good morning, everybody. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin. joe is off today. our best for the next two hours is bob doll. he's equity strategist. >> good morning, becky. i'm awake, how about you? >> i'm awake. it's monday morning, we're good to go. we're talking about the "squawk box" guest, ben bernanke, former fed chair. he's not here yet. >> i know. but he's going to be here. >> right now, let's get a check on the markets, europe and asia closed for may day, it's may 1st. u.s. equity futures, though, at this hour are indicated higher. we saw a pretty quiet day in terms of friday. dow futures up by 28 points. s&p up by 4.5.

and nasdaq up by 12. this comes after a big up week for the markets where nasdaq was up 2.3% across 6,000. closed the week at 6,047. the dow was almost up by 2%. closed very close to 21,000. we're going to continue to watch, as we get closer to the opening bell. take a look at crude oil prices as well. crude oil was down about 29 cents. the big story was it was below $50 for many days last week. this morning, it's down another 16 cents to 49.17. let get you ready for the first trading week of may. the agenda chock-full of economic data and earning reports, the ism manufacturing and construction spending, tomorrow, april auto sales, paychex small business jobs and wednesday, adp, service index and fed decision at 2:00 p.m. eastern time.

thursday, q1 productivity and factory orders, friday, april jobs reports. as for earning, more than 100 companies in the s&p 500 reporting. the big names to watch, include conocophillips, merck, apple, facebook, tesla, kellogg and cbs. >> more than the holdings of united states and canada. >> yep, you could buy netflix and tesla. >> 90% of that is still overseas. brings us back to the question we keep talking about again and again which is tax reform will it will be something that allows repatriation in a temporary or ten days. how important is that, bob? >> it's huge. i think, maybe if we get tax reform, repatriation is 100%

likely. >> do you believe that apple is sitting with all of that cash overseas, not bringing it back, not buying anything because of it? >> not necessarily. look. apple is very stingy with their money. we know that. i don't know they bring the money home and all of a sudden, there's some major acquisition. just gives them norflexability to buy a little more stock back. >> and it's not apple specific. there's a lot of money that you'll be waiting to see what industries -- >> yeah. technology and health care by far are the two biggest beneficiaries of this. they're among the sectors doing the best from an earnings standpoint. from a future development standpoint. i think the sectors can be overweighted in portfolios. regardless of is this, this is icing on the cake. be looking ahead to the marketing next weekend the second and final round of the french election. wednesday is the last debate. marine le pen, far right and

independent centrist emmanuel macron. friday people head to the polls to elect the next president. you can expect an indication of the winner in the afternoon sometime in the united states on sunday. that will give us a big expectation for monday, with the markets. for the most part, bob, people are expecting the centrist le pen to pin. but i have heard other reports some of the left labor unions being unhappy with him. saying he's too market centrist. too much of a capitalist. as a result, they may not vote. what happens if he didn't get enough votes, if marine le pen wins? >> that will be a lot of problems for a lot of things, starting with the marketing and the euro. i agree. some people might sit home but other people are going out. this is not going to be close. breaking overnight, the big story that may be moving the markets, lawmakers reaching a deal for the final five months ago of the fiscal year avoiding

a government shutdown. eamon javers joins us with more now that we passed 100 days. >> that's right, andrew, we're on of the second 100 days. negotiators are working through the weekend to try to pin down the deal. we got word late last night that they have in fact reached a deal. we haven't heard from all of the parties yet but we're waiting for lawmakers on capitol hill to make sure everyone is in fact cheering the deal. here's what we know so far about what's in the deal specifically. democrats got a lot of what they were looking for. donald trump got some of what he was looking for, including an additional $12 billion in defense spending. a permanent fix to fund coal miner's health care. $1.5 billion for border security. that's less than what donald trump wanted. $295 million for puerto rico's medicaid program. and now take a look at what's in the deal. this is as important as what was in it. no funding for the border wall.

nothing for a deportation force as democrats have called it. and democrats have said there are no cuts in funding for sanctuary cities. "the new york times" is reporting there are millions of dollars in here for additional security funding for donald trump own personal travel. that has been a sticking point because the president travels a lot to new york and florida. that costs some of those metropolitan areas a lot of money additionally. that funding will be taken care of in the bill. that means we're headed for passage likely this week. it looks like that will keep the government open until september and we'll do this over again. >> eamon, we weren't there this year, we need the highlights from the washington correspondents' dinner. >> you know, it was great. we missed you guys. to me the highlight was -- >> you missed us or you missed trump? >> well, i missed trump and you. maybe equally. to me, the highlight was woodward and burnstein. they brought them out. they look great.

they sound great. they delivered a forth right lecture on journalism and the things that we value. and it was a funny, loud, interesting night. but i'll tell you what, the big theme has changed from obama's white house correspondents' dinner to trump's correspondents' dinner is we just didn't have those hollywood celebrities in the crowd. no jonas brothers. no kardashians, nothing like that. in many ways, personally, my take is that dinner had gotten a little brit out of control. and maybe a little bit of a reset was not a bad thing. knocking it down a few pegs is all right. >> eamon javers, great to see you, sir. we also have big corporate news to bring you this morning, twe 21st century fox reportedly in talks with blackstone for tribune. the largest station operator, we should tell you the bidding deadline for tribune is this week. under the terms of the deal,

21st century fox would contribute its 28 owned and operated stations. blackstone has partnered with media companies before. blackstone partnered with cnbc, nbcuniversal to buy the weather channel a few years back. a couple other stocks to watch today as well, fitbit issuing a statement after a woman claimed that her fit by the way flex 2 exploded. the company says that the initial investigation conclude chad the device did not malfunction. testing showed external forces caused the damage, according to the company. that stock right now down about two cents about $5. >> what forces? >> maybe somebody was banging on it, smashing on it. that's what i read between the lines on it. she said it exploded something internally caused it. they're saying, no. u.p.s. air maintenance is

threatening to strike pushing the workers to settle a three-year contract duty saying it would seek clearance to strike. coach is looking at a potential $1 billion deal for jimmy choo. the telegraph reports that coach is on the hunt for luxury brands after last year's failed attempt at taking over burberry. and the paper says that coach recently hired former jimmy choo boss joshua schulman. the big box retailer signing a lease to open up a development in essex square. as we start the countdown for friday's job report. joining us is rob martin. he's barclays u.s. senior economist. doug voyeur, and the guest host,

of course, bob doll, chief equity strategist at levine asset management. gentlemen, let's talk about the economy, what's been happening because we're coming off that weaker than expected weak gdp quarter for the first quarter. we're looking at the friday jobs numbers. rob, why don't you tell us what you think. is the economy weak here? >> this slump is different than the last sulumps we've seen in the last five years. this is the week we're going to find out if that was a temporary slump. we think it's a temporary slump. we'll get manufacturing tomorrow. of course, friday, we'll get the april employment report. march was very weak, 98,000 jobs. we're expecting a big swing back from that, from 2005. we think all of the data from here on out will improve coming this spring. we felt that temporary factors

held back growth in the first quarter. >> i have heard anecdotally from companies that they saw weaknesses in january and february. but things seemed to pick up a bit in march? >> things definitely picked up in march. i think the biggest things january and february was the delay of the tax refund. we have $55 billion behind in tax refunds. that's a lot of money considering the ordinary valuation in retail sales is about 4 billion a month. we started to see that go back up in spending. it was weak in the first quarter with motor vehicle sales. so, hopefully, when we get that data on tuesday, we'll see a bounce bounceback as well. >> how much of it is the economy? how much of it is earnings? how much is the headline news you're hearing out of the washington? >> first of all, fundamentals

and compliments joining forces. i expect manufacturing to be positive this week. not just in the u.s. it's around the world. and it's all been positive. then you have the payroll report. but you have to look at corporate earning. it does seem nearly in the coal mine, it drives markets. right now we're in double digits in the first quarter. >> yeah, it's not dying. >> yeah, this is continued for 12.5% q1 expectations. top line revenue is three quarters in a grow of positive top line revenue. this is a sign that the global economy is doing well. and if you want to position for this, you need to broaden out your portfolio -- >> you mean broaden beyond ek equi -- u.s. equities? >> beyond u.s. oequities. many investors have been playing

u.s. lap cap or cash or fixed income. you need to get into not only emerging markets but global reits and across the board. i think that's, over the next five years, we've been in a very narrow market of u.s.-only. now emerging markets when they start to run, they run. i'm seeing most investors are very narrowly invested. broaden out into large, mid, small. >> how large? >> emerging markets, international. you look at the some of the emerging economies. india just had huge tax reform. you have brazil, more conservative candidates. argentina, more conservative candidates. you have france that will elect macron. >> you think? >> i think. >> but we'll find out. >> but i'm seeing a conservative shift, not just in the u.s., but around the world. that's why i believe the global

economy is getting going. catching fire. and i think it's going to continue. and it that will keep corporate earnings growing. >> bob, you're usually focused on u.s. stock. what do you think about that? >> for the first time in eight years i said don't only own u.s. if you're fortunate enough, lucky enough, smart enough to do big time, do some dollars outside of the u.s. it's not instead of the u.s., it's in addition. >> are you talk emerging markets? european markets, japanese? >> yes. >> everywhere? >> yes. >> a broad base. >> you said for the first time you're pushing usa. you're pointing out that so many people are u.s.-centric at this point. i think there are a lot of people not comfortable beyond the u.s. borders. >> slowly and surely. you don't have to be brazen about it. just start dollar cost averaging elsewhere. if you can't handle the emerging values do developed markets.

>> but again, you're not saying sell your u.s. holdings? >> no, just don't be only u.s. centric. >> what are your favorite picks outside of the united states? >> so, i prefer the emerging markets to be developed. while we continue to get a good trade out of europe and japan, the populations are declining. you can't grow your economy if there are fewer people around. the emerging market is going to be good. >> this is what you're going to see this year, you're going to actually lower your risk by asking risky afterclasses to your portfolio. you're going to see risks going down. that's diversification, i would get right in. i would position right now. i see this trending through the year. >> having said that, where do you think you can expect gains for u.s. stocks? are you talking single digit gains? you're not talking losing ground? >> no, no, no. still single digits in the

s&p 500. but i would say midcaps and small caps if you want to be more u.s.-centric could see double-digit returns. i think emerging markets and international, yeah, i'm seeing double-digit returns. why be in single-digit s&p 500 when you can be doublie digit everything else. >> rob, what do you expect on friday with the jobs number? >> i think it's absolutely critic critical. we always look at jobs to judge where we are in the company. some what we've seen over the last quarter, a slowing in supervises employment in the united states. so kind of that edge coming off the services employment. we need to see that come back. i'm looking for it to come back in the big states where it's been weakest in ohio, pennsylvania, indiana where it's classic manufacturing midwestern states i want to see a return in services. i expect to see it. we'll see if it comes through on friday. >> well, i'm looking at the second quarter.

the average swing in the last ten years from first to second quarter is more than 2%. >> that's right. >> can we get that this year? >> i think we will. the first quarter gdp came in 0.7%. we're expecting 2.5% in the second quarter. the big difference this year, we don't think the primary target in the first quarter was the residual own residual seasonality that we've been talk about. we talked about confidence earlier, confidence is up. i don't think we can get those levels of confidence without some good things happening in the household sector, so, i think we'll see that rebound. >> i think the interesting part of gdp was business fixed investment jumped to double-digit growth. we haven't seen that in a long time. >> and that's where we've seen such problems? >> yes. so it's a very important thing here. >> doug, rob, thank you for coming in. bob is going to be with us for the next two hours.

it's small business week in america. our kate rogers is traveling the country to talk to entrepreneu entrepreneurs. kate what is coming up? >> reporter: hey there, andrew, we're talking to millennials and what is coming up in new ventures. coming back after the break. ♪ still to come, a cnbc exclusive interview with the former fed chair ben bernanke. the state of the u.s. economy. deregulation, tax reform and the fate of dodd-frank. no top sick off tic is off the exclusive interview at 8:00 a.m. eastern time only on "squawk box." ♪ it's been over 100 years since the first stock index was created,

