>> i'm stuck on you where. >> don't look at -- we're together here. don't -- >> took me a second to put that together >> i wasn't looking at you it's wednesday, april 3rd, 2019 "squawk box" begins right now. >> i know -- ♪ we do still have music we did k play, apparently good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernan and andrew ross sorkin. let's take a look at the u.s. equity futures at this hour. you're going to see right now that things are indicated in the positive territory once again, you are talking about the dow futures looking up another 75 poi poin-- the nasdap by about 20 points

this morning nasdaq has indicated up once again. up 38 points then you see the futures indicated up by 10 points. >> let's take a look at what happened overnight in asia you'll see with the markets closed the nikkei was up by 1% the hang seng up by 1.2%, and the shanghai composite was up by 1.25%. in europe where some of the early trading is taking place right now, you will see that there are green arrows across most of the markets. ftse is flat, but are you talking about gains of better than 1% for germany, for italy, and for spain. in france the cac is up by .6% the treasury markets here, yield at the ten-year is sitting above 2.5% 2.522% we have an update on u.s.-china trade the talks picking back up in washington the chinese premier is expected to might with robert lighthizer and steve mnuchin. the financial times reporting this morning that the u.s. and china are closer to finalizing a deal the report quoting chamber of

commerce executive myron brilliant. we'll get to that name in a second it's a side note there we said 90% of the deal is done, but the final 10% remains the trickiest part and will require trade-offs on both sides the u.s. wants china to agree on enforcement mechanism and balk i -- beijing wants them to remove tariffs where, myron brilliant his name people say mr. brilliant, how are you doing? really nice to meet you, mr. brilliant. >> you sound jealous >> i am jealous. >> i sort of felt it was an okay market yesterday >> i did, too. >> walgreens down $8 >> they have a dow component down by that much. >> the s&p was fractional. up .05 the nasdaq was up 20 it was the day before that was a huge day yesterday with the s&p flat -- >> to be hanging in like that. >> it felt like an up day.

>> the dow was down. >> the dow was down. >> we're in kind of an up trend here >> between last week and what we saw earlier this week. >> the beginning of this quarter is starting like what last quarter was. it was big you know, boeing can always influence things too we have an update now. i mean, this must be an important update did you see who is here? >> yeah. >> sitting right over there? >> phil lebeau in the house. >> wow >> phil lebeau -- >> good to see you >> hello >> big election in your town last night big -- >> yeah. i heard. >> mayoral election. big win. a lot of the -- well, let's get. we'll talk to phil when he gets up here. keep in mind, he is going to be here in a minute an update on the crash of the ethiopian airline 737 max jet that crashed last month. the journal, wall street journal, reports that the pilots of that plane initially followed boeing's emergency procedures, but later deviated from them guess we can -- that makes sense. they tried to regain control of the plane, but you wouldn't have

procedures that obviously would result in what finally happened. you would figure there was some deviation, but we are hearing the pilot -- that sounds like pilots, doesn't it boeing released guidelines on how to work an emergency install system the pilots initially shut often the anti-stall system and then cranked a manual wheel in an attempt to stabilize the plane, but they eventually decided to deviate from boeing's recommended procedure and restore power to the trim system, likely in an attempt to use the normal controls to correct the angle of the plane rather than the physically demanding trim wheel that would have reactivated the anti-stall system in its strong downward command. boeing hasn't commented. that was a lot i just said you'll have to explain exactly what i -- >> two things. first of all, what you said is right. it does sound like the pilots were on the right track and then

deviated from that track however, it's a lot more complicated than i thought it might have been. >> than just turning it off. >> you don't just flip a switch and turn it off and the plane goes back to flying normally it sounds like what you must be when the power steering and you have to manually crank something? >> i would say that's a halfway decent analogy to use. it's not as simple as, boom, i hit a switch, and then it's done keep in mind, imagine what's going through the minds of these pilots when the plane is not reacting the way they expect it to react they see it oscillating to the degree that it was. >> fight or flight >> not even sure if you are correcting for the right mistake. if you have analyzed it correctly because you don't have the lights that are there. >> yeah.

>> the technology was always there. the issue is -- >> whether or not the pilots could tell if there was a problem with the system. >> correct in addition, do certain airlines have said, look, we want on the flight control display an indication that there is a disagreement between the two angle of attack sensors and the readings that are coming from that >> i think it's probably guesswork for the pilots at that point anyway if you don't have the plane that has the better features indicating what's really happening >> you could make that argument. i understand why i think what bothered a lot of people is if you have this technology and you have this ability to put it in place, why aren't you doing it? why does it have to be a feature that an airline has to pay extra for in order for the flight crew to have it >> when -- not if, but when these planes come back on-line this summer, wlefr you think it is, do you think people are going to get on them how do you think it's going did change -- >> after a week or dwo -- >> is it a couple of weeks >> well, two questions it can be four feel before they come back or before people get

on them right away >> let's assume they're back in service. >> okay. let's say june 1st june 1st they're in service. >> you are booking a flight to florida or i don't know, to maine. >> right >> this summer >> i think initially therely i would say the first two to three weeks you will have some people -- i'm not sure it's a huge number of the people on those flights, but some people will say i'm not comfortable i'm not going on this plane. at the same time people have very short memories. people forget about this very quickly. i remember after the dreamliner, you know, i had friends back home that say i'm not getting on that plane it's going to catch on fire in the air. you don't hear people say that anymore, and they stopped saying it very quickly. i don't think it lasts i think it's a very short a lot of press attention when they first come in service, and that's what we're going to be focused on >> you were headed to floor, but

then you said wait a minute, it's suppmmer, so i'm going to o to maine instead >> warm in florida >> to hot in the summer. maybe maine. even just an example you were thinking -- >> the example didn't make any sense. >> exactly i follow you >> stop correcting >> i follow -- maine is very cool in the summer it's like a crisp sort of a 70 degree -- >> let's not do florida if we do zoid >> dodge the taxes >> i actually thought about that toosh where. >> is that your other thought? >> it's just weird you think florida -- >> 183 days. i got to get down to florida >> because of what's happening here that you think about it now. right? >> taxation. >> it's big. look who is raising more money on the top of the polls and everything else. it's amazing bernie people are feeling the bern 2.0. zbloog heading to vermont.

>> is that it? >> he is here to talk about tesla, too >> he is not even supposed to be here >> i came to check out your pants. >> you know, i think people in glass houses >> i'm wearing jeans i have no problem. i flew in at midnight last night. i have no problem. >> now you have seen these do you ever -- >> yeah, i have seen those >> do these look like yoga pants to you >> they don't look like it at first. >> what do you mean at first >> for those viewers that have missed the joke. >> it's not a joke lululemon pants. they're hitting a new high because i'm a leader, not a follower leaders lead i'm the decider. >> what kind of lulu lemon pants are they >> abc pants >> what does that stand for? >> aebt banti-ball crushing. it's apparently on the lululemon website. ousted nissan be boss carlos ghosn -- it is on there, right >> it's true

go ahead >> carlos ghosn tweeting i'm getting ready to tell the truth. really that's awesome about what's happening press conference on thursday, april 11th it is tweet came from a verified twitter account bearing his name it probably is his every him it was the first tweet from the account, which was later followed by a second tweet bearing the same message in japanese we're told we don't know. it could say anything. in the meantime, reports say that new probes by nissan and renault are investigating payments made by the companies to a distributor in oweman investigators found that the distributor then funneled millions of dollars back to ghosn. a spokesman for the family good news d denies that any of the oman payments benefitted ghosn or his family. probably know about this too, don't you? >> you have the nissan shareholder meeting on april 8th so, that monday before this press conference i suspect that carlos ghosn in

his mind, knowing him the way i do, that he would be, like, bring me into that meeting you want to have it out? let's have it outty meeting. >> he already asked if he could go to the meeting before when he was under house arrest, and they said no. >> no. he would love to be there. i am sure. >> you think no prison time? >> no prison time. that's just back of the envelope looking from afar. you know, i haven't seen -- >> what about all these articles suggesting there's been new money that's been -- >> i have seen some of those, yeah >> that he was giving money over to some company in the middle east that was then moving the money to his family and this and that and with his son and the yachts and you buy that or you

think they're making that up to stir -- >> i don't think -- i can't say that they're making it up, but there are certain things, as i have been following this story, that i'm, like, this doesn't make sense certain things just don't add up that's why i'm skeptical this is all going to hash out with him being convicted. >> the wheels -- what is it begun? wheels and wings >> wheels and wings, or as they say back in the day, bankruptcy court. >> no, you you are here -- >> i'm here for wheels and wings. today it's wheels because it's -- >> let's talk wheels >> yeah. we're waiting on the numbers >> exactly we are expecting tlifry numbers from tesla that is why phil is here, and exactly what shuds we be expecting? >> the focus is the model three. we have a chart -- a wall that shows how many deliveries have happened with the model three over the last five quarters. the expectation is that they will deliver somewhere around 55,100 model threes. if they come close, we might see a relief rally >> it's what >> 55,100.

>> the expectation lower is that's the whisper number? >> no, the 63 was fourth quarter production deliveries. the whisper number, the expectation is 5,100 for the first quarter. if they come close to that, i think people will say, fine. you get a bit of a relief rally. also, you take a look at shares of tesla they announced overnight that on april 19th, i think, good friday, they're going to be having an autonomous vehicle investor day out at the headquarters this is interesting because elan musk has maintained that they are on the cutting edge, the lead, if you will, when it comes to autonomous vehicles, and so this will be a chance for them to show their technology, to talk about where they're going let's see what wall street says after going to this meeting, and don't forget, tomorrow elan

musk's attorneys are in federal court against the s.e.c. >> you think there's going to be a result >> i don't think the judge makes a decision right away. i think a week, week and a half, two weeks. >> what are the tea leaf readers saying >> nobody has i heard that has said definitely i think this is what's going to happen >> although jim cramer has been -- >> they're all over the map. >> jim cramer, i have been listening to him, and that's -- he has made a pretty good argument for why this judge might actually throw the book at him. >> correct >> remember, guys, this is -- at the end of the day this is about the agreement that he signed living up to the agreement i know they want to say it's about free speech. i think the judge is going to say you signed an agreement. >> do you think there's been any machinations inside tesla to prepare for a decision that would go against elan musk >> yes >> do you think there's somebody waiting in the wings >> i don't know if there's

somebody waiting in the wings. i think that -- i don't think they're whistling past the graveyard. i think that the board probably if you had to -- based on people i have talked about, you probably have a contingent of the board who are saying, well, we just can't be standing here and if the judge comes down and says, look, elan musk can't be ceo, we have to have at least a rough blueprint in terms of what we're going to do. >> let's call a spade a spade. elknow musk still the largest shareholder, and he is still calling the shots at that company. the question becomes if are you the judge, if you don't want him to be ceo and you know that he didn't live up to this agreement in your eyes, if you rule against him, how do you make it so that he doesn't have that kind of an influence on a company? do you want to make it that he doesn't have that kind of an influence on the company

>> did you watch -- you don't watch bob lutz >> i saw him yesterday >> what did you think of when he -- is he just kind of like an old line car guy i don't want to use the word dinosaur, but does he make any -- should you take his points about tesla and put how much faith in, like, 50% 70%, 20% >> i would put more than 50% of what bob says. >> he says stuff that -- >> some of the stuff he said look, i have interviewed him, and i know him well, and i like bob a lot. over the years he has said, look, these guys are going to zero they're going to be out of business >> this is from a guy, though, that when guys like him ran the auto companies, they need aid complete bail-out, and this guy came along and is making cars that are just the heartthrob of a large part of the population is it bitterness do you really think it's accurate >> i think some of what he says is accurate. i also think that there is an element of the comments that you hear from bob and from others in

the auto industry, and i don't know if bitterness is the right word, but it comes from this -- >> jealousy. something that they didn't -- gm, would have been nice if gm made -- >> sour grapes >> that may be a better way. >> how come they have all these advantages, and we got held to a different standard, and we couldn't -- >> from scratch they built a car that there's no -- you would probably say that there's not a gm car that's comparable to the s, right >> i think there is also an element within the auto industry that for the longest time they scoffed at elan musk and tesla, and they never wanted to publicly give him his due. even though privately you would talk with executives, and they would say, look, what these guys are doing is impressive. >> back to autonomous driving, autonomous vehicles. the story that came out yesterday about the hacking. forbes magazine about the stickers and the hacking and being able to very easily fool this autonomous driving vehicle.

