>> announcer: live from new york, where business never sleeps, this is "squawk box. ♪ >> good morning, everybody welcome to "squawk box" here on skrrks nbc we're live from the nasdaq market site in times square. i'm becky quick with joe kernen. andrew is off today. peter boockvar is cnbc contributor. peter, welcome good to see you. >> thanks. good to be here. >> let's look at the u.s. equity futures. check out the futures this morning, you're going to see that the dow futures are down by 27 the nasdaq is up by 13 and then the s&p is up by about 2.5. peter last week you had the s&p climbing to a five-month high. what do you think about the rebound that stocks have made since those lows setback in december >> it's riding the hopes of what the fed will tell us on wednesday that the balance sheet will probably stop shrinking come september/october at a level well above what the people had feared and reiterate that

they're probably not going to raise rates again unless the economy accelerates and maybe they'll throw in one or two, but assuming that we are steady state rates will probably steady at these current levels. >> you feel comfortable here >> do i feel comfortable here? it depends on where earnings go from here. earnings estimates have been shrinking. global growth has been slowing and that's been reflected in the price of gold. that's hanging in about 1,300 and reflected in the ten-year yield below 260. there needs to be reconciliation between what the messages and the markets they're sending. >> peter is our guest host let's look at what happened overnight in asia. you'll see that the nikkei was up by .6%. hang sang up by 1.3% still hopes for a trade deal for some sort of talks to be later in april and talk more about that later this morning too. in the meantime, check out what's been happening in europe where the markets there are actively trading right now looks like the ftse is up .7%

despite any concerns about brexit you have the cac up by .1% and the dax is flat. stocks are higher in italy and spain. look at what's happening in the treasury markets here in the united states. right now the ten-year note check this out, below 2.6%, 2.587% what the fed says on wednesday will have a lot of people paying attention. and we're following a developing story on boeing that is solely responsible for what you're seeing in the dow this morning. boeing is indicated down nine points premarket, so do the math we would be up about 40 on the dow. the department of transportation is reportedly investigating the faa's approval of the boeing 737 max planes the probe is focussed on an anti- -- down ten points on an anti-stall system imly indicated in the lion air crash in indonesia and whether it played a role in last week's ethiopian's crash.

"wall street journal" reported they issued a subpoena seeking documents related to the development of the 737 max the new scrutiny comes as ethiopian authorities say that there are some clear similarities between the two crashes. u.s. officials say it's too early to draw conclusions. as data from the black boxes are currently being analyzed we'll have much more on boeing in a few minutes, but that move back to 2822 on the s&p came as the dow's gains were kind of masking what was really happening in the broader markets because last week boeing was down significantly and the largest price weighted stock in the dow. so what did it lose? it probably lost 40, 50 points last week, so that's almost 400 dow points that were not reflected in that average. >> right. >> so the stealth rally and the s&p back to 2822 i don't remember you being very positive on the markets in the last six months.

>> the markets for the last 13 or 14 months are just in this gigantic trading range from what we've seen. >> we went down in december to -- >> yeah. >> to 2300 or whatever -- >> two biggest pressure points -- >> everybody came down very rare person who said we'll get back to 2800 2300 you weren't pounding the table for us to buy this did your clients miss 20%? >> no, we stayed mostly invested actually throughout the fourth quarter's decline. >> you rode it down and rode it back up. >> yes, exactly and actually added a little towards the end of the year. the two biggest pressure points got relieved being the fed and the china trade deal which will happen just a matter of timing at this point. >> so is this the top end of a range as you see it? >> again, depends on where earnings estimates go from here. >> that's what we're asking you. >> right now we're below 167 so if this trend continues and earnings estimate continues to fall -- >> below 167 or to that?

-- >> where s&p have fallen to. >> 160 -- >> 160 would be 0 growth it's hard to see the market rally past 2800. >> so what do you think will happen with earnings >> i think earnings growth will continue to shrink >> so you're negative on the equities then? >> i'm worried about overseas growth i see what's going on in europe. china is trying to stabilize their slowing growth rate, which i think they'll have some success. >> european central banks will help. >> i'm of the opinion they're trying to help but at this point monetary policy and japan and europe are actually restrictive because they're damaging the profitability of their banking system negative interest rates in my opinion is a poison throughout the entire global banking system so we have to shift our mindset the ecb and boj are not accommodative, they're restrictive. >> the chances we hit 3,000 in

2019 are what, 1 in 30% chance in your view, 25% chance you would be absolutely shocked if we hit 3,000 on the dow >> i would be surprised. you need amazon and google and apple, big market cap stocks to carry us up to 3,000 unless you get a rotation into something else. >> you don't see that happening? >> i do not because of global growth half the s&p is financials and tech tech is very exposed to what's going on overseas and the slow-down. you need overseas growth to stabilize to give tech a chance to continue to rally from here >> okay. peter is with us again for the rest of the hour we'll talk more about the markets in just a little bit. in the meantime, president trump blasting gm over the weekend. he tweeted yesterday urging gm to reopen its manufacturing plant in lordstown, ohio he said, gm let our country down then later yesterday president trump tweeted, just spoke to mary barra, the ceo of general motors about the lordstown, ohio, plant. i am not happy that it's closed and everything else in our country is booming

asked her to sell it or do something quickly. he blamed the uaw union. i don't care i just want it open. gm shares up by 3 cents, 3810. >> it was busy. >> yeah. >> new record in tweets yesterday. i was reading. >> yeah. >> president trump criticized google, speaking of tweets, saying that google is helping china and their military but not the u.s. terrible the good news is that they helped crooked hillary clinton and not trump and how did that turn out president's criticism came days after the chairman of his joint chiefs of staff said that the work google is doing in china had direct and indirect benefits to the chinese military. the tech giant responded quickly saying in their words we are not working with the chinese military we are working with u.s. government including the department of defense in many areas including cyber security, recruiting and health care

>> interesting that caught my attention when the joint chiefs of staff was talking last week. you want to know more. what are they doing? how does he say they're directly -- indirectly in some ways, how are they directly benefitting the chinese military >> right. >> i want to know. >> and i guess senator warren is -- has a detailed plan to break -- maybe president wants to do it too who knows. >> one of the few bipartisan areas. >> that's the question, there's no harm to consumers in the prices have come down for consumers. >> right. >> what i will say is i think you have to separate the two the privacy issues i think do deserve oversight and regulation the idea of breaking them up because they're harming competition i don't quite see how that works out. >> yeah, agreed. lyft report lid plans to kick off its road show today sources say that the ride-hailing company is looking to raise as much as $2 billion that could value lyft at more than $20 billion when it goes public

we'll have full coverage of lyft's ipo plans throughout the day right here on cnbc and one of russia's richest men is going on the defensive. russian billionaire oleg deripaska is suing the u.s. government, demanding that it lift sanctions against him deripaska sat down for a rare, exclusive interview with our very own geoff cutmore over the weekend. geoff joins us more with more on this big interview geoff, good morning. >> reporter: good morning, becky. it's been over two years since oleg deripaska spoke publicly about anything, but we sat down with him because he's decided that enough is enough on this sanctions list he claims that the sanctions imposed back in april of 2018 have led to at least 7 $1/2 billion of material loss for him. that as a result are being forced to lower his ownership of two companies that he founded, rusel and ian plus let's have a listen to why he

says the sanctions need to go. >> i hope that sooner or later people will recognize it's wrong. will try to assess the facts and actually it's getting worse and worse. last hearing in congress when people start blaming me personally for any sort of things which i had no connection even with, not just based on fact, just fantasy and of course it's give me total understanding that legal system in u.s. may be the last resort where people could assess the facts and to see, you know, what justice would be >> reporter: well, oleg deripaska accuses treasury secretary steve mnuchin and the treasury department of weaponizing the u.s. financial system he says he wants justice, which is why he's launching this

lawsuit. and he pointed out that he's become somewhat of a business pariah by being put on this list, even here in moscow. the government and the central bank are unwilling to deal with him for fear of being exposed to secondary sanctions from the u.s. government. back to you. >> geoff, you or somebody who have never seen back down from a tough question i watched you interview vladimir putin a few years ago and putin saying at the time, what is with this guy what he's doing pushing me on all these issues what's your take on having seen all of this? what's your own judgment on what you think is happening here? >> reporter: well, of course, the treasury department put him on this list because they say he's part of a group who are close to president putin who have been involved in, quote, malign activity. i think anybody can go back and look at the records as to his business activities, how he became as rich as he is.

and of course, his involvement in the commodity markets the outstanding questions that still remain i think for a lot of people, though, becky are was he involved in some way with paul manafort in the alleged interference in the 2016 u.s. presidential elections and i asked him point blank, do you think paul manafort was working for a russian intelligence agency or the gru do you think that others who have been sited in the mueller investigation were involved? he himself is someone who has become part of the scrutiny under robert mueller but hasn't been accused of anything at this stage, he categorically said i do not think that they have been working either of these individuals for russia intelligence or for the gru and he has says no evidence to show that but i think we'll have to wait and see what mueller comes up

with and whether oleg deripaska's name turns up on any of the subsequent documentation. but for the time being, becky, he's saying he's not involved and it's time for the sanctions to finish. >> geoff, thank you so much. geoff cutmore will join us later in the day with more that interview very rare with oleg deripaska. when we return today, we have the latest on boeings grounded 737 max and get an update on the time line for the software upgrade for those planes. new details about government investigations as we head to a break right now, let's take a look at the biggest premarket winners and liosers in the dow. leading the way cisco which is up by 21 cents ♪ this is loma linda,

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$11 billion deal two years ago when its predecessor company was acquired by vantiv that company combine and took the worldpay name. you can see this morning, fidelity up by 2% and worldpay up by 11%. shares of boeing are under pressure again this morning as we learn more about government investigations into the grounded 737 max now down 368 that also coincides with the 200 day moving average or there abouts we're getting close to that again and that's 70, 80 points -- >> how many billions is that in terms of market cap? >> that's what i was saying. phil la bow will join us now with more. so there's going to be software fixes and i don't know, maybe they get sued by other places besides norwegian air or something, phil, but the market cap loss, it's hard to imagine

actual monetary effects that total. do you roughly know where we are right now, must be 50, $06 billion? >> in terms of how much lost market cap relatively to what they might ultimately pay? is that what you're asking >> the market cap loss to where it was to 369 is probably -- i don't want to say -- it's up there. >> yeah, absolutely. >> so maybe it was overvalued. maybe it shouldn't have been there or however you want to look at it, but it's unlikely that if you add everything up when it's all said and done, that it could equal that. >> well, that depends on what happens in terms of these investigations i think that it's clear as we look at the headlines that have come out over the last 24 to 48 hours that this is going to be a far more extensive investigation than simply, hey, we have a software fix, we'll put it in place and get these planes back in the air and resume our deliveries of the 737 max.