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alright, see you down there. mmm, fine. okay, what do we got? okay, watch this. do the thing we talked about. what do we say? it's going to be great. watch. remember what we were just saying? go irish! see that? yes! i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. ♪ welcome back, everybody. this week is national small business week. and kate rogers is hitting the road to highlight different dem graphics of entrepreneurs and the ecosystem in recent years. this morning, we find kate in atlanta checking out the millennials. kate, what have you found? >> reporter: hey there, becky, it may seem surprising but

millennials have been slow to jump into the entrepreneurship. they're on track to become the least entrepreneurial in recent history because they're being outbased by baby boomers. student debt didn't stop hanna mitchell from launching her business. a huge factor among the entrepreneurs. hanna says the company scientifically analyzing your hair to recommend the perfect products for you. >> just decided that i wasn't going to allow that to hold me back. even with the little debt that i had, i knew that i would have the opportunity to really pay it back in full through the success of this venture. so, rather seeing it as a weakness, i saw it more as an opportunity. >> reporter: now, the key is to get the next generation behind the millennials interested in becoming their own boss.

and here in the atlanta metro, there's a chapter of the national program called youth entrepreneurs looking to do jut that. over the past ten years, they worked with over 600 students including this high school student who has caught the entrepreneurial bug. >> i was thinking of being my own boss. not having someone tell me what i can and cannot do. i want to be able to make my own rules. >> reporter: programs like youth entrepreneurs are very important here in atlanta. and of course in the broader state, georgia which has one of the highest unemployment rates in the country. students who go through that go through high school at a 99% rate. and 80% of them go on to pursue higher education. once in the workforce, they're making on average about $9,000 more than their peers. >> that is a huge stat.

kate, bob doll is here and he has a question for you. >> reporter: sure, good morning. >> hi. s&p profits have kind of off the charts, but government-reported profits have not been nearly as good. and a lot of people say the difference is small businesses that they're struggling. any observation? >> reporter: so, bob, that's really interesting since the election, we've seen small business optimism continue to climb because small business owners are reporting that they're feeling more optimistic about their business prospect. but we're not yet seeing that consumer confidence necessarily translate into more spending. and that spending isn't necessarily happening at the small business owner companies. while they're feeling better, and they think the conditions will improve, i'm not sure they're seeing it just yet. one thing we do know for sure, it's not yet translating into more hiring and spending and investing back into the company. hopefully it will all come to

fruition. we can tell you that they're definitely feeling better but not necessarily seeing that translate just jet. >> kate, thank you very much. coming up when we return, congress reaching a late night deal to fund the golf and finally avert a government shutdown. well, at least for now. we'll talk to david wessel from the bookings institute next. and a look at the last week's s&p 500 winners. >> shirley, you can't be serious? >> i think serious. and don't calm me shirley. >> may day, may day, may day? >> may day? what the hell is that? >> we'll have a big parade. ♪

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♪ >> announcer: welcome back. you're watching "worldwide exchange" live from the nasdaq market site in times square. ♪ good morning. welcome back to "squawk box" here on cnbc. taking a look at u.s. equity futures at this hour. dow opening about 32.5 point it's higher. nasdaq looking to open about 32 points higher. and nasdaq about five points higher as well as we learned that the government won't shut down. at least for now. >> at least for now. >> five more months we'll have this conversation again. >> five more months, i think a lot of us think a couple weeks and we may have to do it again. >> right. maybe some day we'll actually pass a budget that we can hold on to for the whole year. believe it or not, there is an issue that has put president trump and chuck schumer on the same side. the dairy war with canada. u.s. dairy farmers were left on

alert when the u.s. cut prices on ultra filtered milk. contessa brewer joins us this morning. she is live at an upstate new york dairy farm directly affected when their canadian customers disappeared with no warning. contes contessa, good to see you. >> reporter: i'm in skinateles. 2400 cows, 26 employees. in a good year, it can make a quarter million dollars. but the dairy farmer here dirk young is waiting to see how the pricing change is going to affect the price he gets for his milk. >> i think we're going to see declining premiums. i know it's been a struggle at the plant to market all the milk. i think there's some milk going in the north. which is too bad.

>> reporter: twin birch is among 21 farms that processes the milk. and sending this ultra filtered milk to canada, also used for cheese making. but canada decided to ed td to that price that the canadians no long accepts the american products. 25% of the business suddenly evaporated. that meant $30 million lost in just three days. >> we're trying to pick up new business internationally to replace the business that we lost. guys made a promise, i went to our employees that we will not lay off anyone. >> reporter: well, so, apparently, that promise was not able to be kept in wisconsin as well. one of the competitors gradline in fact did have to lay off some of its employees. they told 75 farms in wisconsin,

look agency of today, we can't buy your milk because it's too expensive for us. those farmers went to find other buyers, it worked. as for this farm, he's looking for a price cut about 5%. that could entirely wipe out any profits he has making him barely break even, or he says potentially operating at a loss. >> contessa did he say that some of the milk is just winding up in the -- it's basically going to waste? >> reporter: yeah, exactly the oversupply problem is real and that existed before canada changed its pricing structure. he said, in fact cows produce now double the milk that they produce when he was growing up as a dairy farmer. now, they have so many milk, they don't know what to do with it, tom wilsack, the former agriculture secretary told us they're trying to open up milk.

asia is one of the best prospects. it means 30,000 jobs in the united states. they're watching this nafta thing very closely, because it has the potential to affect all of these local farmers across the nation. trying to get the cows to come here. >> why do cows produce twice as much milk as they used to? hormones or part of better feeding? >> reporter: yes -- no no, they have scientifically engineered the feed so it gives them optimal nutrition. they milk them around the clock. instead of being milked just in the morning and night. these cows are milked four times a day. they're getting twice as much milk out of these cows. >> as a nursing mom, i get it. contes contessa, thank you. >> you just -- thank you. >> i get it! >> let's talk taxes. negotiators overnight on the bill to fund the government. avert that government shutdown,

joining us now is brookings chief david wessel, director of fiscal policy. good morning, david, we're talking about milking cows. we'll see what we can milk from this interview. david, help us understand this. we have averted a government shutdown. that's get news. what's on tap? we have health care. i'm curious if that happens this week? >> i'm not sure whether it happens or not. clearly, the republicans would like to vote to repeal the affordable care act or modify it. but they seem to be scrambling for votes and wisely, they said, they're not going to bring it up unless they have the votes. i think we won't know until the last minute. my guess right now, they won't have the vote. if they do have it, it will squeak through by a hair. and what they pass through the house will be substantially notified if it gets to the senate at all. let me ask you this, how

important do you think it really is to be able to accomplish tax reform without -- without the health care bill appealed? >> i think that they -- my guess is what happens is, they make one more try at health care. they blame it on somebody else. this is one of those games where nobody wants to be the last guy accused of holding up the aca repeal. but they'll then move to taxes. i don't think that they need health care to get taxes done. if they can get health care through the house, having averted the shutdown, they have a lot of momentum, there's some skins to get rid of the tax reform. i think the tax bill is in real trouble. you can see there's disagreement between the house and senate. there's disagreements among republicans on the hill in the white house. and there's disagreements with republicans on what exactly this is going to look like. it stirred up a lot of dust but didn't clarify anything.

>> david, if you were king for the day, what would you do? >> well, i'm trying to figure out what i can do to feed the members of congress so we can milk more good stuff out of them? how's that? look, i think the problem is we're screwing around with a lot of political partisanship and short-term thinking. we don't have a lot of short-term problems. we have a lot of long-term problems. i would do a tax reform bill. i would make it revenue neutral. add money for infrastructure. trying to find a way to get a bipartisan coalition to incre e increase. and try to find out how to come up with spending for health care so we don't leave our children with debt. >> let's just talk corporate taxes in terms of what the rate would be. if you talk to grover norquist, if you take the bat off the table, there's no revenue there

and you don't have health care reform he thinks you're talking about a 28% rate which is basically what obama was proposing. and frankly, i think we can all agree 28% is not necessarily going to make you competitive, if that's the goal, relative to the rest of the world. >> well, i think you pointed out there's a real tough tradeoff here. the more you lower the rate, you have two problem. one is you have to get rid of credits and deductions and exclusions. some of which have focused very much on incoming domestic investment. and unless you're willing to give those up, it's hard to lower the rate. if you refuse to raise individual rates it gets even harder. so i don't think we're going to get a dramatic cut in the court tax rate. i think we'll get a small cut. i think the problem with the border adjust tax is it's not a dumb idea. it's very complicated. the system isn't ready for it. so it will come back in some form. for now, i think they're going to settle for a modest tax cut. income some commission to study

more comprehensive tax reform. i think the markets will be disappointed but it may be better than blowing up the deficit by doing huge unfinanced tax cut which is another possibility. >> david back to the tacticers her -- tactics here. it's a one-pager. is the absence of detail, we just haven't gotten it done? we just want to leave room for negotiation? what's the reason for doing it that way? >> i think those of us in washington have a bit given up on trying to figure out how to quite figure out if the trump administration has an incredibly clever strategy that we don't understand or whether they don't have a strategy at all. in this case, i think the president got impatient. said they were going to have a tax plan. they weren't ready and they put out the first page of what looks like talking points for the campaign. they didn't want to tackle the tough issues and they don't know

where the break points will be in the brackets. and they ran despite the programs that they're running tax reform from the white house and treasury, unlike the health care bill. in fact, the tax bill is being written on the hill. and the president will have some influence on it. but he can't dictate the terms if he doesn't have a team to have something comprehensive. >> david, i will help you with that answer, by way of politico this morning, saying, quote, nobody wanted to do this now, we weren't ready to do this now but we weren't given a choice. >> that's right. >> hey, david, can i ask you, repatriation, what happens, there's an article in "the wall street journal" about apple having a quarter of a trillion dollars. it's one of many companies that has a lot of money. what will happen? will there be anything worked out to try to bring some of that money back? >> i think if there is a tax bill there will be some kind of lower rate for repatriated

earnings that may go to finance an infrastructure program. at times like this, you luke for those thing where is democrats and republicans on the hill can agree in order to get the rest of the thing through. the spending bill for the next five months of the fiscal bill, what was it that greased that? another couple billions for the national institute of health seems to be very popular on the hill. i think repatriation is popular on the hill because it kind of checks the box, we're going to bring the money back. and it raises revenue and they need refuvenue to make the tax bill work. >> david, we'll tend there. we've milked this. >> i recommend you retire the metaphor at this moment. >> we will do that right now. thank you, sir. when we come, jobs in america, former labor secretary seth harris will join us to talk about friday's job reports. also, helicopters on demand, the founder and ceo of blade

will talk about delta and american airlines. and ben bernanke former fed chair will be our guest at 8:00 a.m. eastern time. stay tuned. you are watching "squawk box" on cnbc. ♪

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♪ welcome back to "worldwide exchange" this morning, time for "executive edge." netflix, apparently the latest company to fall victim to a security breach. a hacker called himself the dark overlord. apparently releasing eight episodes of the series "orange is the new black," saying they are refuse fing to pay ransom. it confirms one of the production companies had its security compromised. nbc has not confirmed the authenticity. we should note, in this instance, it really was a production company that was hacked, not the netflix servers

themselves. but so much of the tv content you that see today lives on all sorts of production companies. you know, small companies. without necessarily the type of security that a google, youtube, or netflix or big company might have. so, this will be very interesting to see whether there's more to come. >> dark overlord. >> the dark overlord. >> a big milestone at the weekend box office. universal's "fate of the furious" topping the $1 billion in global ticket sales. the movie has been in theaters for just 17 days. "favorite of t "fate of the furious" is the second movie of the "fast & furious" series to top $1 billion. and "how to be a latin lover" brought in $12 million. as mentioned earlier the white house correspondents' association held its annual

correspondents' dinner in washington, d.c. journalists attended the event in washington. but less star power. this year's "the daily show" correspondent hasan minhaj took the hosting deduties. >> we've got to address the elephants not in the room. [ laughter ] . >> the leader of our country is not here. that's because he lives in moscow. it's a very long flight. it would be hard for vlad to make it. vlad cannot make it. as for the president, he's in pennsylvania because he can't take a joke. >> that was very funny over the weekend but so many comedians didn't want to take the job. alec baldwin wanted it. and then they didn't want him. james cordon said he didn't. this was a hard job to actually take. they didn't want to make it too

political. of course, it becomes very political. anyway, as we mentioned president trump was not in attendance. he held a rally, in harrisburg, pennsylvania where he criticized the media giving them a failing grade in honesty. >> they are gathered together for the white house correspondents' dinner without the president. and i could not possibly be more thrilled than to be more than 100 miles away from washington swamp. spending my evening with all of you and with a much, much larger crowd and much better people. right? >> guys, i should tell you maybe we just fell for it, i don't know if you saw the stories but

steve bannon suggested this exact strategy. what he wanted to ham -- he wanted dual screens. he wanted trump to be up there with his supporters. this group of journalists to be in dark tie in washington and juxtapose them together. >> and very far away from each other. >> exactly. u.s. steel companies getting a boost. trump administration probing foreign steel producers. we'll talk to the ceo of cliffs natural resources. we'll be up next with that. back in a moment. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures.

