live from new york where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. joining us is steve grasso, director of institutional sales at stewart frankel. welcome. >> great to be here. >> it's not dick grasso? >> steve. >> uncle richard. >> i prepared for the wrong show -- again. >> different hairstyle. different look. different height. and -- and different money. >> didn't competition. >> that's what i was prepared for. well -- welcome. we like you. >> thank you. efrnlt was he

>> he was here when you were out one day. >> andrew was out. >> antimatter and matter together. >> we're both gentlemen. >> okay. after another down day yesterday, it's been five out of six down sessions for the dow and the s&p 500, it looks like things are turning around in the early hours. right now dow futures are indicated up by 43 points. s&p would open up, so would the nasdaq. overnight in asia, the nikkei ended flat. the hang seng was up by 1 %. shanghai was flat as well. in europe, as france prepares for elections, the cac is higher by 1% today. the dax is up as well. ftse slightly lower. if you check out crude oil prices, this was the big story yesterday. after a slide of 4% yesterday, things are picking up this morning. you can see wti up to $50.79 a

barrel. >> american express posting better than expected q1 profit. the positive results helped in higher spending by card members -- i feel like our family helped them there. amex's guidance indicating it was starting to mitigate some impact of losing key partnerships last year. ebay's q2 profit falling short of estimates. they spent heavily on revamping t the -- and qualcomm reporting revenue and profit that topped the street's forecast. the positive results easing concerns surrounding the chipmaker's dispute with apple. apple suing qualcomm back in january accusing the company of overcharging for chips and refusing to pay roughly $1 billion in promised rebates. weekly jobless claims and the april philly fed survey will be released at 8:30 a.m. eastern.

at the same time fed governor jay powell will be speaking in washington about capital markets and growth. as for earnings, talked about this a little bit at the top of the show, couple dow components. travelers, verizon, bank of new york, melon and blackstone report this morning. after the close, visa and mattel. the imf and the world bank holding spring meetings in washington. a couple interviews today, grown alan greenspan at 10:00 a.m. eastern time in an exclusive interview. imf managing director christine lagarde will be on "squawk alley" at 11:00 a.m. at noon, michelle caruso-cabrera sets down with german finance minister wolfgang schauble. a bit of political news -- a lot going on today. some tough talk on iran late yesterday from secretary of state tillerson. tillerson describing the iran nuclear deal as brokered by the

obama administration as a failure. >> an unchecked rye riran has o potential to travel the same path as north korea and take the world with it. the united states is keen to avoid a second piece of evidence that strategic patience is a failed approach. a comprehensive iran policy requires that we address all the of the threats posed by iran. it's clear there are many. >> tillerson getting out there. his comments came hours after the state department confirmed that iran was complying with that nuclear deal. elliott management has released the private letter from klaus kleinfeld which led to his resignation on monday. arconic, which is in a proxy fight with elliott said kleinfeld agreed to resign after the company found he used poor judgment by sending a letter. the hedge fund is run by paul

singer. the letter read as a threat based on false insinuations and it immediately informed arconic board. kleinfeld wrote to singer last week mentioning a tlip singrip took with his family to the world cup in 2006 and singer's alleged partying after the soccer matches. >> going to out you for partying? >> he enclosed an official soccer ball from the world cup as a souvenir. arconic cited the letter as the reason kleinfeld was stepping down. >> that's interesting. i had been wondering since we heard about this letter, what could he write to make them say forget it, we question your judgment. >> interesting watching fox news cover this. brett baer does straight intros, the howard kurtz, who then did a completely scripted, very

straightforward read of how this happened. o'reilly had a lot of interesting mannerisms. i thought about doing a caution, or something like that. you can't. you have to do it straight. fox news is parting ways with bill o'reilly following sexual harassment allegations. 21st century fox, the parent company of fox news releasing a statement saying the agreement was reached after a -- in their words a thorough and careful review of allegations. o'reilly calling the move incredibly disheartening. the star host came under pressure after an article by the "new york times" revealed that 21st century fox paid $13 million to settle harassment claims against him. since then more than 50 advertisers abandoned his show. according to forbes the o'reilly factor brought in 1$111 million in ad revenue last year.

we'll talk about the impact on the company at the bottom of the hour. >> i think it was more than 65 advertisers. >> 2015, i think o'reilly had 1$168 million, "the factor" generated. greta left, it didn't seem like a big deal at time. went over to msnbc. gretchen carlson was embroiled in the roger ailes thing. she left. megan kelly went to nbc. darn lucky they brought in tucker carlson. brought in a lot of traction. but they got your boy, did you work with bowling here? >> no, just missed him. >> he has a big job now at 5:00. i couldn't watch this show at 5:00. >> isn't it a demonstration of the power of the network, the platform over the people? >> we'll see. >> people always argued that the flat form w platform was like that because

of roger ailes. >> it gets a lot of viewers because it's seen to present a totally different viewpoint than mainstream media. >> appeals to half the nation. >> anybody could be that conduit, but then again, you wonder whether you can just throw anything up there and that it will stick. >> you might be able to. separate question what do you think this says about the larger ambitions and plans of the murdoch -- to me this is as much about the murdoch family and the change in terms of power, appreciating the way james and lachland and the way rupert thinks about the world. >> there was a much bigger deal that mattered for them, the sky news deal. and making sure -- >> i don't know that there's the political leanings of james and lachland. i don't know if an 86-year-old rupert murdoch totally stepped

aside. the ongoing investigations about whether the cfo, whether the payments were proper, all the management that was there enabling ailes and o'reilly are all still there. >> and promoted. >> right. in this day and age, you get the harassment sort of paint on you, and highw and how do you come out of it. >> they had to get rid of him. >> but what about the people calling women in saying we'll give you this. >> fox paid for these settlements. it's not like this was news to them. >> i think that's one of the investigations, whether the settlements were done out of -- how do you do it if you're the cfo? >> can you plug and play and put anybody in that seat? he was a light personality. that is a huge difference. does his following turn away

from fox news? >> do they follow him or -- >> are they upset with him being pushed out? >> he was one of the first hires. do you remember him from "inside editi edition" that ridiculous sound? i thought he was like an entertainment tonight host. you worked for him for a while i w . >> i was an intern at "inside edition." 1994, o.j. simpson. >> you were like an abused child. you had him abuse you -- >> that's not true. he put the promos together. that's mostly what we did. but it was fun. >> that's why you feel so comfortable here. >> he gets abused. he started in '98. by 2000 he overtook larry king. then ailes put out this is the new king of cable news. it began a total domination of cable news by fox. >> once you get to that tipping point, where you knew when he

took that vacation, he said it was always a planned vacation, you knew he was gone. it's a matter of balancing the advertisers who don't want to be there anymore and his fondness -- >> he's a ratings jugger thought. juggernaut. does someone take over? when you wipe the slate clean at fox and start anew as someone who is not a harasser moniker? you would want to hire him if you could get beyond -- >> i don't think an advertising-supported net wowor could hire him. >> we did see don imus come back after controversy. >> true. would have to findtrue upstart -- i don't think a classic mainstream, dare i say,

media company could hire him. >> unless there's more innings to play out and the story changes and evolves. you don't know. >> i wouldn't place any bets on it at this point. we've seen all kinds of people who have come back from getting knocked down. >> being in the media -- >> maybe he can start his own ott network. he has his own audience. he has his own audience. i think that mainstream advertisers won't want to support like that. mainstream networks will not want to get behind that. >> do you think his audience would -- >> maybe. if there was a new -- i don't think netflix would do this, but if there was new netflix, somebody who was a start-up trying to make a name for itself, against a netflix -- >> agreed. >> in a subscription business -- >> i'm not sure his following is that real. >> that's the other thing. >> it's not a digital audience. >> glenn beck's audience finally had to leave.