>> that makes me wonder about the future of aurt onmus vehicles >> this is at the heart of why people say as much as you are seeing this technology come along, we are so far from this truly taking off aside from in geofenced areas. gm cruise in a certain neighborhood in san francisco. later this year. i think these are at the heart of those questions that are going to have to be answered by regular tor regulators >> tucson, good place to try this stuff you got to try to hit something. i mean, it's like, nothing anywhere >> straight road >> road. love it. i love it. it's beautiful >> thank you, sir. >> see you later with the numbers. >> linkedn, one of the best companies to work for, and amazon has been dethroned. we'll tell it you which company

took the on top spot i can't imagine a better place than cnbc or comcast as we head to break, here's a look at the biggest premarket winners and losers in the dow. >> you are such a suck-up. bye! ♪ hey dad! hello, betee! kaisi hain aap (how are you)? i'm good, how are you? good! so good to see you. it's late, where are you? i'm at work. oh gosh, so late. i know, but guess what? what? i've saved enough to come visit you. well, that's such great news! at u.s. bank, we believe that hard work works. and for everyone working toward a goal, we're here to help.

welcome back let's get a check on the stocks on the move. game stop reporting fourth quarter earnings that actually beat analyst expectations, but revenue numbers every missed they're warning of a possible first quarter loss as it struggles with slowing salgz of games and consoles, and that stock is down 9% this morning. last check is at $9.18 also, dave & busters stopping forecasts on strong same-store sales the arcade themed restaurant chain also expects revenue this year to come in above what the street was expecting, and that stock is up by just over 6%. then shares of blue apron are soaring. relatively speaking. after the company announced ceo brad dickerson is resigning. he will be replaced by former etsy coo linda keselowski. blue apron stock is down 90% since the meal kit delivery

service went public in 2017 as it struggled to boost sales and turn a profit. it's worth noting that the company's market cap is now below $200 million it's up 15%, but that's 15 cents. when we come back, the list of the best places to work we'll tell you which companies are climbing the list and which companies are losing ground. that's next. -i call it my comfortable future plan.

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>> linkedn just out with 2019 list of the top companies to work for there's some bad news for tesla. joining us now to elaborate, dan roth, linkedn editor in chief. you don't make any value judgments on why people want to work at these places you got 610 million global members, and you just look at where they want to work. like, amazon is always up there. why would anyone want to work at amazon >> well, if you look at the top three companies,they've been the same basically trading places for the last three years. alphabet, facebook, amazon >> all right i'm reasking the question. why would you want to work in one of those -- it's 18 hours a day where you don't get -- you read the article >> yeah, sure. >> you need management there, or you don't want to be one of the -- >> every one of these conditions, there are -- you hear stories about the high pressure atmosphere. especially at amazon what people do is they want to world war i at places where they

get skills -- >> get stock >> these places pay well and treat you well and train you the last one is the most important. if you look at how many jobs millenials who are now the biggest chunk of the work force will have, they'll have three times as many jobs as baby boomers will have, and so they are collecting skills. they're adding things to their resume that will look good when they go to their next job. >> they seem to pick the companies that are sort of in vogue or in the news i'm not sure i want to work on an assembly line at tesla either maybe in management or something. >> yeah. >> what are they thinking? at least there are some old line companies that made it there are some banks on here and there is some advertising agencies, mad men. that seems like fun, right >> it's actually totally different. it's going to -- it's about tesla. something like 90% of workers at tesla said they believe they're changing the world these are people that are investing in the company because they're saying these are hard problems these are a company that i believe in that is going to -- that i'm selecting myself. >> you believe that here, dan. >> don't you believe you're

changing the world here. >> every day >> i'm trying. knocking my head against the wall trying to change the world. >> you're just trying to change the show >> you and aoc, and it's very difficult to change it into the world they want. >> a company like tesla, which has a reputation of being a difficult place to work, given all these articles you read, how do you square those pieces >> i think there is a massive difference between what we expect job seekers to do and that what they actually do i think if you are going to somewhere where you say, look, i want to solve problems around self-driving cars, where are you going to go? you're going to go to tesla. we did a story on uber a couple of years ago when they were the top of the top start-ups list, and that's the exact same question how is a company that is constantly getting bad headlines still attracting top talent, and the answer was i believe that it's not going to affect me. >> that's -- well, that's interesting, too, though the best pras to wolace to work place that offers you

opportunity. >> going back to the millenials' point, they are making one-third less than their peers did at this point in their lives. they need good jobs. they are catching up from the greats recession >> why are they making less? >> they graduated during a really bad time. they started way behind. >> uber is number six. you don't need to use linked you say i'm going to be a driver can't you just become a driver >> an interesting stat about uber -- >> you don't work for uber if you are a driver you are a contractor >> these are all management jobs >> even white collar jobs. >> for these, the ones that you're hiring for, they are not driver positions these are -- 3,000 workers at uber changed jobs last year. within the company there's a ton of mobility, and about one-tenth of those were sent overseas. deloitte is number five because deloitte lets you find new skills they'll send you different places they are -- it's very

attractive if you are going to work at this company for a few years and gain valuable skills, and then you're going to go hop somewhere or do what i want to do. these are job hoppers you are training, so you have to figure out a way to get them in, give them the skills, and going back to your "mad men" question, the era of advertising is over, but these ad agencies are here because they are training people how to be analytical, how to use new tools, and every one of these companies in the top ten are hiring those companies to go and do their marketing campaigns. >> wall disney, can i see your front of the line pass i don't want any of these jobs >> are you kidding me? happiest place on earth. >> you know who worked there carl >> he is here. he likes it better here. yeah actually, comcast is -- 15 we're ahead of tesla >> i think he works summer down there. the cruise >> goldman sachs should be hire, i think, unless you don't want to make $100 million i think -- i don't know. i just -- >> this is the nice part about this list is it's based on the data that that's what i mean. it makes no sense.

>> it makes no sense to you? >> no. >> dan, thank you, sir >> thanks for having me. made sense to me >> changing the world. coming up next, we're going to talk about the oods of a deal we'll see where whether that will change the world and what it could mean fort markets that's next. as we head to a break, a look at yesterday's s&p 50000 winners and losers back in a moment let's build a better world for investing. let's create jobs, build bridges, insure prosperity. as investment management professionals, let's measure up. cfa institute.

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box. among the stories that are front and center at this hour, u.s.-china trade talks picking right back up in washington. china's vice premier, is he in town today and expected to meet with u.s. trade representative robert lighthizer and treasury

secretary stephen mnud chin. the u.s. and china, they are closer to finalizing a deal, least that's the report. we'll see whether that moves markets today. carlos ghosn tweeting this morning, yes, he is on twitter, and he is saying i'm getting ready to tell the truth about what's happening press conference on thursday, april 11th mark your calendars for that that tweet came from a verified twitter account baring his name, and that was created just this week the british prime minister theresa may will push to further delay the exit from the e.u. may says she plans to meet with labour leader jeremy corbin to break the brexit deadlock. without a plan the u.k. will crash out of the european union, and mark your calendars for that it will happen next friday if it does happen. u.s. equities. the dow looking like we would ep on up 76 points higher the nasdaq up 36 points higher if the market opened right now, the s&p 500 would open up close to ten points higher >> let's talk about what to expect for the equity and bond markets in the trading day

ahead. joining us for that is kevin, president of fixed income capital markets at raymond james. also, david lebowitz who is from jp morgan asset management equity markets have been done incredibly well lately what's motivating that is it the numbers we saw from china? is it something else that we think a trade deal is near >> i think when it comes to trade, there's a lot in the price. i think the markets have basically priced in some resolution to trade. i think he what's been moving markets has obviously been the dovish shift of the federal reserve last month the manufacturing pmis don't look great the u.s. flbz are getting a little better. retail sales, durable goods, right, all showing signs of life, and i think when you look at where the first quarter could shake out and where we may be headed for the rets of the year, things just aren't looking quite as dower as they did back in

december >> deutsche bank downgraded caterpillar today. they said it was the oversaturation of machinery here in the united states, but they also said in europe they think it's going to be worse than expected they said chooirina, the slowdo there has been particularly big. is that a look at things to come or backwards looking if you look at the green chutes, how much can you really think, okay, these are going to fully bloom? >> i think it's backward-looking, and i think, importantly, to kind of go back to my earlier comments, tempered enthusiasm is what i would recommend here this is still a global economy when you look at productivity and demographics there's only so fast that we really can grow without overheating. there's a lot of uncertainty >> companies and investors too >> investors too if you put the bar on the ground, it's much easier to step over as opposed to setting it higher and then disappointing over the course of 2019. i think there might be a little

bit of that going on there in general where we're kind of in a more glass half full mode with respect to global growth this year >> what's your take on the economy both here and abroad especially when we keep watching yields under incredible pressure >> david and i were talking about this coming off the best quarter for fixed income we've had in two years. it all started with the fed in december and it's carried on into last month as well. everyone can see that globally the economies are slowing. we won't be the exception in this country, but it's not as bad as everybody thinks. for bonds it's always been an inflation story or lack thereof, and it will continue to be so. we saw spreads go out and spreads contract quite a bit the only risks that we see are georisk of some kind and the trade deal the trade deal is going to -- it could have some mild impact. i don't think it's going to be robust enough to generate inflation and get the fed back in the game, but we're extending durations in here versus being worried about some of the risks. >> you have some particular

ideas, too, when it comes to trying to lower your tax bill. it's tax season. people in the salt states probably looking at this and thinking, oh, my gosh, what do i do >> there aren't many plays left for anyone that's doing their taxes or has done their taxes. you're capped at 10,000. what are you going to do to offset that? there's been a tremendous influx of money into municipal bonds. that's one of the few things that you can earn interest and earn interest tax-free to help you offset that. big surges in money going into bonds, whether it's etfs or individual bonds and funds, which is a push spread out a little bit, but prices up quite a bit since probably the best year in five years >> david, you think we're going to hit new highs i mean, it sounds like you think we're continuing higher from here >> i think intrayear we will hit a new high, but last time i was on i think we were talking about this i think where we finish the year is probably somewhere around where we are today when i think about the behavior

and the performance of the markets over the past couple of months, it's really been driven by a rerating and value wags to your point about earnings expectations, they've actually declined during this period of time >> that makes it a lot easier to be >> are you saying that we're going to end the year where we are right now when we were at 2700 on the s&p? how long have you been saying that >> we talked about in the other week, joe. 2800 to 2900 is a fair range for the s&p 500. i think we could easily get to 3,000 if we have a trade deal. fed stays on hold. global growth -- >> could we easily get to 2400 >> not as easily, i don't think. there's more support on the valuation side than there has been in some time given the rerating that we saw last year what i would say, though, is that i think we're going to see a blow-off phase >> we're at 2867, and your latest range is 2800 to 2900 >> yep >> that is -- >> it's safe

>> i don't think, b, earnings are going to come through much higher than 170 a share you multiply those two numbers together, that's where you shake out. >> thank you both for coming in. >> president trump reportedly told fed chair jay powell he is stuck with him that story is next then, later, should lyft give uber pause knitsin its ipo plans you're watching "squawk box" on cnbc