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welcome back, everyone. president trump recently launched a probe aimed at protecting america's steel industry. joining us right now on set is lorenzo gonzalves, chairman and ceo of america's largest iron ore pellet producer cliffs iron resources. thank you for being here. >> a pleasure to be here with you. >> i want to talk about what the trump administration is doing but i want to talk about your company in particular. you guys missed earnings last week, and it was a bigger miss than had been anticipated. it brings all kinds of questions up about what's happening in the industry. particularly after what we saw from u.s. steel, too.

and i know that you're not a customer of u.s. steel. but seeing these kinds of surprising weakness does make people start to try and figure out what's happening. >> yeah, we're not a customer of u.s. steel. and we are not a client of u.s. steel. we compete against u.s. steel. however, i have to correct you. we did not miss earnings. the consensus, the bloomberg conseine us was 16s cents and we reported negative 11. because we had a 27 cent charge on elimination of debt. so we paid down $16 million in debt during q1. >> if you look at your stock price it's been cut in half over the past three months. obviously the street is seeing something it doesn't like. >> yes. >> so what's happening? >> the street's not seeing reality. and that happens with a lot of company and it happened with cliffs in q1. >> what is the street missing? >> the street is missing that we are having in 2017 with less than two times ebitda in terms

of leverage, and we are going to end '17 with one. and very few companies can say that. >> part of what some analysts have pointed out is that you have some legacy contracts where the average sales prices are still weighing down, holding you back. i think the average sales price was $79.35 a ton for the most recent quarter which was an improvement over the fourth quarter but probably not what you would be getting if you didn't have the legacy contracts. >> we actually in q1 we had all the sales based on 2016 contracts. so as we head into q2 the new contracts for 2017 kick in, and this $79 that was actually a pretty good price for q1, we will go to $95, $96. >> someone raised a price target on you, raised a rating on you saying things have been set up at this point. but i also have seen articles going back over the last couple of months saying this is a buying time, this is a buyinging time, this is a buying time that

people have missed out on along the way. when do you think that things will actually start to be so clear that the street won't be able to miss it? >> q2. >> and what are you seeing right now? >> i'm seeing a very decent demand. actually, that's a continuation of q1. q1 was very good for us in terms of demand. we are seeing a market that's firming. we're not seeing any weaknesses in pretty much any sectors. so, we feel great. >> is that because of the economy? or is that because of what the trump administration is doing in terms of trying to stop other countries from dumping steel? >> it's a continuation of both. but i don't want to give credit where credit is not due yet. everything that you come from president trump hasn't materialized yet. everything that we're enjoying at this point was a consequence of the trades that were litigated in 2016. and we are created a situation

right now for the united states that we have a lot more fairness, and a lot less of illegal steel. >> wilbur ross is somebody who knows the steel industry very well and as commerce secretary he has certainly set his sights on the steel industry and has been making some moves in other industries as well. we spoke with him last week. do you expect to see those types of moves pay off in dividends for your company? >> i do. i do. section 232, self-initiated by the secretary of commerce wilbur ross is something extremely encouraging. >> okay. sir, thank you for your time today. >> it's a pleasure. >> appreciate it. >> thank you. >> okay. coming up when we return, it is jobs week in 34erk. we're going to talk employment with seth harris. he served as acting labor secretary under president obama. former fed chair ben bernanke is going to be our very special guest at 8:00 a.m. eastern time. "squawk" returns in just a moment. moment. customer traffic?

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washington watch. congressional leaders reach a deal to avert a government shutdown. plus president trump talks tough on nasa. the details and what it means for your portfolio is straight ahead. new this morning it 21st century fox reportedly in talks with blackstone to buy tribune. the details are straight ahead. plus, sell in may go away. we kick off a new month of trading with our guest bob daal. we're going to find out where you should be putting money to work plus a review of the number of the month, the april jobs report. the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." good morning, welcome back to "squawk box" right here on

cnbc. we're live at the nasdaq marketsite in times square. i'm andrew ross sorkin along with becky quick and steve liesman who is hanging out with us this morning. joe is out. take a quick look at the futures this morning. things are looking in the green as we might -- we have now averted a government shutdown. we'll talk about that in a moment. the dow looking like it would open up about 32.5. the nasdaq looking up 13 points higher and the s&p 5 points. the 10-year note as we go around, 2.298. and we are watching oil this morning. crude losing ground in eight of the last eleven sessions amid concerns over whether or not opec will extend output cuts at its may meeting. here's what -- taking a look at wti crude right now 49.13. also some headlines for you at this hour as i just mentioned the government shutdown has been averted at least for now. nbc news reporting that congressional negotiators have agreed on a deal to keep the government funded through the end of september. so we'll have this conversation

all over again towards -- once we all get back from the summer. the agreement would still need final house and senate approval. so the game story is not over just yet. also twitter shares are on our monday morning watch list. ceo jack dorsey has added 570,000 more shares to his holdings. that brings his 2017 purchase of twitter stock to a total of 1 million shares. so, talk about whether there's a believer there or not, at least one believer right there. anthem says it is considering its options regarding its planned merger deal with rival insurer cigna. that follows friday's ruling by an appeals court. you might have noticed in the headlines which upheld a lower court ruling that blocked the deal. now anthem does say it is still committed to completing the transaction, but, it's unlikely to happen. and frankly they have to say that given the way the merger terms work. >> meaning they'd be in violation of the contract. >> they can't -- >> if they did anything else. >> they can't claim it's all

over just yet. but it will be all over sooner or later. they know that. >> 21st century fox is reportedly in talks with blackstone group to make an offer for tribune media. the move by fox and blackstone could beat out an offer from sinclair broadcast group. america's largest station operator. the bidding deadline for tribune is this week. under the terms of the deal blackstone would contribute cash while 21st century fox would contribute its 28 owned and operated stations. and target is opening up a store on manhattan's lower east side. they signed a lease to open a 22,500 square foot store in s crossing. part of the company's expansion into urban areas. >> i thought they were done with that stuff. nobody was opening retail stores anymore. >> i thought retail was over. >> there's no more big box stores. no more anything, no? >> apparently not. >> how big is that store, though? they have this new did >> 22,500. >> this may be one of those smaller stores. they opened one by us recently and it doesn't have any of the stuff you want in it.

>> 22,000 square feet is a small store? >> i think it might be. >> really? feels big to me. >> oh. >> let's talk about politician for the moment here and the issues that matters most to business leaders and investors, president trump talking trade and the future of nafta. >> nafta, as you know, i was going to terminate it. but i got a very nice call from a man i like, the president of mexico. i got a very nice call from justin trudeau. the prime minister of canada. and they said, please, would you rather, than terminating nafta, i was all set to do it, in fact i was going to do it today. as we're sitting here i would have had to delay you, i was going to do it today, i was going to terminate nafta but they called up and they said, would you negotiate. and i said, yes. >> the president did warn that if renegotiation efforts prove fruitless he is prepared to kill nafta. also prepared to say he got a lot of angry calls from several industries and lobbies in the united states. who warned that ending nafta

would be a very big harm to their business. >> we had wilbur ross on thursday morning we asked him what had happened. because we had that peter and a half oro note that everyone had talked about but justin trudeau just call on his own or did somebody whisper in his ear? they both called exactly at the same time. how did that happen? >> i don't know. it's a mystery. but all of a sudden, this ending nafta kind of came out of nowhere. >> right. >> we knew he wanted to renegotiate. although he did say in the karn -- >> it was in the campaign. >> and/or renegotiate. you would have thought before the threat to end it there would have been more serious negotiations before that. >> although there were these flare-ups that we talked about earlier this morning, too, with the dairy -- the dairy farmers that were hurt so badly by canada making some quick changes to the milk that it was accepting. and it was subsidizing its own michl and that hurt a lot of dairy farmers here. he met with some of the farmers in wisconsin last week. >> right. >> which was the -- the timber

issue, and could have spiraled pretty quickly. >> what i pointed out in a column last week was that we buy 300 billion dollars of stuff that we want from them. they buy 300 billion dollars of stuff that they want from us. it's about a $600 billion overall relationship. when you add up dairy and lumber, it doesn't amount to, pardon the mixed metaphor, a hill of beans between the two. there's much more significant consequential trade that has to do with the broader -- the broader -- >> but president trump campaigned on this, and if he feels like the little people are going to hurt, he has said he's going to be the president that doesn't allow that to happen and you can see where things can kind of get pushed in some of those areas. >> if he was wrong about it during the campaign it doesn't make it right as president. in other words to take these issues that are small parts of an overall much more significant economic relationship. >> that's the entire thing he ran is no more business as usual. >> doesn't make it right now.

>> no, i'm not saying it's right. i'm saying it's what he's doing and probably where he's headed on these things. >> by the way, you talked about this being a negotiation. that perhaps the leak on tuesday -- you talked about why did these two gentlemen from mexico and canada call at the same time. perhaps it was a purposeful leak on tuesday, and this is part of a grand negotiating plan, which is something that donald trump has -- >> what i read in the papers -- >> -- before in his life. >> all i know is it was the calls from the u.s. industries. cattles association or whatever it is. and other significant lobbies that k5u8d and said you can't do this. >> i don't disagree with you. it is the first trading day of the month. joining us right now -- i apologize every time i screw it up. nice to see you. ceo -- cio, we just upgraded you, too. after i screwed it up i've got to give you something, op i'mer funds and our guest host this

morning chief equity strat jest of nuveen asset management. what do you do ahead of the earnings this week? >> so i think earnings have been really good. global economy overall continues to do well. markets are doing fine. for the markets to get to the next level we need some impetus. that was supposed to be tax reform. if the tax reform comes without widening of fiscal deficit the likelihood that we get to significant high growth rate is probably unlikely. >> so you don't think the earnings on their own will do it? >> no. earnings on their own are pretty much discounted. that's slightly better than what people were expecting so that's a good thing. but the economy is really not accelerating on a global basis. it's growing. it's growing at a decent pace. but for us to get to the next level we need some accelerant. >> right. and are you handicapping that accelerant to happen this year? meaning tax reform to take place? >> i think if tax reform takes

place it won't be of the magnitude that people are talking about, and it probably won't be as deficit widening as the current proposal seems to indicate. >> everyone who's come on this set has said similar things to you and then has said as a result of that view, i should invest in europe and emerging markets and other places. is that your view? >> yes. but i think you invest in emerging markets because emerging market growth is significantly better than u.s. growth, and the outlook looks quite good, especially in china, india, and things have bottomed out in brazil and russia. so the economic outlook for emerging markets is much better after three, four, five years of really horrendous outlook. >> agreed. with the help of emerging markets the u.s. could grow a little faster, as i know you'll agree and that takes us back to boy it would be great to get some fiscal tax re230r78. >> absolutely. if we get tax reform along with fiscal -- fiscal deficit