how is the blaze? >> mixed bag. unclear whether the mixed bag is a function of his performance or the way it was managed. >> is this a big story for everybody? >> no. >> we're in the media, we think this is a big story. >> and we're not on air right now which is great. >> yeah. hopefully the show is starting soon. we should move on. >> let's talk crude prices. crude prices rebounding this morning after a dip of nearly 4% yesterday. jackie deangelis has more. she can jump in on the conversation. >> good morning. another support was tested yesterday indicating a lack of confidence in oil's recent rise. a rebound today after saudi arabia and kuwait say consensus is building to extend that opec cut. we saw almost a $2 drop on the back of that crude inventory number. this time of year we should be seeing a bigger cried turn as the summer driving season is

around the corner. when the market does consider supply and demand the signs are not that encouraging. u.s. production is climbing. the big question now is this, will opec extend that cut? the secretary-general said it is too early to make a call. the next opec meeting is a month away. second, will geopolitical tensions be an issue? could the iran deal be revamped? keep an eye on washington. and is a rebalance panning out as wall street expected? the figures not signaling confidence. back to you. >> thank you for that. we'll check the markets. >> let's look at things. joining us to talk about the markets is jeff saud. and raymond joy also joins us. our guest host for the hour is jeff grasso. david, you still like u.s. stocks, but you sound like you're more cautious than you had been in the past. >> well, i am to the extent that

i think the market needs something to break it out of its current lethargy. we've pushed out expectations of policy initiatives from washington. that's number one. number two, earnings are coming in pretty well with some notable exceptions. that's already priced in. if you look at the economic data, it's been just okay. it hasn't really supported expectations of improving earnings over the balance of the year. we need something to get this market moving. i think it will be on the economic front. but we haven't seen it yet. so we're treading water, just drifting lower now. >> but you definitely like stocks more than bonds? >> yeah. yes, i do. i do think that earnings on balance this year are going to be pretty good. maybe in the 10% range overall. i think that's enough to get us a little bit higher. i'm not looking for a big move up. maybe another 5% in the s&p at

the peak of where we get to this year. but the other thing is i think to a certain extent, it's kind of a counter intuitive way, the fact that washington is delaying on tax reform, fiscal stimulus, that is keeping the market in -- propping it up a bit. i think there is still widespread expectation. we'll get something. we just don't know when. >> jeff, i think you agree with most of david's points, at least the points about how you would stay away from bonds at this point but you still like equities? >> yeah. greetings from your home city of cincinnati, which is where i am this week. my models called the trump rally, they got cautious the end of jab.

of january, but our models are turning positive. we think the markets have transitioned from an interest rate secular bull market to an earnings driven secular market. i think people are profoundly underinvested. i'm looking for a bottom for the first time since we turned cautious at the end of january. >> and the earnings you think will not disappoint? >> no, i don't think the earnings will disappoint at all. they're slated to come in up 9% according to fact set, and i think that will be on target. i think the second quarter of this year will show earnings growth better than that. >> steve, i think you made the point that we keep looking at the market averages, but there's a lot happening beneath the surface. >> sure. if you really look at what's gotten killed, everyone looks at the trump rally as jeff said, you watch that 13% rally in the s&p. then you see the market sort of hanging in there everyone says, well, we're meandering or moving sideways. financials got killed the last month. energy falling off a table, the industrials falling off a table.

there's a lot happening. a lot of fund managers are getting carried out. andrew speaks to them every day. when you talk to these guys watching their performance on a year-to-date basis fall after a cliff in a market that seems to be hanging in, as people say. but there's a lot of stuff getting whacked. to jeff's point, if we don't get pro-growth policies, i don't know where the market goes from here. >> jeff, how do you feel about sectors like financials? >> i like financials. i think the fiduciary role won't go into place. what i hear all the hill is constructive for financials. we have not seen the steepening of the yield curve yet, which would also be very positive for financials. the back drop for financials has the wind at its back. we think you should be overweight financials. >> jeff, david, thank you very much for joining us. jeff, enjoy cincinnati.

steve will be with us for the rest of the hour. >> that's a beautiful shot. that's from kentucky, but i don't think that's a real shot. are you on the other side of the river? >> no i'm in downtown cincinnati, wkrp, joe. ♪ in cincinnati >> very close. i know exactly where you are. you can either have some -- gold stark chili or skyline chili. >> skyline. >> i'm a price hill chili fan. >> grasso, do you want reagan's economy or obama's economy? the phil graham editorial in the "wall street journal." i thought about you reading this, andrew. i have grasso here, i have to talk with him about it so i can have help. they looked at cbo scoring. the point of the article is there's no way the cbo in its scoring can distinguish between

good economic policy and bad economic policy. so when they looked at scoring reagan's programs, there's -- they were unability to see that it would -- it delivered -- >> they didn't do dynamic scoring. >> it generated an additional 2.3 in new revenues, when they scored obama's, they were unable to see you would last 2.4 in federal revenues. but you have reasons. it doesn't happen in a vacuum. >> thank you. thank you. >> i tell you one thing, president obama was the first president from herbert hoover to not have a 4% -- >> 3%. >> i thought it was 4%. >> 3%. >> even worse. >> 3%. >> okay. so you can pore over the gdp number. it's an objective number. i won't debate the number. but i think life is relative, you tell me when president trump gets you a 3% or dare i say 4%

gdp the way he promised, then we can have this conversation. >> i understand. >> unless and until we get in there -- >> we're 100 days in. 16r7b8g9s 16r7b8g >> 1 00 days in and it's hard to say it's going swimmingly. >> i think it's hard to increase population that you need to for gdp. >> that's the point. the obama administration said this is a demographic story. this is a world relative story -- >> we'll see. look closely.

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investors will be watching closely on sunday as french voters go to the polls. wilfred frost is covering the election. where are you, in las vegas? that's a very real-looking -- what is that structure called behind you, wilf? if media matters watches, i want them to write a story that i didn't know the eiffel tower. you're in paris? >> i am, indeed. it looks almost as real as the one in las vegas. any way, let's get to the point, three days away until france goes to the polls to pick its next president. four candidates with a chance of winning. let's look at the odds of who is most likely to win the first

votes. marine le pen, the far-right leader of the national front party.icy she has. but she's not likely to get to 50% of the votes, so round two who is likely to be the president at the end of this whole process? there le pen drops to third place. the forgave sit the favorite is the centrist, mr. macron. i want to use a newspaper to highlight some thoughts. the left-wing newspaper has a title that reads "the battle for the working class vote." the picture, marine le pen of the far-right, jean-luc melenchon of the far-left. the working class vote could be won by the far-right or

far-left, donald trump and bernie sanders prospects. a jean-luc melenchon rose over the last couple of weeks. the other paper i want to show you, a right-wing newspaper what a picture of francois fillon, the candidate for the republican party, the party that former president sarkozy was in. six months ago the republican favorites to win, but then he was engulfed in scandal. but he's fought back. and the prospect of two centrists rather than two extremes is welcomed in the markets if we look at euro versus the yun over oen, you'll that has played out. it's down 3% for the month as a whole, but it has bounced back the last two, three days. the euro and french market up today in part because of the bounce back in the polls of the

center-right candidate, francois fillon. >> it was a personal scandal but involved money. it wasn't like a blue dress or something. it -- they don't wear about that stuff. >> no, no. well, i'm not quite sure if i can answer that. >> three words for you. >> money to family -- paying none family members in his past political career. personal scandal was that it wasn't along political lines in terms of which party he was or wasn't standing for. it was questioning his own integrity. >> you know what i mean. hollande had a choice, who do i want to take tonight? my wife -- what do i feel like? wilfred frost -- >> and -- >> go ahead. >> i was going to say, the interesting thing about president hollande, he is on single digit approval ratings. that highlights whoever wins, the crazy nature of french politics, his approval digits.

and his candidate not even in the top four. that's the crazy nature. either way, as things stand, this is a historical situation. very divided. very close. we'll see what happens on sunday. >> wilfred, i would have gone over much earlier if i were i to cover this couldn't you have been there three weeks ago staying at the bristol? just to get a real feel for happening? did you nach to tyou pitch thats that be? >> three weeks ago the weather wasn't quite as nice as now. >> maybe extend it. >> i need to come back and follow up every weekend over the summer i think. >> he was in miami last week. >> pray for some hanging chads over there. maybe this will drag out for a while. >> see you guys tomorrow. >> all right. >> coming up, when we return, "squawk box" going behind the wheel live in china. we'll talk to the top cadillac executive in that country. live from the shanghai auto show as we head to break. a look at yesterday's s&p 500 winners and losers.