♪ stuck on you ♪ got this feeling down deep in my soul ♪ >> all right welcome back president trump is reportedly not warming up to his fed chairman jay powell. the "wall street journal" says that the president complained about powell in three meetings in the past week in one meeting president trump reportedly recalled a phone call that he had with powell in march when he told powell "i guess i'm stuck with you." the president has criticized the fed for holding back the economy and the stock market despite the bank's recent decision to do two things that he wanted. halt rate increases and stop shrinking its asset portfolio. the journal report also said that the president blames treasury secretary mnuchin for

recommending powell in the first place. >> the top democrat on the senate tax writing committee out with a new proposal to tax unrealized gains in investment assets every year at the same rate as other income now, the proposal is coming from senator ron wyden. it's the latest plans to raise taxes on the wealthy to address what they're calling economic inequality and try to provide funding for their policy agenda. under the plan here's how it, who. capital gains would be taxed annually based on how much assets have gained in value. now, currently gains are taxed only, of course, when assets are sold and at a rate below that of ordinary income. >> they're now taxed when you have actually locked in one or the other. >> this is effectively marked -- effectively they're mark to market assets where. >> i saw somebody tweet yesterday, alexa, what's the dumbest idea you have ever heard? >> lock it in. >> it's good to actually have a contract >> there used to be some

fortunately of taxes on stock options. you remember when there was a time -- was it stock options there's a whole group of people in the valley who used to explain bitterly because they would get taxed before they had actually sold their shares i don't remember what that was about. >> you get taxed if you receive restricted shares and invest you get taxed on that because of income >> it's income >> you don't even have to explain why this is so stupid. there's -- i'm not even going to go into it mark to market -- to do things on a mark to market basis, on a yearly basis what happens when it goes down 50% the next year? you have already paid taxes on it >> get a write-off on the next year's taxes >> write-offs aren't the same. >> i know. makes zero sense >> you always explain what the actual issues are, like we can't figure it out ourselves. >> what do you think the larger issue is >> i i guess you're going to say that these things stay untaxed god forbid that the government doesn't have its hands in every single aspect of your life, and there might be some gains somewhere that they actually didn't get >> we all know each other so

well the actual problem is if you hand these -- that they never get taxed if you hand them over to your heirs. >> the government never gets its take god forbid that they don't -- >> larger issue is there's a question about inequality. there's a question of -- i'm not suggesting this is the way to go about it i disagree with this zplie love your do what i say, not what i do attitude >> i disagree with this -- this is to me the wrong approach to do this with to dismiss the whole concept -- >> as i always say, since you can write a check, do that with your investments now you don't need a law just do it, andrew step up. walk the walk. pay that government. give it away don't give it to charity >> this is a longer conversation >> when we come back -- >> you set the example, and i won't follow >> more prosecufrom joe kernan very issue 'rgono wee ing to hear about why this is a make it or break it week for u.s.-china trade talks. back in just a moment.

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u.s./china trade talks resuming today in washington, d.c. the premier is here and a new report in "the ft" says a deal is 90% done, but the last 10% may be the trickiest joining us now to talk about this, wendy cutler, former acting deputy u.s. trade representative and now vice president of the asia society policy institute ambassador cutler, good morning and thanks for joining us. >> good morning. >> help us understand what you think that -- first of all, do you believe that 90% of it is done, and if so, what that 10% really entails >> yeah, i don't know about the exact number, but i think it's clear these negotiations are really in the final tages. they're down to a handful of final issues those are tricky issues but

compromises can be reached on all of them. so i'm optimistic a deal can be reached. >> let's walk through the top three issues that you think are the trickiest, the thorniest, and how you think they get overcome. >> okay. first, what do you do with the existing tariffs in place? remember, we have tariffs in $250 billion worth of chinese imports in place china says take them all off the u.s. says we want to keep at least part of them in place. so, the negotiation will center around how much of those tariffs will stay in place, or is china able to convince the united states to lift all of them or snap back the tariffs if china doesn't live up to its obligations. so that's a key issue. >> you think that's the single issue of all of the issues that are still outstanding. >> i think that's one of the most important it's hard to say which is the most important the second issue has to deal with the whole enforcement mechanism. >> right. >> and the united states wants to reserve its right to impose

tariffs, should it feel that china is not living up to its obligations. and moreover, it wants china to say we won't counterretaliate if you impose tariffs that's a big issue as well. >> okay. number three on your list? >> number three, i'd put the issue of forced technology transfer remember, this is the issue that kind of launched these negotiations china has, you know, made some progress i think in addressing u.s. concerns, but it's a tricky issue and it's hard to write rules that would really stop this practice. >> wendy, help me with this. this is the part i don't understand the three issues you just raised seem to me to be all of the issues, meaning those are the issues we've been talking about for the last three, four months, if not years so the question is, when people say 90%'s already been accomplished, what has already been taken off the table >> what's been taken off the table are probably 20 or 30 pages on other obligations on

intellectual property rights, purchasing commitments of over $1 trillion over a five-year period, other relaxation of investment restrictions, lowering of other tariffs. so you're going to be surprised how much has been agreed to and what i understand is close now to 200 pages of text. >> ambassador, we've got to go, but final question, do you think this changes the relationship with china, meaning there had been a sense that all of a sudden we had gone from confr t cooperation to confrontation does this bring us into a cooperative stance or do you think we're in a different place? >> we're in a different place, but a deal on trade would have better relations and establishes high-level contacts between the two governments which i think is key towards resolving any problems in the future. >> ambassador cutler, thank you for joining us this morning. >> thank you. >> appreciate your time. you bet. when we return, former fdic share sheila bair joins us to talk about her op ed on cnbc this morning is colle rllwoh geeay rtit that conversation is next. g our,

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america's new crisis, the skyrocketing cost of education former fdic chairwoman sheila bair now raising the question, is college really worth it she's here to discuss her op ed

and talk about the future of higher learning with guest host and businessman john hope bryant of "operation hope." drawing closer to a trade deal the latest developments out of talks between american and chinese officials and what it means for the markets. that's straight ahead. and capital gains tax gone wild a top democrat floating the idea of taxing the wealthy on capital gains annually the latest on a mark-to-market proposal and what it could mean for your portfolio, as the second hour of "squawk box" begins right now ♪ ♪ party all the time, party all the time ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. ♪ want to party all the time good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky

quick and andrew ross sorkin in studio for the hour, philanthropic entrepreneur and businessman john hope bryant, chairman, founder and ceo of operation hope, back by popular demand last time you were on, so many people commenting, writing in, we need more, we need more, because you speak in plain english about a lot of issues and how to solve a lot of these things, rather than things that are never going to happen, really >> thank you, my man just a radical movement of common sense >> you like the prospects for the private sector and capitalism and helping raise people up that need to be, need little help and need to be raised up. >> absolutely. i'm a capitalist i'm just a capitalist with a heart. i think you can be a capitalist without being a jerk >> right. >> and i think even if you want to distribute the money like a socialist, you've got to first collect money like a capitalist, and that's the way all around the world, you know? i mean, wherever you look in the nordic countries, we use that as

a model, but underneath that is capitalism and free enterprise it's about how you treat that once you earn it. >> it helps to grow the pie. >> it helps to grow the pie, versus cutting up -- >> a smaller pie. >> -- smaller pieces of it. >> pie's getting little bigger this morning, at least for equities and the s&p and the dow, up 68 points this morning on the dow jones, s&p up 9, the nasdaq indicated up 35 and rates, which were down to 2.3% or so, i saw 2.55% this morning -- >> back above 2.5%. >> yeah, back above 2.5%. meantime, making headlines this hour, the pilots of the ethiopian airlines jet that crashed last month did follow emergency procedures laid down by boeing, according to the "wall street journal." quoting people who were briefed on preliminary findings of the crash investigation. the paper says that when those procedures didn't work, they turned off the flight control system that had pushed the plane's nose downward, then turned it back on when that move was ineffective. right now boeing's shares up by

about 65 cents president trump continues to blame the fed and chairman jay powell for holding back the economy and the stock market the president reportedly criticized powell at at least three different meetings in the last week and is blaming treasury secretary steven mnuchin for recommending powell in the first place the president is also said to have told powell "i'm stuck with you" during a phone conversation that they had earlier last month. intel has a new chief financial officer who comes directly from a chipmaking competitor intel named george davis, who's been qualcomm's cfo for the last six years as its new cfo that job had become vacant when bob swann was promoted to chief executive officer last year. intel shares up by 1%. qualcomm shares down by 0.5%. and for financial literacy month, cnbc and acorns conducted a savings survey, asking respondents what their biggest hurdles to saving money were, and the most common answer among college grads -- ready for this,

guys payi paying off debt. sheila bair is the former chair of the federal deposit corporation and part of our advisory council she wrote an op ed on student debt good morning. >> good morning. >> this is entitled "is college really worth it? it details what she calls america's new kind of crisis also joining us, guest host john hope bryant, founder of operation hope, devoted to literacy and inclusion good morning to both of you. sheila, so, answer the question that's posed as the headline, which is, is college worth it? >> well, it may be it may very well be. there is a significant income premium on average, but there's really not enough information i think out there. there's not much transparency around college cost, debt cost, how much you can expect to earn by major when you graduate, so i think it's very difficult for students to make, you know, a rational economic decision about this, and i freely admit that, you know, there may be other

factors besides monetary that will drive a student's decision to go to college, and college is an enriching experience. i want it to be broadly available. >> all right, but if you're a young person today, and let's say you're a young person without money, so you're going to be going into debt to go to college, what should be the calculus in terms of your decision-making, your thought process around, okay, i'm going to do this we've read all the headlines if you go to college, your chances of success historically are significantly better than those with a high school diploma. >> well, that's true, if you graduate, and less than 60% of students do so first of all, if they're going to borrow, they need to be committed to finishing that degree they need to pick a good quality school with good graduation rates and good job placement rates, that will be candid about the likely cost, if it's a four-year degree, what that cost will be, and clearly how much will be financed with debt and how much that debt's going to cost those are just basic factors that anybody would need to make a decision about the economic

justification for a college degree so we don't have that level of transparency right now, and i think that's unfortunate. >> john, what do you tell kids when they talk about college >> first of all, i tell kids that one of the coolest fdic chairs ever was sheila bair. she went to the hood with me >> hey, john. >> for those who don't know, that's the inner city. she went to the inner city with me when she was chair. i say education is the ultimate poverty eradication tool when you know better, you do better but also, this system is so screwed up right now, i think this could be the next subprime crisis, student loan debt, if we don't manage it properly and this situation is so screwed up right now because you really -- we take a public asset and made it a private asset, which is college education and unless you can track the student loan debt to a job and make sure you can pay off the debt with the job, i'm not sure what we're doing we're sort of rearranging the deck chairs on "the titanic. i love what she's talking about, embedding financial literacy into the higher education

process on the back end, more transparency keep in mind, this is personal to me because most people getting student loan debts are minorities >> that's right. >> almost 90% of african-americans who go to college are getting a loan, and they're dropping out not because they're not smart. they're dropping out because they're stressed out femalely and they have too much at the end of their money and the system is not working for the least of these god's children and most wealth in this country came from poor people who struggled really hard and made it from nothing. so, i think we need to be investing heavily in the bottom of the pyramid, not with a handout, but with a hand-up. and financial literacy, both on the student's side and on the structural side, meaning more transparency -- >> meaning it should start before college, too. >> absolutely, "k" through college, no doubt about it. >> sheila, you've talked about income share agreements, which i'm fascinated by, the whole idea effectively that you don't take on debt but actually that the instrument itself is a system in which effectively, for some of these schools, you go to school for free and you only pay it back as part of your income