the ethiopian minister out with a statement yesterday after looking at the data that was analyzed in france saying, look, there are clear similarities between the crashes in ethiopia and the one with lion air back in october after this statement came out regarding the black box data, boeing ceo issued a statement saying while investigators continue to work to establish definitive conclusions, boeing is finalizing its development of a previously announced software update and pilot training revision that will address the mcas flight control law's behavior in response to erroneous sensor inputs. bowing is moving forward with that software update which many believe in the company and we talked with people who said look we think it will happen by the last week or next week in march, you've got the d.o.t. investigating the faa certification process according to "the wall street journal," also there are reports that the grand jury that could be looking

into the relationship between the faa and boeing in terms of what happens with the certification. meanwhile, the seattle times out with a damning piece over the weekend saying that former and current boeing engineers were pressured to approve some of the systems within the 737 max, the anti-stall technology that was ultimately approved. so as you take a look at shares of boeing, guys, we're into that phase now, just beginning that phase, where you're going to see more headlines and the headline risk, if you will, to shares of boeing, that will be increasing especially if the d.o.t. and d.o.j. are looking into the relationship between the faa and boeing guys, this is a relationship increasingly over the last couple years you heard critics come out and say i'm not sure this is the best way for us to approve either new aircraft or new systems when you have the faa deciding, okay, what can boeing work on and approve

versus what do we ourselves independently say yes this works or this needs to be modified this has to happen before approval those headlines i suspect we're going to see a lot of those over the next couple weeks. >> that chart we just showed was useless because it goes back to tuesday. so shows 380 as the high the high was 446 on -- >> yeah, 446, right. >> 446 so we're 370 now so that's 76 points times .56 is how many shares are outstanding so over $40 billion in market cap losses >> and off the low of late december 295, about 50% retracement of that rally. >> what do you mean? >> late december through a couple weeks ago. >> late december it was below where it is now. >> 50% retraceable. >> that's unbelievable it got down there on china worries, got

down to 290. that's unbelievable. 50% retracement. >> phil, just go back to this whole idea of having the mcas system, the entire reason it exists is to try to prevent a stall. this is an airline -- >> correct. >> -- that is more fuel efficient. they think it must be more likely to stall is the only rb -- >> no, no, no. there's modifications, becky, in terms of the design of this 737 max relative to the old 737. it has newer, larger ge engines. these ge leap engines. and because of that, because they are larger, they had to move slightly forward in on the wing that changes the center of gravity relative to the entire aircraft that's the issue that if there is erroneous data that is fed in -- >> right, but the entire reason for the system to exist is if they worry about a stall it starts to push the nose down and the pilot is fighting against trying to pull it back up. >> correct, correct. based on the data that could be

coming in, being fed into the aircraft, that tells the anti-stall technician. >> as a novice, i don't like the idea of a software designed to push the nose down after an pilot trying to actively push it back up. that's all i'm saying. >> dominic gates the reporter of the seattle times they talk with former around current boeing engineers who have not given their names in this report, but they say, look, i didn't sign off on -- what happened in terms of the nose being pushed down. >> phil, we keep showing this scary like animation of it almost looks like the plane has too much power because we show this animation right where at takeoff -- >> takeoff. >> it goes straight up like that where is where -- >> that's boeing issued video. >> that's why you had that system trying to -- is it more -- does it have more thrust is it more powerful?

>> it's not that it has more thrust it's when you're taking off if erroneous data is fed into the system, it will force the nose -- if it doesn't force the nose down, then you'll go into a stall. so what this system does is forces the nose down. >> this is what i don't like right here can you see that >> yes i see what you're saying the issue is this, joe, the fact that the mcas system when it forces the nose down, it apparently can do it several times. so if -- looking at from the position of a pilot who may not be experienced and ready for it, he fixes it and then it happens again. he fixes it again. and it happens again that's at the heart of this issue. >> that's -- maybe additional pilot training helps with all of these things you see how often you have problem with the sensors in your car or anything else, that's where you start to think, wow. lots of computer technology you want to trust the pilots you understand the computer

technology helps to a great degree, but when the pilot is being overridden by this computer software -- >> sure. >> that's why i have concerns on all of it. >> both cases that's the clear similarities that we believe that they're pointing out when they look at the black box data that the pilots appeared to have been fighting the mcas system. now again, we don't know that definitively that has not been rooted out as the exact cause, but that's the suggestion based on the initial analysis coming out of the black boxes. >> in addition to the black box, you have -- you can sort of see the -- on radar or satellite data and we heard from ron barron, that are showing sort similar patterns of bucking. >> that's correct. >> how long before the black boxes get analyzed, phil they've had them for a while. >> joe, they've got the initial analysis that's been done. now the question becomes it goes back to the ethiopian government

moch what do they do in terms of how much of that do they release? that is completely up to them. they own the black box, so to speak. they own that data so, it is their decision in terms of how much they release look, i think we're going to see this come out -- >> who owns the black box? >> ethiopian government. >> the ethiopian government because it was ethiopian airlines so, whether or not they release that in terms of a full report, remains to be seen look at the lion air crash that data has been analyzed, but we've yet to see a final report from that crash in terms of what the data definitively shows. >> phil, can i ask you a quick question sorry. how are the airlines managing in bringing in unused airlines to replace the max temporarily? >> as far as i can tell fairly well look, you had your delays and you had your cancellations starting on wednesday and thursday clearly southwest was the most impacted because they had the

most 737 maxes in the system but they've been able to fairly quickly re-book passengers and say, okay, well, look, you were on a max from this destination to this destination. can we put you on a different flight at this time, whether it's later in the day, whether it's the next day. they've been able to work through that fairly quickly. as have united and american. >> phil, thank you very much i'm sure we'll have a lot more to talk about with this story. in the meantime, lyft just out with some news on its ipo and leslie picker is here with that leslie, good morning. >> good morning. lyft filing its amended perspective which discloses price range, offering size evaluation say they're seeking between 62 and $68 a share for this ipo they'll be offering $30,700,000 shares this deal would yield a $2 billion offering size for their ipo, now they also disclose their shares outstanding which

would show what they're looking for in terms of a market cap for their ipo which at the midpoint of this range is $18.5 billion on a non-diluted basis pretty sizable decent amount higher than its $15 billion it raised in 2018 from its private fundraising, its most recent private fund raising in 2018. >> it raised the valued at 15. >> valued at 15. >> exactly, exactly. raised at a $15 billion valuation. it also disclosed it has a dual clash air structure. it show what had the economic rights versus the voting rights are for its insiders logan green, the ceo, will have about 29% of the voting power. john zimmer will have 19.45% of the voting power those two are the co-founders. zimmer is the president of the company and green is the ceo it should be one of the biggest ipos we've seen in years with

the exception of snapchat and spotify, guys. >> leslie, thank you. coming up, marriott ceo speaking to analysts today about the company's strategy, but he'll speak to us first. that's coming up at 6:50 eastern, about 20 minutes from now. "squawk box" will be right back. ♪ -i call it my comfortable future plan.

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♪ >> announcer: welcome back you're watching "squawk box. live from the nasdaq market site in times square. ♪ good morning u.s. equity futures at least in the dow have deteriorated from the beginning at 6:00 down 25 points, now down 68 points as you can see that's mostly boeing the s&p and nasdaq are die verging once again and in the green along with some european markets and asia as well it was a good feeling early on or at least a good tone globally forequities, but boeing affecting the dow specifically

today. all right. let's talk about some investment opportunities. joining us now for that is david bonnset the founder and chief investment the author of upcoming book "the case for dividend growth. let's talk about the case for "dividend growth." what do you think of where we are and what would you be telling people to do overall >> well, as far as the market multiple goes, i mean, price levels getting back near its all-time high but the multiple is still not and the valuation level of the market is very reasonable. it isn't cheap, by any means it was cheap three months ago. but i think the market itself is about fairly valued, which kind of brings me to the dividend growth case. there's an awful lot of things that are undervalued in the value space. and there happens to be some great dividend growers that we

fit into that. >> one of them you like is black stone. why is that? >> well, black stone is kind of the perfect dividend grower for us because they're a company that they're set up in an interesting and legal, accounting structure as lp they have to distribute this level of profits and they just happen to grow their profits monstrously black stone pays you right now on an annualized basis, 7 to 8% yield but they're also growing organically like no other asset manager. most asset managers are shrinking and black stone is rare case because they're in the alternative space, private equity, real estate. and i think that beginning of what they're doing is quite impressive in retail wealth management. >> you also like amj, a basket of oil and gas pipelines let's talk about that a little bit. >> it's more about the space that we really love and amj happens to be the way that we've chosen to get that mop exposure. there's a lot of individual mop

names that we really like. some clients don't care for the k1s that come with it. amj is way to receive exposure to the case, 7 1/2% dividend yield we've got that while we had to wait for price recovery it's up about 15% year to date, but the story there, becky, is very simple. oil and gas at whatever price level there's more and more of it flowing through pipelines in the u.s. and this is before the story kicks in of the u.s. becoming a leading exporter we think a major economic macro story will be in the next ten years the u.s. exporting natural gas all over the world these pipelines are very necessary for it and now over the last several years many had to clean up their act financially, their balance sheets and it's just a completely different space than it was three years ago a lot of companies went away,

which is necessary because they were not well run. now you have very different environment and we love the space for the next two to three years. >> do you think we'll see more companies collapse the mlp structure like williams did with williams partners? >> yeah, i do. and i think there will be some enterprise products is an example that simply can't. they're well too deep into it and there's tax reasons and so forth. you'll have more that it makes sense for them to do it. williams was a great example you had acquisition of spectra so there are situations where that tax structure will come down remember, the corporate tax reform made them a structure less necessary for a lot of the companies. i think you have a mixed bag there. that's another example and get the best of breed names. >> just quickly with black stone, do you think they'll keep

the lp structure or do what kkr did and shift? >> yeah. it's a great question. and i really don't know the answer i think that they are genuinely looking at it. there's some significant advantages to doing it primarily in democratizing the investor base. and i think giving mr. schwartzman the multiple that he feels the company deserves but there's also some disadvantages, so they're having to weigh both. the kkr thing, by the way, has not proven to increase the multiple quite as much as it would. it's a secret little call option there. it could happen. i think it would be good for the stock, but it's by no means the basis of our thesis. >> david, thanks for joining us today. >> thank for having me. when we come back, we will tell you the results of the journal's latest ceo compensation study plus, marriott just out with a new strategy for growth. planning to open 1,700 new hotels around the world.

ceo arne sorenson will talk to analysts later today but now he's tkialng to us stay tuned you're watching "squawk box" right here on cnbc each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.