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♪ good morning. welcome back to "squawk box" on cnbc. let's look at the u.s. equity futures. you'll see that things are hanging in after a rough session yesterday. where we saw the markets

basically give background the entire session, closing down for the fifth out of six sessions. the dow futures are indicated up by 41 points. s&p futures indicating an open of 6.5%. the nasdaq up by 18.5. >> phil lebeau is at the gm cadillac plant in shanghai. he joins us with a special guest. hi, phil. >> joe, i'm joined by andre andreas shiff who runs cadillac in china as you see your vehicles coming off the line at your plant, you're riding the bull, so to speak, sensational growth in the first quarter, up 90%, 45% growth last year. how much longer can you continue to have these gains in sales? >> i think cadillac is doing extremely well in china. we're among the fastest growing luxury brands. i'm confident we will continue. you will likely see double digit growth this year in china.

china is one of the fastest growing markets for cadillac in the world. >> you know the argument is the big three german brands dominate this market, clearly lead the luxury market here. how does cadillac differentiate itself compared to bmw, mercedes and audi? >> the answer is relatively ee. easy. we are the only luxury car brand that originates out of the united states. >> that's an advantage here. >> very big advantage here. for those people who want something different than the european luxury, the traditional european luxury, american luxury is the alternative. >> what is it about the american brand that appeals to the chinese? >> it's a lot. america has a lot of positive connotation for chinese. it's the country of optimism, the county of opportunities. i think cadillac is reflecting those values. it's broad, sophisticated, something that stands out in the crowd. >> you have the plug-in ct6 hybrid that you're building

here. some of those will be exported to the u.s., primarily it's here because it will be sold in the china market. how quickly is the electric vehicle revolution coming in china? you are already number one in the world in terms of electric vehicles. what do you foresee over the next five years? >> electrification in china will become faster and faster. in 2020 we already expect 2 million to 3 million electric vehicles here on the road in china. so the growth will be phenomenal in this play. i think with gm and all the came nl capabilities in electrification, we will play a dominant role. >> a lot of concern in the u.s. if a trade war breaks out with china t hits the automakers. are you insulated because you have the manufacturing here? >> it's not a likely scenario. it want be in anyone's interest. as you said, we have local manufacturing. at the end of the day consumer also decide about their

preferences and toys. cadillac is a demanded car. i'm not really worried about this. >> andreas scaaf, the man who runs cadillac into china hard to believe overinwe're in a manufag plant because it's so quiet. >> i thought they were in a subway at first. thank you very much. when we return, senator pat toomey will be joining us on set to talk about president trump's first 100 days in office and the gop's legislative agenda. then riding the rails, the ceo of amtrak will join us at 8:00 a.m. eastern time to talk about infrastructure in america. and later, former treasury secretary robert rubin will be here to talk taxes, the fed and the trump economy. stay tuned, you're watching "squawk box" on cnbc.

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fox news parting ways with bill o'reilly amid harassment a allegations and advertisers abandoning his show. joining us is barton crocket from fbr capital markets. thinking about this barton. you heard the term the graveyard

is full of indispensable men. it's like if you put your hand in a bucket, you take your hand out, you can't tell anything different about the water when someone leaves. i don't know if i believe that about bill o'reilly. you seem to believe that the juggernaut continues with or without bill o'reilly. >> i do. clearly time will tell, but they lost glenn beck, they lost megyn kelly, they lost roger ailes, and ratings are at an all-time high now. fox's strength stems from formula, from production values, stems from its positioning on the political spectrum. i think those things continue. i think the better bet is these guys can do just fine without o'reilly. clearly you would like to keep him. but in this case they'll survive the transition. they'll still be a strong network. >> i watch some fox.

tucker's great, obviously. but i'm not convinced you throw up anything against the wall and then it sticks necessarily. could you ever see that they would put someone in an important time slot that was unsuccessful? or that msnbc or that cnn was able to steal market share if they got a bit less conventional in their thinking? i don't know. you just figure they -- fox has this fair and balanced, we're an a alternative to mainstream media, whoever you put up will be the same and you'll still go there. >> i don't think they'll put up losers, they'll put up good, talented presenters on television that combined with their positioning, formula and brand makes it a good bet they'll continued to be a winner. >> what does this say about the larger 21st century fox, the management of it when you think about what's going on inside the murdoch family, the transition

from rupert murdoch who was a bill o'reilly fan, who i think otherwise might have kept him had his sons not been in power position that they r and now james and lachland, who clearly not only have asserted power but have different political views. >> i don't think this is about political views, this is about a legal investigation and public accusations and an advertiser boycott. i don't think you can make the statement if the kids were not there that rupert would have stuck to o'reilly. it's hypothetical. maybe, maybe not. the fact it we're moving on. the fact is there is a generational transition. the street has confidence in james. there's a lot of things people are interested in at fox that go beyond fox news. the sky acquisition, the growth in india with star. ratings are up after the trump election. everyone thought the ratings would come down.

>> you don't think the transition within the family will be a transition within fox news, whether it comes to the editorial page, fox news itself, fox business news, that it moves more to the middle and opporten to competitors who would like to go more right? >> i think they like their formula, they're sticking with it you'll see the same political stability at fox news and at the journal that we have been seeing. >> what about o'reilly? he's 67. he has more money than anyone could ever possibly use. you don't think that cnn, any of the other cable networks would take a shot. >> given what happened, the advertisers leaving, i can't

imagine him going on msnbc or cnn. i could imagine him on a cable network, that's something you could draw a big part of his audience. over time that could be perceived as a threat to fox. but i think that, you know, in the near-term, you know, the internet services just don't seem to stand in the way of what anyone is doing in the big networks like fox news. >> you actually made the point that him leaving might be good for fox stock because it removes the overhang of the concerns about what was going to happen. so it may not be a negative even now. >> right. i think that the longer this had drug on, you know, there was risk that advertisers that were not putting money in the o'reilly show were putting it elsewhere on the network would have walked away. there's a point where if this persisted, the protests, all of the news reporting, that it could have impaired the brand more from an advertiser

perspective than anything. i'm glad to see that risk gotten rid of. >> we have to go. do you think there's any way the average person or advertiser would say you had the first guy, then you have this guy, you have all these enablers that are paying people off, hushing things up. i don't like this entire place. do you think that could ever happen? >> no doubt that people are thinking that right now. then they're waking up and looking at the audience and they still want to be there. ultimately the audience is what matters here. >> okay. that is the one fact, the audience matters. it's rough. barton, thank you. >> thank you. he is related distantly to davie crocket. >> really? >> not kidding. >> seriously? >> yfrmt. >> i did not realize that. >> see his hat in the back? >> the mortgage bankers association is asking the president to tackle home finance

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welcome back to "squawk box." the mortgage bankers association taking aim at housing reform. the group pushing congress and the president to make make changes at fannie and freddie. since being under conservatorship. good morning, david. >> good morning. >> you're going to be laying out a plan this morning at about 10 or 10:30. i have a couple of questions about how it's all going to work. >> fannie mae and freddie mac have have $5 trillion at risk to the tax payers over time.

secretary mnuchin has said they're going to take care of this. they've held discussion sessions on the future. so it's here and they're going to work on it sometime likely after tax reform and reg relief esh use. the challenge is very complicated. it's a difficult subject in terms of thinking how to deal with these massive institutions and put them in a state that protects homeownership, doesn't disrupt the market in a way that hurts the economy or consumers but is sustainable moving forward. >> there's two critical issues, one is how you structure it and make it work so that the 30-year mortgage doesn't go away, if you will, and completely up end the real estate business, but there's a secondary issue in which investors who watch this

show have which is to say hedgefund managers have piled in on expectations of profit and in terms of how you're going to privatize these companies and at the same time, i think it's going to be very hard if it looks like there's a whole group of people profiteering from it. >> yeah, and i think that's right. our paper is agnostic in terms of speculators who took advantage buying those prices during the conservatorship period. we do care about the future of the housing system. when those two companies were bailed out, the united states government had to infuse billions of dollars and over $2 billion in credit.

we have to look at how do you not only keep and protect the 30-year mortgage for home buyers without disruption or minimum disruption or get those two businesses out of -- >> i think we all have the impulse to try to privatize these institutions. but the other question is what would happen if this were just left to their own devices in the state they're in now? >> conservatorship is a legal position. theoretically i guess you can kick the can down the road as longs as you want, but in our view it really doesn't matter at this point. we can debate all we want but the players are on the field and they're starting to play the game. the administration is committed to taking them out of c

conservatorship. people can sit on the sidelines or you get in the game. our view is we're going to get in the game and try to make sure as we guide this through, we don't lose those core principles that protect homeownership. but you can do it with a lot less taxpayer risk and that's what our plan lays out. >> david, 48 hours after president trump won, i remember interviewing bill ackman, who was one of those who piled into fannie and freddie with the hope that something would happen in terms of some sort of privatization. in terms of handicapping whether it happens and when it happens. you said you thought this doesn't happen until we get tax reform. as you know given the

conversation we've been having, the expectations on tax reform keep getting pushed out. >> it's definitely going to happen on the committee level. the senator made clear that committee can walk and chew gum at the same time. they're working in meetings with a variety of stake holders to make sure, one, it gets a little less complicated than the last attempt and takes into consideration lessons learned. whaef it looks like, a big piece of legislation or something more narrow, that clock is going to run out and they're going to have then time to move on to the next issue. the committee can take this up before -- during the time at which tax form is being engaged.

our expectation is by the end of this year or early next year this will be a hot topic. i think it's really important that stake holders be there to take up a plan that solves what democrats and republicans want, protect the taxpayer and not disrupt the housing market. >> good to see you. >> good to see you. >> thank you. >> you'll be back here. >> the next time? friday night i'll be back. i swear i'll be 100% awake. today was 50%. >> would you put money on fannie and freddie? >> my bet is on the housing stocks, kb wrongs, millennials get me out of my parents' basement, what i'm long. this is too much of a crap shoot. >> coming up, we have senator

pat toomey joining us. let's go, she's a dog.