widening, i think that will be good for every country in the world. >> steve, interest rates. right? is the fed going to hold us back? we'll talk to ben bernanke in a little bit. >> i don't think so. if the underlying economy supports a higher interest rate the rate that underlies it ought to be higher. that sort of goes without saying. i think there are risks to inflation from the large balance sheets. risk to inflation from rates being too low. risks to asset prices, as well. and the fed, look, i want to ask bernanke about this and we've asked a lot of fed guys, the idea that they may get out of this without a major disruption is beyond comprehension. >> get out of the -- >> the whole extraordinary measures. i've always thought about writing a book about this whole period. but i've never been able to figure out what the ending is. and if -- it is always because it's been this long, continuous, maybe go on through another job of sweeping streets or something simple, but the idea that this

long exit process. and now, it looks like there's at least a way out, and the way out that doesn't involve tapered tantrum-like market reaction. is a pretty good prospect here. and it really comes from the president. and his stepping up here with these fiscal policies. >> it's like they can eventually hand off the baton. >> of shifting the onus. >> right. >> from the monetary side to the fiscal side. i don't know that ben bernanke in his book saw this as the absolute way to do this. he did mention this earlier on. but the idea, if you want to get out of extraordinary monetary measures. you can do so by getting the fiscal side to take on the burden. >> right. >> he's been asking for it for awhile. >> so has janet yellen, by the way. >> critical part of the exit strategy. >> the point is the fiscal side really hasn't taken it. >> yet. >> not yet. if we get out of it, it will be

more because of what china has done, where things, you know, effectively, they're bailing out the world by effectively blowing up their economy by taking on more debt, and delivering significant high level of debt. so i think -- >> by the way, we're not out of it yet. >> no. you can't write the book. you don't know what the ending is. >> i think if you kind of go back to 2009, 2010, and ask people, had asked people what would the situation be in 2017, they would have predicted ten disasters until we got here. >> bernanke feels the same way that he would not predict we are where we are. >> the point is financial repression, which exercises restraints over so many things for so many years is ending. it's not just fiscal policy. it's regulatory reform, it's the fed having latitude to raise rates. so we're going to get differentiated returns on capital means lower correlations

which should be good for markets and should be good for active -- >> certainly good for volatility, too. >> yes, it is. which is a good thing. we've had so little of it. >> bob is sticking around. krishna, thank you. ceo of oppenheimer over there. just got the promotion. >> love it. >> coming up when we return it is the first week of may which can only mean one things. 9 jobs report. we're going to preview friday's big data report with former acting labor secretary steph harris after the break. still to come, a cnbc exclusive interview with the former fed chair ben bernanke. the state of the u.s. economy. deregulation. tax reform. and the fate of dodd-frank. no topic is off the table. that exclusive interview starts at 8:00 a.m. eastern time. only on "squawk box."

the count join to the april jobs report is on. joining us to talk about the labor market under the trump administration is seth harris, former acting u.s. secretary of labor. good morning, seth. >> good morning. >> how's it look out there right now? there was concern that last month we sank below previous levels, down below 100,000. do you think it bounces back this month. >> i think it does. the march numbers were disappointing but they were also largely a reflection of bad weather during the survey week

in march. so, i think we'll see a bump in april. i'd expect to see us over 200,000 again. the big question will be what's the mix of jobs that have been created in the economy. do we see middle wage, middle skill jobs, construction, manufacturing, the kind of jobs that folks who don't necessarily have a college agree with get and keep and get benefits, earn enough to be able to support their families. that's going to be the big question. >> can we go back to this number you just said which is 200,000. what do you think the trend of job growth is and why would you expect it to bourns back to a number that many economists say is well above what trends should be? >> well, i think that's an interesting question. we've been on average at around 180 over the course of the last year. 200,000 has become sort of a milestone for us about what's healthy and what's not healthy. >> right. >> partly that's because it's so much above what the replacement rate would have to be for the people who are coming in to the workforce.

the workforce is growing at about 75,000 people a month. so if you're up and around 200,000, that means you're bringing people back into the economy. you're maybe bringing people who left the labor market entirely back. you're bringing the unemployment rate further down. so it's a very healthy, robust, number to help to bring people back in to work. >> oh, totally agree. but how far can it go? and you know, you said 75,000 is what is the number of people entering the workforce. so to do that, you can do that for awhile but how much is there on the sidelines? we've talked about this number which i believe is now down to 94 million which is those not in the labor force. those include homemakers, students, they include people who are choosing not to work and some of whom would still like to work. how long can it go on at this 200,000 plus rate? >> well i actually think there's a lot more slack in the labor market than we're acknowledging. and the numbers that i like to look at are labor force

participation which has flattened out. which means that people are beginning to at least stay in the economy, not exit the economy. exit the labor market. but also i like to look at part-time involuntary workers. people who would like to have a full-time job but are working part-time. there's still about 5.5 million of those in the united states. when those folks get full-time jobs. when that number gets down closer to around 2 million. which is what we saw president clinton's second term that would be a sign we're closer to full employment. >> sometimes there's a rivalry among the fiscal agencies in the government. i know what side you're on having been in the labor department. i'm going to give you achance. we have these weak gdp numbers but strong job numbers. the fed tells us in that case they tend to side with the numbers from your alma mater the labor department. tell us why those numbers are better numbers than the gdp numbers? >> well i don't want to get in

the middle of the warfare. i think the first quarter gdp numbers were weak partly because a lot of the consumer spending that we would expect to see in the first quarter gets moved up into the fourth quarter because of a holiday. people slow down their consumer spending. we saw disappointing consumer spending numbers in the first quarter. there's also this phenomenon that economists like to call about called residual seasonality. the gdp numbers are an amalgamation of lots and lots and lots of other statistics which are adjusted for the season. but when you put them all together, there's still a little bit of a drag so the numbers are artificially low in the first quarter. >> right. >> that's why we see gdp grow over the course of the year. >> i don't want to get viewers more intimidated than they need to be because there's no point in that. bottom line you think if you want to have a better zbaj on the economy follow jobs numbers rather than follow gdp numbers.

>> i would say follow job and wage numbers. the wage numbers, real wage numbers in particular, are the best indicator of how tight the labor market is. whether employers are having to bid for fewer and fewer workers to get them to come to a job in their establishment. so, keep a close eye on wages. that will tell you what's going on in the labor market. >> now, the president has, and several of his advisers have indicated a preference for manufacturing jobs. some people have said that's kind of i guess of a throwback to a mythical past. in fact our next guest coming up at 8:00 talks about this thing about a partly mythical past. is it right to emphasize manufacturing jobs over other jobs out there that the economy might create? >> well, manufacturing jobs are sort of indicative of a good quality middle-class job that a working person who has a high school degree or maybe a little bit of college can get and keep and support their family, save for retirement.

you know, it doesn't have to be a manufacturing job in order to be a good middle-class job. that's the scheme that we have in our heads from the '70s and early '80s. what we need to focus on is job quality throughout the economy. how do people get enough money so that they can save for retirement to be able to support themselves in retirement. how do they get their health insurance? do they have enough money to put their kids through college? do they have enough money to buy a home? so we really need to focus instead on middle-class jobs for middle skill workers that give them a middle wage. that's going to happen throughout the economy in the service sector, the information sector, and the transportation sector, not just the manufacturing sector. but it invokes this image of the steel mill where the father and the son work together, they both came out of high school, and they both were able to succeed economically. that may be in our past but we can have other jobs in our economy that produce the same kind of thing.

>> seth, thanks for joining us this morning. i love your perspective on the job market overall. >> great. thanks very much. enjoyed it. >> i don't know, but to me a manufacturing, some of these manufacturing jobs don't sound all that incredibly appealing to me personally. i'm -- you watch this pulitzer prize winning play "sweat" did you see that play? >> i got tickets. >> quite remarkable. not clear to me that they're necessarily happy in the job. i would say less happy without it. >> that's been the same. "the wall street journal" had a big front page story about the jobs under the clinton presidency. not every job is going to be a great job coming back through. i mean -- anyway, when we come back this morning a flood of new questions about the president's tax plan. what's in it? and how will it affect millions of american families and your money? we will tackle the issues this morning at 7:30 eastern time. take a look at the futures this morning. they've been indicated higher even after some big gains last week. dow futures up 35 points, s&p futures up by 5. the nasdaq up by 13. kevin, meet your father.

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folks just moments ago a successful launch of the spacex

falcon 9 rocket. this was the first launch for spacex of a government satellite. about eight minutes later after being up in air it came back down and landed perfectly, as well. we're still waiting for some of those video -- we have it just in time. here's the landing video, as well. this rocket took off from the kennedy space center in florida after an attempt yesterday had to be scrubbed. the rocket contains a classified payload from the u.s. national reconnaissance office which is an agency of the defense department. again took off and came back down -- >> stuck the landing. the hardest part. >> yep. coming up when we return, tax reform front and center for wall street and main street. we'll debate the issues that matter most for your money. keep it locked to "squawk box" here at 8:00 a.m. eastern time. we will welcome former fed chairman ben bernanke. take a look 23e futures.

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good morning, everybody. welcome back to "squawk box"

here on cnbc. we are live from the nasdaq marketsite in times square. among the stories front and center this morning, apple's cash stash is getting some extra attention this week. apple releases its quarterly numbers tomorrow and when it does, it's expected to report that it has a cash total that has topped more than a quarter of a trillion dollars. more than 90% of that is held outside the united states. and that's expected to focus more attention on proposed tax law changes to encourage companies to bring that cash back to the united states. we are an hour away from the first economic report of the month. we're going to be getting march data on personal income and spending at 8:30 a.m. eastern time. economists think that income rose by 0.3% while spending probably increased by about 0.2%. and the fate of the furious topped the weekend box office for the third straight week. it took in $19.4 million in north american ticket sales. the weekend's performance pushed the film's total global tick e9 sales across the $1 billion mark. >> looking ahead to the big

market events coming over the weekend, this is next weekend, the second and final round of the french election. wednesday is the last debate between the remaining candidates. marine le pen of the far right national front and emmanuel macron. and friday is the final day of campaigning and sunday the big day. 9 french people head to the polls to elect their next president. you can expect an indication of the winner in the afternoon that sunday u.s. time. meanwhile, berkshire hathaway has its annual meeting that weekend, too. just throwing out what you might want to put on your calendar. i know some people going to omaha. >> which is more consequential for investors. berkshire@way -- >> depends on how the french election goes. >> or what buffett says. >> yes. >> now we have a special presidential edition of the cnbc fed survey. we asked our respondents to grade the first 100 days of the trump presidency. the report card says -- "c." our 43 respondents who include

economists, fund managers and strategists giving the new president an overall grade of krx. his economic idea as a c-plus but the execution gets a c-minus. meanwhile they do continue to give fairly high marks to the broad thrust of his economic proposals. plans to reduce business regulation get higher marks. support for the president's plans to cut individual taxes falling a bit in this survey but they do remain positive. health care and trade are both rated negatively by respondents. these are the -- their views of the president's ideas. asked specifically about the president's tax plan, released days before the survey was taken at the end of last week, they generally thought it was good for growth, and bad for deficit. 86% saying the tax plan would increase growth, with most saying it would increase growth just somewhat. 90% said it would increase deficits, with half saying the plan would boost deficits a lot. we'll have the regular results of the fed survey, including the outlook for interest rates, balance sheets, and the outlook

for stocks and the economy stomp on "squawk box." this is just the presidential edition for the first 100 days. i looked at the individual data. 21 cs. so it wasn't like there was a mixture of as and fs. it was right in the middle there where they, i guess, feel that there's -- what would you say to a "c" student? there's substantial room for improvement. >> was incomplete a possibility? >> it was not. it was not. but we've got to give them a grade somehow. good idea. maybe i could add that to the next grading of the president. but i think a "c" is kind of like an incomplete. >> in some ways. only 100 days is nothing as we know. >> let's get right to our tax debate on the economic payoffs and problems with the most recent white house tax proposal. joining us right now is allen villard, resident scholar at the american enterprise institute and curtis buyu is senior council at gracewell and giuliani. welcome to both of you. let's talk about this tax plan, at least the light version of the tax plan that we've seen. we still need to get a lot of the details. what's been laid out to this

