do we deserve this does anybody we love this "squawk box" begins right now. 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 check out the u.s. equity futures. another update from the market yesterday. in fact, we have now seen five up days in a row for both the s&p 500 and the nasdaq right now it looks like those futures are indicated slightly higher but could go either way dow futures indicated up by five points >> woel talk more about that too because october has been -- hang

seng down just slielgs, and the shanghai composite was up by 1%. then in europe where there is some active trading that's taking place right now, mixed board. dax is flat. you do see some red arrows coming into play both in france and in london. the cac off by a quarter percentage point the ftse down by half a percent. check out what's been happening in treasury markets. the yield on the ten-year is now sitting at 2.5%. >> breaking news overnight the ethiopian government out with its preliminary report on the investigation into the crash of a boeing 737 max jet last month. and phil lebeau is here in the flesh with the details there are comments from ethiopian authorities in a very broad, general sense we want to see more of the details. the overall take-away here is

what we reported and confirmed independently yesterday is that the pilots at least initially, followed the procedures that boeing laid out in order to how to disable the m-cast anti-stall technology within the airplane shortly after takeoff. then they, for some reason, inexplicably, turned it back on shortly before the crash, whic made the situation that much more dire, if you will, for the pilots those are the sensors that feed the data into the m-cast software system. my understanding is that one of those sensors, the fed the data in, may have been damaged at takeoff. potentially friday a bird strike, which would explain why m-cast malfunctioned in that's

what happened here the black box details have not been handed over broadly where is all this other information of other people saying, oh, there was a bird sfriek, the pilots were actually doing this where is all that of other information coming from? >> it's coming from people who have been fed data, who have been fed an analysis at least initially from the ethiopian authorities. as that has circulated, some of the details have come up that's why people were hoping this morning that they would say here you go. here's what we have in terms of an actual initial report what we have so far is a press conference >> like the mueller report >> i want to see details, and a lot of people want to see some details here >> it means it's not going to go to rest. we're not -- >> oh, god, no no, no, no you saw what the faa said late yesterday that they are forming a technical review committee of

to review any software fix this is getting slow-rolled. they're going to take some time looking at it. zoo part of the training a pilot is supposed to get is if there is some type of like a bird strike, that would -- >> no, that's separate that brings into the question why was false data or bad data being fed into the system? >> is there a procedure with that system where you -- if it's malfunctioning, because of the sensor is messed up, do you turn it off are you told to just turn it off? >> part of the training is to understand when the m-cast anti-stall technology is pulling the notices of the plane down. >> the sensor gets to why was false data or bad data being fed into the system?

that is separate from why the pilots corrected >> fits not working properly, what are you supposed to do about it >> correct and by all accounts, what we're hearing out of ethiopia is that the pilots at least initially followed the procedures that boeing had laid out in november following the lion air crash >> phil is here, skps we've got a couple other stories the tesly delivery numbers missed expectations and missed them badly >> have you seen the stock premarket? it's down to 271, down 7%. good reason. these are ugly numbers these are below what people were expecting. i think or you're going to see the analysts coming up with notes today saying wait a second

>> you have the headline risk in the afternoon with the -- >> we're no longer production hell anymore, by the way they're almost over producing the cars at a relative basis >> right right. >> now, there's a bit of a -- there is a bit of a lag here because you were feeding the international market, so you got that production and those vehicles that are in transit strip that out, however. these numbers in terms of model three, far lower than were expected the numbers you are looking at here, the fourth quarter at 63,359, they delivered 50,250 for the first quarter. we knew that there would be slower demand in the united states because you had the end of the federal tax credit and -- >> a second wave of tax credits coming off in the summer, too. >> get those down. >> what's the number we're looking at of 3 here >> that's the fourth quarter

>> no, on the fourth -- tesla shipped 63,000 vehicles q1 missing expectations >> that's total. that's total >> that's not -- you're not talking about the did. >> model three is what everybody is focussing on. that total number was supposed to be 76,000 that was the expectation >> and the -- and it was just the model three. >> model three expectation was 54,100 they came in at just over 50,000 >> is there any catalyst that you see that's going to increase the demand picture to match the production now that he has the production kinks out of the way, what happens? it just feels like the story is now shifting in a very different way. >> it's shifting because the big question is how much -- second quarter we get a full quarter with china, provided there are not these ridiculous issues in terms of licensing vehicles at the port we'll get a better sense of that demand in china, and we will have a clear picture as to just how much of that demand is the

model three -- going to be model three alone, versus pulling away demand from the model s. that's the other issue >> help investors who maybe like myself spent too much time on twitter and see these images and videos of pashing lots full of teslas >> i've seen these there are a couple of issues at play here. one, their distribution system, it's a lumpy system. they pash these vehicles, and then the vehicles are then shipped off for final distribution you can take a picture somewhere and say, aha, we have a parking lot full of model threes they can't sell them i know people around the country who have seen them in parking lots full, and they've said, well, they're there. and then i'll hear back from them two or three weeks later. there's no model threes on that lot. yes, because they finally were delivered to somebody. that's part of the issue that you have to keep in mind >> phil, stick around. we're going to want your insight on this next story

