, thank you for being here. >> thank you. >> when you go to the super bowl, you lose five weeks, i have no problem doing that. i would love to do from losing the super bowl? what is your plan for 2016? >> for the most part, there's a lot of experiences we went through as a football team. we went through a tumultuous couple of years to get to where we are today. the biggest thing i learned is we have a great locker room, great culture. the players have taken over that locker room and taken ownership. it's something i preached when i first got there and it's tremendous to watch them do that. >> how do you do that? >> when i played for mike ditka, he always told us about taking charge, leadership. i have 16 captains i can trust. great example is what happened this past training camp. our quarterback and one of our

star defensive bae iive backs g fight. i'm ready to handle it. group of a player came to me and said coach, we'll take care of it. they did. during the season, i had a young player who broke a rule. i was ready to take care of it. veteran player came up to me and said coach, i'll take cake of it. he came back and said done. >> that sounds ominous. >> he said we're not going to fine you, but if you break that rule, fine me. a little peer pressure, holding each other accountable. >> let me ask you, can you do the dab? >> you know, i -- when it started happening with our treatment, group of the guys said, coach, you have to do it. i said nah. we were getting ready, i said if we win this one, i'll go ahead and dab. i thought i was going to get away with it. thomas davis held me to task.

>> come back. come back, guys. come back to him now. >> coach, we missed at this. come back to coach rivera. was in the middle of giving my speech, ready to break the guys down. thomas says, coach you have to do it. i went -- one time. >> cam newtnewton, people think showed poor sportsmanship after losing the super bowl. what do you think? >> was a difficult time for him and the rest of the guys in the locker room when we lost. i've been on the winning end and losing end twice now. you put your whole heart and soul into something, you wanted to win, i don't think guys other people understand how certain guys react to it. to get out there, do what he did. it was very difficult. not many people have been in that situation. it's easy to be critical about it. the best way to handle it, let

the head coach get up there. let me speak for my football team. a day or two after the players settle down, put them out there. i will get across of criticism for saying what i'm saying. i believe that if you're going to have a player come out there with this raw emotion, i think we have to accept how he handles it. this is true raw emotion. the young man plays on emotion. when that situation he was put in, i thought it was very difficult. >> let me ask viewers, you said your investment is in the panthers, the best investment you've made. you're not talking about just getting to go to games and the fun stuff out of it. >> no, it's by far the best investment i've nmade. not a better leader that i've known. when you have leaders like ron and the team captains, the future of this ichb investmev i good hands. >> the sports licensing fees and

rights have grown. >> it's been a great business, but you also have to manage it, have goals, objectives, timelines and accountability. >> what do you do to extend cam newton's career. it's a violent game. >> hopefully we will continue do the things we've done as an offense. we rely on the running game. we try to rush for 100 yards a game. we would like to see the running backs take more pressure off. one thing we talked about is making sure we build an offensive line around him and protect him and put playmakers around him to hand the ball off, throw the ball. that way the quarterback is not always the target. if we limit the hits he takes, that will most definitely extend his career. i don't know if we've seen a quarterback with in type of athletic ability. >> let's talk about the violence of the game it comes back again and again with concussions, the linkages to cte.

the nfl had one speaking to congress saying they're acknowledging a link between the hard hits and potentially cte. how does the game evolve to deal with that? >> what we've talked about and i'm on some of the subcommittees to make sure we're taking the head out of the game in terms of using it as a weapon, a battering ram and teaching proper techniques, how to tackle properly, take the top of the head out of it, use the shoulders, face and hands. when you strike people properly, you lower the opportunity to get hurt. it's about better education, make sure these young men are taught properly and we don't glorify the big hits any time these young players are using the heads. >> sometimes we do. >> that's because we glorify. we see the highlights, look at this big hit, and it's the head leading. we want to see really good tackles. forming up, tackling the way

you're supposed to and we want to see the big plays, big catches, big interceptions, stuff like that. >> thank you very much for joining us today. really appreciate your time. >> great leader. >> erskine, if you had a message for washington, if you had a wish that you could get through for something we could tackle in the next four years after the election, that what would it be. >> reform the tax code so we can compete in a global marketplace and produce more revenue and produce it in a progressive manner, and let's do something about the entitlements. dim the healthcare cost curve and make social security sustainably solvent. if we do that, we'll have enough money to invest in things like education, infrastructure, research. so we're economically secure and can defend ourself through the army, navy, marine corps, if we

don't, there won't be enough money. >> when i sat down with you and senator simpson four years ago you had about half the senate on your side. about 150 members of the house, and 100 of the fortune 500 ceos who were coming out strongly advocating for those who are your friends and allies in washington? >> we're ahead of that now. we've been to districts, talked to the people in the districts, people turned around and talked to their members of congress. we spent a lot of time with some of these candidates in the presidential race. i'm hopeful for the future. i think we have a real chance. eventually we have to handle this program. we can't postpone it forever. >> erskine, thank you for being with us today. being our special guest. >> thank you. >> coach rivera, thank you. >> thank you. >> you want do the dab one more time? >> one more time. >> one more time. >> here we go. >> love that.

gentlemen, thank you very much. back to you guys in the studio. >> great to have someone from both sides, erskine bowles from the republican side. >> thanks, guys. we'll see you all on monday. "squawk on the street" begins right now. good friday morning. welcome to "squawk on the street," i'm carl quintanilla with david faber, mike santoli. cramer is off. stocks on track for the second down week in three. futures are higher in part on yellen's comments last night as she pushes back on some recession fears. you have got some decent import/export numbers out of germany. more fed speak today. dudley on the tape. oil is catching a bid as b of a says stockpiles should decline by the end of the year.