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earnings alert. we've got the number on street reactions. senator pat toomey joins us to talk jobs, tax form and health care on your portfolio. and happy 420 day, everybody. the marijuana companies giving stocks a big bump. we'll go inside "uber for weed." >> that look like a quarter pounder, man. ♪ ♪

live from new york city, this is "squawk box." >> good morning, welcome back to "squawk box" right here, i'm andrew sorkin, general motors said it had to shut down operations at its venezuela plant after the plant was seized by the government. the automaker calls the seizure unexpected and illegal. the government did not give any reason for the action. we'll keep an eye on that deal. a takeover deal reportedly imminent involving two high-speed firms. the deal is said to be worth $20

per share. you're looking at kcb up 2.7% in the premarket. and the dow component is out with earnings that will help lift the dow. american express beating estimates on the top and bottom line thanks to increased spending by customers. and that's good news for a company that hasn't had a lot over the past couple of years. >> dow component traveling came out with earnings of $2.16 a share. that was below the street's estimates of $2.35. there have been some other insurers that reported recently and travelers was among those impacted by higher-than-expected catastrophic losses. the revenue number did come in above analyst forecast and the insurer raised the quarterly dividend by 7.5%. some of those catastrophic

losses were from storms that came late in the quarter. we'll keep track of the dow component today. >> the strong levels of consumer confidence, it's a story we've been talking about a lot all week here on "squawk box." senior economic reporter steve liesman is here. >> it's pretty interesting, andrew. confidence is at a multi-year high. retail sales have fallen for months. which tells the real story? we compared our polling data of 800 people. we found a lot of it is exclusive just to republicans. just 11% of republicans rated the economy to good or excellent in october and that number jumped to 45%, even though the economy seemed to have weakened.

and economic outlook for next year surged for republicans and plunged for democrats. there's been a spike in optimism over the stock market. there's been a mass of increase in love for stocks among the gop and somewhat as well as for independents with little change for democrats. so it looks, folks, more and more economic views tied to political beliefs, that makes it unclear how much markets should rely on sentiment data to show the way on the economy and it raises the stakes for the trump administration to deliver on its promises to justify the optimism of its supporters. >> why do you hate the stock market? >> because he's a democratic and he looks at it the wrong way. >> first of all, i'm not a democrat. >> this poll, you just polled athletes? >> all americans. with an emphasis on wide receivers. >> and linebackers? >> an emphasis on wide receivers. >> is there a different

preferences between defense and offense? >> the reason we call it all america is we don't want people to think we polled just rich people or stock owners or -- it's across the country. >> can we just go back for a second? >> you've been in a bad mood since 17,500 before the election. >> but this is what woo nee nee talk about -- hold on. >> let him ask the question. >> you look at growth in the united states, just straight up gdp numbers. >> didn't care about gdp the last eight years. >> it's weakened, right? >> it's weakened since the election. i'm simply pointing out two things, one is that people's

current economic views are filtered through their political beliefs and, two, the market is crazy about consumer sentiment numbers, which is a piece of data that economists have always been skeptical about. i'm offering another reason toito be skeptical about the confidence. what happens if tax reform doesn't happen? i don't think a democrat is going to go spend less money today versus october because of the election and i hardly think republicans -- >> i agree. >> what i think will matter three things, stock market wealth, wage growth and job security. i think the hard data of the wallet matters more than what's in the brain. >> what about kickers, field goal kickers? >> we have a special group. >> president trump continues to tout -- it's kind of a

subjective word to use but anyway, tout tax reform while great lak goldman sachs -- senator toomey is here. he's on the senate banking and finance committee. so confusing. you're back listening to the president, he wants the savings from the obamacare appeal to do something positive. you can't do it unless you have the obamacare. some worry we're backing that mo -- >> i think it's important to get obamacare done. i think we can get that done. i think the biggest challenge is one that will be self-imposed if

we choose this and that is to hold ourselves to a congressional budget office and joint tax commission, to insist it's revenue neutral. if that's what we encyst on, they won't give us credit for the kind of growth our economy is capable of. >> the treasury secretary told us themselves they already have a lot of people working in the treasury with their own numbers because they can't get this. >> they don't think lower marginal rates matter that much. to steve's point, what i would say is the person that matters a lot is the entrepreneur that decides i'm going to risk everything i have to launch a new business. and it's part of why you can really get a surge of economic growth if you do it right. but if we hold ourselves to revenue neutral, it's going to be really hard to get to where we want to be.

>> entrepreneurs are not going to wait for you to get your act together. you think they're going to make a gamble on what you're going to do? >> absolutely. entrepreneurs have to make a decision one way or another. they're going cbo during the regular administration, the cbo was wassin and cbo unable to forecast and said there will be a lot of 4.2 trillion. this don't know whether economic policy is going to be a good or bad thing before it happens. >> but that's an argument for taking out any score keeping. >> or having a much more different approach.

>> it's better i at this think and we don't to -- i ran free election last year around pennsylvania, i heard more complaints about the level of regulation even than the tax code because of the avalanche we've had over the last several years. >> is there hypocrisy when you see that republicans cared a lot about the deficit and polling shows concern over the deficit now among republicans has declined quite a bit. >> abated. >> abated. is less. is that a hypocritical concern? >> i always looked we ought to lock at what's driving it. it's the unstainable growth. it means can you never catch them until you chang that fundamental dynamic. revenue today is bigger than and

we still have obama era tax increases. we have plenty of revenue. the trouble is the spending is out of control. >> but you have no ambition at the moment or this president has no -- >> as you know, obamacare dramatically expanded medicaid. this is a chance to sustain medicaid and put it on a. >> i -- >> you know some people? okay. >> their argument, they made the case obama went from 10 trillion to 20 trillion. will the me work with 10 trillion. but not to use it to fill potholes and union pay out but

let do tr to if you get the deficit with typical -- >> but it's so cynical because the world is so different -- >> fundamentally what's not different we still have the moe subtop the population not growing, the rest of the globe -- >> people aren't investing because they're not willing to take a risk in an environment where regulations are so onerous and the tax burden is a disaster. >> so help our audience understand what it's going to look like, not what they've been told it going to look like. >> i city we sill have a.

>> i think we kep closing the gaps between the conservatives. >> did you see the first failure coming? if i had asked you this question prior? >> i like the approach we were on a long time ago, which is to acknowledge that the replacement is a multi-stage process and when -- and so it's okay to do a repeal with a phase-in that's like three years, give us the time to do both the regulatory changes and the legislative changes that get you to the kind of market based health care we want. the expectation we're going to do that all in one bill was a huge mistake. one we staekd that expectation, i knew it was going to really hard to get everyone on the same page. >> so the house could do it and

then you'd find a way in the senate for you good guys, you brahmans. >> talk all day long and. >> every time obamacare has been on the ballot, it's lost. republicans have made it abundantly clear they're not going to do anything with us on obamacare. >> it might work for impeachment. >> if we can change the facts on the ground, repeal obamacare, and begin to work on reforms, a

year from now will democrats work with us -- >> what does it say about tax reform? a lot of the arm chair quarterbacking is you should have never put health care first, you could maybe get bipartisan -- >> it does help if you do obamacare -- >> it helps from the funding perspective. >> plus some of the taxes we'd like to get rid of -- >> does that mean tax reform is going to be completely one sided. >> it was always going to be. >> but that means up throw people off of insurance. that's what it looks likes the public is opposing. >> and for the first time the republican has a favorable opinion. >> the fundamental model of obamacare, let's force people to buy a product that's overpriced and since they can't afford it, we'll subsidize it. there are plenty of other mechanisms you could use to make

health care available to people who even have expensive, cron being needs but not distort the market to keep healthy people out it have. >> but a lot of those are the ones the freedom caucus are opposed o. >> i'm in favor of getting rid of regulations that drive up the costs so people have a market that reflects the. >> it's hard. it's hard. >> and then a lose in '18. >> people have seen how premiums have gone through the roof. that has been driven largely by obamacare. health care becomes more affordable. >> but you're not going to have

and tax reform i think can be done by the end of the year. >> all american. >> yeah, get the athletes on board first. corporate tax reform, personal tax reform or all of it? >> all of it. >> with infrastructure? >> that's separate. >> thanks for being here. >> thanks for having me. >> coming up, the maker of big screen picture technology reporting earnings just minutes ago. squa "squawk box" will be right back. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready. because we're helping leading companies lead with digital.