>> yes former nissan chairman carlos ghosn is behind bars again japanese authorities re-arrested him early this morning on suspicion of aggravated breach of trust prosecutors are reportedly building a new case against him over payments made to an auto dealer in oman ghosn for his part called the arrest outrageous and arbitrary and said it was part of an attempt by some people at nissan to silence him the arrest comes a day after ghosn tweet from a new twitter account, i'm getting ready to tell the truth about what's happening. a press conference on thursday, april 11th i guess -- >> that's off. >> yeah. >> i don't know. >> exin time maybe don't give him a heads-up >> maybe >> they are bound -- >> maybe the press conference would be through glass on one of those phones you know how they have midnight express? oh, billy. >> in a statement overnight

ghosn said prosecutors have now denied him that opportunity, but he is determined that the truth will come out, and he is going to be vindicated, so he says >> okay. by the way, now he is in for the next -- the other piece he is definitively in for nine days. there's a whole other separate piece to this. >> i had heard also that his wife had her phone taken away from her passport, too >> it's remarkable it's remarkable. and, remember, you know, people say what is this going to say about japan? what is this going to say about doing business with japan? the olympics are going to be in japan, and it's supposed to be a huge -- there's a conversation going on right now i've heard in the business community about whether this gets wrapped up before a year from now when everybody is -- >> some people suggest they p actually wouldn't go if it's not wrapped up >> no, but it's going to be a cloud that as a news story >> they just don't want it

detracting from the olympics >> well, from the olympics and what it says >> the olympics, the sports of it, it has much more to do with what it says about japan activist investor carl icahn reportedly sold his stake in lyft prior to last week's ipo. now, he had held a roughly 2.7% stake ahead of the public offering the "wall street journal" reporting icahn sold the stake to fellow billionaire george soros. icahn had been an investor in lyft for about five years. i had asked the founders of lyft during our interview, and i think we have a video. >> you asked them about carl icahn. >> i asked how they felt about icahn being in their stock clearly, they didn't know. can we roll the tape, guys >> carl icahn is one of your

investors. he, i imagine, may stay in this stock. are you worried about that >> no. >> it's been a good investment for him so far, but we've actually -- >> he is also an agitator. >> we've had a great relationship with carl icahn it looks like he made close to half a billion dollars pretty good business if you can do it. >> coming up, high level trade talks between the u.s. and china are picking back up today. president trump is expected to meet with china's vice premier this afternoon in the oval office much more on trade is coming up later this hour. first, though, i'm going to tell you about a new company in the energy sector that's looking to change the way oil drillers find work as you head do break, here's a look at the biggest premarket winners and losers in this case it's in the dow

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the economy has hit the energy industry. rig up is a company looking to remedy the labor shortage in oil, and it has a few big backers, including the san francisco-based founders fund and quantum energy partners. joining us now is the ceo and founder of rig up, the start-up looking to disrupt the oil industry with technology explain how this works, and how much money could i make working at rig is it worth a look for me, do you think? >> yeah, but it would be tough, right?

certainly, you know, prior to our business being started, it was primarily an analog network, right? brick and mortars. phone calls. who you know gets you on location to do the work. as our company has experienced this renaissance, despite sort of relatively low commodity prices producers continue to compete on a cost advantage basis. therefore, needing more and more workers to fill the gap. are there ten different skill sets how many would -- >> hundreds of different service lines. clearing the location to drilling a well, fracturing the

well, producing the well >> how does it work? if i'm a worker, i do what i go on the app. i put in my skills >> yes >> how do you make sure that they have the skills they say? >> certainly there's certifications and testing that our business does, right, and we partnered with trade schools to take the education that workers are learning, and then bringing that testing on-line to sort of vet and assure that these folks have done it for them. there's also social verification, right? there's reviews after you have completed a job, your superintendent -- et cetera. everything that you see sort of in the consumer world, it's possible to move it to -- >> does the call for the job go out through your system, though? >> yes >> i would get a notification saying what? >> looking for your specific skill set in this job in the next 48 hours to do x, y, and z job.