point, courteous? do you think that this is something that can pass or is this like the beginning of a negotiation? >> definitely think it's the beginning of a negotiation. in fact, there was a lot left out of the plan and i think that was a strategic move by trump. because if you look at it, he included a lot of things that overlap with the house republican blue print, including cutting the corporate tax rate by half. increasing the standard deduction. eliminating tax credits and deductions, moving toward territorial system, repatriat n repatriation. those are things to kind of bring along some of the republicans. but noticeably he left out a lot of things and i think that is geared towards bringing on democrats. he left out infrastructure spending. he left out increasing taxes on the wealthy which he promised to do. i think those will be used as markening chips going down the road. this is an initial offer. first proposal. and i think each concession that he makes here going out will make him look more reasonable when we start getting into the

tax reform debate. >> that's an interesting perspective. allen you agree with that? >> yes, i do. i mean to say there's a lot of details left out is almost an understatement. the plan really consists at this point of just a dozen bullet points. and it is in many respects similar to the house plan but i think the increase in the deficit is even larger than would occur under the house plan. because the border adjustment is not in there, which is something that would have raised a little over a trillion dollars in the short run under the house plan. also, he's reducing the corporate rate down to 15% rather than 20%. so it looks like a very large deficit impact. very big increase in debt. however, there is so much that has been left unspecified here that i don't think it really even quite qualifies as a plan at this point. maybe it should be called an outline. >> let's talk about timing at this point. curtis, if there are so many details still left to fill in, is this something that you expect to see movement on this year? the hope has been that maybe by august that would have been what

has been offered up. does that sound like a reasonable timetable to you? >> yes, becky. i refer back to your exclusive interview with secretary mnuchin where he said he would hope to get tax reform done by august. what i think he meant was august of 2018. because i think it's become unrealistic at this point that they could get enacted into law. but what is realistic is the house is smeeting today, the house ways and means committee is meet dag for a retreat to lay out their time frame going forward. and i think that what you'll see is that they'll start moving fairly quickly now that the trump plan is out there it puts a little pressure on them to act. i expect the house to pass something before this august recess and then move over to the senate with things slowed down tremendously. but i think realistically we're looking at an april time frame of next year to actually have tax form enacted into law. >> you think the house passes this as-is? >> well, it depends on what that is. i was just referring to more of

a time frame on tax reform. what i think is actually going to pass is something that's a scaled-down version of what the house gop blue print is proposing. the border adjustment doesn't seem like it's gaining momentum at this point. except i don't consider it to be dead. i think chairman grady and paul ryan are talking with members as we speak. i feel like they have pressure on them now that the trump plan did not include the border adjustment. >> the problem is even if they can sell it to the house, good luck getting that through the senate. we have all kinds of republican senators who have said that they won't support it. >> we're still waiting for the senate to come up with a plan. i mean, they've been talking for a long time now about how they're developing a plan. but we still haven't seen one on the senate side. >> bob, what's the most important for business and for the markets? what would lie take to see accomplish? is it just getting anything done? is it the actual size of the deductions? >> getting something done, period. the worst that could happen for the markets is to say this just isn't going to happen. that would not be good news.

i think any direction, smaller is acceptable. >> what's acceptable when you say smaller? >> well, if we -- 15 -- i don't think no one i talked to expects 15 for corporate taxes. >> okay. >> i'm not sure anybody expects 20. >> okay. >> so give me 25 and -- >> you'd take 25? >> i'd take 25. >> and you think that the market would take 25. >> i think the market would take 25. >> positively? what's the market right now, whatever premium -- if you think there's a premium built in at all, maybe even discounted, what do you think the expectation is? >> i think the expectation is we're going to get a modest bill sometime next year. pass late this year, early next year, effective jan 1 of '18. >> i think it's just corporate tax reform or full-on -- >> certainly corporate tax reform has to be part of it. including repatriation. >> allan can i ask you a quick question what is your view of deficits? we had a gentleman on earlier that said you know what? we need deficit spending because

the economy needs a boost here. should the republican party, should overall congress be concerned about increased deficit spending? >> yeah, so well first let me explain that there is no ai institutional view of any policy issue but i can give you my view. i think that the long run fiscal imbalance that we're facing in the united states is already very severe. and anything that would add significantly to deficits on an ongoing basis, therefore, would be a serious concern. yes, of course, it's true that deficits could provide a short-run boost to the economy when you're below full employment. but we're starting to approach full employment now and by the time any tax cut took effect we'd probably be closer still. so i don't think that's a very good argument for deficit finance. i'd really prefer that we try to maintain as much fiscal responsibility as possible, which means that we shouldn't be doing any large deficit finance, spending programs or tax cuts. >> alan and curtis, thank you

both for your time today. >> when we return ride hailing meets fly hailing. uber teaming up with blade and pouring millions into making flying cars in new york city a reality. ceo of blade joins us right after the break to explain just how this plan will get off the ground. "squawk box" returns in just a moment. moment. still to come a cnbc exclusive interview with the former fed chair ben bernanke. the state of the u.s. economy. deregulation. tax reform. and the fate of dodd-frank. no topic is off the table. that exclusive interview starts at 8:00 a.m. eastern time. only on "squawk box." quawk box." ahh. where are mom and dad? 'saved money on motorcycle insurance with geico! goin' up the country. love mom and dad' i'm takin' a nap. dude, you just woke up! ♪ ♪ i'm goin' up the country, baby don't you wanna go? ♪ ♪ i'm goin' up the country, baby don't you wanna go? ♪

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translation? why invest in average? "squawk box" this morning, on demand helicopter company blade teaming up were uber to make flying cars a reality. we just said a reality, but i don't know. here in new york city. and with us to talk more about

this founder and ceo of blade rob wiesenthal. is this real? >> is it real? receipt now we formed a working group with uber to form the infrastructure and equipment that we need to make this a reality. but there are no plans of right now is bring this to iner city. it is early. >> what does it mean, though? in terms of what flying cars look like to you. we saw video last week of what larry page is putting together which is like someone was joking like a trampoline over water like that was basically a human drone that you'd sit on top of. >> yeah. well it's very early days. and the two things that i see that they do for blade, call it roto craft company it eliminates the issue of noise. >> right. >> it also brings the cost down dramatically. so despite the fact that through crowd sourcing blade has lowered the cost of a 90 mile trip from $3,000 or $4,000 to $595 a seat which has never been done before

this would allow us to address a wider market to make it more accessible. especially for short distance aviation. there's just so much friction, especially in new york city between 50,000 ride sharing cars. >> right. >> white house north of the -- >> how would you -- >> i imagine 50,000 drones in the air? >> you have to get off the concept of flying cars. >> okay. >> these are basically rotocraft or helicopters that use fans. >> okay. >> which are quiet. and we're now at the point essentially where battery technology can actually have enough power to lift a good amount of weight and travel a decent speeds to have a lower operating cost and lower acquisition cost. this is sometime off -- >> but are we going to look like the jetsons? because we just talked about how many uber cars there are. >> i think we're going to be looking a lot more kind of like small planes that can vertical takeoff and landing. >> how many of them are going to be here? >> from our perspective this will be -- we view a cohabitation phase five or six years from now where you'll see

helicopters and this new type of rotocraft that are quiet, fast, cheaper. won't be cheaper in the beginning and we'll get communities to the point where helicopters are not this thing where oh, my god, they're noisy. they're only for the, you know, extremely wealthy. >> what do you think a price point -- >> can i just -- you just said something that makes it seem like it's a reality. that something has gone from 3,000 to $595. >> yes. that's today. actually $195. we will fly you to the airport for $195. right now, $195 you can go on the blade app and book a five-minute helicopter flight from one of three heliports to jfk. >> right. and that's $195. that's a gas powered helicopter. >> that is a jet fuel powered helicopter. >> i'm sorry. i need to understand. does the technology exist right now to get me in one of these boughtry powered rotor things and go how far and do what? >> right now the technology is looking at between 60 and 100 miles and about -- >> that's what we're looking at

now on tv right there? those -- >> yes, that's -- >> that exists? >> that is the very first test flight of a full scale ev-but the key here is faa approval. so you'll see those tested i believe in three years in the new york city -- in the new york area. >> right. >> and then probably -- it's up to the faa when they deem them safe to play for passengers. >> i want to transition to the partnership you have with delta. in terms of what it looks like is this the kind of thing that somebody would take from the west side to the east side and from uptown to downtown -- >> again this cohabitation phase we have three heliports in manhattan. we're kind of blessed, they're on the water, easily accessible if you're on the east side or west side. you want to go to newark, very comfortable. very useful from the east side. >> i'm saying -- >> jfk from the west side. again, the cohabitation phase, using the existing infrastructure. it's going to take a lot of government -- local regular la

laters, real estate developers to get to the point where they feel comfortable with the noise, the safety, the technology, to start putting this on buildings. so we're not at the jetsons phase yet. >> okay. >> give us time. >> i want to just insert one thing which i know, andrew, this thing about these cars, computers can talk to each other. >> right. >> and avoid crashes. >> yes. >> and ways airplanes that is way more efficient than the human air traffic. when we get there it's going to be the computers on board each air -- >> i think you need to get to the point where the second pilot in many of these things will, you know, can be a computer. to kind of help out. no question. but i think in terms of, you know, self-driving, you know, flying cars, obviously it's always in everybody's future. but, we're taking one step at a time. >> okay. this partnership with delta. >> delta. >> what is it and what does it mean? >> what does it mean is it's reducing friction for people who fly often to specifically to jfk. and what's interesting about it is when you hand at jfk on a delta flight, if you've booked blade for the five minute flight

to new york city, a delta representative will go on board, pull you off, take you down the jet bridge into a car, for 30 second drive to a helicopter for your five minute flight. you never step foot in the terminal. >> wow. >> okay how does it work? how much does it cost? >> $250 on top of your helicopter flight. >> $250 -- what's the helicopter cost? >> for your own charter, starting probably about $895. >> so this is not the $195. >> 9 $195 is scheduled by the sea on specific times. we have a long way to go. >> i book it through delta, book it through you? >> you can book it either way. if you're part of delta select you go to your delta representative. if you're not, straight to the board app. >> if you're exclusive to delta. >> yes. >> in mesh calls you up -- >> if you have your own flight on american you cannot use it. you can fly blade. this is specific delta service

that they've been working on for a very long time. when you go to jfk, you still have to, you get picked up but you still have to go through security. so you do enter the terminal when you're going through jfk. eventually there will be tsa in new york city so we can make it seamless and again land the helicopter, drive you behind the tarmac and get you on that plane. the friction as we all know is not -- are two things. the drive to the airport. >> right. >> in which you get stressed because you know if you're in an uber how much longer, they go, depends on the traffic. and when you get to the airport, now situations where tsa pre can be longer than the normal line. >> right. >> so it eliminates blade, core issue, core competency of the company, learning how to eliminate friction. >> wow. >> and this is a lot of friction. >> rob wiesenthal. great to see you. >> great seeing you. >> you flying out of here? >> yeah we're on the roof. thanks to the permission. i appreciate it. >> coming up, stocks to watch, ahead of the open on wall street.

and then we just heard about flying cars at the fop of the hour we welcome, well, helicopter ben former federal reserve chairman ben bernanke joins us for the hour producers could not resist the pun. check out truth yours at this hour. i think that she's a very nice girl... you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers 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.

welcome back, everybody. let's take a look at some stocks to watch this morning. dunkin' brands was upgraded from outperform which points to several factors including cash being returned to shareholders. cardinal health reported quarterly profit of $1.53 a share. seven sents better than the street was expecting. the drug distributor also gave a full-year forecast that falls largely above consensus wall street forecasts. and drugmaker valiant pharmaceuticals has trimmed its debt by $220 million. that follows a deal to sell three skin care brands to l'oreal. coming up we're going to welcome former french chairman ben bernanke for the hour. we have a lot to cover with him. in the meantime check out the futures. >> there he is. >> hanging out with matthew quail. "squawk box" returns in just a moment. >> bob doll thank you for being here today. >> thank you. >> thank you.