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welcome back to "squawk box." earnings just out from imax. revenue four months short of forecast after imax's biggest opening weekend ever in china with the release of "the fate and the furious." >> good to see you. >> it's early. >> too early in the morning for you? you're up watching movies? >> pretty much. >> blockbuster movies aren't released in january and february

unless you have a tail from a december movie, it's a relatively slow quarter. starting right now, you said fate of the furious, this is what kicks off blockbuster season. >> how much of the business has moved to china? >> for fate of the furious, china did higher box office than the u.s. by almost double, not only in imax but in the u.s. film industry. it's become really important. for some franchises, including transformers coming up, china is incredibly important. >> what are the expansion plans in the united states screenwise? >> the u.s. is a more mature market than other places. there's been some consolidation, amc, the majority owned by wanda. but there's not a lot of new building. >> when you're thinking growth,

you're still thinking china, china, china? >> we just signed a very big deal, amc bought o odeon and nordic cinemas. we did a 25-theater deal with this covering 11 countries in europe. that's going to give our european expansion a shot in the arm. china is big in the market. >> i love imax. a lot times it involves heights like you're there and that doesn't do it with me. >> you have a stomach issue? >> to the a stomach issue. i'm petrified. >> becky, can you go to an imax movie? >> just because planes for you sometimes -- >> i can suspend it.

>> what can we look for coming in the summer. >> galaxy of -- i think that's going to be maybe the biggest movie of the year until star wars but also transformers, dunkirk. >> what's the average ticket price? >> depends on your city. >> around $16. >> what is the elasticity? >> it's almost the same as in china, which doesn't have the money here. >> and window compression doesn't matter to you? >> no, because we're still an event. >> you're still an event. >> there is the right movie for

an imimax theater. but i'd rather have space. >> you didn't do "la la land." >> we did. >> see, see? >> what prsaercentage of films done on imax? >> "la la land" didn't. >> it didn't but he said hisn k next movie. >> what is the cost? >> if you film the whole movie, probably $5 million more. >> but it's worth it. you get to see "la la land" and

"fate of the furious." >> it's not aging well. did you like it. >> i liked it for what they were trying to do with it. >> earnings that are out right now, blackstone came in with earnings of 69 cents. >> is that what you use? >> i don't know if you use that or $1.02. in either case it beats expectations. revenue beat street expectations. first quarter distribution, 87 cents is the old record. that's a big number. >> yield on the screen is 5%. five times 30, it's usually 1.50 a year. so it's much bigger than typical distributions. stocks up a little bit on this. now, did you see what number -- they just gave an 82 cent

number. >> all those numbers. >> coming up, we're going to talk markets and earnings but this team. >> it's 4 slk 20. >> and it's my cousin katie's birthday. happy birthday. >>. >> and we're going to talk pot profits. andrew have a brownie. >> i could use one. >> "squawk box" will be right back. >> time now for o our aflac trivia question. who created the fearless girl statue? my vette!? it's just a gall bladder! you don't have.. aflac! paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent.

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all right. let's take a look at verizon. first quarter earnings of 84 cents a share. it includes an 11 cent early debt redemption charge and gain on spectrum license. back out the 11 cents and it's 95 cents. we don't make value judgments

but 96 cents of the estimates. so it's a penny pee low estimates. street was looking for 96 and company earned 95. lowell mcadam said it demonstrates customers value a high quality network experience, references the unlimited pricing opportunity, they saw a decline of 307,000 retail connections. fios reiterated, the company did, some outlook items saying full year 2017 consolidated earnings per share tends to be at similar levels as consolidated revenues. >> what does that mean? full year estimates for the street, 124.5 billion for

consolidated revenue. >> the analysts don't come up with their own stuff. >> 11 precommercial -- >> if they can't hit their numbers, why are they going to take over these other companies that do hit their number. >> why do you think at&t was trying to buy time warner. that's the story. these businesses are not growing the way they used to. and you start to look to what can you buy that can add on the other end? >> let talk stocks right now. joining us is joe quinlan, the head of strategy at merrill lynch and jason pride. joseph, maybe you can talk about where you see things are we

hitting numbers and is that the key to where we're headed? >> i think finances are doing better. but it's already baked into the cake. earnings season's here, stock specific, we have to see the financial side kick in later on. >> so stocks are fairly valued based on earnings numbers we're starting to see sm. >> i think earnings will come up and justify the valuations. >> do you agree with that? >> we do. we think we're in a consolidation period. as some of the policy hype is now backing away and eventually as those valuations back off due to what joe is saying, earnings catching up with it, they provide the support for the market to go higher. it just takes a little bit of a consolidation period to get there, basically because of how far we went on the hype of all

these based on tax reform and infrastructure spending that were really the economic kind of impact items that the market was fairly hopeful about. >> the other view we hear from people pretty frequently is, okay, this is a fair price for earnings for a couple of reasons. one, you're already going to see regulatory issues that can help with a lot of the improvement that you have might expect to see and, second of all, there's nowhere else to go right now. particularly when you look at yields. for the ten year, for the 20. >> so i would say two things to come on that. number one is valuations in the u.s. are expensive. it just that historically in other cycles, we've ridden at levels similar to this -- >> so you wouldn't short this market? >> it's overvalued but not so much that it pends a pullback.

the -- japan, asia, those areas there's growth going on that's better than the u.s. and you're getting a discount. it's a little bit of an investment opportunity but it takes a bit of an iron stomach to be able to go there. >> look at middlesex can product groups, korean electronics companies and there's places to go there. >> do you get pushback from your clients -- >> no, because our clients have been there. if you talk russian paper, it gets scarier. >> i could say we do get pushback.

we get pushback because people look at the past five years of returns on international stocks versus u.s. stocks and the past five years has been pretty punk in international pretty much anywhere where you look. people look at that and say why do i want that when the u.s. has done so well. typically you want though things that have done toorly on the 5-to-7 year time frame. >> what do you think about europe? >> look at the pharmaceutical company in switzerland. you're not buying countries. you have to buy companies. >> i noticed you didn't say any of the financials. >> there's some deep, deep value but you're going to wait a long time to see that. >> we'd argue that europe is not as discounted as some of the other areas. you look at a place like japan, extreme discount to the majority

of the developed world markets and you have policy that is one directional. you know exactly on where the governor hits, what they're trying to do with the economy and with temperature. >> jason, joe, thank you both for your time. >> thank you. >> coming up, quarterly results for verizon, they're down a little. and former treasury secretary and chairman of the council on foreign relations robert reuben is our guest. "squawk box" will be right back. . the power of 100 of the world's top companies. the power of an etf. the power of qqq. the thinking we put in, clients get out. power your client's portfolio

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welcome back to "squawk box." emy elliott imagineagement releasing the letter of klaus kleinfeld.

he sent paul singer a letter that they thought was threatening, some form of extorti extortion. the letter suggested, i real cey learned from berlin what a soccer enthusiast you are. how you celebrated your soccer enthusiasm unforgettable without a doubt. if i native to find an american indian's feather head dress i will send this additional part of your memories and by the way, "singing in the rain" is a wonderful classic, even though i never tried to sing it in a fountain. clearly there was some kind of revelry in a fountain with an

indian head dress and i'm going to tell people you were partying at this soccer match. >> that's just weird. >> as a token of my appreciation to learn about this other side of you, i allow myself to bring back some vivid or imagined debauchery. >> i've been around him only a couple of times. >> klaus? >> no, paul singer. you wouldn't think being around here that he's a big partier necessarily. you have your ear to the ground all the time. was there prior to this a reputation -- >> i was not familiar with the reputation of the partying paul singer. >> klaus eludes to i've heard

about your well-known revelry. >> there's another side to you that the public doesn't know and i might tell people about that. >> it sounds like you're at a party with a lamp shade on your head, "singing in the rain." >> the whole thing is bizarre. >> gene kelly and -- >> it's such a strange letter. he says unfortunately have i been wondering what the founder of such a m. >> this has been a very personal and heated battle that elliott has waged. he was basically questioning klaus's leadership and having that as the back drop, it does sound like a threatening letter. it's weird. >> strange, bizarre. in the meantime, verizon reporting earnings just a minute

ago. she focuses on telecommunication services and tower sectors. >> they missed. it was a weak quarter in terms reven revenue, we need to hear more on the quarter. >> what about ifi o os? >> it was decent. wireless, which is their bread and butter, were weaker. i wouldn't underestimate verizon. the announcement they had with you this week, they do tend to be significant and ahead on the network. >> the kmnts that -- comments

that lowell made, when you look at this earnings story about disney, what do you think about that potential? >> i think verizon has an issue in some ways in terms of perception, because unlike at&t who has what we call a look over here moment, verizon is lacking that now. for content if they were to pursue in disney or a cbs, it would go in the face of prioror comments that they made that they don't feel the need to own content. in the press release today, they reconfirmed the balance sheet would invest the highest prior going right monster deal. >> what are you going to say? >> i was looking at that

comcast. i don't know who looked the board. 3753. that's had 3899. >> jennifer real quick, if you. >> at&t is our top mega pick right now. >> because? >> because we like the diversification of their revenue. we like warner deal and then we like their spectrum. >> maybe that is cmcsa. >> what is that about? >> i don't know. >> interesting. >> jennifer, you don't have any insight -- comcast and the premarket might open 4% higher. do you know why? >> interesting. no, i don't. the press release ont hit six minutes ago but they seem open to those type of deals. >> we're going to do a little investigation in the meantime and we will come back to you.