>> that's right. >> some people think this is indentured servitude >> it's called partnership >> i'm just -- >> and debt isn't. so yeah, you always have an affordable payment it protects the students who may not graduate or who may graduate into a bad job market. it's based on an affordable payment based on what you're earning, so it's much better than debt, which is a very fixed, rigid amortization of principal and interest and john's right, this problem is falling disproportionately on minority families, the parent-plus loans as well are disproportionately hurting minority families. and so, especially for students that may be lower earners, income-share is a much better system than the debt system we have here. >> is there a problem here i mean, we blame financial literacy, we say the students drop out, this and that. why have we not created a system, an incentive system for the schools themselves isn't the problem -- >> yeah. >> -- that education has cost so

much, there is no accountability >> yep. >> there is no incentive to actually make sure you don't drop out. >> that's right. >> there is no accountability to make sure you get a job when it's all over. i've talked about the lambda school, which i'm fascinated by, an income-share agreement school where the loan is taken on by the school, so actually, the school doesn't get paid -- if you don't get a job, the school doesn't get paid. >> that's a great idea. >> yeah, and andrew, that's the church of what's happening now, what have you done for me lately that's exactly heading in the right direction, and sheila is extraordinarily right on this point, and we should be more progressive and innovative about how we reimagine education i think sheila, you're about to say something on this. i don't want to step on your talking point. go ahead. >> no, just one of the beauties of i.s.a.s is requiring colleges to provide some or all of the funding so if the student graduates, gets a good job, that income-share agreement will recoup the college's investment. if not, they will lose it does align economic incentives right now, all of the risk is on the student and taxpayers,

ultimately, if the student defaults the colleges get the proceeds of the loans, but they don't suffer any financial consequences if the student does not succeed. >> and adding insult to injury, most african-americans who are getting the student loans are also going to private colleges who may not have their best interests at heart, who are not giving them all the information they need, so their profit is profit. >> sheila, are for-profit schools, for-profit education, is that a problem? because i know that the dropout rate can be particularly high at some of those schools. >> yeah, well, statistically, you're certainly seeing much higher debt enrichment at these for-profit schools and higher incomplete rates and higher default rates. that's true. that said, i don't know if it's so much a factor of being for-profit or being poor quality because there are some non-profit colleges that are also not doing a very good job. >> they're not, and looking at college tuition prices, outpacing inflation at any rate, so it brings back pressure -- >> i'm not jamming up for-profit

colleges, because they do what andrew just said, which is to put the incentive on the back end, that you've got to place them into a job. they might be performing better than everybody else. >> shouldn't put them in the same category. >> we need to redefine for-profit after the latest stuff. seem to be for-profit more than one way or another. >> most of universities are a business most things are a business. >> real quick before we run. do you see any movement on this topic? and i say that almost sadly, because we've been talking, you and i and so many of us have been talking about this issue for now many, many years, almost a decade now, at least, if not more, and it seems like, unfortunately, we've talked and talked and talked but doesn't seem like there's any real -- >> nothing happens yeah to their credit, some colleges -- i did a report for the manhattan institute with my son, actually, who a good higher ed economist, taking a look at the growing number of schools that are offering their own i.s.a.s, so they're taking initiative on their own. and we argue in that paper for

at least a federal pilot to try i.s.a.s as an alternative to debt i think there may be some chance of that. but in any event, colleges themselves, the better ones, frankly, are taking the lead on this. >> i was at clark atlanta university yesterday, a black hbcu, and they're an office of financial literacy, and the office of the president, because they want to reimagine the whole educational experience and do, really, what you guys are talking about, which is to try to connect education with aspiration, like plugging a socket in the wall and you know, if a kid wants to teach school versus go on wall street, we should want kids to aspire at every level, and it shouldn't be a tax on you because you're choosing something that pays less because it actually may give society more value, but there should be some escalation that's tied to that, that allows you to pay as you go, and that's i think what we're talking about here we're not talking about a giveaway program we're talking about an invest in us program. >> sheila bair, thank you. and john, you're sticking around for the rest of the hour. >> nice seeing you, john. >> nice to see you. >> for more on this topic and investing in you, visit

cnbc.com/investinyou nbcuniversal and comcast ventures are investors in acorns. coming up, your morning market movers, plus the chief executive officer from merrill and bank of america private bank says the market is ready to make a run later this year. chris will tell us why he's bullish on the second half of 2019 bck x"n ed to "squawbo o cn so with xfinity mobile

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welcome back to "squawk box. the futures right now indicated up 82 now on the dow, which would get back yesterday's losses in the dow. the s&p was flat yesterday it's indicated up another ten. we're not that far from 2,900 suddenly, so maybe we are through that 2,800 level that we ran up against a few times nasdaq was strong yesterday in a down dow market. it's up another 40 this morning. the mortgage bankers association says mortgage apps jumped 18.6% last week that included a 38.5% surge in refinancing activity to the highest level in more than three years. the average mortgage rate fell nine basis points during the week to 4.36%. carlos ghosn plans to hold a news conference on april 11th. the former nissan chairman is facing financial misconduct charges in japan he was released from jail last month after being arrested in

november ghosn tweeting today, "i'm getting ready to tell the truth about what's happening." this is a brand-new twitter account that was just created, but a verified account as well. and coming up when we return, what a trade deal! what china means for the markets. then later, taxes gone wild. the top democrat on the senate finance committee, he wants to tax wealthy individuals on investments annually instead of when they're sold. we're going to break down what that plan is and what it will mean for your portfolio. you don't want to miss that. aw rur aerhe t break.

welcome back to "squawk box. time for this morning's "market movers." want to talk about it with dom chu because he has those movers. dom. >> good morning, andrew. so, we're going to kick off things with a look on the down side with that mover a drag on the industrials, it will be caterpillar early on, down just around a percent or so, roughly 25,000 shares of premarket volume the construction and money equipmentmaker was downgraded to a hold from a buy by analysts at deutsche bank. the target price also cut to .

$128 from $152, slighting a backlog and macro concern over slowing global economic growth, so shares are lower now. shares of advanced micro devices are up between 3% and 4%, roughly 270,000 shares of premarket volume -- volume premarket. the chipmaker was initiated at a buy rating of a number that they believe should have a higher multiple based on sales growth they started intel with a buy rating and a $65 price target in that same note and we'll end your morning with a cup of joe we are watching shares of dunkin' right now, down by about a percent or so on very thin premarket volume it was downgraded to market perform from outperform. they kept their $75 price target they cited a more balanced risk-reward at current valuations, so those shares once to watch in the premarket, joe back over to you.

>> thanks, dom. sticking with markets, our next guest expects a second-half rally in 2019. we're seeing a first-half rally right now, chris chris hizey, chief investment officer. is it implied we trade sideways until the second half or we continue making gains again today? >> there isn't as many people in the market as people think, so the investor sentiment has turned quickly, but it has a ways to go before -- we should basically say it's peaking out so, we could say it's sideways because of the big v-shaped move we've had, but the reality is we've now switched into what have you done for me lately earnings mode. we've gotten a few things out of the way. the biggest thing was the pivot by the fed now, some will say they didn't really pivot they've been paying attention to the data you could argue that, but the big pivot was instead of trying

to slow down growth, it's now become a part of their real mandate, which is price stability, and inflation has dropped. you can't average 2% if you don't go above 2% for a long enough period of time. we barely got above a 2% inflation target rates went up and then we fell directly back to much below it so, here we are. the fed's on pause and that's a lot more powerful than people think. >> so, we don't want to get into the weeds too much but eve the flat yield curve and the invasiersion, when you raise rates and the long end comes down, that's not necessarily signaling a recession. it could be signaling lower inflation expectations, which would be bullish. >> yeah, absolutely correct. the three-month to ten-year yield when it inverted, it was the back end coming down we had that the last time was 1998 seven times there's been reversions stocks have rallied all seven times, but most importantly, in 1998, that was a pretty powerful move after the inversion from three-month to ten-year.

>> so do you think we're seeing a replay in u.s. equities that we saw in china? china, the narrative was that it was slowing, yet chinese stocks were rallying. and now the most recent numbers are above 50% on manufacturing so maybe you think that's happening here, too. so, the earnings recession might never actually come to pass in this country, or -- >> that's right. the earnings recession could literally just be the first quarter. then you start to positively slope from there and expectations have come way down it's a lower bar than people think, and at the same time, chinese stocks are signaling what's going on in the back half of the year in china, which is better numbers they're starting to percolate right now, but the most important thing is going to be earnings revisions, particularly globally, and you'll start to see that turn in the summer. >> so if china somehow walks the line where it gives up enough to get a deal, but you know, it's still china, it still grows at 6% a year or whatever, could that be an actual tailwind for china, above and beyond what it was before, even though they agree to something with the united states? >> it can.

it can it will show a lot more resolve in global trade and also europe will benefit as well as the largest trading partner with china. so you get a little bit of a, dare we say, global synchronized expansion, which is what we had expected about a year ago. >> so, why do you think there's a major productivity wave building in this country is it tax reform, delayed effect of that? >> it's not as measurable as we all would like it to be in terms of productivity. it's very difficult to use old ways to measure productivity today, but the productivity wave is more about automation it's more about the ancillary effects of the third wave of innovation first wave was in the '90s we created the internet second wave was we used the internet the third wave is how do we store information and use information that is basically moving across the internet and that's just the very, very early stages of all of this. so it's not just capex build-out. it's how do you use software and big data in today's type of

environment, and that is just the beginning stages. >> it is -- i mean, the future is scary to consider, if you believe that huge discoveries are coming more and more frequently in health care and in information technology, and it would explain why inflation has been muted, the internet's effect on price discovery and price transparency there could be great things coming i would hate to miss out on the golden age of technology and everything else by being worried about, i don't know -- >> right that's right you know, one thing that's not talked about enough is the dollar goes a lot farther than it ever did before you used to pay one for one. here's your dollar, this is what you get. now here's your dollar and you get rewards and points and other things off of it when you go to a particular coffee shop and you accumulate enough stars, you use that dollar there, but then you don't need to use the next dollar to get the next cup of coffee so your dollar goes a lot

farther than it ever did before, which also keeps a level -- >> assuming you're financially literate. >> that's what i was thinking. you have to be in on the deal before you know that before you can take advantage of it. >> it's what you don't know that you don't know that's killing you, but you think you know. >> right. >> but i agree with you. >> which leads to additional inequality. >> which leads -- those who get it really get it and those who know least pay the most. >> until we start taxing mark-to-market gains for retired people that have no money to pay the gains and stocks that they're -- >> that they're living on -- >> -- owning for income -- do we have ron wyden himself on? >> probably not. >> have you thought this through? i don't know anyway, chris, thank you >> thank you all right, when we return, it's been a rough ride for lyft since going public last week uber preparing to do the same, and by that, we mean go public hopefully, they think, not take the same rough ride.

what can uber learn from lyft's ipo? a bull-bear debate is next right now, though, as we head to break, let's look at the u.s. equity futures we've been up all morning. dow futures indicated up about 87 points, s&p up 11, the nasdaq rhtac41 and "squawk box" will beig bk.

still to come on "squawk box" this morning, we're going to talk taxes, the wealthy, and a new proposal from senator ron wyden on taxing long-term investments annually what it would mean for the 2020 presidential election. more importantly, what it would mean for your money. then later, tesla's in focus from production numbers to elon musk's day in court. we're going to find out what you should be doing with your shares of the electric carmaker. and then, mark grant is our guest. why he says bond investors are, quote, living in hell right now. eas market thoughts, straight "squawk box" returns with all that and more in just a moment for another 150 years. ♪ to inspire confidence through style. ♪ i'm working to make connections of a different kind.

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well, he was already dancing-- locked eyes and continued dancing. i still have to like pinch myself and make sure i'm not dreaming. every now and then, i'm like, "wait, did that happen?" (gasps) i've got photos of it, it must have. (vo) get more music on us with vip tickets to the best shows, like shawn mendes and camila cabello. plus, save big when you switch. only on verizon. lyft's stock remains below the ipo price, although it continues to hover above the initial ipo range. it did make a stand yesterday, in the last couple of sessions, where it looked like it was going to get ugly, but it rebounded from some of the $65,