>> is it usually a job for 24 hours, 27 hours, two weeks >> projects can last anywhere between just a few days, as we see drilling efficiencies continue to increase or improve. days to drill continue to drop as technology and a myriad of technologies are making the energy industry for efficient, so could be just the ten days to drill a well could be up to 90 days to, you know, build out a facility like a construction job >> what prooechbtss an employer from finding me, deciding they like me, and then circumventing you? >> yeah. it's -- it's -- there's several things first is general liability insurance, right it's uneconomic for a contractor to want to work directly for any one of these operators primarily because they need -- it's adviser with us work to get on location to do a job. sometimes you have to carry $50 million general liability just to get on location to wauv a rig. it would be uneconomic for

individuals to do that, but, secondly, because of, you know, increased activity levels and our industry there's -- the industry is moving more and more -- pivoting more and more to an on demand aspect what if there was a storm in west texas last night? the road that you have leading out to the operations was washed out. you need the rock right away there's no time to go. >> i can see how this is a great thing for employees looking for more opportunities rather than just word of mouth and where you might hear things from, but i can see where it would be a good thing for an employer who by getting this word of mouth and getting it out there maybe doesn't have to pay quite as much of a premium because you have got a bigger pool of people to choose from do you think you are boosting prices that people get paid or keeping them a little lower? >> i think if there is sufficiencies to be had on both sides, frankly the management of this contract

waiver, you know, the management of this contract labor can be done more efficiently using technology, right? prior to, you know, a lot of the status quo has been white boards where are all our contractors deployed in a specific asset and what are they doing and we're going to jot it down and dispatch accordingly off of a white board or a chalkboard out in the field that still happens today >> you know, like goufrp people like our age, you have a 10% -- >> i mean, i think in regards to just the supply-demand dynamics of labor in general, says you know, the world is going through a massive shift of -- >> that's -- going through a massive shifted of asset labor into short labor >> where would i probably get sent right now where is the hottest place where i can definitely find some things >> certainly west texas. >> west texas. >> but, you know, if you -- >> could be a lot of put

>> say that -- >> a whole lot of different puts >> a lot of different planning >> if you wear those shoes, they are going to laugh at you. >> i wouldn't wear this coat i wouldn't wear the tie either where. >> i don't mind the coat it's the shoes where if you wear the rough necks are going to go, wow, those are -- >> in terms of what if andrew is i don't think chronically late for most jobs. would they see that on his resume if he were are -- if gets there right before the drilling is supposed to start or something. >> you get several one stars on that >> yeah. >> this is like your uber rating >> i think what we would call in our industry, they would run you off location you would get a few one stars. >> the show begins and i'm here. i don't understand what he was talking about. coming up when we return, after the liquidation of babies r us, there's been a land grab for market share in baby goods we'll tell you how one major retailer is hoping to corner the market for new parents a lot more on "squawk box" coming up right after this

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on-line baby registry featuring thousands of new products and dozens of new brands target announced an expansion of its baby line-up back in january. courtney reagan will be speaking with wal-mart ceo doug mcmillan today in an exclusive interview. that's coming up around 2:30 p.m. eastern time. bhurn, president trump is expected to meet with china's vice premier this afternoon in the oval office. we're going to talk about the rising expectations for a trade deal first, former cisco ceo john chambers will join us to talk about the biggest challenges facing the world of technology right now as we head to a break, let's take a look at yesterday's s&p 500 winners and losers this is my headquarters. this is where i trade and manage my portfolio.

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welcome back to "squawk box" this morning time for the squawk planner on the data front we're going to get weekly jobless claims at 8:30 a.m. eastern time forecasters looking for 218,000 first time filings, and we have some legal news, too elan musk is the big day he will be appearing in federal court. the s.e. krchl has asked a judge to hold him in contempt over his tweets that hearing happening at 2:00 p.m. today a lot of foels are going to be watching for that. then in trade news president trump expected to meet with china's vice premier to talk trade. that oval office meeting is set at 4:30 p.m. a quick check on u.s.ic e equity futures at this hour we'll show you what's going on ahead of the market open we'll call it virtually unchanged across the board the dow up about four points as mark zuckerberg pushes for stronger internet regulation, facebook took another hit. it was revealed that data was once begin found in a place it shouldn't be the amazon cloud

joining us now to talk privacy and other big challenges, utd founder and ceo of -- john chambers and silicon valley bank ceo greg becker. gentlemen, welcome to both of you. >> good morning. >> pleasure to be with you >> it's great to see you both. this is a time in washington where it seems like both sides of the aisle are kind of focussing on the technology world and things that have gone awry and potential for more regulation do you think that's the feeling that you get right now >> i think it's in between the two. i think most of the leaders, both democrats and republicans, realize that innovation is where job creation is going to occur every company becomes a technology company they're very lodge i want issues we have to solve such as privacy, such as trade the key take-away is what do we look like as an innovation nation a start-up nation one, three, and five yoerz out, and that's really the message that we're conveying in tech. our 21st trip to washington you can imagine since we are founded in 1997.