jennifer, we appreciate your time and of course your perspective this morning. >> thanks, guys. is that right, though? i'm looking at another screen -- >> i've got 37.9 ask. >> i was showing a 38 handle. >>i know. and i don't see that on the it is 4:20 day. one company is being called the uber of weed in san francisco. we're going to go inside the company's war room on what could arguably their biggest day of the year. later, former treasury secretary bob rubin joins us for our

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mitigating after losing some key players yesterday. >> and american express down about 2%. and apple is suing qualcomm back in january accusing the company of never champion charging in. >> it is april 20th, 4:20. woor going unside the 4:20 a known as the uber of weed. and we're joined now with more. just how deeply did you devil into the they are. >> we didn't try out the products but we did go to the

war proom pechl is because it's a platform and they deliver marijuana. they're expecting that it will be floded with order in just a few hours when folks here in california make up. >> it's going to be our biggest day of the year. it's one that's just really exciting for not only the employees here, people have worked really hard to prepare for tomorrow. tomorrow will probably be two to and in 2016 the mtd mmt and by 200 it's spbd to be worth more than $13 billion. fwroet of the recreational market, guys, it may be uncertain governor but if it

comes down to to be be it snshlg will create more than a kwar million jobs by 2020. for comparison, the bureau of labor and statistics expects by 2024 manufacturing jobs are expected to decline by more than 800,000. guys, with that kind of green p prp. in the your for many, many more people. >> all right, dierdre, thank you. kick this around a little bit. so you talk to people that for frnl. >> have you seen sh show called

"crashing" on hbo. and one kid said the anxiety he feels about not being able to get marijuana is so -- getting so large that he needs the medical marijuana because he gets so anxious about not being able to get the marijuana. so that was his bit on the standup, which i thought was -- >> clever? >>. >> rich: kind of funny. >>. >> i might need it for professional reasons given my anxiety. people thought i was kidding about the brownie. >> did we figure out -- >> actually, it's a foot bar, it's a foot bar. >> i was anxious to see what happened in the come past inand

the ceo of amtrak will talk to us about the plan to rebuild the nation's transportation system. and we have former treasury secretary will join news an exclusive interview starting at 8:30 a.m. legacy technology can handcuff any company. but "yes" is here. you're saying the new app will go live monday?! yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes.

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a "squawk box" news maker. former treasury secretary robert rubin on the economy, president trump's strong dollar talk and the fate of the fed. >> amtrak's leader calls for a new infrastructure. >> and why paying for more could be fueling retailers. ♪ go big or go home, go, go >> live from the most powerful city in the world, new york, this is "squawk box." >> good morning. welcome back to "squawk box" here on cnbc, live from the

nasdaq market site in an area of new york, sort of right in the middle of it -- >> times square. >> 42nd, 43rd street, once known as time acre -- >> i'm in squawk scare, i'm joe kernen along with andrew ross sorkin and burecky quirk. >> and back in times square, times gerry dinarare square, i' say it anymore. i'm not. i'm sorry. >> we have a breaking deal to

tell you about this morning just happening crossing the wires. talking about speed trading firms getting together, virtu financials buying kcg homemadings for $20. credit is due to our good friend we'll bring you more news as we get it. >> let's get you caught up if you are just waking us up, verizon missing earnings revenues by a penny. the telecom giant said it lost 307,000 retail postsubscribers. the stock down 2%. and travelers reporting a quarterly profit of $2.16 a share. fell short of street expectations largely because of higher than expected

catastrophic losses. revenue did exceed forecast but right now that stock is down by 1.1%. and blackstone beating estimates by 14 cents with economic net income of 82 sent a they're. revenue more than doubling from a year old. >> okay. the world's fastest railway could connect new york to washington in less than one hour and japan twroonts bring it to the u.s. morgan? >> the super conducting mag love a -- maglev. now, greenlit says the company could have this done by 2026.

the cost upwards of $100 billion. how does this work? as you can see with the tres track in japan, lit and japan even says it would help to pay for this. when abe met with president trump recently, this was discussed. high steel rail projects lnl s that's what my questions were going to ask when we hear from wayne rogers of mag m poo g lef

mmm president and o of amtrak, is that correct in your view? are guj budgetary concerns going to come to the forewith this president? >> you know, amtrak's always had budgetary concerns at various times in various strains. people have tried to even zero out the funding. this is a long process. it will be decided ultimately by the congress. and i i think amtrak has the highest sprchl go forward. >> if it was just the eastern corridor, i could see how this could be a money maker and work.

but i'm not sure if you take the entire system whether it will ever be profitable. if anyone can run it. >> welfare reform. >> it produces cash and the way to think about amtrak is it's a cash company but it doesn't produce the earnings for infrastructure invest bent pchbt may help make up the operating could have had can kpmt it's always been a bad business model. that's why amtrak was created. >> all they having said that, a

lot of our allocated costs, g & a and everything else are over on the long distance side. if you cut long distance funding, the revenue goes away. there's a sungs stags frchor how do you measure the economic efficiencies, societal benefits longer term? that's the question. >> i think that's the great question. andrew, what i always say is i've been it needs to be run like a very good corporation because in a real way, it's a government contractor, providing services that the government feels are essential. the business model is such that we're going to run an operating loss and we're going to need

help on the capital side. but i think one measure of efficiency is we'll continue to drive those operating losses down and be seen as being a company in which if we're given a dollar, we give a dollar plus in value. that's my goal to make it a better performing company. >> in the last couple of weeks, there were the track issues that shut down transit and people threatening not to pay. >> well, of course we're in penn state, which is totally at capacity. number of trains and people through has doubled in the past 30 some years. >> and that's not dissimilar to what you see in a lot of places?

where i think am rack be had i been down there and walked the track down there, it is the most complex maintenance operation you can imagine. and we're going to have to step up our game a little bit on thinking more about just renewings at the end the day somebody has to panage and main taken that station and do the same thing we're doing, plan'd who are the way projects. sfb it's all around the country right now. >> and our planning for gateway, which are two nun tunnels under the tunnel, the expansion off

bridges and i think we can do a lot of that work without nt rupt thrn one pickup and we start talking about more hours. >> right. money frchl you know, the example i'll give to you is the chinese built i think and it work fine this n rail has the flexibility and all of the vajs of being able to use current infrastructure in highly congested areas. so i think it makes a lot of

sense. and anybody, maglev, hyper loop, high speed rail, they'll all going to akwir so it not government inefficiency, can't run amtrak at a profit sp. >> last year we had record ridership and covered 94% of our operating cost. you look around the world, the french, the japanese, all of these places, that's a really, really good number. most large rail networks don't get there. so can amtrak be better? sure. as i say, that's why i'm there. but it's a bad business model in a lot of ways. >> and all of the expert places

that we point to are being heavily subsidized by the government now. >> exactly, right. >> wick, thank you for joining us. when we come back, why the retail slump may have finally hit their level. stay here. you're watching "squawk box" on cnbc. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and.

welcome back to "squawk box" this morning. the imf and world bank holding spring meetings in washington. former fed chairman alan greenspan will be on at 10 a.m. and later imf managing director christine lagarde will be on "squawk alley" and later wolf

gang schauble. >> let's bring in jan. you think this is truly a tipping point and these are not numbers that can be explained away by the weather or any other issues at this point, right? >> yes, i think we tipped over in the fourth quarter. we saw down traffic in malls of about 10%. normally we see better quarter in the third quarter and i don't think that's happening this year. i don't think it's the weather. it's certainly not the consumer. everybody's working, jobs are fine, wages are rising, we don't have an issue with the consumer. we have an issue with brick and

mortar sales. >> what i hear when talk to retailers, oh, we just need to change the malls, bring in special things, you hear what the department stores are doing with up to shops and all those kind of things. all of those things you don't matter. why? >> i think that's we have 250 great ones, they're going to be fine and do all the things you said. but we have to figure out what we're going to do with the rest of those malls. the bot pom 400, i'm not convinced anything you do is going to work there. the bun middle but on the top ones are you can't do that everywhere at all thousand malls. we just doesn't have the demand for it. business is going to off price,

meaning across the street from the pal. business is going to local businesses at a rate it's going to in poston,off price and local are making it hard to get enough retailers. >> -- >> which of these companies can get out unscathed? >> well, none of them can get out unscathed. you're seeing mace's store. pennies has already announced closing 140 stars. it's already started. we're going to see more store closures, we're going to see people consolidate down to the stores that work. do i think macy's is going away?

absolutely not. macy's is a great retailer but they have to change. i think penney's is a great retailer but they still have to change. we have kohl's and penney's in that small space we have 3,000. there's 'mays and they know it and they've been restructuring to make that work. who is winning? t.j. maxx is winning, ross is winning, they're across the street from the mall. they're not in the mall. macy's online business is

growing dramatically. not their store business. nordstrom's online business is growing, not their store business. everyone else is doing their business online. so far an online sale doesn't make as much stale as an in-store sale for anybody hardly. and given that, it makes it even more difficult when you're playing -- because the same and then the store deleverages because it's operating prove is hard to run becauseses have a difficult time transitioning and retailing. >> and it sounds like a while before we get through to easier times. >> we've seen this before. >> when is the last time? >> walmart. we saw that with walmart. >> it will take a while for it to work its way out then. >> a long while.