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"squawk box" newsmaker, a c incomes exclusive interview are former fed rather ben bernanke.

he speaks out on president trump, the economy and the future of the central bank. takeover talks. 21st century fox reportedly teaming up with blackstone to bid for another media conglomerate. we have the details straight ahead. plus a rat feud between m&m and new zealand. the battle over a grammy award winning song heads to court. we'll tell you why as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york. this is "squawk box." good morning, everybody. welcome back to "squawk box" here on cnbc. we are live from the nasdaq marketsite in times square. i'm becky quick along with andrew ross sorkin and steve liesman. joe is off today. we have a big hour ahead. our special guest is former fed chair ben bernanke. mr. chairman, thank you for being here today. it's a pleasure to have you here. >> thanks for inviting me. >> we're going to be talking to him in just a moment. quickly let's get a check on the

markets. after a big week last week fruit yours are in the green once again. dow futures indicated up by about 30 points. dow is not far from 21,000. and the nasdaq closed above 6,000 for the first time last week indicated up by another 15 points again this morning. s&p futures indicated up by 5. the 10-year right now, yielding just below 2.3% at 2.295. >> among today's top stories, a media bidding war could be in the works. 21st century fox in talks with blackstone to make a joint offer for tribune media. the move by fox and blackstone could beat out another off by sinclair broadcasting group. the deadline for tribune is this week and under the terms of the deal, blackstone would contribute cash while 21st century fox would contribute 28 owned and operated stations. we mentioned blackstone had teamed up with nbc universal years ago to buy the weather channel. so the model is perhaps somewhat similar.

also president trump might soon be taking aim at carried interest. reince priebus said this week that the loophole could be on the chopping block and warned against people taking the view that financial managers would keep benefiting from it. there was no mention of carried interest in president trump's tax proposal released last week, guys. and i thought it was off the table because if you got to 15% you consider most hedge funds and partnership pass thrus it was a moot point. maybe something else is afoot. a busy economic agenda kicking off the first day of may. personal income and spending out in just about 30 minutes. we'll talk about it at 10:00 a.m. eastern time and get the ism manufacturing index and construction spending. top newsmaker of the morning. joining us now ben bernanke former chair of the federal reserve, also a distinguished fellow at the brookings institution. thanks for joining us. >> good to be here. >> distinguished guy. i want to start off with a conversation we had in the past hour which is the prospects that the exit from easy monetary 308

policies, these extraordinary promise that the fed put in place under you, it could end well. what is your assessment that the fed could exit in a smooth way from these measures? >> i think so far so good. you know, wasn't too long ago when people on shows like this were saying that we were going to be having hyperinflation and huge stock market bubbles and dollar collapse and all kinds of terrible things were going to come. in fact it's gone pretty smoothly. the fed is on the process from exiting from easy money. the economy is doing pretty well. inflation is close to the fed's target. all those things are on track looks like. >> and you say in the new afterword to your book, which is the courage to act, out in paperback with this new afterword, that you think the economy is ahead of where you thought it would be at this point. >> if you look at those kinds of cyclical indicators like gdp growth we're above 12% above the

precrisis peak. we made everything up that we lost plus 12%. 16 million jobs, 4.5% unemployment. inflation is fine. stock market is up, housing market. all those things are looking good. on those indicators, yeah, if you'd told me three, four years ago this is where we'd be i would have been pretty happy. >> would you have been surprised if we told you three or four years ago that we would still be largely in all of these extreme measures? that the balance sheet is still this big, that we still haven't raised rates by much? >> that would have been a surprise. but what's happened basically is that we've seen that the interest rate environment, not just the fed's actions or ecb's actions, but just the fact that the interest rate of, you know, that's needed to get to full employment is just much lower. that's just a long-term thing. it comes from global savings. it comes from low returns on new capital investments. so, the fed's very low interest rates are not as stimulative as it would have been, you know, 10, 15 years ago because we're not that far from where interest rates are neutral.

>> is that a reflection of just how low interest rates are around the globe? what -- >> well again it's not -- central banks are reacting to the environment not creating the environment. >> that's what i'm trying to get at. >> so larry summers, secular stagnation. he says basically we're in a world of slow growth, demography, you know, population is not growing so quickly, the work force is shrinking in some places. technological change has been relatively muted at least in terms of gdp recently. so the rate of return on new capital investments is at least for now kind of low. meanwhile around the world you have lots of savings looking for opportunities, and so the neutral interest rate, forget you know what the fed is doing, the neutral interest rate where we're going to end up appears to be a good bit lower than in the past. >> do you buy into secular stagnation? >> parts of it. i think we are in slow growth now. i'm not as pessimistic as larry for two reasons. we do have a lot of promising technological changes on the hoar susan for example.

and activity has been unusually low. the other reason is part of the reason for low interest rates is something i've talked about in the past which is global savings glut. there's a lot of savings being dumped on the world market by countries like china which at least until recently were buying up a lot of assets. and that is also pushing interest rates down. so i think they'll probably go up some in the future. >> if we get past reform and some of those other fiscal things including perhaps infrastructure can you get growth over 3% in this country? >> it's certainly possible. but probably not that likely. i think if there's a big tax cut for example that lowers tax rates, you might have a bump, because of the increased demand. increased consumer spending. >> that gets you over 3%? >> probably not. i would -- i would take the under on that. i would take the under. >> that's interesting given that, of course, the president has said repeatedly all he wants to do is get over 3%. in fact, thinks he can ultimately get to 4%. you think that's not even possible? >> you know how good economists are at forecasting.

and i'm an economist. but i would have so say that's a pretty long shot. the reason is, we're not in the same world we were in 20, 30 years ago. in particular, our workforce is growing much more slowly. so just pure demographics. number of people available to work. it's not consistent with 4% growth. and then, you know, at the moment we're kind of in a lull in terms of the application of new technologies to -- >> what could it do to unemployment in this country? and i know you think we're close to full employment, but when you talk about some of the policies that have been laid out by the administration, they are hoping to goose the economy, and to goose jobs in particular. what's the lows rate you think you could legitimately get to given some of the policies that have been talked about. >> i think the full employment is kind of a zone rather than a single number. but clearly we're approaching the level of unemployment whereby it's just much harder to get it much lower, because if you do, you know, it's just going to be hard for firms to find workers, it's going to

start pushing wages and prices more quickly. so the fed would probably react to that. >> we do want wage growth though. >> we want real wage growth. we want wages to grow more quickly than prices. if you get a wage/price spiral where you're running to stay where you are, that's not really helpful. >> have you had conversations with either steve mnuchin or gary cohn about these views? >> i've had one meeting with gary cohn where we talked about a number of issues, regulatory and other issues. i have not met secretary mnuchin. so no. >> is it a problem to try? in other words let's say the secular stagnation story is right. let's say your story is right that because of population growth and productivity growth at the moment we're kind of in this 2% range. doesn't it make sense for the administration to do things that would essentially effort higher growth and if it fails i'm not sure there's all that much downside. it depends on the type of policy. but yeah, no, i didn't mean to say that. you were asking me if we could get to 4% -- >> but it's not a problem to

try? >> not if it's smart policies. for example infrastructure. you know, look around, obviously infrastructure in america is not where it should be. and some smart investment there could make us more productive. that could help longer-term growth. tax reform. make the tax system more efficient. >> when you add all this up -- >> go ahead. >> what do you think is a better, reasonable target? i've heard a lot of people say you know what? if the president can add a half a point, go home and declare victory. because a half a point is a lot and if it's sustainable it creates a-outcome than if it's a one-time bump up to 3 and then you go back down to 2. >> that's right. well, i would just suggest trying to do smart policies that improve productivity and improve potential, and if it's 2.5, great, if it's 3 even better. but there's lots of things that affect growth so you can't really fine-tune that. but you can try to move things in the right direction. >> can you be more specific with what is smart policy in your opinion? >> well, so, one thing is that

it's not simple. there's dimensions, so many different dimensions. so, on the workforce side are we giving our workers their best opportunity to participate in a modern changing economy? do we have, for example, not just access to college but do we have apprenticeships, vocational training, do we have pre-k interventions that help kids get up to school level? so there's labor force things, tax policy, clearly we would like to make the tax code simpler, more efficient. lower rates. less loopholes. infrastructure i think is a direction. so there's any number of ways that you can move in the right direction. but it's a complicated, big economy and probably not going to be a single magic bullet that's going to do it. >> what do you think of the proposals that have been made to this point? donald trump has laid out a bare bones tax plan but it's one that is the working plan for now. >> that plan we don't know much about it. in fairness we have to see the

whole plan. in terms of the one page summary it looks like it's mostly cutting tax rates i would say i want to see some fox reform that makes the system simpler, more efficient, lower rights, also fewer loopholes. i also think i would put more emphasis on the corporate side than the personal side. >> in terms of reform? >> that's where the real money is, so to speak. >> the question then becomes if you reform corporate without reforming the individual side what happens with all the s-1 pass throughs? >> lots of retails. but again i think there's a whole range of things we could be looking at, and in the tax system i think the corporate tax code is the lower hanging fruit at this point. >> okay. we're going to slip in a quick break. >> quick break, and it's amazing we have the fed chair for the entire hour -- >> ex-fed chair. >> former. >> we just drop the ex stuff a lot of times. >> once you're treasury secretary you're always treasury

secretary. and once chairman of the fed you're always mr. chairman. we're going to talk to him about a lot of things coming up, including his biggest worry when it comes to politics and the economy. you are watching "squawk box" right here on cnbc. . tired of paying hundreds more a year in taxes and fees on your wireless bill? only t-mobile one gives you unlimited data with taxes and fees included. that'll save you hundreds. get two lines of unlimited data for a hundred dollars. that's right. two lines. a hundred bucks. all in. and now, the brand new samsung galaxy s8 is here. so what are you waiting for? get the new galaxy s8. plus get 2 lines of unlimted data for a hundred bucks. taxes and fees included. only at t-mobile.

welcome back to "squawk box." our guest host this morning, ben bernanke. former fed chair. also distinguished fellow at the brookings institution. his book "the courage to act" is out in paperback with a new afterword this week that you have to take a look at. i am going to hand over my time to the professor. >> oh, no, you'll get your time. >> i know you had a question. so i wanted to -- >> i want to -- >> give you the floor. >> i want to read from the afterword which i think is so interesting. by the way, it's totally, the new afterword totally up to date in terms of the discussion, of course. and we were talking about the economy and the right jobs. and it says here in the afterword, candidate trump's promises to bring back manufacturing, and mining jobs, not create new good jobs in general, and to, quote, make america great again, were aimed at invoking his supporters

yearnings for a in par enthe ses, partly mythical past. do you think the president is aiming for an economy that is unachievable and the wrong goal? >> take manufacturing for example. obviously trade is an issue. but, you know, in terms of the u.s. economy, manufacturing is still about the same share of the overall economy today that it was 40 years ago. but there are far fewer people working manufacturing. because the manufacturing is such a productive and efficient industry that with robots and so on. so it's reduced the number of manufacturing workers. are we going to get rid of those innovations? are we going to try to eliminate the gains in productivity. i don't think we want to do that. and if we did we want be competitive internationally anyway. i don't think there's much chance that we're going to bring back the assembly lines of, you know, 50 years ago. at the same time growing industries throughout the economy, and that's, you know, that's where most of the jobs are going to be. and it's really the job and the income that matters to people i

think. not so much whether it's manufacturing or services. >> is there a danger that the president directs or even saves industries that should really be becoming obsolete or jobs that should be obsolete? >> well that would be a problem if it was doing that in practice. i don't really see anything that's in the policy, you know, list so far. that is really focused on -- >> part of what he's done though is just to follow up, part of what he's done is to try and stop companies from taking factories and shutting them down and moving those jobs overseas. is what you're suggesting that even with companies doing that we've had enough new manufacturing that's come in that it would have been the same anyway? >> yeah, those are very small -- >> i know -- >> you know, there's every month we have literally millions of jobs being created and destroyed. and so a thousand jobs here, there, even if persistent for more than a short time wouldn't really make much difference. the bigger policies, the tax policies, the infrastructure policies, they're going to determine the economy's growth. but you want the economy to grow in the most productive

direction. >> i yield my time back to the gentleman from the upper west side. >> thank you. along the lines of trump, it's been sort of a cliche question over the past week given that we have hit 100 days. how would you grade the president? >> i don't -- i agree with him that 100 days is not particularly meaningful. that goes back to fdr and all those things that happened in 1933 which is not exactly a typical year. so far in my book i said that, you know, there was kind of a trump boom in the markets. you know when he was elected. and i said in my book written before the inaugural that this was going to be a much slower process than people thought, because the politics is a lot more complicated than it may look superficially. it's true that we now have a one-party control of the congress and the white house. but within the republican party as we've already seen there's some big divisions. and then of course you do have democrats with blocking the minority in the senate. so politically it's going to be a much slower process. and i think more limited process than --