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a new report card on ceo

pay. "the wall street journal" study found that the median compensation for 132 chief executives of s&p 500 companies reached $12.4 million last year, that's an increase from the $11.7 million the prior year for that group and it's an average raise of 6.4% and it lifted median pay if you divide it by 12, i guess that's the headline. it comes out to a million dollars a month. that trend holds as more s&p companies report compensation the third-straight year for ceo pay to hit a new record. coming up, arne sorenson the ceo of marriott joins us next to discuss his three-year growth plan here is a quick check on what's happening in the european markets right now.

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marriott ceo speaking to analysts later today he's going to outline a three-year growth plan which includes opening more than 1700 hotels around the world. but he's here with us first. let's welcome marriott international president and ceo arne sorenson. we could give you a dvd and just take it to the analysts and say i'm skipping the whole update. just, we'll do it all right now. can we do it right now >> that would be great >> it's a pain to answer all those guys

anyway, so 1700 locations. let's talk in total rooms. it's like 300,000 rooms. >> it's almost 300,000 rooms over the next three years. we're counting '19, '20, and '21. we started doing this about 15 or 16 years ago when i was cfo today we debate whether companies should provide guidance at all. we've been providing a model once every 18 or 24 months to the street that says here is how our business is performing we give them an assumption about same store sales we tell them how many hotels we should open. 295,000 rooms today, we'll say and we'll tell them what our ebitda and eps should do in 2021 it's a way of being transparent, but it's also a way of saying let's get beyond this quarter and look at steady state, how the company should be. >> but you're still more dependent on the united states than on the rest of the world in

terms of hitting numbers still because in the most recent quarter, it was some weakness in the united states that caused rev par to be a little bit below expectations so it's still here >> well, we're -- as we speak today, we're about two-thirds u.s. and one-third the rest of the world. >> but you're opening a hotel in china how often? >> we'll open half of our hotels outside of the u.s >> you open one how many every days >> more than one a week. i don't know precisely the number >> just crazy. >> is that intentional or once you get that big, if you're going to continue to grow, it's going to be outside the united states? >> the rest of the world is growing faster u.s. is still growing. but when you see the growing global middle class, you see the relative lack of existing hotel stock in some of these parkt markets. just the percentage growth is higher our share of the business is less outside the u.s

>> and the numbers out of china are extraordinary. >> they're amazing we don't have a really reliable 2018 data yet. but close to 150 million outbound trips by the chinese in calendar 2018. >> and you see them traveling within asia or all over the world? >> the closer destinations are more common. but they're coming to europe and the united states. they want to see the places they read about and seen in movies forever. >> there's an activist, what's his name, lit? he wants to get on the board he says he thinks there's too many brantds i was wondering. i like all the brands. but when you put starwood and marriott together, both had more than one brand at that point and you still got all of them, right? how many total >> we have about 30. i mean, marriott had about 20 and starwood had about 10. 30 today. >> is that too many? >> absolutely not. the philosophy we've been purr

s suing, we need to have under our loyalty umbrella a breadth of choice and the broader that is, the more likely they're staying with us we're competing against technology platforms who offer breadth of choice. >> and your most important brand in your view, it will finally bring all the rewards programs together now that the merger is complete >> that's right. marriott bonvoy is all of the rewards. one loyalty. >> and you're rolling that out already. >> we launched at the academy awards had a really good time with that program. >> might think that -- you know -- >> i'm members of several of those. they all get merged into one place? >> they're in one program. so now you've got the simplicity earning points at any of those why would you want to offer fewer hotels within that system? and so we're -- obviously we got to make things like sheraton

stronger which we're working on. >> why don't you -- just to cover everybody, you did the academy awards why not do march madness that way -- you know what i mean basically have covered everyone in the -- >> we did the f1 this past weekend. we've got a partnership with mercedes came in first and second it was pretty good time. >> there probably won't be any overlap. >> you get joe in one and andrew in the other >> that's right. and my son with the academy awards he's insanely interested in that stuff. all right. so in the results, there was what i think like $25 million of insurance for the hacking thing? >> yeah. >> is that the final >> oh, no, no, no. not by any means we announced that cyberattack november 30. the fourth quarter of 2018 was the first time we were really spending money on it we spent $28 million $25 million was covered by insurance. the way our legal system works, this will be many quarters if not a number of years until resolved >> talk to the banks

>> exactly i think as a consumer story, we're working our way through that we've given consumers a way to figure out what data of theirs we have. and we want to be as transparent as we can with them. but, you know, the legal process grinds slowly. >> they're playing us out. is there anything else you're telling analysts today you're not telling us >> we are talking same store sales growth of 1% to 3% which is a fairly modest level of growth reflecting a stead economy but not an economy ramping up, particularly >> what did the street expect? is that in line with expectations >> when you talk about 2021, it's hard to get much of a read for where the street is, but we think they'll be pleased >> all right arne, thank you. >> thank you also, peter, thank you for being here today peter boockvar when we come back on "squawk box," much more to come. our guest host for the next two hours is jason trennert. we'll get his thoughts on the fed and his apocalypse not

portfolio.

gearing up for fed week. the central bank gets ready to meet the market wants to hear more evidence that rates are staying put for the rest of 2019

we have a preview. new developments surrounding boeing the justice department reporting how the faa approved the 737 max jets in the first place. we have the details. and following the money. the irs is now involved in the college cheating scandal we have the latest developments. the second hour of "squawk box" begins right now live from the beating heart of business, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick. andrew is out this week. our guest host for the rest of the morning is jason trennert. jason? how are you? >> i'm happy to be here. >> got the jacket off, cuff links on >> that's right. >> that collar is attached, right? remember in the old days --

>> you would take them off >> that's right. but it's like the '80s trying to bring it back. >> it's a good look. and let's check out u.s. equity futures switch may have gotten a little better considering that boeing is indicated down we saw it down 11 earlier. we'll get a more recent quote when we do that story. if boeing's down ten points, that's at least 70 points or so for the dow of downward pressure so once again -- >> i think it's 77 points right now. >> s&p indicated up three. the nasdaq indicated up 11 here's what's making headlines at this hour the development and eventual approval of boeing 737 max jets are under scrutiny of the transportation department and prosecutors. all of this follows that crash of a 737 max jet operated by ethiopian airlines a week ago.

as joe mentioned, boeing shares now down over $11, decline of almost 3%. sitting now at $367.84 meantime, lyft is kicking off its ipo road show today. in a few filing this morning, lyft says it expects to sell 30.8 million shares at $62 to $68 a share. and fidelity is buying worldpay fidelity national is a provider of financial services technology while worldpay is in systems world pay share up by 12%. president trump blasted gm yesterday urging them to reopen their manufacturing plant in ohio he said in his words, gm let our country down then later yesterday, president

trump tweeted, just spoke to mary barra ceo of general motors about the lordstown, ohio, plant. i am not happy that it is closed when everything else in our country is booming i asked her to sell it or do something quickly. she blamed the uaw i don't care i just want it open. gm shares are not moving much on any of this news it's up 3 cents at this point. the fed's going to be kicking off its two-day meeting tomorrow ending with a news conference on wednesday. steve liesman is here with what to expect from all of this >> yeah. >> steve, we're getting lots of telegraphing coming early or at least our expectations of what we think. >> with the main question surrounding the meeting is just how easy does the fed get. this will mark the first round of forecasts since the fed pivoted to its policy of patience and ends its balance sheet run off this year. here's some of the questions

does it forecast one hike this year or none does it stop predicting restrictive fund rates in outlying years and does it further downgrade the economy where it went from 2.5% to 2.3% of gdp this year the fed rate outlook called for two quarter point hikes this year and pushing rates above the long run or neutral rate for 2020 and 2021. that is going restrictive. you can see that the 2.4% is where we are now two hikes in there and then 3.1%, 3.1%. those are above restrictive. which is neutral that whole apparatus that whole structure is going to come down. gold man says despite the elimination of the fomc statement, they would like to retain an upward tilt. where b of a the fed has one more hike left in december and that's not all the fed will

detail plans to end the balance. there are days we talked about $2.5 trillion to $3 trillion on the sheet. one more thing, the dodd plot, it's unclear what purpose it's serving right now. it's not -- >> i know a purpose it's serving. >> you must applaud -- you want to applaud transparency. and remember we used to clamor for this, right? >> yeah. that was a different environment. >> we wanted to know what's your outlook. the trouble is if we all together randomly give a number and that number provided randomly becomes a policy statement. >> it should be like the olympics where >> that's already in there

the problem is the way the market is the policy it's a set of not random but set of forecasts put together that become policy. guys, what do you think? is the plot the problem? let me ask this a slightly different way. the fed set everything up perfectly in december for the markets to rally back. we have seen the all clear from them is there anything that they can do this week to either screw this up or continue that policy? >> there's plenty they could do. whether they do it or not. but look i think there's always a question of how much transparency is the optimal amount of transparency my personal opinion is the fed has gone way over and they are actually too transparent

and what's happening is everybody's living on every word when we're parsing sentences in fed reports, that's hardly good policy that's hardly good transparency. i think we've gone too far i think what that means is it adds -- people have a feeling of certainty about what the fed is going -- >> just for the record here, we were always parsing sentences and periods and adjectives the difference now is that we actually have numbers. we were translating sentences into numbers now we have numbers and sentences. >> that's fair that's absolutely fair >> i just want to be getting that point of information in >> i think that there's -- i would argue there's too much transparency it's getting silly and there is a positive side to being opaque the positive side is that it forces an element of risk takes. it forces an element of rational decision making in the economy and when you think you have too much certainty and you know what's going on, bad decisions