>> thank you for joining us. >> many cog up, it's like taking candy from a baby. turns out kitkat, snickers will no longer be so easy to find at one drugstore. and coming up, robert rubin, a cnbc exclusive.

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a downgrade this morning. analysts saying the company's unique exposure to increasing growing cannabis markets and says it because of expectations for downwinds. >> because they're from denver and colorado, you smoke pot now instead of drink beer? >> there's a lot of calories in beer. >> there's a lot of calories of the munchies, too. we've heard taco bell is doing very well in denver. >> it does seem like candy-laced marijuana seems to be the most

efficient way of doing things, right? >> we've heard some people who have gotten in trouble with eating a little too much too quickly. >> but you don't need to follow up the smoking of the marijuana with the eating of the candy. >> speaking of candy, cvs is getting rid of the candy counter near the register, they're moving it to the back of the store, back near the marijuana -- no, kidding. it will make the changes next year as it reinvents its image as a beacon of healthy living. >> don't go that. all right. uber might be causing travels are to rethink using the giant on trips. according to expense report tracker call certify, it's the slowest quarter-to-quarter growth uber has seen seen since

2014. >> coming up, our exclusive interview with former treasury secretary robert rubin. so much to talk about. he'll join us on set right after the break. squawk reports in a moment. facts make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies lead with digital.

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♪ ♪ good morning, everybody. welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. look at kcg holdings. it's being bought by virtu financial, $1.4 billion overall. our david faber reported that deal was imminent yesterday. you can see virtu is up by 7%, even though it's the acquirer. his financial officer doug cifu will talk about the deal at noon

eastern time. and google is planning to introduce an ad blocking feature in its popular chrome browser. the feature could be announced in a few weeks. it would lock srn types of ads and pop-ups. and and is going to launch a card in may targeted at individuals and millennials. >> former treasury secretary robert rubin was out last week with a new op-ed saying don't politicize the federal reserve. the question he said every president should ask, who and what will best serve our country? let's bring in our special guest for the rest of the hour.

>> he's also involved with the hamlet project and -- >> great play. >> unfortunately, joe, that was not my play. >> my mistake, my mistake. >> we want to talk about so many things with you. we haven't seen you in quite some time. before we get to the op-ed and what's going on in washington, just help us understand your sense of where. >> our basic rate of growth this year year, next year is somewhere around 2 to 2 1/4 percent. people have been lowering estimates lately and then there's a request if you get the kind of policies that the ryan

blueprint and to the extent that it's possible to entertain, the policy that trump is talking about, you could get some stimulus. so i think we're constrained by the ablt of laborer by the labor supply. my guess would be in, you can get to 2% 2rks.5%. but it can also have adverse effects but i think you're somewhere in that range, assuming that those measures take place and that itself is not clear. >> i'm assuming you're talking about tax, infrastructure -- >> no, rel infrastructure, although he. >> i don't know in you saw this in the "new york times," there's an op-ed by steve fork, larry

kudlow and stephen moore, all of whom were advisers to the president during his campaign. they seem to be breaking ranks with him. the title "why are americans making tax reform so hard." and it's almost surprisingly to hear them make this suggestion publicly -- >> well, haven't read the on sez because i got up early to see. they are interested in a tax cut and ryan says they want tax reform, which is a much more complicated set of measures, most of which in my opinion have a low probability of having. >> and the border tax. >> i think the remiz.

>> well, think the first time in '86 was unblow already. >> when i became second of treasury, i said to ours is sant secretary approximately you're a very nice man but when you start talking do away with the bouts and inductions and credits and do what you have to do. >> larry, steve forbes, it's nice to say that it's simple but the devil's in the details. >> there's always been enthusiasm by the republican party for tax cuts and also in the democratic party for tax cuts. i think the problem here is they have no way to pay for them. >> if you throw out pay for, though, and that's the

speculation, you say dynamic scoring will take care of this and you go ahead and give the cuts. what does that did for dynamic scoring, it will get you a little bit but not much. fundamentally if you did the rye you've got certainly luke 4.5 to 6 trillion of tax cuts offer ten years with very little to pay for it. whatwill it due do to the growth? number one, the fed said in their last decision and i think they're right, by the way, they were probably pretty close to having fully employed our labor supply subject to the skills gap and then you've got the fed itself at a tron consistent? >> to go, briefly yes. >> there has been a controversy

of full employment but then people point out that young people, 45 to 55 or whatever, there a a huge number of those people that are not in the workforce right now them and people working parm time, work psh and that is the debate. in my view, i've spoken to a lot of labor kmis, there is a skills gap. part of the issue you're talking about, joe, there's a lot of people in the 55 to 64, there's a lot of people in that group. a lot of that skills gap but unfortunately nothing health insurance being proposed either

by the administration or congress. what i think we should do what we need a policy that would include measures to address the skills gap both in the short term and the long run. they you might be able to -- >> can i just give this breaking news? there some fresh fed commentary from federal regulator joel powell. he said some parts of dodd-frank are unnecessarily burdensome. he says overall the dodd-frank rules are unnecessarible complex and inappropriate lip applied to small and medium banks. >> i say one thing about jay powell? squla is a terrifically thoughtful guy.

this whole go. >> pfrm you're probably familiar with the book "the second machine age." the technological developments expected are likely to increase productivity very substantially. and then the question is, the one joe raised before, how do you in that kind of environment environment provide well paying jobs to the american people? >> this this -- the the rubin doctrine -- >> don't call it the rubin doctrine. you can call it the andrew ross sorkin document. don't call it the tolliver market. when people want to get back to a three handle or dare i say a

four handle, is that certainly realistic or is that something. >> i think, andrew, i've spent an enormous amount of time with people who are very thoughtful about this -- jason furman pro projected 2.3% growth assuming that we did what we need from a policy perspective. my instincts say we can do better that that if -- that's if -- we have the policy that's technical need. . you had this on head about trying to avoid politicizing the fed. steve liesman was saying it

feels that even our standing do you think that's true? >>, here's what i think has happened, andrew. it's a a during the transition in '92, he met with our economic team and said i'm willing to fight all the time about policy but i neff want anyone to attack to protect the -- that way you have a mooring, you have a base for which can have your argument and debates. unfortunately, i think a lot of people today are -- this is contrary to alternative facts, trying to develop facts that meet their agreements -- >> on both sides? >> there's some of this on both sides but i think it i think

it's imperative that we pro ekt the faeld in i. >> unfortunately you can blow holes in some of these numbers and raise questionswhat things they candidate been. >> absolutely right, you're correct. but we should proing owe tess. >> real briefly and then we'll go to break and come back. but on this op-ed in what is trying to politicize the fed, the president has talked about potentially keeping janet yellen in this role. what worries you? >> and this is not a disrespectful comment but my

impression is that sarah tru trup what worries me when look at everything else that's happened is the poe sense tension at least. he also said sprp and there really are immense risks. secondly, he said he wanted to have lower interest rates. and president clinton never commented on his entire eight years on fed rates. once you get to that position, then you do worry a little bit, i worry at least a little bit, will they appoint people committed to the dual mandate of the fed or will they appoint people who base cl were. >> look, becky, there's a very

big debate about whether this should be mandate, price stability. >> but green stan has told us on this program -- there is a dual mant date pu frrkt the president may appoint people who are commentate can accommodate, which is to say people who will disward regard. >> what? >> could we disregard -- >> the price sfablt? >> yeah. any more than we already. >> that's a good question. i've thought a lot about that. i think they did at the time what they needed to do. i think qe2 is staunable and qe3

i would not have done. >> maybe you're not getting they're buying back stock, they're doing musers in specific pension managers have had nothing to return to their clients for the past -- i mean, there aring in tiff consequences to staying at zero forever. aren't there? >> we came close to go over the brink. >> you yourself at the time said qe1 made sense. does qe infinity make sense? >> qe3 i think would not have done? znd the balance but having these

are serious people. i would have come out differently on qe three -- >> it's mauch harder to take it away according to volker. >> it's mauch harder to take it away. in terms of asset bubbles with all due respect to kniffen and it's very hard to know when you have an asset bubble. it's it hard to identify a little bit skep trick. we're going to slib -- slip into that next after this break.