$66 areas and is actually up in premarket trade at $69.21. what can uber learn from lyft's foray into public markets? it's only been four days i don't know if they can learn anything joining us, tom white, senior research analyst at d.a. davidson and i guess you're a bull. you've got a buy with a $75 price target so, it came at $72, tom, so i don't know how bullish it's kind of like kissing your sister or something, it's not -- a little joe biden kiss. >> oh! ouch >> how yeie mogarabi, an also - >> nice one, joe. >> a clean one just a peck -- >> joe's sorry joe's sorry. >> morning star. you're our bear. and you're supposedly bearish, but you've got a neutral on it i guess that's a morning -- is that ali from morning star, is that a negative rating, would you say? >> no, i think it's just

basically patience that's recommended. >> well, that doesn't sound like a bear i want a bear! >> you think eventually this is a great stock? >> well, i think eventually it's going to become profitable it's got a few things in its favor. i think the platform it has can create what we refer to as economies of scale i think that the demand for ride-sharing continues to increase, and that's going to, of course, attract drivers onto that platform, so it's got the network effect mote source are a competitive advantage we think that's sustainable. so, in about three years, we actually see these guys becoming profitable and expanding operating margins going forward. >> you're a lousy bear anyway, tommy, are you more bullish than ali >> i'm bullish to a point. funny, i mean, i'm actually -- >> a lousy bull! >> i have the buy on the stock with a $75 target but not ebitda profitable until 2023 or later. >> and that's ebitda. >> yeah, free cash flow trends

are actually better. they have some working capital benefits in their business, so they'll show better free cash flow trends -- >> listening to both of you, nobody knows what to think of this, because it can't be valued on any normal -- >> i think there is a significant kind of blind spot on operating expenses, and particularly the incentives that lyft uses to attract riders and drivers. on the top line, i think there's pretty good visibility, and that's what we think is going to -- >> here's the question i have about how investors are going to look at it when we finally see the first-quarter earnings that are public, in terms of incentives, promotions, marketing, all of that, does that number -- >> first-quarter results. >> first-quarter results does that number have to come down materially or do you want them spending so the revenue's higher >> i'm not sure that number's going to matter over the next couple quarters. i think the management team out on the road show was very clear that 2019 is a peak investment year from investors we talked to, it seems like at least for the next couple quarters, we think bookings and top-line -- >> top line matters more. >> top line's going to matter more

of course, profits matter, but i think in the near term -- >> why do you think this is an investing highwater mark i mean, if what matters is top line, what makes you think that that spending's going to slow? >> well, you know, to echo a little bit of what the former speaker said, you know, at its core, this is a two-sided marketplace business it has very low capital intensity. there are real networks effects when you get these two-sided marketplaces to a certain scale. they attract riders. the more riders attract more drivers and so on. these businesses tend to be significantly profitable as long as they can be the number one or number two player in a market. and i think that's the real challenge for lyft is, is the north american market big enough where a number two player can really kind of drive those economies of scale and network effect >> i think we're missing some real obvious value here. i think there can be a lift for lyft and what i mean by that is i read some of the notes on this in order to justify the current

market valuation, investors need to take a big leap of faith that the millennials and later generations will forego ownership of car and opt instead for reliance on ride-sharing but millennials are also purpose-driven and they're mission-driven, and they're looking for companies with a purpose and a mission. and we're in a gig economy right now. these companies -- lyft and uber have contract drivers. nothing wrong with it, but these folks don't have health insurance and benefits they're basically small business owners, joe. and so, let's lean into them i think that lyft has the chance here, and uber after them, to sort of upgrade capitalism itself let's do financial well-being, hope financial -- look, a community private banker, doesn't have to be operation hope, any non-profit, for the drivers. help them with their financial well-being lean into them so they're, by the way, less angry when somebody gets into the car to get a ride because that's your ambassador that lyft driver or uber driver is your ambassador for your market share i think that the profitability will go up, people will lean

into the investment more because it's a company with a purpose. it takes the noise out of the balance sheet because now you know that your most important asset, that driver, is not going to abandon you or steal from you. >> unfortunately, there's a target on the driver's back in the future for autonomous vehicles they're trying to get rid of the driver as the driver -- >> at a big cost. >> -- is the most important part of it -- >> that becomes your value proposition because now i trust the drivers, right and i think that, again, by reinvesting into the drivers -- if you can't pay them more, treat them better. financial coaching is cheap, but it's an incredible -- this is financial literacy once again. we have to lean into the american worker who's got too much month at the end of their money. >> they did put out an announcement on friday when they went public that every year they'll be paying either $50 million or 1% of profits, whatever is larger, for something else outside the company. maybe that money would be better spent investing in the driver. >> that's fantastic, by the way. i'm not talking about philanthropy i'm not talking about --

♪ we are the world, we are the future ♪ i'm talking about the business plan of lyft, uber, and every other gig economy company who's relying on contract workers who have got too much money b at thd of their money to show america, we are struggling. >> let me ask you a question, both you guys, as it relates to cost -- >> it would help in the bottom line. >> lyft has, not investing like you're talking about, but all these companies are trying to figure out what can they do for the drivers. lyft is setting up driver centers where you can bring the car in if you have a problem, get them fixed up much more quickly. >> yeah. >> there's lots of things going on so, how much of the investment do you want to see in things like this? if you saw them investing in financial literacy, which i think's fantastic from a sort of, you know -- >> common sense? >> -- theoretical idea but economically, will investors applaud that or not? >> look, i think lyft, it's going to be tricky for them to

find that balance between reducing their reliance on these incentives and bonuses for drivers, which they need to do to help drive profitability. the company's talking about driving leverage in things like insurance costs, but i think it was over $800 million last year for drivers and riders, so that's clearly a very big lever for them being able to achieve profitability, but there is pr risk from them doing that and also there is risk to the business from drivers peeling away and i think what's important for lyft is one of the big reasons why it's been able to gain share over the last couple years versus uber is them leaning into their brand as differentiated around corporate responsibility -- >> differentiated. >> and socially conscious -- >> and -- >> and that will be a tough thing for them to balance. >> final thoughts, ali on -- >> i mean, you look fine, but just to wrap this up we've got to go. but you've been listening patiently? >> thanks. yeah, i think the main thing is this requires some patience. i do say, as you mentioned, it's

a neutral. and i do think -- we do think that in the long run they will reach that economies of scale and progress towards profitability, probably you know, three to four years from now. >> all right and i don't know what it means for uber, but that will make the lyft ipo look like -- i mean, the coverage we're going to give uber, get ready, sorkin. you're going to be on the road somewhere. i don't know taking ride-sharing to the airport and back anyway, thank you, tom white and ali mogharabi. thanks. coming up, a key democrat wants to tax the wealthy on their investments annually, almost like a mark-to-market idea, instead of when they are sold and it could be a key point for candidates in the 2020 presidential election. my idea is just roll it right into the green new deal. just make it part of that. let's just go for the whole thing. but will the mark-to-market model work we'll discuss right after the quick break. here are the futures at this hour we're up about 85 points we'll be right back. (clock ticking) (bell ringing) it's time. time for a new kind of cloud.

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welcome back to "squawk box. a top senate democrat is out with a new way to tax capital gains, and it's causing a little commotion this morning robert frank is here to talk about that commotion. >> commotion even on the set here >> yeah. >> before we started senator ron wyden is proposing a new tax on investments of the wealthy. the plan would call for taxing long-term capital gains every year as opposed to the current

capital gains tax which taxes assets only when they're sold. now, the plan known as mark-to-market, would also tax capital gains at the same rate as ordinary income so, the top capital gains rate is 23.8% and the top rate for ordinary income is 37% details won't be released until later this year. the office saying the tax would eliminate serious loopholes that allows some to pay a lower rate than wage-earners to delay their taxes indefinitely, and in some cases to avoid paying tax at all. the loophole he's referring to is families that have an asset or stock that is passed to their kids or to charities without ever paying a tax on the gains now, analyses of similar plans show they can raise over $125 billion a year, so that's why they like it there are a few problems it has little chance of passing a republican senate and a big challenge will be how to value the annual change in assets, especially illiquid assets like

private companies or real estate there are also questions over how to handle losses, and of course, tax payers who don't have enough ready cash to pay the tax on illiquid assets. >> on paper gains on all of this stuff, too. >> paper gains. >> that you may never see. look, there have been a number of kind of ridiculous ideas that have come out that have been populated out there. we've talked about a lot of them but to this point, they've either been freshmen in congress or they've been people who are running for president who want to get attention i think this is different because it comes from the ranking member on the senate finance committee. what's happening >> well, he's proposed sort of similar ideas before that have gone nowhere i think his real goal here is to get the idea of an increase in the capital gains tax into the mix of the 2020 elections. >> let's get the conversation started. >> just like the new green deal. that's what they say, we don't mean any of this, and we certainly don't want to vote on it, but let's get the conversation started. >> so it's a negotiation saying we'll propose something ridiculous to get to what we want >> we've had a proposal for the

wealth tax, increase the income tax and the estate tax the only tax that hasn't been proposed by one of the candidates is a capital gains tax. >> just say that instead of making some ridiculous, unenforceable -- >> sometimes in washington you have to go here to get here. i think that's -- >> so retired people that already can't get any income in cds because rates are so low now are living a lot of them off dividend income from stocks, so you're going to tax them on the stocks that they're holding. they have no money anyway -- >> in which case you have to sell the stock -- >> you have to sell the stock to pay for the taxes and then the stock goes down the next year and you don't have the gain anymore. >> not to suggest -- >> i'm just saying, i don't like to get emotional, but if you don't suffer fools, it's tough to pay attention to politicians. >> so -- >> if you have trouble suffering fools, it's really difficult -- >> so, let's start by suggesting that the senator had good intentions i believe he had good intentions. >> where do they usually lead? >> well -- >> where do they pave the path to, john 90% of the time -- >> you have good intentions,

joe, even though every now and then you say something unintelligent. >> let me know let me know. >> it's very rare. >> can you bring up an example >> um, no. so look, we don't want to be france economically and we don't want to be venezuela economically we've got to find a common ground forward when we were on the show last time, you raised something which initially i didn't think was a great idea, but i really didn't understand it. i think it's almost the same conversation. >> exactly. >> so, you talked about philanthropy. >> yep. >> and i thought you were talking about taxing me, and i have a hard enough time. i have too much month in my money. i'm trying to track capital. you were talking about the wealthiest of the wealthy who take money, set it aside into a commitment for philanthropy, but that money sits there forever, untaxed but unused. >> yep. >> and i think, so, if we can find a common ground here, we want to not focus on what we're against but what we're for what we're for is get that money either into investments or into philanthropy -- >> 100%. >> what if it's forced to be used in seven years as buffett's donations are forced to be used?

>> perfect. >> does that take it out of the equation >> as long as you're using that money as a force for good or a force for investment, then it should be untaxed, but it it's sitting there, parked somewhere, then you should be disincentivized from having it sitting there. to this point, if you invest in let's say small business, you're the top 10%. that's what we're really talking about here and you're investing your capital, some of your capital gains in small opportunity zones. then maybe you get a four times capital gains set-aside. you're not taxed because you're doing this good thing over here that, by the way, is good for you and good for america okay now i think we're sort of getting into the right direction. i think this is a conversation-starter joe, try to take your heart medicine so it doesn't get you all worked up. >> i, i -- >> joe's completely turned off. >> there was a time during the reagan presidency where the capital gains tax rate was equal to the ordinary income tax at 28%, and those diverged and have continued to diverge, and there

are many people, including heidi heitkamp and -- >> i'd take 28% right now. >> -- democrats who feel work should be taxed the same as money. >> i agree lower the ordinary income down to capital gains -- >> that could be the nswer, too. >> the explanation -- >> that could be the answer, too, but i think that's the core issue, and i do agree this mark-to-market issue has sort of strayed to the other end. >> we have a lower capital gains rate, not the to reward people that own the assets but to try to -- >> incentivize investment. >> -- incentivize capital investment it's fine to have the conversation -- here i go -- about whether you need to raise capital gains, but make sure you understand what the unintended consequences could be, that once again it's self-defeating from the end result you're trying to get to, to help the people that you're trying to help. i'm not sure you get there. >> so, let me say this some people say i hate rich people it's not true. you hate rich people until you become rich. what people hate is a gain system what they hate is they say no matter how hard i work, i'll

never succeed. so, that's what's really underneath this, is that since i'm never going to be there, so i'm going to tax them, we've got to create a ladder. >> so, in your view, is there anything about the tax system that can change that >> there's a lot of things i mean, let's just start with let's create an incentive -- i'm going to get on my bandwagon again -- for internships, for apprenticeships. so, you can avoid taxation if you massively invest, not talking about tokenism, in internships and apprenticeships at scale that's good for america. after world war ii, that's what saved this country, people coming back from world war ii -- >> and it should be paid internships for people who could not get paid for their -- >> although i'd intern here for free because i get relationship capital hanging out with joe and -- by the way, relationship capital is as valuable as financial capital, so -- >> but the reality is there are a lot of kids who cannot afford to not work over the summer. >> agreed. >> but there's nothing on the actual tax this goes to the other question,

which is, is the tax system itself creating the inequality >> tax system is not creating enough opportunity, already? we're focusing on penalizing, not incentivizing. >> but wyden should have -- i understand that when you die, if you've never been taxed on a huge appreciation that if you want the government to get its share of everything that happened, then figure out a way of doing that, whether it's -- >> well, that would eliminate the step-up. >> that's what i mean -- >> if you want to do something like that, but don't do something -- >> you're okay with that >> that seems like a pretty simple fix. >> by the way, we've been talking about that for a long time. >> do you think that's the right way to go? >> i think that's the easiest and most effective way to do it and practical -- >> who would do something patently stupid like this? that's my point. >> so, bill clinton had a great quote -- president bill clinton -- it's hard to get somebody to agree to the truth when the lies pay their paycheck and i think we have to flip the script to kroocreate an incenti conversation, not a taxation

conversation and incentives that raise the equity at the bottom of the pyramid -- >> you've got to pay for those somehow -- >> what i'm talking about will pay for itself apprenticeships -- >> if companies are incentivized to pay for these things. >> there will be a tax benefit for investing -- >> there's also a larger issue which we're not talking about, which is is there enough revenue in the system today -- now, you could argue to me that there's waste and all sorts of things that are in government right now, but -- >> great question. >> -- the question is do we have enough revenue what should that revenue number be and what do you want to spend that money on to help raise people up? >> depends what you want to do. >> it depends what you want to do i think you're going to say to me that there's not enough revenue, because i would imagine we need more money to do some of the things we're talking about. >> you're absolutely right, but when you're being run out of town, app drew, get in front of the crowd, make it like a parade america's gdp grows, hello, every year and the way you grow it is by growing the bottom of the pyramid. what i'm talking about is going to grow gdp.