get made and i think we're seeing that. i think we've seen that for awhile >> i would say another benefit to opacity is it shows some humility on the part of the federal reserve. because they don't -- so that no one views them as any sort of -- i think the fed gets in trouble when it uses terms like autopilot. that suggests they know better than the rest of us what's going o happen instead of -- my opinion over the last ten years, we've relied too much on monetary policy to solve all over the world's economic ails. what their primary mandates are. which is low inflalgs. and if you look at it from that

prpt perspective, i wish they would relax. >> first of all, i think you disagree with the fed. >> we might, but i would also say there's little risk in them really just going to the sidelines. i think the fed is benched i don't think there's any chance of them tightening right now the odds -- i was just looking at this over the weekend. i think the odds of the fed easing now are 26% between now and the end of the year. the odds of them tightening are close to zero. that may not be correct. but -- >> those are the market odds, yeah >> they may not be forecasting the right outcome, but it seems to me that if i were them i would try to stay out of the picture to rich's point. i would just go dark >> right

i mean, there's no greater consensus right now than inflation is dead, gone, and never coming back. all we need is one bad inflation number and the whole thing will become topsy-turvy again they'll think those probabilities are going to start changing and i mean, it becomes a little bit too much realtime on monetary policy which i think everybody knows takes, like, a year and a day to work and it's not going to happen in a short period of time >> very quickly, what happens to the markets from here? peter boockvar thinks it's all based on earnings. >> absolutely. i think -- well, let's assume the fed is somewhere on hold in here then we only have to look at one variable and that would be earnings profits are going to decelerate this year. in my book, that's the only certainty -- >> more than the street already anticipates? >> it's not that -- i think most people believe the profits will decelerate there's huge disagreement. i think people are optimistic

about cyclicals and financials and technology and those are some of the sectors that just don't work well when profits decelerate i think that's where the problem is for the market. >> for six months, that's been the same thing people have been saying >> what's that >> profits are decelerating. so you have to ask yourself -- and turn that six months we went to whatever it was on the s&p. and now back to everyone knowing that profits are decelerating. so give me a forecast from here. so many people went to 2750. they all went to 2750. so now we're back to 2820. we going up from here to 3,000 in 2019? or are we going to be in a trading range and go back down >> so there's a lot packed into that question. >> no, there's no. going up or down from here >> we're going up, but not an awful lot? >> 3,000 or not?

>> i don't know. pick whatever number you want. >> okay. 3,000. that's why i said that >> you're not going to nail me on a number. >> i can see that. i say 3,000 and he says pick a number it's like is 3,000 not a number? >> if you like 3,000 -- >> i don't like it i'm saying do we hit it this year jason, do you think we hit it this year since he won't answer? >> i do. but i share his hesitance to put a number and a time. >> 3,000 at some point it'll go up at some point. >> i think it's 3,000. i'll tell you how we get there >> it's only march >> $172 for s&p 500 operating earnings the consensus is is $169 i think you have a trailing multiple at the end of the year. we goet to 3,005. >> trying to think of another way to ask this question since we're not talking about the fed really anymore you think we're going to go to

2,600 first or 3,000 first >> no. >> no what >> let me finish the is sentence >> i try but you use it for time to not say anything. >> all right i believe that the market will appreciate this year very modestly so the argument -- if you're giving me a choice between 3,000 and 2,600, i think it's 3,000. >> okay. >> he answered it. >> and you've got like six teeth left i've only had to pull -- >> what would you say? >> i think you could probably go to -- >> don't you have a contrarian call that -- come on you've been a huge supporter of the tax cuts you told people to jump back in in december. aren't you looking for better gdp, better profits? isn't that the core of who you are? >> it absolutely is true but the s&p is up 12%. >> okay. so we've got it. >> i'm saying you've gotten a fair amount of -- >> fair enough >> the risk reward has changed >> i'm certainly not bearish we are different to the extent to which we don't think we're

late cycle we tend to think we're more mid-cycle. or certainly not as late in the cycle. >> the fed's going to 2.3% gdp and you think they're wrong? >> i do think if you knock some of these pins down in terms of uncertainty, the economic growth can last a lot longer than people think there's no reason to have a recession in 2020 or even 2021. >> we end modestly higher, but are we going to have 10% swings between now and then >> i think we could. the number one factor that affects volatility is the lack of liquidity right? and we know the liquidity is coming out of the system every place probably but china modest a little bit in europe and stuff like that. the united states, if you think the fed's on hold, you're not getting more liquidity you're probably getting less >> i don't know why you get mad when i try to get stuff. i read your bio. you are like an all-star you have accolades coming out

the -- i mean, you can't even -- your trophy case -- >> it's only because i wrote that bio >> i wondered about that but you've got so many career accolades that, i mean, we want to know what you think so we get the benefit of your unbelievable analysis >> modest returns, increase in volatility, decelerating profits. the key phrase for us is quality instability of earnings. >> and the final four? >> final four? >> which four teams? >> i -- i -- i usually -- you're going to love this, joe. i usually pick my teams by s.a.t. scores. >> did you pay someone to take or that you take yourself? >> good question i'm hoping that they actually do take their own s.a.t.s >> thank you for joining us. steve, we'll see you later and jason is staying with us >> i need a. that i got to rest now. >> and you never answered 2600

or 3,000 first >> i'm not saying. stocks to watch including a possible -- no, i think 3,000. i do but i always think the market -- the market over time goes up it does. >> everybody who missed this rally is hoping they can get 2600 before 3,000. >> possible gamble on a casino merger -- >> okay, grandpa >> white house council of economic advisers -- both ways to school. chairman kevin hassett is going to be our guest to break down the budget guess he agreed to come sonince it's just me and becky stay tuned you're watching "squawk box" on cnbc you.

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internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. welcome back to "squawk box. futures now have improved to just down 20 points even with boeing sharply lower this morning. and the nasdaq has kbrooued up 18 now s&p 500 up almost six points few stocks on the move this morning. casino operator cesar's entertainment and el dorado resorts are in early merger talks. carl icahn has been pushing cesars to sell itself after taking a steak in the company.

deutsche bank and commerz bank they have sparked concerns for labor groups and politicians about the number of jobs that could be lost. still to come this morning, new developments in the college cheating scandal the irs is now following the money as this dra mma continuest unfold more "squawk box" in a moment.

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. the college cheating scandal now has the irs involved robert frank joins us with the latest development >> we knew there was a bribery side to this now it's emerging there is actually a tax side of this. the company at the center of the cheating scandal called key worldwide financial was designated as a charity so parents could write off the six figure bribes from their taxes now the irs is looking at where the money went and whether some of those deductions could actually be clawed back.

now, kwf was approved as a charity by the irs in 2014 $7 million in contributions between 2013 and 2016. and total payouts of about $5 million. now singer who's the head of it took no official salary. more than a dozen colleges and groups received money from that. some were not named in that initial scandal. you have theuniversity of texas, nyu, chapman, and the university of miami. they all received hundreds of thousands of dollars from kwf. the university of texas told us they're in the process of reviewing more than $250,000 it receive received chapman said of the 150k they got, they're looking to make sure none of their principles have been comp miessed the parents who made a total of $25 million in donations to the foundation and then claimed it on their taxes

in addition to the charges of conspiracy to commit mail fraud and honest services fraud, they could now also face charges of tax fraud. >> i mean, i just keep wondering. if you're looking at the broader issue of fairness and whether you can buy your way into these colleges, influence your way in. it's going to dig a lot deeper than just this but the idea you could make a donation to a school, i think it brings tax status of a lot of these colleges into question too. >> especially the wealthier ones where someone can give tens of hundreds of millions and write it off on their taxes and get their children in. there's also a bigger question of the irs and its effectiveness and lack of resources. should they have noticed that this guy took no salary, that they had no real board of directors. that some of the money went to singer's son's school. $150,000 he gave some of these schools -- i mean, some of these organizations beyond the colleges they gave

to, there's friends of cambodia who said we never received money from this thing. >> really? >> yeah. and a couple of other weird foundations i called that it's unclear what they do so many say, look. this was so obviously not a charity, the irs should have noticed. >> there must be millions of not for profit organizations >> this was large. their revenue was doubling every year so yes, there are a lot of little outfits out there that aren't worth it. >> just red flags if it's doubling to say, humans, take a look at this >> is this an ongoing investigation? >> what's fascinating about this and when i looked at these forms on friday. these universities were not named in the initial scandal texas, miami, chapman. so were there people that bribed to get into those schools that we haven't heard about we know the feds have said other people will be prosecuted whether it's the coaches and people or whether it's the

parents themselves is there more sharing? >> oh, yeah. >> yeah. >> endless jokes about -- >> on the internet the couple of the people that got in for rowing, it's their first day rowing and on the internet there's a video of a rowing -- basically underwater and they're trying to >> they had rowed on a chroometer once. >> i know this is a serious matter but the twitter sphere doesn't care >> no. it's so absurd >> the seats it takes away from the students that should have been there, that's the outrage >> have you seen that already? >> i had not seen that >> want me to send it to you >> the icing on the cake this was all subsidized by taxpayers. >> that's how they got caught. they were doubly greedy. not only buy their way in but write it off on taxes. >> they signed a letter the

foundation sent them that said i did not receive anything of value. they all signed that it's going to be tough to say i'm innocent on tax fraud. >> we're going to see this goes down thank you. coming up, march madness has arrived. i've done the first -- i picked some upsets. i haven't gone yet to the next round. but "the new york post" has one out. are you going to press the button again >> no. i'm going to go through based on the colors of the uniforms >> good. >> and the seed. >> craftkings ceo, it's one of the most wonderful times of the year every game seems like it goes down to the wire and everyone matters if you have a bracket. as we head to break, take a look at the futures

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still to come on "squawk box," the ncaa tournament kicks off. the ceo of draft kings will give us a preview then another debate on taxing wealth we'll face off then top of the hour, squawk news maker kevin hassett will join us with his view of the economy right now before he briefs the president this morning. "squawk" returns in just a moment rholder does. they have the investment expertise to unlock opportunities other advisers might not see. learn what a cfa charterholder can do for you, at therightquestion.org ...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.