>> former processor is not going to give a grade? >> 2340e. i try to stay out of that business now. >> okay. separately the bat, and this goes to some of the manufacturing topics we've talked about, the border adjustment tax when we spoke a week or two ago you said you were intrigued by it. >> the b.a.t., the border adj t adjustment tax. some of the best economists have advocated the system, and i think it's been sold in kind of a bad way. it's not really about trade. it's not really about imports and exports. it's about where revenue is taxed. and the idea is that ref flew should be taxed where it's earned. so that you could sell exports you don't get taxed on it because you're earning those revenues in another country and vice versa. so it has a lot of appeal in many ways, for example it eliminates the incentive for companies to move their headquarters for tax reasons. it eliminates some of this transfer pricing where you're fooling around trying to figure out where the profits were

actually booked versus where they're actually earned. in many ways it's a good system. i think a couple of points. one that it is politically going to be a very tough sell. but transition problems are pretty serious. in example in order for the system to work the way it's anticipated you would have to see a very big appreciation in the dollar. some people say 25%. and that would have a lot of side effects. it would, for example, affect the debt positions of emerging market economies that have borrowed in dollars. it would affect the wealth of americans who own foreign currency denominated assets. so, there are a lot of big transition issues to worry about. so i think, you know -- >> you're talking -- >> both sides of this one. because i think it's very interesting in principle. but it's hard to get from here to there. >> you're talking about a lot of issues that are not the ones that we normally throw up when we bring up the arguments against the b.a.t. normally it's the retailers hold on it means i'm going to have to charge a lot more money and it's a direct tax on consumers. >> if the dollar were actually

to appreciate the way the economists say it should, then that would eliminate that problem because even though you would be paying the tax and imports, dollar would be stronger so the price of imports would still be about the same. what i'm saying, if we were starting to design the system from scratch, this would make a lot of sense. and it would not have those implications you're talking about. who knows if the dollar -- >> is there any other clever revenue enhancer that you heard of or thought of? if you were to take the bat out of it, which clearly may not be 34ri9ically palatable, is there any other interesting approach to this issue? >> only the general notion that, and people of the congress have been working on this for some years, just the general notion even within the current structure, there's an awful lot of exemptions, deductions, credits that make the system very complex. and they talk a lot about how high the tax rate is. 35% is the highest, one of the highest in the industrial world. but the average rate that people

actually pay is much lower. so you could lower the tax rate by eliminating enough of the deductions, credits, exemptions and so on and you would have a more efficient system. >> martyr feldsteen often points out this idea that a deduction is essentially an unlimited government subsidy. you say i'm going to spend a billion dollars on poverty as opposed to a deduction which has no limit at all, just come forward and say one way to reduce it. how important are deficits in general? should the prospect of higher deficits curtail -- >> deficits, you can't have a deficit situation which is out of control and that's going to, you know, not be stage over the long-term, and there are some real issues. the congressional budget office projects that 10, 15 years from now, we would be in a really serious debt situation. so you have to, yeah, you have to think about that, absolutely. i don't agree that you have to

have a balanced budget every year. there's plenty of reasons you could run a deficit. but some famous economist once said there's no free lunch. in the end you have to pay for what you spend. >> the trump administration has said that the dynamic scoring is something that cbo doesn't take into account and by unleashing this they would boost growth and that would take care of a lot of problems. >> dynamic scoring, you take growth impact and feed that back into the revenue estimate. cbo does do some dynamic scoring. there's a lot of controversy about which model, how much you assume and so on. i don't think -- well it depends on what you're coming up with here. so there's this idea that tax cuts will pay for it themselves. that would require a really big boost in growth. to offset the decline in tax rates. even the most conservative think tanks, and tax policy centers don't buy that. and doesn't seem to be much evidence that that's true. it could be the case that a good tax plan will add to growth.

not enough necessarily to replace the lost revenue. but still to get some more growth and that might be worthwhile. >> okay we're going to continue this conversation. we're going to slip in a quick break. thank you. >> when we come back, president trump wants the government to be more digital and he's getting a little bit of help from silicon valley. what if we pull customer insights from the data in real time? wait, our data center and our clouds can't connect? michael, can we get this data to...? look at me...look at me... look at me... you used to be the "yes" guy. what happened to that guy? legacy technology can handcuff any company. but "yes" is here. so, you're saying we can cut delivery time? yeah. with help from hpe, we can finally work the way we want to. with the right mix of hybrid it, everything computes. it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios

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welcome back to "squawk box." president trump is enlisting silicon valley to help the government deliver better ding tal services. according to a court the white house establishing the american technology council and inviting tech leaders to washington in june for a summit. officials say the new council is part of an effort by jared kushner's white house office of american innovation. no word yet on which ceos were invited or who will be attending. i'm sure we'll try to have our cameras there when and if this all happens. >> a lot ahead on "squawk box." former fed chair ben bernanke still in the house and a lot to talk to him about, including his take on the future of the fed. as we head to break, though, take a look at u.s. equity futures. up nearly 50 points on the dow. . . why pause a spontaneous moment? cialis for daily use treats ed and the urinary symptoms of bph.

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we are live right here at the nasdaq marketsite in times square. among the stories front and center at this hour, cash held by u.s. companies overseas will be back in the spotlight this week in large part because when it reports quarterly numbers tomorrow, apple expected to show a cash forward of more than $250

billion. 90% of that is held overseas. the white house wants to change tax laws to encourage u.s. companies to bring money back to this country. also a successful launch of spacex rocket from the kennedy space center in florida the unmanned falcon 9 rocket carried a classified satellite for the u.s. government. the flight had been scheduled for yesterday but had to be postponed because of a malfunctioning sensor. and i should say just as importantly it stuck the landing. which is a huge part of all of this. we're also watching shares of dish this morning. the satellite tv provider reported quarterly profit of 76 cents per share, 7 cents above estimates. however revenue came in below forecasts as the company lost more subscribers than had been expected. our newsmaker of the morning, ben bernanke former chair of the federal reserve, his book "the courage is act" is out in paperback today with a new afterword. mr. chairman, it's been three years since you left the federal

reserve. do you miss the job? >> well i miss some parts of it. i miss a lot of the people. i miss having 200 great research assistants. anything you want to know, you get. but i'm certainly happy to be a civilian and not have to make those decisions anymore. do you think janet yellen would miss the job if he's not reappointed. i ask because there's been so much speculation about what donald trump would do with this position. >> you have to ask her. i think she'll have mixed feelings one way or another as well. it is a very tough job. congress has been very hostile at times and she's had to deal with that. and it's, of course, a tough job to herding the cats at the fomc. but again, it's a very satisfying job. you're doing important work. and it's really interesting work. so, you know, i'm sure she thinks about it both ways. >> do you worry that the fed has become much more politicized over the last eight to ten years? >> not the fed itself. the fed is a nonpartisan institution. it is not political. >> the reactions from congress,

from the presidency, at this point? >> i do worry about it. and obviously there's been various bills and proposals to curtail the fed's independence which i think would be a big mistake. i think, though, to some extent it's not so much that the fed's actions are causing partisan reaction. i think in some sense the high level of partisanship is causing the reaction to the fed. in the sense that republicans republicans in particular. i was appointed by george w. bush and he was very sympathetic to the independence of the fed. very good on those counts. but i think perhaps because the congress perceives the fed as having been supportive of obama's recovery perhaps or whatever reason it's now an article of partisan faith to be aggressive against -- >> people blame you for that. people blame the extraordinary actions -- >> it's the extraordinary actions and the fed doing things that had such a huge impact on the economy that hadn't before that probably changed a lot of people's -- >> if that was the reason, then

given that those things seem to have worked that we haven't had the inflation, that the economy has recovered. that the u.s. is doing much better than other industrial economies. if that was the reason you would think by now people would say we were wrong, you're right, sorry. but obviously that hasn't happened. >> there's other criticism of the federal reserve that joe not being here i have the obligation to play joe's role here. >> yeah. >> stan druckenmiller and kevin walsh both have this concept that extraordinary actions by the federal reserve, in particular quantitative easing where you bought all these bonds has created a companies going out and buying stocks, buying back their stocks, giving more dividends, instead of actual capital investment. >> it doesn't make sense. i mean if you have very low cost to capital, all else equal that's going to make firms more willing to invest. the reason they're not, it goes back to the beginning of our conversation, we're in a world, again, i don't entirely endorse secular stagnation but i think it is true that the rate of return to new capital investments is low in a lot of

places. and so firms with lots of cash, lots of profits, they can't reasonably invest it all. some of it, it makes sense in a capitalist society that you give the dividends back or the buybacks to the investors and they could redeploy the assets elsewhere. >> i was going to ask you a separate question is you mentioned about two minutes ago the phrase obama recovery. while you were there. that's a phrase that clearly didn't necessarily resonate during this past election. why do you think that was? >> well, from a cyclical point of view the economy has recovered. from 2009 until today, unemployment has equalen by more than half. we've tremendous increase in jobs. stock market has improved a lot. housing market. all those things are very positive. but of course, you know, the obama's successor, hand-picked successor did not win and obviously there are some longer-term issues in the economy from inequality to low participation rates and so on

that a lot of people weren't happy about. >> i think people would call it the bernanke recovery. do you get credit for this? >> i think the fed was certainly part of the process. even if it was the fed, i'm part of a big team and we work together. we work internationally as well. i would just say that the cyclical recovery the fed's policies were one factor in that. >> a lot of people say the reason there's so much discontent because the people who were at the bottom recovered the least, if they recovered at all. all of the moves that brought up the stock market make well-to-do people feel much better, they got richer along the way. people who were left behind weren't necessarily left behind. i remember at the time the fed was saying, look we have to do this, lift all boats. when you save the economy you lift all boats but it certainly helped the wealthiest americans more than anybody else. >> that's not true. that's not true. the fed's policies contributed substantially to 16 million new jobs. the decline in unemployment rate. the people who benefit the most

from that are working klaas people. it's very interesting, all this talk about how the fed's policies help the rich. lately when the fed was thinking about raising rates it was the hedge fund guys writing op-eds saying rates are too low the fed's got to raise rates whereas people like fed up, who supposedly represent workers say no, no, keep rates low. it was really the case that the fed's lower interest rate policies were helping rich people i would think you would get that politics going the other direction. >> you hear people say the savers are the ones who got killed. retired people on fixed incomes, bshs >> but rich people save a lot more than poor people, right? >> but they also plow a lot more money back into the stock market, and the stock market did so well. >> we8, that's true. but you know, i don't mean to deny that low interest rates have caused problems for some savers. absolutely. and i'm sure you'll get lots of calls on that. but i would say that the low interest rate environment in the world we see today which is not just the united states, it's all around the world, is less central bank policy and more just the fact that we are in a

slow growth world now with slow population growth, slow productivity growth which means the rate of investment return is low. that's something the central bank can't do much about. >> i want to follow up with something from your afterword which is interest, you have a section in there which talks about the economic roots of the rise of donald trump but also the noneconomic roots and you point out that there's sort of no income correlation with support for donald trump, and we found this in our survey, that there were people who were over $100,000 and people under $30,000. it's not necessarily an economic phenomenon. you talk about those aspects of that? >> i think it's interesting that you know you look at the consumer confidence numbers, for example, and ask people how they think the economy is doing, there's a huge partisan divide. so, before the election, democrats more optimistic about the current economy and the near-term financial situation than republicans. two days later it just reversed. so it was obviously very strong

partisan aspect to this. people are rooting for their team. and that affects the way they think about the economy. that is certainly part of it. i think i also talked about, there's lots of changes in america. they're not purely economic. there's changes in our demography. changes in our culture. and people don't necessarily like change. so some of that we're seeing that, as well. so i don't want to be an amateur sociologist here. i think that's not really what i do. but, it is clear it's not just income, because, for example, just the fact that you know, minorities who are lower income on average, you know, did not vote for trump. i mean, obviously there was other issues here besides just their economic situation. >> can we talk about gdp numbers? someone wrote in on twitter and asked if you would like to see a revision in how gdp is compiled? people have asked around, steve's done some work on this. what do you think? >> i think gdp is an important number.