every time i open my mouth i believe i'm going to grow gdp 1% financial literacy grows gdp as you grow it, you pay for it. >> new york politicians are making the same case for more revenue, and look at what the end result of raising more revenue, they end up with less revenue. so you've got to make sure you don't -- >> i 100% agree that the way some of this is being done is completely -- >> but when you try to raise revenue, you have to make sure you're not actually lowering revenue -- >> yes, but i think when you look at what's happened over the last two years and what that tax program has done -- >> it's been flat revenue. >> ultimately it's going to be -- but i think you would have wanted a lot more revenue. >> it's been increased -- but andrew, we have increased spending on defense, on other issues. >> 100%! but -- >> and we're also paying more on the debt that we've taken on. >> yes, we're spending a lot more money than we used to, from a president who said they were going to reduce spending, so the whole thing doesn't make sense i think that's where we need to have a conversation. it gets political. >> we've got ten last seconds before you go, john. your last thought you want to leave us with today? >> i think that we've forgotten

our story line in this country we've forgotten that goldman sachs was a guy named goldman and a guy named sachs selling financial services door to door and walmart was is a guy named sam with a storefront and a high school education god's children is where most of the legitimate wealth came from and we have to invest in them. >> john,thank you. john hope bryant. >> you have one other bill clinton quote you can use, the era of big government is over, which he said when he was elected. another one to throw -- >> and i've just made you an ga. rary black man ain >> john, thank you robert, thank you.

one step forward, two steps back key meetings on a china trade deal set to kick off today in washington, but tensions with mexico are rising again. a live report from the border is coming up. the bull and bear case for tesla. first-quarter delivery numbers will be in focus as elon musk's legal team prepares to head to court over, well, what else, a questionable tweet. and this hour, the first big read on hiring in march. adp payroll data is coming your way in just minutes. it's the final hour of "squawk box," and it begins right now.

>> announcer: live from the most powerful city in the world, new york, this is "squawk box. 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 and andrew ross sorkin the futures right now indicated up by 88 points on the dow, 42 on the nasdaq, the s&p up 12 and andrew, senator warren -- >> yes, news just in to tell you about this morning from capitol hill democratic senator elizabeth warren introducing some legislation that would make it easier to criminally charge executives for a company's wrongdoing it would widen criminal liability to include what they're calling negligent executives of companies with more than $1 billion in annual revenue. however, the bill is not likely to get through the republican-controlled senate we're going to have a lot more on this story later in the hour, but the idea of a negligent executive would really widen the scope and make -- i mean, the

idea is to put board members and other executives on the hot seat to make them even more responsible for what takes place inside these companies -- >> so that you could go after people if they were just stupid, not just if there was criminal wrongdoing as well. >> exactly. >> republican senate. >> it's not getting through. again, though -- >> i know! let's have the discussion. >> by the way, in the wake of the financial crisis ten years later, worth having the discussion i'm actually surprised nobody ever brought this up prior. >> can we vote on it, or -- >> no, of course we can vote. >> are you going to vote present again? >> you can vote on this. >> it's not going anywhere she's running for president. >> she is running for president. >> call it what it is! go ahead. all right, here are the other stories that investors are going to be talking about today. chi china's vice premier is in washington today as trade talks are set to resume. he is expected to meet with trade representative robert lighthizer and secretary steven mnuchin. it is reported that they are

closer to finalizing a deal. the report comes and quotes a chamber of commerce executive who said 90% of the deal is done but the final 10% remains the trickiest part and will require trade-offs on both sides the pilots of the ethiopian airlines jet that crashed last month did at first follow emergency procedures laid out by boeing, according to the "wall street journal," quoting people who were briefed on preliminary findings of the crash investigation. the paper says that the ethiopian air pilots turned off the flight control system that was pushing the plane's nose down, then they turned it back on when that move was ineffective. the "journal" says that's likely because manual attempts to raise the plane's nose failed. and we are awaiting the latest payroll data from adp, which will give us a critical look at hiring in march. those numbers are due out at 8:15 eastern time. economists are looking for an addition of 173,000 jobs last month after february's 183,000 jobs that were added, and that means that friday we will see the government's jobs report,

too. stocks on the move, caterpillar was downgraded from hold to buy from deutsche bank, based on concerns that growth in the heavy equipment-maker's back log will disappear in the next few months signet jewelers reported a quarterly profit of $3.96 a share, beating estimates a 2% decline in same-store sales was slightly bigger than expected. president trump and his national economic council director, larry kudlow, both weighing in on the potential for a border closure with mexico scott cohn joins us now with more from san diego, california. scott, good morning. >> reporter: good morning, becky. the president is sticking with that threat to shut down large portions of this border, even though he now says that mexico is doing just what he demanded a few days ago and starting to crack down on illegal immigration. >> if they keep doing that now, if they don't or if we

don't make a deal with congress, the border's going to be closed, 100% >> reporter: well, what about the economic impact? well, the president said yesterday that security is more important to him than trade. so, elsewhere in the white house, they are looking at ways to blunt the shutdown's economic consequences >> we're watching it and looking for ways to allow the freight passage. some people call it truck roads. and there are ways you can do that, which would ameliorate the breakdown in supply chains >> reporter: experts are skeptical about that and there may be more pressing issues to deal with anyway as homeland security moves more resources away from these ports of entry to elsewhere on the border it's creating backlogs at the big otay mesa port of entry not far from here. they were looking at big delays yesterday, dozens of trucks

still waiting to be processed. wait times yesterday of up to four hours and of course, here at the border, guys, time is money. >> that is true. and i wonder, scott -- we're going to talk about it now -- but the president said i'm more interested in security than trade. i don't believe him. i mean, i understand what he's saying because he's still making that point, but this -- i mean, look at all the other stuff we're doing with trade right now, trade and the economy i just can't imagine that billions of dollars that he would be willing to sacrifice that to make this point. do you really think that that's in the cards, scott? >> reporter: well, you know, as you were listening to the remarks yesterday, there's clearly a lot of posturing going on, but really -- and it's hard to imagine -- as he started to walk things back a little bit, saying that mexico is now starting to do some things -- that they're actually going to go through with a shutdown, but there is this issue of a huge

amount of migrants now arriving at the border seeking asylum and homeland security displacing all of these agents, hundreds of them it is creating some real issues at the border, and that alone, as we were talking about yesterday and we've been talking about throughout this -- that alone could lead to at least a slowdown, certainly not a shutdown of the $1.7 billion in trade every day, but it's an issue. >> yeah, the conversation's changing a little. even jeh johnson acknowledging that, you know -- the former obama cabinet member -- that there are some serious issues, humanitarian issues, and you know, the guys getting just swamped with -- guys and gals getting swamped with what's happening. let's talk more about this, scott. the rail industry's also concerned about a potential border shutdown with mexico. joining us now, ian jefferies, president and ceo of the association of american railroads. and when you're doing contingency planning, ian, i don't know whether you set

percentage possibility numbers to things that you worry about is this on your radar as a real viable possibility at this point, or do you not really believe it could happen? >> good morning. thanks for having me we are absolutely acting like it is a viable, real scenario, because quite frankly, the consequences of a shutdown would be devastating not only to our industry but to our customers. the rail industry specifically 50,000 jobs rely on international trade, the export market for grain and corn out of the u.s. into mexico is massive. mexico's the world's second largest importer of those products and at a time when our farmers are facing challenges with floods throughout the midwest, shutting down that market would be pretty catastrophic mexico's the world's largest export market for the u.s. chemical sector. again, you know, we've got an integrated north american supply chain, and shutting off that ability to move back and forth

across the border would have largely immediate impacts across any number of sectors in our economy. >> yeah, i understand what the consequences are that was my point. so, knowing that the president's aware of these consequences, you think it's a 50% possibility, a 20% possibility, 80% i mean, what's a realistic number for whether you think this is something that you're actually going to have to deal with >> well, we have to deal with it as though, you know, it could be reality. at the same time, we were encouraged that mr. kudlow and the reports that the administration is looking at ways to potentially keep commerce moving during a heightened security increase on the border we certainly understand the need to have safe and secure borders, but you've got to balance that with the free throw of commerce. so we have to take the administration seriously when it brings up the notion of a shutdown or even a slowdown at our nation's freight ports

>> we've just seen this movie before with president trump, though i mean, we know when he's making a -- you know, he's making a point. and a lot of times in making the point, the worst-case scenario doesn't really come to pass and some of the threats -- >> by the way, isn't that what some of these other senators and other folks have proposed, not related to the wall, but in the conversations we've had in the past two hours about tax proposals and those sorts of things >> i don't -- that sounds like the most -- no, this actually has a chance of forcing people to -- i don't know maybe you're feeling sensitive about your side of things that -- you're bringing that up in the -- >> i am. >> that's silly. anyway so, ian, i look at these numbers. these numbers have got to be -- i mean, they've got to be apparent to larry kudlow i'm sure he knows the exact numbers that you're talking about. he talks to trump. trump -- i mean, there's no way that -- i mean, in terms of

economic activity, i hear the rhetoric about security, but i just, i can't imagine that the worst-case scenario would come to pass. but you're certainly hopeful. >> we're hopeful that's certainly not the case and again, we think a balance can be struck and the economy and the trading relationship with mexico's too important to shut that down >> all right, ian. thank you. we should know in a couple of days how likely this is, i guess, but got a lot less likely yesterday from what we saw coming out of the white house. anyway, thanks. >> thank you for having me. >> okay. coming up when we return, a key look at march jobs data. adp numbers are due out in a couple minutes we will have those for you first thing when "squawk" returns in st ment. -driverless cars... -all ground personnel...