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welcome back to "squawk box. the futures right now, some of the best levels we've actually seen today the dow is down just 13 at this point. even though boeing is dragging that average lower the s&p has indicated up five. good week for the averages last week very good week as the s&p got up to a point where it could be ready theoretically, that maybe this time after challenging that level could be ready to break through. who knows? the nasdaq indicated up about 16 and the march madness bracket was revealed last night. draft kings sees a chance of a

different kind joining us now is jason robbins. founder and ceo. this is the first march madness post in the new world of gambling, is that true >> it is it's exciting. we had a great nfl season and now looking forward to the first march madness. >> super bowl was a record $258 million kentucky derby, 209 milli$209 mn march madness, $10 billion did you hear super bowl $158 million. is that real $10 billion? >> well, ten is including the illegal market >> that's what i want to get to as well. only 3% is legal 37 w why aren't you thinking this is going to be unbelievable for you

if you can get some of that business, right? do you plan -- was it possible to do that >> i think this year it's going to be hard there's only mobile betting in jersey also some forms in nevada and a few other states like mississippi. but come a few years from now when a lot more of the country will have legal mobile sports betting, you'll see more of that coming to the legal market i think most would rather bet legally. >> i was thinking of it in my own way. it was a 20 anniversary of the sopranos so i rewatched it. >> great show. >> unbelievable show and we just had the first gang -- it looked like a gang hit, but it wasn't as it turns out. in staten island i was just wondering, that is still sort of the bread and butter of organized crime is still gambling is it -- are they eventually going to be cut out of this whole thing if it's legalized? they must be fighting tooth and nail to not let this happen. >> right now i think a lot of it

is happening offshore. i think a lot of it has been moved from onshore to offshore still, of course, there's going to be a decline eventually i think in the short-term because there's so much hype around sports betting and still yet most of the u.s. has to legalize it, they're probably seeing a rise. >> do you -- so i got my brackets here. do you -- i don't -- i don't do the individual bets. i just do it like everybody does >> brackets are fun. >> they are. my problem is i watched the bracket selection last night and listened to these clowns pick all the cinderellas in the upsets and they affect me like, should i pick liberty over mississippi state? they told me liberty and i do that or a pick another one and then mississippi state will go to the elite eight that's what always happens to me should i just press the button on the first round and just do the high seed? or should i try to pick upsets >> if you've seen my bracket the last few years after day one,

you wouldn't be asking me for advice but the betting public likes the favorites. the top four teams outside of only kentucky is in the top four as not a number one seed and gonzaga is the fifth most bet on team to win the tournament on draftkings so four of the top five bets for winning the tournament are number ones. >> and you saw zion come back. >> yeah. i'm a duke guy so i'm happy about that first game he was 13 of 13 he's an amazing player he's a player unlike anyone we've seen >> he's a freshman. >> yeah. >> should i pick -- i mean, i've never seen belmond play. is belmond going to be -- i just don't know whether i should really do these -- it makes me mad. because these guys they may no nothing. they picked it, yeah, yeah, for sure oregon is -- they've won seven straight oregon's definitely going to beat -- who have i got them beating? i've got them beating a much

better team. so you can't help me you're the wrong guy in this case is that what you're saying >> like i said, my bracket has been destroyed the last few years. >> oregon going to beat wisconsin? >> you know, i think wisconsin will win that one. i'm biased against, you know, probably i don't see as many of the west coast games because they're late at night and i have young kids. >> there's just no way to do this without -- >> even if you saw every game, you wouldn't know. >> does draftkings make more money on the overall brackets or the individual games >> we just launched brackets this year so we'll see but i bet it'll be on the individual games however, we do have brackets for the first time this year there's a free version you can play, enter for free, of the $64,000 in prizes. then you can also play with your friends set up for free. and then in our sports betting app, if you're in new jersey, there's all kinds of pay to enter brackets just like you play with your friends. put in 5, 10, 20 bucks

some of the pools are $100,000 or more. >> my team is in the n.i.t., the not important tournament could we -- we're lucky we're playing past the last week can i bet on -- can i go to draftkings and bet on the n.i.t. as well? >> absolutely. we do not have brackets but we have betting on the games. i think you can bet on who wins the tournament i think georgetown is the shot >> you should do n.i.t. brackets >> are you going to be a gazillionaire in five years. what's the other one that you -- >> his competitor? >> draftkings are fanduel are the main ones. we're trying to build a great product for customers. all the other stuff will follow. we're excited for the first time ever outside of nevada, we can have mobile sports betting available. i hope in a few years people all

over the country will be able to do this. >> is some -- you were a disrupter. one of our cnbc disrupters is some other disrupter going to come in or is it going to be one of you >> it's hard it's a regulated market. so there's a lot of environments to be able to bring a product to market but like anything, there'll be disruption we have to stay on top of it if we don't, we will get disrupted like everybody else. >> is anyone going to come up to you saying that's a nice car there. be a shame if anything happened to it. anything happen along those lines? >> no. nothing like that. we're always keeping an eye on competition, but nothing along those lines. >> all right >> so georgetown, huh? >> n.i.t >> i know. but, you got into georgetown >> we had no money, joe. i'm telling you. no influence i did get it in. legitimately. >> did you go to school with bill >> bill?

>> clinton >> oh, no. i'm not that old >> oh, okay. >> but i would have loved to have been his wing man >> oh, man trennert, inviting you back. everybody wants to be bill's wing man oh, god. thank you, jason robins. president trump just tweeting, general motors and the uaw are going to start talks in september/october. why wait start them now i want jobs to stay in the usa and want lordstown, ohio, and one of the best economies in our history opened or sold to a company who will open it up fast car companies, dot dot dot we have to wait for the rest of this tweet probably says something like car companies have benefitted massively since being bailed out in 2008. you can fill in the blanks yourself this just continues what he has been doing in terms of putting

pressure on gm starting over the weekend. when we come back, we're going to spark up another debate on taxing wealth at the top of the hour, kevin hassett will give us an update on the budget and the state of the economy. and as we head to break right now, check out the futures this morning dow futures down by about 12 s&p up by 5.5. the nasdaq up by 16.5. "squawk box" will beig bk. rhtac i consulted with your grandmother's doctor.

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welcome back, everybody. we're getting the second part of that tweet we just told you about from president trump the first one ended with car companies, dot dot dot we should probably call up the first part of that tweet for people not watching before he started off saying that talks are scheduled to start between september and october with gm -- between gm and the unions. he would like to see it started sooner he said the car companies going back to general motors and the uaw going to start talks in september and okay why wait start them now car companies are all coming back to the u.s. so is everyone else. we now have the best economy in the world. the envy of all. get that big, beautiful plant in ohio open now. close the plant in china or mexico where you invested so heavily pre-trump. bring business home. small business owners were excited over a tax law hoping it would simplify did it pan out kate rogers takes a look

>> reporter: lana paul is a double winner under the new tax law. at least for now the entrepreneur owns four businesses across iowa and saw her tax rate fall. thanks to a new business deduction. she was also able to expense a major investment buying six new tractors totaling a million dollars. her accountant says her savings looks substantial. >> we're estimating up around $40,000. and by utilizing that, we gave employees raises knowing that was going to help us for taxes this year. >> reporter: but the changes to the individual taxes will expire after 2025 and main street advocates point out corporations still have a 21% rate while pass through businesses could still operate up to 29.6%. >> we got some ground work laid. the big corporations that make millions of dollars are seeing tax rates at a level of small

businesses that are pass throughs that are making less money. and we don't think that's fair we think we need to get closer to parity than we have >> reporter: kate rogers, cnbc business news. >> for more on the impact of the new tax law, let's bring in our guests joining us is andy puzder. and joe crowley. welcome to both of you let's take a quick look one year out. what do you think, andy? >> well, sure can't argue about the jobs numbers i mean, we've got more job openings than we've ever had only a million people unemployed we've seen the lowest unemployment rate for four consecutive months we're now at 3.4%. the last time it was over 3% was april of 2009. so we're seeing great results in the economy. it's getting to workers. workers' wages are up. particularly lower wage workers. goldman came out with a report last week saying most of the

gains have been for blue collar workers. i'd say we've seen real success. it's been very, very positive for the american people. >> congressman crowley, what do you think? >> i think the hype of the tax bill is starting to really show it's fading. we saw the jobs numbers for the last month were severely lower than expectations. and so i think more about what's in this tax bill, the more they're not going to like it >> let's focus to the new proposals being put out there. this is the first time we've spoken with you since your district was taken over by aoc but there have been a lot of new plans out there. a wealth tax plan. other proposals that have been put out. do you think those will be helpful or will they hurt the economy? >> clearly in terms of the bill that was passed while i was at the house, with no real discussion with democrats.

and now democrats have flipped, you know, despite the loss of my district to me i was replaced by democrats actually took seats from republicans. that we saw the difference in terms of who is now controlling congress >> that's why you think republicans lost the house >> i think for a number of reasons. app lot of reasons not the least which is the president himself and the way he's running the government. but i think that was an impact in the election. >> those are a lot of districts facing higher taxes. >> correct and that's why -- >> right the salt provisions. i do think it had an impact. in the dark of night with no hearings

there's some certainly good aspects to the bill. but overall, it's not the way laws should be passed. not tax policy >> congressman, you used to come in i always liked you although we used to argue about some stuff i never knew how much i really did love you though. i didn't know how much i would miss you and think what a great guy -- >> joe, is this being recorded because i want to show this to my wife later today. >> are you done? >> am i done look, i'm 56 >> i heard it could be a one-shot phenomenon. i'm going to get in trouble for saying that. but i don't know would you ever think about primarying her >> i wish her well i wish her well because my former constituents, their lives and their futures are at stake i think the country's at stake

as well. >> we don't hear democrats saying that about trump. i wish him well because the country is dependent on that >> i do wish the president would do well. i wish he would do better. i think we're a better -- >> there are some things going pretty well. >> we're a better nation than what the president has portrayed as >> because of the tweets and everything but in terms of real results, there are some good things happening. >> you know, this is the democrats' position. i think they're going out to people who are you going to believe? us or your wallets people are making more money the tax bill was hugely beneficial to people and in many senses i'm sorry that congressman crowley lost. in the other sense, i'm glad that aoc is in office. she's proving -- she takes everything the ross sorkepublic saying i think she's probably the -- she's been called the secret weapon for 2020. i think she may be