the honeymoon is over on tax cuts. the president said he was working on tax cuts yesterday. the market ignored him. >> there is just general

confusion in this country about taxes and what's going to happen. >> there's nothing in that executive order that prohibits companies from bringing in peoplend the h1 program. they just have to answer more questions. >> let's get back to our special guest, robert rubin, former treasury secretary. let me see if i can draw something out of you, mr. secretary. that is i look back at bill clinton now, i almost think of him as sort of a centrist -- almost a centrist private sector guy now given the state of the current democratic party. i think about a guy like you, treasury secretary, came from goldman sachs, i think of a lot of preeivate sector guys around for the clinton administration, the initiatives, the welfare reform and the things that happened back then and the kind of economy we had. you saw the baum administratiobn

for eight years. do you think that this current cabinet where it's wilbur ross and another guy from goldman sachs, mnuchin and gary cohn, guys that have sort of your background, is that a better way to make government policy or -- >> let me disagree with you on the obama -- he had a great cabinet. tim had a normous amount of experien -- an enormous amount of private sector. i met him in the 80s. these were exceedingly good choices. they also had a very pragmatic

feel for what they were doing. i think it was an outsanditandi initial cabinet group. and, by the way, if you take -- it's interesting. and i know there are people who don't, leave the acsi for the moment which is a complicated issue. i thought it was a good idea, but leave it aside. write down all the things that president obama proposed, actually i think it's a very sound economic program not unlike what president clinton did. but he couldn't get much done. >> there was no supply-side type of growth policies. >> that's not true. >> like what? >> he for example had an executive order roughly three years ago in which he said that all regulations should be subject to the cost benefit framework. >> as he was layering regulation over regulation for just -- and none of the old ones ever go away. >> well, they issued regulations

that they thought were appropriate. you may or may not agree with them. but if you take a cost benefit framework the one he put in the executive order and you impose that on whatever is being done, then you would have in a sense -- now that was never fully executed. >> the below historical average growth rate that we saw for eight years, none of that was self-inflicted. it was all because of the reinhart row of go response -- >> who knows, we grew at roughly 2%. >> barely. i mean, if you round down, we probably didn't grow at 2% it's the first time a single year didn't hit 3%. >> you wouldn't hit 3% -- >> we're arguing counterfactuals again. >> we'll discuss the counterfactuals. i think you had powerful head winds. i think we almost went off the brink and tim geithner had immense good courage in the stress test path he designed and

president obama supported him despite tremendous pressures from the right and the left and then as we went along, president obama proposed a budget in which he had change cpi, which is to say adjusting the inflation indicator for social security and he had means testing for medicare. these -- neither party supported him, but he tried to do something about a serious issue we have in this country. >> but his bully pulpit was wasted in my view, waetsed on thing -- wasted on things that didn't happen either. whether it was gun control. did nothing about -- he could have done corporate tax reform. he could have done repatriation -- >> he could have tried. he could have put something forward. >> he did put something forward. >> he did try to lower the tax -- corporate tax rate. >> not very hard. >> well, no. andrew is right, he tried to get a corporate tax rate. but once you -- as you may remember, you probably do remember, when president obama was elected, the leader --

majority leader of the senate said we'll make sure that he doesn't get re-elected and instead of the republicans in the house and the senate -- this is nothing critical. >> but this might have been after the aca was rammed through without a -- >> it wasn't. it was before hand. a, it was before the aca because it was right after he got elected. >> rather than relitigate the past i have a question about the future. >> but this is an important point. this system will only work if there's a willingness to engage -- if policy is based on facts and analysis and on principle compromise. as mcconnell said we'll make sure he doesn't get re-elected. >> what they're doing now -- what does that bring us to the future? >> i think we have a serious problem in this country. i do think that the onus lies more on one side than the other. but leave that issue aside. >> get back to the point that you can define the policy? >> people need to work together.

>> but the obstruction on both sides is on struktding things that both sides oppose. the republicans oppose higher taxes across the -- and now the democrats i give them credit. they oppose the things. but that's what the opposition party is supposed to do. you're supposed to oppose. >> it's supposed to do two things. in my opinion. start with the opposition and then work with the majority party to do find ways to go forward. the 97 balanced budget agreement that trent lott and president clinton worked out -- >> there's no overlap. recently there's no overlap whatsoever. >> i'm saying this is the way that the system should work. trent lott was willing to do certain things he didn't want to do and president clinton was willing to do certain things i didn't think he should do, but he was right to do. to get a tax -- i'm sorry a budget that moved forward that was very good for the country. >> we need to take another break at some point. >> i think we're going to keep going. why don't we talk about how you get to the point and the

hamilton project is part of that. >> how we get to that point, i think the fundamental question with respect to the future of our country. we have enormous strengths and i would rather invest in this country than any other country in the world. i would rather do business in this country and i would rather have our hand to play from the policy point of view but we can only realize our potential, our potential for growth and broad based participation, i don't think you'll get good growth unless you also get good -- we can only in my opinion only realize the benefits that come from our potential if we can once again re-establish -- goes to joe's point, re-establish a political system that's working. that is to say fact and analysis based, willing to compromise on both sides and we are not there today. the question of whether or not we will get there is the key and critical question we have for the future of our country. >> steve balmer was here with a similar perspective on these things. he's taking his own project. trying to come up with the

numbers and he conditioned find those things -- and he can't side the things. he said the same things you're saying right now. is there enough of a critical mass on both sides of the aisle who are willing to move forward? >> well, that's the question. at the moment at least it doesn't seem to be very much willingness to do this. but politics can change rapidly in america. i think we have to hope that in some fashion or another, i have views how this can conceivably happen, but at the moment the evidence is very troubling. >> one of the questions i wanted to ask you about, we had shown you some of the comments about dodd/frank earlier. there's a raging debate about what should happen to dodd/frank one way or the other. gary cohn made comments about bringing back glass/steagall. you had something to do with undoing it and have been criticized to some degree. you know about criticism. what do you think should happen to dodd/frank? >> we had a financial crisis

which was far worse than -- virtually anybody thought our system was subject to anymore, andrew. i think we're clear -- it's clear that we need to focus on systemic risk and it was clear we need to strong regulatory reform with respect to the financial system. out of that came dodd/frank. i think a lot of parts of dodd/frank are very good. i wrote a book that came out in 2003, still available in paper back i might add that advocated that we have regulations with respect to derivatives and i think it was good. there are constraints on what the fed can do to deal with dodd/frank. i think it weakens the system. the volcker rule is controversial. i think it had -- i think it had nothing to do with what caused the crisis. that is something one can review. but as a general proposition i think that we do need to have strong protection against systemic risk. in that context you can take a

look. i think it's totally appropriate to look from the cost benefit perspective at the various provisions of dodd/frank and try to decide what changes if any should be made. but i think that the -- but i think the central features of dodd/frank are the protection bureau and the positions on derivatives increase. and the systemic risk, it's capital, capital, capital. now, you have to balance that against the desire to have banks lend but it's true we need strong capital requirements. while i think it's useful always to look at anything that's been done from a cost benefit perspective to see if changes should be made, i think it has to start from the perspective that we have to have strong systemic risk. glass/steagall was rescinded only after the fed had interpreted away with respect to the big banks. they could have done whatever they wanted to do, whether or

not glass/steagall has been rescinded. i think bringing it back would have nothing to do with anything. >> you have heard the comments from neil kas carry, now a fed president. he thinks too big to fail -- he thinks that dodd/frank won't effectively work. >> too big to fail, let me -- i have seen his comments. let me put it slightly differently. i think there are still considerable systemic risk in our system though i think there are a lot less than there used to be. i think that's shifted from the banking system to the shadow banking system. because the constraints on the banking system have moved a lot of activity into shadow banking. in the shadow banking system, marty feldstein said there are no regulations with respect to the risk in the shadow bank system and instead of worrying and -- certainly appropriate to take a look at dodd/frank, i think it's far more useful to take a look at the shadow bank system to see what should protect ourselves against the

systemic risk there. >> october of 2010, one term president. o'connell. >> it was after. it was after the aca. >> but -- >> but it was -- it wasn't like right at the start of -- it was after i won. this is what we do. >> i may be wrong, but i'd be give you fairly big odds, i think before he took office he said that. >> we're going to go. i'm going to buy you breakfast. in the meantime, thank you, mr. secretary. we appreciate it. >> great being here. >> join us tomorrow. "squawk on the street" begins right now. ♪ good thursday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. futures recovering after a day of triple digit losses for the dow.