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ended up staying on at&t however, they took a lower carriage fee from at&t, and that was a big question mark. we are now seconds away, we should say, from the adp private payroll report and steve liesman is with us on set, and i believe, sir, in about three seconds, you will be allowed to tell us the number. >> thanks for covering me on that 129,000, adp reporting that private payrolls rose 129,000 in the month of march that is below both the estimate for adp itself and below the estimate for friday, and maybe enough below that you might get some tweaking of the estimates out there on the street. >> 117,000 was the estimate is this. >> that was the estimate for adp and 170,000 is the estimate for friday adp's been a little bit on the high side, and i will tell you, interestingly enough, they doubled down on their estimate for february remember february was the big disappointment, around 20,000? they raised their february estimate by 14,000 to 197,000,

so they don't think that the government has it right. and by the way, there's considerable debate on the street which number is the right number there's where you saw the shortfall there. small business up only 6,000 with the category of employees of 1 to 19 actually losing work. we've seen small business optimism fall off. i don't know quite what's happening there. becky becky? >> it's the first year of a new tax law, a lot of individuals trying to figure out what they owe. i wonder if businesses are, too. big businesses have figured it out well in advance. if you have less than 50 people, my guess is they're waiting to see what happens. >> a couple friends of mine run small businesses and they have no idea. i think i said this story on air before, but i'm raising money for a charity right now and i had a friend of mine say to me, i will give you money after i meet with the accountant and i find out what's happened to the s.a.l.t. deduction he met with the accountant and was told he should be giving 25%

of what he gave last year. >> because that's how big of a hit he's taking -- >> he took a huge hit on s.a.l.t. and the interest deduction. >> i mean, small businesses, not that the businesses saw their taxes increase, but the owners of the small business may have seen their taxes increase, which makes them wonder how much they can invest back in the business. >> now you have the pass-through thing, so don't forget that. where's robert frank when you need him he knows about all this -- >> but if your personal taxes go up, you think i don't have as much money as i would. >> peter bookfar saying we are underestimating the results of the s.a.l.t. impact. i looked into this 90% of taxpayers in the top quintile are estimated to have gotten a tax cut this is tax policy center data, of around $8,000 10% took a whack of around $7,000 maybe the 10% are talking loudly or the tax policy center estimates are wrong. >> or maybe you don't know, you're waiting to see if you have a big tax bill to pay for the year or not. >> it's something we need to

watch, and we don't know it affected a lot of the blue states quite a bit let me give you some other data. education/health services leading the pack if you have seen that before, it's because they always lead the pack, up 56,000. and the construction number down 6,000, had a lousy month as is manufacturing. here's a quote from mark zandi, who puts this together but couldn't join us says the job market is weakening with employment gains slowing significantly across most industries and company sizes businesses are hiring cautiously as the economy is struggling with fading fiscal stimulus, the trade uncertainty and the lagged impact of fed tightening if employment growth weakens much further, unemployment will begin to rise. i'm not as pessimistic as that, i want you to know, for what it's worth i think this is the slowdown we've been waiting for it's not the slowdown that's coming the slowdown is here right now >> sure. >> i will say, though, that jobless claims have been pretty healthy, down in that 211,000, lower 200,000 range. the jolts data is not getting

any better in terms of job openings, but it's leveled off at a very high level so i'm not ready quite yet to write off the jobs business, but the slowdown both in gdp and the follow-along of slowdown in employment, it's here, and if this is where we settle, it's good it's good numbers. 2%-plus, and then still 100,000-plus on jobs. >> that's not the way of the universe, though you're either always getting better or getting worse, moving towards more chaos or moving away from it. >> this is a little bit heretical, but it might be worth saying, the fed kind of wanted this to happen >> basically always moving towards more chaos >> unless -- >> in the physical world. >> but if you stop -- you're never finished with your house, you know if you stop fixing, things start to fall apart. >> but joe talks about the idea that your house is always falling apart. >> that's why you have to always work to try and keep order you can never coast -- >> it just means buy home depot. you need to take something away interest this. >> right

>> zandi's been negative for a while. >> he's been negative. he's very negative -- >> on the views that we'd run out of workers we miss outed out on alan krueger. he had some words -- >> alan said until the very last time i talked to him that he was correct. >> that's what i thought. >> and i'll tell you why he said he was correct, just very quickly. he said so long as more and more people are coming to the workforce and the unemployment rate was falling, we were not, he said, adding into the workforce on that. that was his idea. there's been some stories, though, that we have been able to level off the decline of the participation rate that everybody forecast because of retirement so you have this force of people leaving the workforce because they're retiring but also the force of a better economy drawing people back in, and that's created a stalemate in the participation rate, which is not what was expected. it was expected to continue to decline. >> i'm glad you brought that up. we miss alan. >> we miss alan krueger. >> yes, we do. >> is chaos and enterpaey the same thing i'm talking about moving towards maximum entropy, which is one of

the immutable -- >> i mix up two words in physics. one is the tendency of systems to fall apart. is that entropy or -- i think that's the idea. now, whether or not the universe is falling apart could we get a little "star trek" music? >> don't rest on the laurels -- >> it's the state of a physical system at its greatest disorder, and it moves towards that, which happens between six and nine -- >> so hard to pull together. >> it happens between 6:00 and 9:00 every morning. >> every morning. >> big bang. we keep moving steve, thank you. >> for what? getting it together or pulling it apart >> just commenting on what we're doing. when we come back, the analyst behind this morning's downgrade of caterpillar the dow component dipping as deutsche bank calls peak earnings we're going to find out what drove this call when "squawk box" returns caterpillar shares down about 55 cents.

ackman is a liar, okay and i'll tell you, he's like the crybaby in the schoolyard. >> he is a bully, okay this is not an honest guy. this is a guy who takes advantage of little people. >> on wall street, if you want a friend, get a dog. >> carl, why don't you just come clean on the herballife thing? >> i didn't get on to be bullied by you, okay >> i'm not bullying you. i'm asking the question everybody wants to know. >> i'm not going on a show with you again, that's for damn sure, okay welcome back to "squawk box. the futures right now indicated up 82 or 83 points, as we can see now on the dow the s&p indicated up 11, and the negative just under 38 points right now. dow would be going a little bit better without caterpillar, i think. >> it would. caterpillar's down last i saw by about 55 cents take another look at it. the construction and mining equipmentmaker was downgraded this morning to a hold from a prior buy rating at deutsche

bank the target price was also lowered to $128 from $152. joining us now on the squawk news line is the analyst who made that call, chad dillard and chad, you've got kind of a three-pronged approach here to why you're downgrading this stock. if i'm understanding it correctly, you're concerned about europe being worse than anticipated, about the slowdown in china still being in full effect, and then in the united states, already maybe too much machinery equipment that's here on the books is that a correct assessment of it >> yeah. it's becoming increasingly clear that caterpillar's approaching a negative earnings cycle. historically, earns get cut by 45% and shares fall about 40% and we see downside risk to numbers this year and next cat's negative earnings vision cycle typically begins within a few months of back log turning negative and this is becoming increasingly clear this would happen next quarter. synchronized global growth has collapsed and 55% of cat's sales are coming from outside the u.s.

second, the china land cycle's rolling over and that's about 45% of sales that's indirectly or directly influenced by the cycle. third, europe is slowing more than expected and that accounts for about 25% of cat's sales and fourth and finally, the u.s. is oversaturated with construction equipment and that kpts for about 25% of sales. equipment percentage of gdp is at a 40-year high and typically declines 15% after reaching the peak on that back drop, i think the risk-reward is pretty balanced, so i'm stepping to the sidelines today. >> chad, when i saw your note, i was interested by it obviously, we watch caterpillar closely and all of these macro calls are important, but this is the same time where the markets have suddenly thought, okay, maybe things are bottoming in china. we saw better-than-anticipated manufacturing activity coming out of china when we came in monday morning, and that has a lot of people thinking, okay, maybe the stimulus that china's been pouring into things is actually starting to pay out if that's the case, is this a backward-looking call? >> yes, i think it's a couple of important things to understand

so, first of all, the numbers actually work on a bit of a lag, so you know, what's actually flowing through in our model was a pretty negative revision from the last six months or so. and then secondly, if you look at just, like how the land cycle trends, i mean, we are 35% above the prior trough and historically that's been the high water mark. so if you look at how that cycle typically plays out, there's probably a little bit more down side to go from there. >> do you have a price target? what was your price target what is your price target? >> so, currently, price target is $128. prior price target was $152. >> okay. is there anything that would change your mind would there be economic numbers you'd be watching? would it be a situation where you thought there was going to be more business investment in the united states, potentially more growth or even an infrastructure deal? >> yes so, the number one thing i look at is how synchronized the world

is in terms of growth. so over the last 12 months it's gone down from about 80% to currently around like 15%. so if we see that starts to inflect, i think that's a positive sign, but at the same time, you know, it takes several months for that to actually flow through caterpillar's numbers and actually see that materialize on the bottom line >> chad, thank you for your time today. again, chad dillard, who's a deutsche bank analyst who downgraded shares of caterpillar today. a lot more coming up on "squawk box" this morning. is it time to buy or sell shares of tesla the electric carmaker getting set to record first-quarter deliveries and we're watching. we'll debate the case for that stock. aneld on musk, stay tuned. you're watching "squawk" here on cnbc

welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. here are the stories investors will be talking about today, some of them, perhaps.

the justice department has sent a warning to the motion picture academy. it says a proposed rule to exclude netflix and other streaming services from receiving academy awards could raise antitrust concerns the academy is set to meet on possible rule changes on april 23rd maybe we've already seen an example of this. >> i was just going to say, it doesn't matter anyway. they vote on who they want to vote for if they don't want to vote for any, they'll not vote for any netflix players. >> this is attributed to why "roma" didn't win. >> so they can say what they want, but the academy is still going to get to vote and if they decide to blackball you, they'll quietly do it. >> collusion, more collusion americans are -- we need a special counsel. americans are rushing to refinance their mortgages as rates drop the mortgage bankers association says refinancing activity jumped 38.5% last week, highest level in more than three years overall, mortgage applications were up 18.6% last year. and recapping the adp

employment report out just a few minutes ago, the u.s. economy, according to adp, added 129,000 private-sector jobs last month that, however, was below the consensus estimate of 173,000. investors are still waiting for tesla to release its first-quarter delivery numbers phil lebeau is here. and phil, we thought maybe the numbers would come last night. we thought maybe they'd come this morning -- >> welcome to my world >> waiting for guido. >> i wouldn't be surprised if they wait until after the close and i'll be back here it. >> any chance you think it happens at 9:00, 9:15? would they do it like that >> it's possible but theoretically, i don't think they would do it, but it is possible i mean, you would think that it would be out by now, and that was sort of what everybody was expecting. >> last quarter it was 163, was it, or 168 i forget -- >> but the real focus is, and i think we have a wall that shows the model 3 deliveries that's the main metric everybody's focused on

and the expectation is -- it's not going to be what it was last quarter, which was just over 63,000, but keep in mind because of the expiration of the federal tax credit here in the united states, the expectation was that you were going to see a pull forward in terms of deliveries, and then in the first quarter -- if they deliver around 55,100, that's the general expectation that's out there, we might -- >> how much wiggle room is there? if they come in with 50,000, if they come in -- what's a number where the street might say -- >> really hard to tell. >> yeah. >> really. it is. because i have heard -- i've talked with a few analysts who have said, boy, if they don't come over 50,000, that to me is a bad sign i've had others say, come on, we're still in that lumpy phase here where you can't read too much into it >> okay. >> we want to talk a lot most are about tesla. we have two guests on this topic, which i think i should say have very, very different viewpoints our bull and our bear, craig irwin, managing director and senior research analyst at roth

capital partners we wanted to get you together because i think you do have such divergent views about the future of this company. let me start with the bull case, but let me ask you this, what do you think's going to happen this week in terms of what happens in court? when we talk about what these numbers say and what happens in court and whether it matters >> sure. well, for the court case, you know, not a legal expert, so i certainly can't say for certain. but we have heard musk and tesla say that on the production tweet, you know, the stock really didn't move that much, but it did move on the announcement of the investigation. so when we compare this to the take private at 420 tweet, i mean, an obvious mistake musk admitted that and paid for it this doesn't seem as bad, but we'll wait and see we're not too concerned right now. >> would you be concerned if he lost the ceo title >> we'd certainly like him to stay on as ceo for us, the biggest opportunity for tesla is the autonomous opportunity. so until they get a fully autonomous car, we want musk to

stay at the helm, for sure. >> we talked about autonomy earlier, and given the rising concerns that it's going to be -- we are a long way from autonomy what's your take on where we are? >> so, we actually did a podcast with musk, and he told us that tesla would be feature complete by the end of this year. and what that means is the driver still has responsibility. he thinks in another year from now, so 2020, the driver could fall asleep behind the wheel and the car would just take over now, give that musk has very aggressive timelines, we think it's likely say 2021 or 2022, but considering tesla's data advantage, we think they could be first to market in what will be a natural geographic monopoly market and it's worth $2 trillion globally, and it's virtually unaccounted for. so this is a huge opportunity. >> and your price target on this company in the next 24 months would be what? two years out. >> so, we're long-term investors, so our price targets are five years out our bull case with tesla with autonomous is 4,000. >> greg, you have been shaking your head, but i think inside your head, you are