>> in the blue states where they were adversely impacted. a lot of places where some of the consumers are being hurt by the tax law changes. >> people who talked about the salt going away, people say loopholes for the rich, tax cuts for the rich this was a loophole for the rich you had to itemize to take advantage of your salt deduction. people who want to reduce loopholes and complain it all, number one, and number two people have a choice about where they live. you don't have to live in a high tax state. in fact, if you're wealthy enough to be paying -- >> you're probably talking $250,000 with real estate taxes being so high, it's an argument for those states getting their budgets in order. but i don't think a lot of those people hit by that are people who can be mobile and just pick

up and move. >> it was governor cuomo who said we lost $2 billion over a few months people are moving to florida god forbid they leave. they will leave. >> joe, what do you say to that? >> i think that was part of the plan i think the reality is there are an awful lot of folks who are going to be squeezed by this in the middle class they're not really wealthy in new york and places like that. so i think the impact here will be -- >> how will these states address it >> to call this a loophole, something that was in the law for over a century is kind of interesting to say the least this is really going to have an impact i talk to people talk about moving to florida. so they could avoid all state and local taxes.

have their residence part of the year >> why wouldn't they do that i don't understand what is wrong with that? their income is not a dispensation from government >> why change the law in a way that would have that effect? purposeful effect to -- >> joe, give me your endorsement. >> it's a loophole >> 2020 presidential endorsement. give it to me. just give it to me >> my endorsement? i got so as many i love them all. i love beto. >> you love beto >> he's a great man. joe biden. kamala harris. >> oh, the whole gamut all right. thank you. thank you, congressman >> amy klobuchar >> andy, thank you for coming in coming up, council of economic advisers kevin hassett is going to be our special guest when we return

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boeing shares squeezed the stock pressured as the government investigates how the 737 max jets were approved does the deficit matter anymore? white house economist kevin hassett joins us before he briefs the president later this morning. and inside the house of

cards of theranos. >> this is what happens when you work to change things and first they think you're crazy. then they fight you. and then all of a sudden you change the world >> hbo's highly anticipated documentary on the ill-fated blood testing company premieres tonight. the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box. >> it's a much better -- >> this is a good bad blood. >> no, it's not. i like taylor. bastille we'll play that. >> okay. >> can we, evans okay we'll play the better version of bad blood. >> this is the badder bad blood? >> i like taylor, but i don't

like that. good morning and welcome back to "squawk box" here on cnbc. live from the nasdaq market site in times square. i'm joe kernen along with becky quick. andrew is off today. our guest host, jason trennert at stroategas look at the futures. boeing is down about eight points now it had been down 11. in large part, when the dow improves it's because boeing comes back a little. but it's still why the dow is i did vergesing mostly because of boeing treasury yields got back above $2.60. you saw we were below 2.60% late last week. >> this morning. tomorrow the president's council of economic advisers will unveil the economic report for the president. one component will be the budget forecast

joining us with a preview, chairman kevin hassett ken, it's good to see you this morning. >> great to be here. >> we do keep hearing about the new monetary model where deficits don't matter. unfortunately we're in a position where i almost wish that were true it must be on your radar screen. and i just wonder if you think it's mostly due to spending or it's due to not getting enough revenue to come in >> right if you think about it, what's going on right now is that revenue for the first five months of the fiscal year, that's almost the exact same revenue for the first five months of the previous fiscal year the increase in the deficit is not attributable to a decline in revenue. it's a big increase in spending. a lot of that spending is stuff that's kind of fixing a problem.

there was a lot of readiness problem in the military that required higher military spending looking ahead for this budget, we're looking to get ahead of the curve. especially spending and not discretionary spending there's going to be a lot of budget negotiation going on with congress now i think we're hopeful we make some progress in achieving that goal >> kevin, the gdp for last year and i know the white house put out a 3.1% figure. but compare to the obama years the 2.9% is the number to use. >> that's not true but i won't argue with you over everything. >> i'm the one that has to pay off on the bets. but there are people that are down right glee -- i mean, it's sad. because they are gleeful the economy didn't hit 3%. and they're also gleeful that it may not again this year. and my point is, these budget projections that you're using,

do you believe those numbers does anyone believe those numbers? because it looks like we're going to be at best maybe 2.5% this year, right >> don't forget. our first budget, we were coming off a year that was in the ones. and we said that growth would be a little less than 2.5%. people said that's crazy no way that happens. then it came in at 2.6%. then this year we said 3.1%. and it came in at 3.1% the 2.1% is just wrong this year we said 3.2% the furst quarter is looking soft but if you look over the last years, the average first quarter is around 1% the third quarter is about 3%. >> kevin, jason trennert here. >> hey, jason. >> how are you, sir? with regard to capital spending, has the administration been happy with the amount of capital

spending that's come threw as a result of the tax cuts and if not, are you looking forward to that to come through? i mean, i know we're forecasting that but we keep waiting. and more people are more worried it's going more to financial engineering than capex >> you can see it in the data that last year in the fall when we were arguing about the tax cuts right here on "squawk," i said capital spending is going up around 9% capital spending went up by about 9% if you include the intellectual part of it. but anyway, all in, we got about exactly the predicted effective theory we expect it to move forward don't forget, the capital is this weird thing it gives twas to gdp we get gdp when we build the factory. then we get the output from the factory. if you eat a twinkie, you get it

in that quarter. maybe you spend more on going to the gym. but it's not going the have the same effect. >> kevin, have you talked to lighthizer do you see him around? >> yeah, all the time. >> what can you tell us? can you update us on where we are? the markets are following it closely, obviously >> right well, you know, i think the good news is everybody's still talking and there are a lot of tough issues to work through larry kudlow mentioned last week he thought we were making progress on the enforcement issue which is really the hardest thing. if you think about it, right if somebody promises in 2015, for example, it looks like president obama thought he had a really good agreement with the chinese that they promise to adhere to and then i'm not so sure they kept that promise, so the question is respectful of them and not wanting them to lose face or anything. what is good for them and good for us still very hard. and as kudlow said last week, it looks like on one of the trickiest issues, they're making progress >> part of your latest report,

i'm told, includes things like the economic impact of things like cyberterrorist threats and artificial intelligence. >> sure. >> can you give a hint of what that's about. >> the report of the president comes out today. in fact, if liesman disappears, he wasn't kidnapped. he's going to take it about noon and come out with the three numbers we got wrong but in any case, in the ai part we'll talk about how ai is going to affect your job maybe not your job, becky. but most people's jobs will be affected in one way or another a lot of people are worried machines will take their jobs away then the cyber side, we just look at cybersecurity practices in the u.s. and compare them to best practice. i think you'll see some food for thought in there that american american business could improve. >> kevin, the way a democrat describes the tax cuts versus

the way a republican describes it, both can bnt true. it's pretty amazing when you hear democrats talk about it being just a huge gift to the rich so far before 2025, only 20% of the benefits, it is going to be 80%. is that going to be possible to change that in some way so th that -- they also say that -- they say cut taxes on our wealthy corporations i mean, that was the whole point. >> to create the jobs. >> and obama wanted to cut tax on corporations too. maybe not to 21% but they throw that out there too. just the demagogue but can it be fixed so it doesn't -- >> yeah. and let me just say first of all that the tax cuts are working to improve wages at the bottom in exactly the way we said a year

and a half ago if you go to the cea twitter account, we tweeted a chart that shows the wage growth for the people in the bottom are is well north of 6%. then that goes through to wages and we're seeing it in the data. that's why president trump from the beginning wanted these tax cuts to be permanent and of course congress being what congress is, you've got to make some adjustments. but of course we 100% -- i think the tax cuts especially on the corporate side have been successful generating jobs and growth and manufacturing growth. i'm pretty sure there's going to be another apple in the future >> you think there's enough you can say to democrats where you

won't -- if you don't give the $9 billion for the wall, we're not giving anything. is this budget ever really going to pass or are we going to be business as usual? >> i don't negotiate budgets you wouldn't want me to negotiate for you. i'm just a nerdy economist but if you look at the history of it, the budget process gets kicked off it's really the kickoff, you know, and maybe it's a touchback. or maybe they run it back right away the budget process is probably going to be long and involved and tricky but i think that lots of democrats and lots of republicans share the objective of getting ahead of the curve on the deficit. >> you and larry summers agree in the modern monetary theory not being good maybe you should take another look at it >> that's right. he's correct >> maybe it works. i don't know you guys are always on the opposite side of things. >> most of the time larry and i agree. but when we disagree, it's quite

visible to the outside world but he's right on that >> kevin, thanks >> yep bye-bye >> let us know what the president thinks about everything you tell him. >> be back later in the week when we return, inside the house of cards of theranos >> in my mind i've always thought the true legacy of silicon valley is to create good products that exist in the worlds to me i couldn't think of something that could make the difference in the world rather than something that can change when we have to say good-bye too soon >> we've got "the wall street journal" reporter who first broik this story wide open stay tuned you are watching "squawk box" on bccn