it gives a good sense of what the current level of activity is and lots of things it leaves out. it doesn't take into account distribution of income for example. i did a blog about that. it doesn't take into account a lot of things which aren't priced in markets like clean air and people working at home. so i think the answer to that, not necessarily a change the gdp number, at least not materially. lots of technical changes you can make like seasonal adjustment for example. but just to add, just to add other data, that people can look at. you know, but what's happening to income distribution, for example. what's happening to small business formation. things that matter to policymakers. but don't necessarily have to be in the gdp number. >> you talk about productivity and the weak numbers and you've given a lot of reasons, demographics, but you also mentioned at the top of the hour infrastructure, how that might actually help and i started thinking about how many hours we all spend in traffic, how much that's increased, i know just from personal perspective over the last five to ten years and it's not just here in new york

city, it's everywhere i travel. >> sure. sure. >> how much of a drag do you think that is? >> well, i don't have a -- i don't have a number to give you, but, i mean, just everybody's everyday life how much time you spend in traffic, construction or other problems that are blocking -- >> hours and hours and hours? >> or the airport. >> even at 5:00 in the morning. >> yeah. and there's other things, too. you know, what about our schools, what about -- what about bridges, what about airports, so many different things that could be improved. now i'm not talking about make work i think we need to be smart. you've got to be sure that you're getting your money's worth and fully improving the situation. but i think this is one area where i think we've fallen behind somewhat. when you travel abroad as i do, and you all do, you see a lot of countries where it just seems a lot better than here. >> we have to get a quick break in. there's much more to talk about with our special guest this morning ben bernanke who will be back in just a few minutes. stay tuned.

you're watching "squawk box." more on the federal reserve outlook as well as maybe he'll talk a little bit about his other passion, which is baseball. seball.

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when we return in just a moment, where in the world is jim cramer? we're going to tell you why he hit the field with the head coach of the eagles. plus we're going to get his take on today's top stories.

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to be a nightmare! does nobody like the future? c'mon, the future. he obviously doesn't know intel is helping power autonomous cars and the 5g network they connect to. with this, won't happen in the future. thanks, jim. there's some napkins in the glovebox. okay, but why would i need a napkin? you could have just told me a bump was coming. we know the future. because we're building it. a used car,

the philadelphia eagles select matt hollis, wide receiver, north carolina.

>> that's a great pick. >> that was our very own jim cramer announcing the eagles fourth round pick in the nfl draft. right now over to cnbc. jim cramer joins us live in san francisco this morning. jim? >> well, how do you like that? >> so are you on the other coast? because of all of these tech earnings this week including apple which we've been talking about all morning? >> yeah, i think you have to be here. i mean last week we had a pastish of tech earnings but this week is the most important week because of facebook and apple. when you look at these market caps you know where you have to be. and i think it just is essential that we cover them from out here and not just from new york. >> what do you want tim cook to do with that $250 billion? >> i would love to hear him talk about the idea that they could do ever larger acquisitions that build up the service revenue stream because that's the stream that makes it so that the analysts who just do nothing but channel checks on whether the cell phones are doing well or not have to kind of give up their game and start talking

about the company's recurring revenue. this is kind of like alphabet. where alphabet was trying really hard to say we're not just an advertising firm. everybody wants to be more than just what they are. >> fair enough. jim, we will see you in just a little bit at the top of the hour. we head to a break. you don't want to miss a power lineup including transportation secretary elaine chao at 1:40 p.m. eastern time. "squawk" returns in just a moment with ben bernanke. h ben . this is a strategy i'd recommend. this actually makes sense. now on the next page you'll see a breakdown of costs. what? it's just... we were going to ask about it but we weren't sure when. so thanks. yeah, that's great. being clear and upfront. multiplied by 14,000 financial advisors, it's a big deal. and it's how edward jones makes sense of investing. it's a very simple procedure, mr. diaz. we're just going to make one small incision here,

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let's[ whimpers ] dog. find ping-pong. find your awesome with the xfinity x1 voice remote. that's amazing! welcome back. our guest host this morning, ben bernanke. his book "the courage to act" is out in paper back with a new -- i must say interesting afterword. thanks for joining us. >> thanks, steve. >> i want to talk about $4.5 trillion. you were involved in raising the size of that quite substantially. but you have written a blog not too long saying, that the fed shouldn't worry too much about it. shouldn't take action to reduce it. give us your best outlook for what the fed should be doing here. >> so first of all, i mean, it's a very important issue and one that requires more discussion and nevmore debate. bank of japan's balance sheet is half a percent of gdp.

it's not extraordinarily large. there are some arguments for not keeping where it is, but it has to do with fact for example when you have a big balance sheet you have the reverse repo program that allows money market funds to essentially invest with the fed. gives them a safe, short term asset. there's some evidence that a larger balance sheet makes monetary policy more effective because it transmits interest rates into the economy more effectively. so there's a number of reasons like that. i think that what the foc is going to be do, they'll reduce the balance sheet. they want to maintain more bank reserves than before the crisis because they want to run monetary policy and the reasons for that. so i don't think they're going back to the precrisis level by any means but i don't think they have bought the arguments about keeping it relatively large. >> what's the right level, do you think? >> i think that for them, i mean, so depends on how you buy all the -- how much you buy the

different arguments. i think they're aiming in the vicinity of 2.3, 2.8 trillion, something like that. it would allow -- believe it or not, you thought we'd have a cashless society. but there's a lot more currency in circulation than ten years ago and they have to have some bank reserves. so that's the kind of number you get. >> the fed has a long run outlook of sort of the right -- i guess neutral rate for the interest rate of 3% which is quite a bit lower than it was previously. if you were pegging that number today where would you put it be? >> that's generally right. that's what we have been talking about. even when you're at neutral policy, the fed is neither easing or tightening policy, the underlying interest rate environment is obviously much lower and has to do with low inflation and also the fact that real returns are lower around the world. i'm more optimistic than some. i think over time if we see

productivity gains pick up and growth will pick up a little bit. i think we'll see some increase in there. but for right now that seems like a reasonable guess. >> do you buy the general fed program here of getting there gradually, there's no hurry, that you don't look at the inflation numbers. you don't see incipient inflation or the real fear of a spiral? >> i think caution is called for. i think it's gradual process to come out as the -- you know, the post crisis monetary system. and so far, they have been i think just appropriately cautious. and not any evidence that inflation is moving that fast. for example. and so again, because the neutral rate is let's say 3% for sake of argument they're not really that much below that. you know? so in that relative sense monetary policy is not that extraordinarily easy. so, you know, its makes sense to go gradually which is what they're doing. >> if not janet yellen, who? how do you think presidents --

this one and historically have thought about that role? meaning, the sort of balance between hawkish and dovish? >> i think the main thing -- if you look at janet she was characterized early on as a dove and she cares a lot about jobs and employment and she's raising interest rates because of inflation, to head off any inflation problems. she's got a very balanced perspective and she's -- what she is is an independent thinker. very well informed and strong economist. and that's what you need. you need somebody who will be independent, who will make decisions on the long run needs of the economy and who will use the best knowledge we have which is of course imperfect. >> you have to be an economist. i have thrown out the name gary cohn. over the years in recent memory there have been economists. paul volcker wasn't an economist. >> but he had a lot of experience at the fed for sure. i think having a lot of experience in fed monetary policy, those things would be helpful but it's not the only

criteria. having market experience, having other kinds of experience might be relevant. so i'm not saying though necessarily you have to be a ph.d. economist, but obviously having knowledge of the economy and monetary policy is clearly essential. >> but you said in your afterword that the president here faces a bit of a contradiction. on the one hand, he had talked about with the republican party in general has criticized low interest rates from the fed. on the other hand now that you're president you want nothing more than low interest rates. >> that's why i think it's better not to sort of pick somebody based on what sort of interest rate policy they'll give you. you want to pick somebody who's smart and independent and will do a good job. you need continuity and you need the right policies as the economy is shifting. >> you said at the beginning of the hour that you were surprised with where we are in terms of growth and a lot of different statistics. you're also surprised at where we are in terms of interest rates right now. if you had to look three or four

years down the road, where do you think interest rates would be then? >> hard to know. i think obviously if all goes well, the fed will move towards the neutral target. i have been expecting longer term yields to go up for a while and it hasn't happened. not very much. but some of the things that would lead longer term yields to go up over time, inflation is slowly raising. productivity and growth improve a bit, that would tend to raise interest rates and third, the risk premium on long term interest rates has been very, very low or negative which is unusual. if that reverses, all of those things would suggest over time you would see somewhat higher, long term yields. >> it's happened before. greenspan tried to raise rates in the early 2000s, and market rates and yields didn't behave. here you have the fed raising again and essentially you're coming down. the fed losing potency in the economy? >> well, i don't think so, but the fed has to take into account other things that are happening. so globally you have qe and

other things happening around the world. you have the savings glut to some extent. you have a bunch of things happening around the world, but no, i think the fed still remains pretty effective. >> one issue we haven't talked about is dodd/frank and the banks. >> oh, wow. we need another half an hour. >> we probably do. to the extent that dodd/frank gets peeled back, does that make sense to you? are you a fan of that? >> i think the biggest parts of dodd/frank were good and they need to be retained. the one thing in particular i have written about that's extremely important, called title 2 of dodd/frank which is the liquidation authority. a bunch of new rules. the thing that got the fed in the most trouble as you well know was that the interventions to prevent the collapse of aig and other firms during the crisis and so what happened in dodd/frank was the fed gave up some of the powers and in exchange created a whole new system for dealing with a failing lehman or aig or another

big firm that would allow the fed the fdic, the treasury to unwind that firm in a safe way so that it would fail. and the creditors would lose money but wouldn't bring down the financial system. for reasons which i don't fully understand there's a lot of talk about repealing that whole thing. not replacing it with anything. i think that would be very, very unwise to do. >> forget looking three or four years down the road at the economy, when you look to october who do you like right now in baseball? >> well, i'm hopeful that my team the nationals will be there. obviously the cubs are very strong. red sox. so a lot of good teams in baseball. its a good time for baseball right now. >> not the mets though? >> the mets have had injury problems as you know. i was at the game on friday. unfortunately our center fielder at the nationals got injured, he's out for the season. but the mets have had worse injury problems. >> these are good times for baseball. >> yeah. a lot of great young players. >> fantastic. >> i think you could be the next commissioner of baseball. we have talked about that before. one of these days. or i'm proposing him to be part

of the marlins group with jeter and bush. >> mr. charge, thank you very -- chairman, thank you for being with us today. >> thanks for having me. >> again, the book is south in paperback today. "the courage to act." check it out. thank you very much for joining us today. make sure you're back here with us tomorrow. right now time for "squawk on the street." ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla. jim cramer is in san francisco and david faber is in l.a. futures are solid ahead of the earnings. a fed meeting, a jobs number, europe mostly close in order the may day holiday. our road map is like this, first day of the month what is the trading set-up for may? it's a big week in congress from health care to