>> yeah, there's one thing i agree with you know, elon musk, whether or not he keeps his ceo title is completely irrelevant. it you could put him in one of his rockets, accepted him to mars and he's still going to be the most important person to tesla. so if judge nathan wants to hold him in contempt has a pretty tricky issue to deal with. you know, it's a great company they deserve a lot of credit for what they've accomplished. and i think there is potential for some significant drama in the courtroom. >> okay, but you don't think the stock is worth $4,000? you don't even think it's worth what it is on the screen right now. >> no, i think we have to take a close look at what the actual battery prices are there's hard economic data out there. bob lutz has been talking about this for a couple years. i have the data, right $240 a kilowatt hour is what they're pay takiing for cells of japan. the cost to giggo factories is higher and what is porsche and vw paying? wv's paying $240 a kilowatt

hour there is no advantage at tesla it the cost of the batteries are too high for the numbers people are projecting -- >> and that's the basis for your bearish call >> absolutely. >> so it's not about autonomy or all of these other things she's talking about? >> it's the fact that the cost of the cars is way too high. they're too expensive. >> tasha, you buy that >> so, on a range-per-kilowatt basis, tesla has the most efficient batteries, so other automakers that are undercutting them on price are likely sacrificing performance. so this is what's going to allow tesla to produce a car that performs well for cheaper than competitors. and we've already heard signs of this in the news there was have aarticle saying that porsche and audi had done a teardown of the model 3 and were basically scared because they realized exactly how cheap tesla was able to produce this car and they had to rethinkthings themselves >> i agree with her on the battery issue. sam jaffy at karen energy research who tracks battery per kilowatt hour and cell cost per

kilowatt hour has tesla way ahead of their competitors now, that may differ with what you have, but i buy into what sam's saying in terms of the cost advantage there now, are they at a point where they are going to be making money on these vehicles at a lower price point, say $35,000 no they're not there yet. but they are ahead of their competitors in that regard whether that holds -- >> right. >> -- is the big question. >> when do you see these competitors coming online in a meaningful way in terms of true competition to the tesla >> starting this year. that's why i chose to initiate with a bearish perspective, right? porsche going to come on, you've got the kia -- >> how many are they going to sell >> the kaien, first 10, then 20, then it became 40. it ramped very, very quickly they set expectations low, make a lot of money on the front end and ramp and porsche, it all depends. their business is making money, right? they're not about, you know, fluffing numbers so if they think they can sell

30,000 cars into the market over the next, you know, 18 months and make great profit on it, they'll do it, right but they're not going to flood the market to a point where, you know it compresses margins. >> do you think that poses a real problem >> i do think -- well, i think it poses a problem for tesla from the standpoint of let's finally see this vehicle i honestly believe based on tesla owners that i've talked with as well as those who track the company, we're tired of hearing the competitors are coming, the competitors are coming bring it out bring it out and if porsche's tykon is as impressive as the initial indications are, then it will a threat to tesla, but until then -- this is a little bit like the boy cried wolf. we hear it all the time, there's a wave of vehicles coming. well, it's not here yet. it was supposed to be here by 2019 it's not here yet. when does it get here? if i'm a tesla investor, i'm not too worried about this argument until we start to see these vehicles. >> right how much of the sales do you think is going to be driven by the autopilot autonomy feature that i think you're betting on is such a big component of all

this >> >> yeah so, the way we look at tesla is we think they're three years ahead on a few fronts, batteries, autonomous hardware and autonomous data collection they're the only automaker collecting data off of customer cars on the road, which allows them to basically train their machine learning algorithms at a much more accelerated pace than anyone else testing autonomous technology what this means is they have much more scale, they could be first to market, and we think that autonomous cars will be very cheap, autonomous taxis, on a cost-per-mile basis will be extremely competitive to consumers. so these will be fleet sales >> so you think that tesla is going to get into either the fleet business or do you think they actually get into the ride-sharing or services, car service business effectively >> yes so, they've said that they're going to launch the tesla network, which was basically their autonomous version of uber and just today we heard that tesla is going to do an autonomous investor day later this month.

>> when do you think that happens? what's your time horizon not the elon musk time horizon, because you often have to add 12, 18, 24, 36 months to get there. >> yeah, i say give it another year so 2021 they could have a fully autonomous vehicle. >> do you agree with any of this >> you know, what i think people really need to focus on is the battery. i was in florida last week and met with multiple suppliers of equipment to tesla there's nothing fundamentally different to what they're delivering to apple. apple's building multiple drivers right now. or any one of the chinese companies than what is delivered to tesla your supply chain is your cost there is a lot of bad research out there. traditional bad research on the sell side starts with the conclusion and walks backward. i think people need to check the hard economic data and take a close look and diligence that. >> tasha, i think it's crazy to think autonomous vehicles are going to be here in any form, and i'm not blaming tesla for that i'm talking about all the potential for bad things to happen, like the hacking, like regulations, like anything that

comes in i don't anticipate that happening. does that change your stance if there's not an autonomous vehicle here >> so, one i'll say, i think the technology could surprise. and we saw that earlier this year, actually -- >> it surprised me yesterday when i heard about the hacking with the stickers on the ground. that surprised me. >> yes so, in general -- so, for the technology to be ready, if you look at something like the deep mind win against starcraft, that happened years ahead of what you would expect, given what we'd seen in the past in terms of improvements -- >> i understand the ability to do it, but the ability to tamper with it and the ability for it to actually be on the roads where people's lives are at stake changes. >> sure. so the thing about the hacking that you have to remember with tesla is they're the only automaker that can do over-the-air updates that can fix something likethis -- >> after there is an accident. >> and yes, there will be accidents, but they will be 80% safer than -- >> and it will be a programmer's fault when that happens, it will not be the operator of the car whose fault that will be i just see that being a huge -- >> yes, on the technology provider they will take the liability >> for autonomous vehicles and

for legalizing pot and if you think about it -- >> i was thinking all the things that annoy me -- >> but we can legalize pot once we have autonomous drivers, because then it won't matter then you won't have to worry. >> you bet on all those long-shots you put your money there, joe. >> you could drink, you could do a lot of things. >> but they're related if we have autonomous vehicles, you don't worry about the pot. >> that drives me nuts. >> thank you >> sorry, this is my kick since we heard about the hacking thing yesterday. we've been talking about it the entire time. >> autonomous vehicles i'm not worried. all right, coming up, countdown to the opening -- is he hot at all what happened -- >> we're going to talk to market watcher mark grant he says bopd investors are living through hell right now. yes, seniors on fixed income now we're going to tax the capital gain for mark-to-market. that's great yw, ayun t"sawk box" on cnbc great trip. thanks to you, we will. this is why voya helps reach today's goals... ...all while helping you to and through retirement. can you help with these? we're more of the plan, invest and protect kind of help... voya. helping you to

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welcome back to "squawk box," everybody. democratic senator elizabeth warren is introducing legislation that would make it easier to criminally charge executives for a company's wrongdoing ylan mui has been looking into the details and joins us with more on that. >> cnbc.com got exclusive details of that new bill from senator warren that would make it easier to put corporate executives in jail this bill creates a new criminal penalty for executives, even if they did not personally approve the actions that broke the law executives who are found negligent would face up to a year of jail time for the first offense and up to three years for the second offense this penalty would only apply to

executives of companies with $1 billion in revenue or more warren's office said that the bad behavior of repeat offenders like equifax and primarily wells fargo, she said those are the catalysts for this bill. obviously, she has done battle with their ceos before and in a statement, she said that corporations don't make decisions, people do, but for far too long, ceos of giant corporations that break the law have been able to walk away while consumers who are harmed are left picking up the pieces." guys, these are the themes that are the bedrock of her presidential campaign, so i do expect we're going to be hearing a lot more about this on the road to 2020 you can read the full story on cnbc.com. >> tell that to bernie ebbers and jeff skilling and ken lay and, i know a lot of them that have done time, just not the ones -- i asked you, who do you want to throw in jail for the financial crisis you got one for me >> i don't have a particular one, but i think there has been a big question about where negligence lies in all of this.

>> well -- >> and whether there was a different standard -- >> but you have a better idea than any of these senators who are looking at this. you have a better idea than any of these guys. >> wait a minute, senator warren's prospects went from 3% to 3.1% now based on this idea this is not going to get her out of the -- >> look, i don't know all the details, but i'll put in a name for you, angela mozilo >> huh, that's interesting what about dick kolb >> probably a closer person. >> you've got libel insurance? is it libel or slander -- >> it's slander if you say it, libel if you write it. "s" for slander, "s" for saying it. >> you asked the question. >> it's an interesting question. >> you had trump guilty of collusion, too, so you should wait until you had the details -- >> i don't have trump guilty of collusion. >> you told me -- all right, i thought you did. >> no, guilty of being surrounded by people who were involved in all sorts of other -- in the meantime, treasury yields pulled back a little bit yesterday due in part to brexit

fears. our next guest says that bond investors are living in hell at the moment joining us to explain what he means is mark grant. he is chief global strategist for fixed income at b. riley and i think this comes from a discussion point youfdr, b riley. mark, this come frs a discussion point you brought up last week around the world there is a massive amount of debt but now trading in negative territories. bonds we are seeing all over the place. what do you mean by living in hell there is too many. they are $9.7 trillion in negative yield in bond it is ridiculous that's up 50% since september while obviously if you own negative yielding bonds, you know, you are in no man's land

and the other big issue i see in terms of bond hell is the european situation and with brexit and what the press have not focused in much, britain is not going to recognize e.u e.u. is not going to recognize british law. they're hundreds of billions of dollars of debt in europe that are under government they're going to end up in no man's land or probably revert to the country of origin which is going to cause a major problem for the owner of that debt the market will consider that? are they not trading at levels reflecting it now? >> that's correct becky. i don't think many people understand it is complicated and the risks and the securization and so forth

i have to say if there is some kind of hard brexit, the bank as far as i am concerned and europe and britain both are going to be imperi i imperial with and have no idea of what kind of bank obligation they have. i have been telling out of the box my commentary to stay out of putting money on europe. >> do you think our stock market is whistling down the graveyard when it is continuing to climb after the gains we saw last quarter? >> i was listening to you this morning, you are talking about the inclination of the universe. the biggest threat right now to the bond market and the equity market as well is what's going on in europe and i just don't think people been appropriately

focused on this issue >> you think we gotten a little bit irrationally exhuberant. the other issue i want to bring up is even as important than nobody is really focusing is the may 23rd elections, the nationalist in poland, hungary and czech republic this is going to break the cycle of france and germany running the european union it is going to damage it or break it i am also very cautious about that which is why i say the large money man i do business with, keep your money in the

united states, much safer. >> mark, thank you, it is always great to see you >> mark, those glasses have a name it is called the caviar goliath. >> is that good or bad, joe? >> ultra eye glasses -- well, interesting. maybe jimbo knows. anyway, thanks mark. >> thank you, joe. >> let's get down to the new york stock exchange, jim cramer joins us now >> yeah, that works. >> probably goes with a lot of violence where are we going, jim. >> i got to tell you, there is some merit to it

buyer's wrong doing. there is a big fine, who pays it shareholders, that's ridiculous. there is got to be some sort of way that we make it until the individual is punished and not the shareholders these guys don't feel any pain it is the shareholders that feel the pain >> bribiing each other the ceos and executives are bribing the justice department, right? and justice department is bribing the company using shareholders' money. >> how much money when it comes to -- jaime dimon says all right, i did everything i could. i bought these companies and i save you the trouble to bail these guys out but i get a $5 billion fine. you get a shake down and that does not go to shareholders either >> hold the bearstein executive

accountable. >> that's so unfair. i am talking about the idea that we have executives who are rooted to companies. they got a huge amount of money and shareholders pay when they sue the company. jaime dimon never alluded -- >> senator warren was flipping houses in the housing bubble it is a societal, like a manifestation of what our entire society was in on that housing bubble and these guys -- i just think we have to stop letting the shareholders be heard. >> that's a good point i hate the shareholders being bad. >> anyway, thanks, jim, we'll see you in a few minutes coming up on "squawk alley,"

don't miss an interview with ibm's ceo, ginni rometty stay tuned "squawk box" will be right back ♪

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a quick final check on the

mark t market nasdaq is opening higher as well 42 points higher s&p 500 looking to open about 12 points higher. i don't want to stay on the back of but we'll be watching today and talks are underway with china. the china trade deal with the premier is here. make sure you join us tomorrow "squawk on the street" begins right now. ♪ >> good wednesday morning, welcome to "squawk on the street," i am carl quintanilla, with jim cramer, david faber is off today. european pmi is better than expected, too.