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how do you want to be remembered >> we want to be remembered by -- >> you, not we >> for making it possible for people that could not get care to get care. and for making it possible for people who otherwise maybe would have had to say good-bye too soon because they found out

someone they loved had had heart disease too late >> that was elizabeth holmes back on "squawk box" in 2015 the rise and fall of the blood testing company once valued at $9 billion is the focus of a new hbo documentary. joining us right now is the author of "bad blood." his reporting was the first to call out theranos and elizabeth holmes, raise questions about what turned out to be a big fraud. thank you for being here >> thanks for having me. >> incredible book based on incredible reporting she had many people fooled we had her on "squawk box. the documentary spoke to reporters that got fooled by this what made you really say what's going on here? >> she came on my radio and i'd done a lot of investigative

reporting about medicine and health care and the central conceit of that story was th that -- without any real scientific training she rev nugsized blood testing and knowing how medicine works and how you add value in medical science, i was immediately suspicious of that notion. to be fair, i probably wouldn't have done anything with it if i hadn't gotten a tip several weeks later from a pathologist in the midwest who'd read the same new yorker story. knew a lot more about blood testing than i did and he was immediately suspicious of the claims, wrote an item on his pathology blog. and then was contacted by someone who'd been involved in a patent suit with elizabeth who told him you're onto something and that's how it sort of got

rolling. >> i mean, the black box technology that she would never share with anyone that she said was responsible for being able to test all these little tests with just a pinprick of blood, that was the huge controversy. i guess the question is why more people didn't raise questions sooner on. particularly given some of the investors and people on her board. >> there were a lot of scientists and a lot of people in the diagnostics industry, lab directors, et cetera who were skeptical behind the scenes of her claims >> they should have known. >> and a lot of them were very skeptical to the point of doubting -- >> they were experts in the field. i know, you know, waxell used to message me all the time that there's no way this is real. how'd they fool, like, toby cosgrove and cleveland clinic? >> george shultz henry kissinger. >> but there were real

scientists theoretically that knew this was impossible >> so the scientists are very respectful in general. and so they're not going to come out and call someone out unless they can prove it. i think that's part of what was going on but the other part is that, you know, theranos would enter these partnerships or do these studies with another institution such as the cleveland clinic then it would make everyone sign ndas if you were a theranos partner and had seen under the hood, you couldn't say anything. >> but is that a legal nda when you are basically perpetrating a fraud? can you be forced to keep that under the -- >> when i started making contact with ex-employees and started cultivating whistle blowers in order to put out my first story, the argument that i made to them was that an nda can't be used for whistle-blowing about wrong doing and breaking the law that was very much, you know,

something that i argued. i think it's true. i don't think an nda can -- >> unfortunately it probably keeps the whistle blowers in a position saying i might be in the right legally and i'm going to have to defend myself that's really expensive. >> fortunately two of the whistle blowers in this story have faired quite well and tyler's now got a start-up erica heads an incubator in hong kong they were both on the stanford campus recently talking to students you know, they've become sort of folk heroes in silicon valley. >> it's good to see them do well >> you know, i have to say congratulations on the book. one of the few books i read in the last couple years where i couldn't -- i literally had to take a break to go to sleep so that i could finish it i finished it in 24 hours. one of the questions that keeps -- people that i've talked to about the story, it's like, how is this person walking around as, you know, outside the hotel? >> elizabeth holmes.

>> how is that >> the u.s. attorneys office in san francisco charged her criminally three weeks after my book came out back in june as well as sonny, her boyfriend at the time, number two executive of the company they're facing 11 counts of wire fraud and conspiracy to commit wire fraud the case has been moving somewhat slowly in federal court in san jose because there's been delays with the discovery process. but the next status conference in the case is mid-april the judge could very well set a date for the trial in april and then, you know, we could see a trial start either at the end of this year or the first quarter of 2020. >> is there any way people beneath her and sonny were telling them that the black box really did work? or did she know she was fooling everyone >> well, the people -- the scientists and the engineers who were working for her and for sonny did not know what she was telling investors behind closed doors. >> did she know it didn't work

it's a simple question >> oh, she knew. absolutely >> then i don't understand -- i mean, back to jason's questions. what happened here >> well, i think her defense lawyers and his defense lawyers are going to make the case that they thought they were on their way. and they thought they were going to get there eventually and that, yes, this has turned out to be a business failure, but a business failure -- >> do we have any technology to lead you to believe they were on the way to it? >> they were really far away i mean, they were years and years and years away >> did they have technology as good as the current -- as the existing technology? or any different >> no. the one box they had, the second to last iteration they called edison was a rudimentary piece of machinery it was actually a glorified glue dispensing robot that had been turned into a blood testing machine. so they simply did not have any

wisdom in technology >> then you throw in false negatives and false positives. both of them are so bad for people -- >> i'd rather get the false positive >> if you get a false negative, you can have all kinds of procedures done to -- that can then put you in a bad position. >> if you have a false positive -- false negative is the bad thing. false positive is where you get -- >> they're both terrible >> it does but one means you have the disease and you don't. >> you'd like to think you had cancer when you didn't >> no. but if i had to have -- >> you want to have the surgery. >> none of them are good >> they voided a million blood test results and the last who was hired to clean up the mess lobbied liz beth to void many many blood test results she declined we actually don't know the full scale of the errors. >> the s.e.c. seems like a toothless organization

they fined her $500,000. she can no longer be in control of theranos and it has to be ten years before she can run a publicly traded company. that seems ridiculous. >> right and there was a three-month difference in between. for awhile i was getting calls and e-mails from people who were outraged that, you know, that she got off so slightly. >> between that and what they've done with elon musk? >> i agree you know, but the s.e.c. may have known that the feds were coming in afterwards >> maybe, yeah >> how -- as far as silicon valley is concerned, do you think this says anything about the culture of silicon valley more broadly there's this avalanche of money that's been created by 0% interest rates people are looking for the next new thing. there's always, of course, these

ventures but is it worse now? is there more theranoss out there? >> it is a lesson. you've had had this system over the past 10, 12 years built up over there there are now hundreds of them and they're not going public, you know, for a decade now uber has existed and not gone public. and there are many others. so you have this echo system where they don't have to talk to analysts they don't have to open their books. because they're not going public and therefore there's much less transparency and you create an environment in which fraud can thrive and then i think it says many other things about silicon valley culture i think there's this myth in silicon valley that you have these founders, you know, young dropouts who are all knowing and all seeing they can see around corners. they're geniuses and, you know, i think steve jobs popularized that notion and now there are a lot of people in silicon valley who

believe that that's a thing. the mythical founder and i think she's surfed that wave and people bought into her because they bought into this notion >> john, thank you very much john carreyou. the hbo documentary debuted march 18th coming up, what's the appetite on wall street for the first big ipo of the year? lyft starting to find out today as it brings its road show to the big apple. st ted report is coming up ayun you're watching "squawk box" on cnbc logy investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world,

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coming up, lyft versus uber in the race to go public lyft taking a big step today it's amended prospectus out today. that would value it at around $18 billion which is $3 billion above the last round, i think, at $15 billion we'll get a full report as the company gets ready for its road show when "squawk box" returns after a break. everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours.

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welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. here are some of the stocks that are on the move ahead of the opening bell marriott shares are higher in premarket trading. the hotel operator presenting its three-year growth plan the plan involves opening more than 1700 new hotels around the

world and adding up to 295,000 rooms by 2021. worldpay is being bought by fidelity national services processes more than 30 billion transactions each year more than 120 different currencies the deal is expected to close during the second half of the year shares of okta are higher after -- who knows probably in oklahoma i don't know >> oh, oil and gas >> remember oneok? it's one oak >> goldman has the stock -- says the stock has significant upside potential based on the growing importance of identity management in the workplace. >> i'm going to look that up see if it is oklahoma. lyft taking a big step closer to its ipo this morning

leslie picker joins us with more >> reporter: hey, becky. good morning now, we're here at credit suisse one of the underwriters for the lyft ipo they are welcoming lyft executives this morning. moments ago we saw those executives walk in ceo logan green as well as john zimmer they walked into the credit suisse building where they will be meeting with the sales executives in order to learn how to better sell this deal to investors. now, after that meeting, they'll head out these doors and into this car, a lyft car, where they will head up town to jpmorgan where they'll do the same thing with underwriters and sales team there. this morning lyft disclosing its amended s-1 br thwhere they sho price range between $62 to $68 per share. estimated to be $2 billion and a market cap of $18.5

billion. this commences their road show which is expected to span the better part of the next two weeks where they'll market those shares to investors, guys. >> leslie, thank you very much for more on lyft and the rest of the hot ipo scene, let's bring in paul meeks. what do you think about what leslie just reported in terms of the lyft ipo >> well, i did some analysis because i was very curious as to the upcoming valuations for lyft and uber i took a group of marquee tech companies. so companies that are growing so fast and are so profitable, they would have business models that lyft and uber would aspire to be and i come up with a price to sales ratio of about six times so that would put the value and i think it's a generous valuation for lyft at about $14 billion and she reported about $18 billion. and the price talk as recently

of a week ago -- >> the high end, actually, of what they put out would be $19.6 billion. >> so the way i look at it is at the top part of the range, egregiously overvalued where it looks like it's going to come, overvalued but modestly. >> what concerns you the most? what makes you most confident it's an overvaluation? >> well, when you take a look at the continued cash burn, both lyft and uber have been around for awhile and over time, they're starting to narrow their losses but they're still huge and so this will be a story if it's going to work out at least over the next couple of years until it generates cash that is going to have to have some sort of elon musk/tesla fame. where they focus on metrics that have nothing to do with how much the cash is burning. >> and you don't feel comfortable thinking that the market's going to sustain that >> i'm a bit worried about it. because with elon musk, even

though i disagree with what he's doing, do we have the same kind of charismatic known visionary leader at lyft that would be able to sustain those valuations whether you like him or not with his tweets and other conversations with wall street and investors? >> so if you think lyft would be overvalued at 18 or $19 million, what do you think of uber if it were to come out at $70, $72 billion? >> so i think uber at about $70 billion valuation if you use my same valuation metrics might be okay but the price talk as of the last couple weeks or months have been higher to a $120 billion valuation. of course if that happens, that's just blasphemy. >> blasphemy now you're making it like religion >> paul, i would ask you, who is the natural buyer of these

shares at these valuations i think -- you know, i'm still kind of somewhat scarred from my, you know, start in the business where a lot of this was really geared towards individual investors. you wouldn't have price talk -- forget about the valuation you wouldn't have price talk of $60 to $65 you'd be pricing it in the $20s, along those lines. who is going to be the natural buyers of these shares or keep the valuations consistent with what they're talking about now >> the natural buyers will be whether they're individuals and of course they don't move the needle that much, but rather the big institutions that are aggressive growth, momentum investors, hype followers, you're not going to have anyone that does a model on this company in the most ambitious scenario that is going to come up with a valuation that's going to be even close to where they hope this stock goes over time but of course, out there particularly in this

media-driven world there are some folks that will support that kind of a name. >> paul, thank you it's good to see you and as we get closer to these ipos, we'll have to have you on more often to talk a little bit more about it. >> i'd love to do it thanks >> thank you news out from apple. the company has unveiled a new vision of its ipad air and the ipad mini. the larger ipad air starting at $499 when we come back, finding value in value with many investors choosing growth stocks recently, is this values moment to come roaring back we're going to talk volatility, valuations, and the faang trade with matarin capital's nili gilbert when "squawk box" comes right back

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boeing shares under pressure once again this morning. "the wall street journal" reporting that federal officials are investigating the development of the company's 737 max jets involved in those two fay kal crashes. phil lebeau joins us now with more boeing's down sharply. >> it's down sharply because wier in the headline risk here where you'll see the d.o.t., the doj looking at the relationship between the faa and boeing when it comes to certification of the 737 max two or three years ago

i don't know the exact date. i think it was 2015. and what was going on as they were doing that. meanwhile, you've got this investigation into these two crashes that is playing out around the world the most recent development coming overnight out of ethiopia where a minister in ethiopia said there are clear similarities as they analyze the black box data, clear similarities between the crash in ethiopia and the lion air crash in october the d.o.t. and doj are both scrutinizing the faa and boeing, the relationship there in terms of the certification process for the 737 max. and you've got a flight systems software update that should be coming within the next week and a half according to boeing as you take a look at shares of boeing, we should point out that the company has said time and again and they reiterated over the weekend that it went through all of the protocols appropriately with the faa and that it met the faa standards for certification.

that there was nothing unusual in the process having said that, you can bet there are going to be a lot of questions coming out of washington about what the process actually was, who were the people involved, what questions were asked, was it done as thoroughly as it could have been. that's going to be coming out of washington in the weeks to come. >> all right, phil thank you. for more on boeing, let's bring in carter copeland founding partner and defense analyst at melius research this latest news about the investigations taking place, what does this mean in terms of pressure on the stock? >> look, i think it really extends the timeline more than anything else. i think phil was right in pointing out that i think this brings a considerable amount of headline risk. you're now going to be looking for a lot of difference in headlines. i think investors are going to take customer feedback as a, you know, incremental headline risk.

people are going to want to see do the customers rally around boeing and support them here or not? i think we're now in a much longer sort of wait and see period where the headline risk is a little bit higher >> so you would tell people to do what? given how much the stock has already pulled back over the last week. >> i think you can be patient. i think with a lot of data to be expected, i think you can take time >> i'm sorry, be patient in terms of whether you're going to buy or whether you're going to sell >> if you're a long-term holder and you believe in the long-term thesis that's predicated on secular growth and air travel and all of that, then i think you're in a position where you ride out the storm and you expect some volatility but if you're looking to trade around this as a catalyst, i don't think this is going to be something that's going to resolve itself in a matter of days or weeks. i think it's more like months. >> the deeper issues in terms of looking into the faa and its potential relationship with

boeing, does that concern you at all? or do you think that is just a natural reaction given some of the headlines we've seen to this point? >> i think it's tough for us to judge from the outside obviously the faa and beau having a close relationship because boeing is the only major manufacturer of commercial airplanes at least in this country. so you're going to find a lot of movement of, you know, staff and expertise between those two organizations. because there aren't a lot of people that are trained at the highly technical aspects of certifying airplanes there is naturally going to be a relationship between the two of those. i think what the doj and d.o.t. will look to uncover is if some of those relationships, you know, allowed details to get missed or decisions to be made that otherwise shouldn't have happened the way they did. i think boeing can be correct in saying the aircraft went through

every certifiable evaluation that it was supposed to. and passed but at the same time, it can still be objective in says well, we've learned something of this process. now we want to make some changes to the mkarat system and pilot training requirements. and learn from what we've seen in the past couple of months >> dennis muilenburg's point has been they are going to follow this up with a software fix and additional training. does that sound like an appropriate set of measures? >> i think for investors watching this from the outside, i think that's the starting point, right i think most folks conclude having a software fix in ten days and a modestly updated training is not going to end up being sufficient or at least that's what's priced into the stock so the question is how much further beyond that will boeing need to go or aviation regulators around the world, what will they need to see to be

truly comfortable that the problem has been addressed and i don't think we know that yet. >> carter, thank you very much for joining us this morning. >> of course thanks, becky. >> carter copeland all right. under an hour now until the opening bell on wall street. dominic chu joins us with a look at this morning's biggest stock movers we've talked about boeing, but you can't avoid that, right? >> no. it's the biggest waiting there we've got another couple of analyst actions to talk about. first up is facebook it's down a percent in premarket. the social media giant was downgraded to a hold from a buy. cited valuation being close to their price target bank of america by the way also lowered its price target on shares to 187 bucks from $205.

we're also watching shares of dollar general which are up a percent or so on 3,000 shares of premarket volume getting upgraded at barclays thiscited optimism over investments when it comes to generating store traffic and optimizing supply chain. then we'll end on a potential deal maybe happening shares of u.s.-listed lender deutsche bank around 5% on just around 190 shares premarket. that may not materialize into anything but deutsche chashares have lost some of their value in the last 12 months those shares a huge focus when it comes to the european banking trade. back over to you >> all right great. thanks, dom. joining us now on where investors might find opportunities, we're joined by nili gilbert it's not warmer. maybe a little warmer than when we were in davos.

>> at least we're inside this time. >> but we had those nice heaters. it was better this year. >> it wasn't bad >> you weren't there for the bad one. let's talk about just the overall environment. i mean, globally in terms of growth, just in terms of the equities and investing right now after we have come back so sharply from the december lows. >> well, if you want to talk globally, i think we're seeing some divergences the environment for equities and growth looks stronger at this point in the u.s. than in europe where who knows, you know, they're trying to fight off the coming of potential recession. in the u.s., we're continuing to see growth, earnings momentum looked stronger. in terms of markets, we have a more positive outlook here than some other places in the world >> and let's talk about it here. what do you see for 2019, remainder of the year, and then in 2020?

for the u.s. >> we're thinking about forecasting the markets, we're looking at a few things. one is what is happening in the economic and monetary policy environment. it is great that the inflation outlook is at bay. it is a positive that interest rates have actually been falling so far this year, that's a positive catalyst for stocks where the yield can look more attractive than bonds. earnings momentum as i said is strong the two things that we see as potential head winds are, of course, valuation, an ongoing conversation, and investor sentiment. when investors become very bullish, and we have seen investors being very risk seeking so far this year, what that means is that there are fewer and fewer buyers on the sidelines remaining to continue to push the market upward. i will say that we're not seeing bullishness at the levels that we saw back in october before the big correction. >> do you have a bias toward

value stocks there is big debate now between value and growth and what is your thinking there? people keep waiting for value to do better, hard to see it not doing better without the banks particularly doing better. >> we really try to blend value indicators in our forecasting process along with other things that are uncorrelated with value like momentum. so when you get into it an environment like the one we have seen not only this year, but value at this point has actually underperformed growth for a period of ten years or more, so when you blend signals that offer negatively correlated information that can provide more stability, for your returns, but you're right, we actually have a tool that helps us to forecast the forward looking environment for value to do well, and recently we started to see it pick up. the reason that this is important is that, you know, i did mention that we're in a really big drawdown for value

and a long one, but if you look at the historical data, what you'll see is that the strongest periods of value tend to immediately follow the weakest so you don't want to stay out of value until it is too late what we're doing at matarin is increase the emphasis we have on value in our portfolios and we also keep some emphasis at all times. >> rates have come down, but like it is always a worry about what the reason is and if we're tethered to the rest of the world, i see that might not be bearish -- >> does it come down to the fed's comments in. >> i think the ten year is tied to germany and bonds and we're tide tied to growth outlook >> you have to think about how it affects investor sentiment. when interest rates are low, it -- >> why are they low? >> it forces investors to try to

find returns and yields in other places i think that's a big part of what's driven the growth trade for some time. >> is it signaling a slowdown? >> the central banks are artificially -- >> look at the fed themselves have changed their tune, right the expectation for the path of interest rates is very different now than it was this time last year i agree with you that there is -- that there is pressure on the ten year yield coming from foreign buyers, but that differential, they had negative interest rates in europe for some time now, so i don't think that that's the big thing that has changed. >> i think it looked like we were going to break free from that and the fed said no go so we're still tethered. >> the market is rightly listening to what the fed is doing. another thing i think that has happened is under the powell fed, that the effectiveness of communications has gotten better at first there was some choppiness and confusion we're going into the big fed announcement on wednesday, and

what seems to me that -- that's a sign of success, and i think we're also seeing that in the rates themselves. >> so you would at this point tell clients the overweight stocks in the united states, and then how do you -- as far as an asset mix, how do you get some type of less volatile portion of their -- with bonds so -- i don't know do you think they're still attractive, because interest rates aren't going higher or just go 100% into stock? >> our forecast for bonds is also favorable largely because of the inflation environment. you know, it has been hard for central banks around the world to percolate inflation we're still under the 2% target slightly if you look at the fed's pce number, and so as long as inflation remains at bay, interest rates can stay low. but if investors are thinking about how to build a portfolio that will be more resilient,

another thing they can do is look at the types of stocks that they're buying not just to focus on the highest flying, most volatile, highest beta stocks which beta, by the way, is the single indicator that has been the most successful at forecasting stock prices so far this year. but instead really to think about blending in lower volatility, more conservative choices into the equity portfolio itself. >> do you have a strong opinion about faang at this point? >> no, i just find it so interesting that market participants continue to focus on faang as a group, and i think it is a strong sign of how sentiment and behavior drives our way of thinking about stocks at this moment it is true that the faang stocks are very popular, they're highly traded, high beta. but if you were to actually look at the fundamentals of the stocks, you would see they're already very different we're talking about valuation, look at netflix trading at 90

times 2019 forecasted earnings amazon at 60, where you've got apple all the way down at 15 and so the fact that we talk about faang as a group signals to me that in a way we're not really looking at and talking about fundamentals. >> all right nili, thank you. appreciate you coming in good to see you back in the states >> nice to see you >> when we come back, we're going to check the futures and get you ready for the first icg y t wk.ee stk around from the start, the c-class was ahead of its time. still, we never stopped making it stronger. faster. smarter. because to be the best, is to never ever stop making it better. the new 2019 c-class family. visit your local mercedes-benz dealer for exceptional lease & financing offers during the mercedes-benz spring event. going on now.

want to thank jason for being our guest today. right now it is time for "squawk on the street. ♪ i feel so close to you right now ♪ ♪ it is a force field ♪ i wear my heart up on my sleeve ♪ good monday morning. welcome to "squawk on the street." futures in a familiar mode here. s&p and nasdaq higher as investors hope for a dovish fed this week and m&a. boeing will pinch the dow amid reports of a federal probe busy week ahead in europe, more brexit drama will approach us tomorrow ten year barely hanging on to