they may feel they want to have a bigger say in how things are run. >> the companies want to understand how the ground rules are. they're comfortable with regulation, but what they don't want to do is they don't want to have it state by state they want privacy on a federal level. we think it's incredibly important that what you are hearing is that companies are ready for it i think it's -- i think it's fine i think they're comfortable with it we just need to know what the ground rules are >> do you think there's a clear idea for washington what those ground rules would be at this point because i don't. >> yeah. that's definitely the hardest

part no question. i think about what we deal with in independenting gdpr that is the case with small companies, it's going to really make it difficult for them to thrive and that's a key part of the economy. there were rules just passed this year in europe. >> in europe, correct? >> if the european guide is not the way to go, what do you think would make sense from a regulatory framework >> i think part of the european guide was right. there was one policy across all of europe, but they tended to focus on that policy for the big companies and the unintended consequences that slowed down dramatically their start-up engine and job creation engine i think this is where the technology companies, the government leaders ought to say how do we outline something that

gets the privacy needs very legitimately accomplished. it's very important the large companies feel more than halfway to meet with the government on that, but we've got to understand if we destroy our future in terms of small companies not being able to compete, not having jobs, we'll continue to see the number of start-ups slide. and that's the reason there's so much attention being paid to this right now >> the companies have grown very, very fast, and they're trying to come up with what are the right rules to play by i think what mark zuckerberg had talked about the last week, i think the large companies are ready for regulation again, it's hard for them to say

what those rules are they wouldn't work with policymakers, and so we think it's right to work with the largest companies, but also as john and i both said, we've got to be sensitive to understanding what the impact is for start-ups because if we stifle their growth, we know that those are the job createors in the united states, and so dw if we impact them, the numbers that john talked about are going to get even worse we need rules that apply to the large companies, but also being sensitive to the small companies as well. >> john, what are the other big issues that you are going to be talking about today? i know one of them is immigration. what would you like to see on that front >> well, i think selected immigration in terms of high-tech immigration is very important to our country 60% of innovation workers in si silicon valley are first generation, new americans, if you will, where when you look at the start-up engine across the country, and it needs to go across all 50 states, not just the east coast and west coast, it's about how do we attract the best and brightest from all over the world. the trade issues are important to us.

i think we're in a position where we need to move forward with the u.s., mexico, canada agreement, and even though i've been in china for 40 years, i think it was time that we recreated a win-win environment with china i'm optimistic that we'll get there, but it's an issue that had to be addressed. i think the key take-away is don't lose track these are all symptoms of a bigger issue the symptoms are really can we drive an innovation economy where we are no longer in the top ten countries? can we drive a start-up engine for future job creation that isn't just dependent upon the east coast and west coast and is more inclusive, and does our education system and our immigration system come together in terms of how we get leadership on a global basis >> john -- >> those are the key issues. >> here's the thing i'm wrestling with one, we want to be a global powerhouse built here in the united states, right we don't want to let china or other countries overtake what we're doing. at the same time we're trying to figure out how to regulate and oversee our own companies here in the united states

there's sort of this duality which is to say how do you effectively control an instructional. how do you have to do anything structural is it a supervisory thing? if we do those things that we're all talking about to make them more responsible, is that going to do something competitively globally and, therefore, what does that mean more broadly to the country, right that is sort of to me the hardest challenge in all of this >> well, first of all, i think the request on the large companies are fair i've been on your show for two years talking about, i believe, more in the european model of privacy than where the u.s. was going. however, we've got to be very careful. greg and i are in the rest of tech net or united on this our job engine growth -- the unintend the consequences to the spaul companies of these type of regulations causes the u.s. to fall behind.

>> thank you both for your time. >> thank you >> andrew, thank you >> coming up, second brexit headlines. you're not alone even robo-traders are getting overwhelmed. that story is next later, the famous new york state senator michael gianaris, that was with us during the amazon incident, joins us to discuss the recently passed new york state budget and the congestion pricing system for manhattan that's included. stay tuned you're watching "squawk box" on cnbc after my dvt blood clot...

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to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. welcome back jaime dimon just out with his annual letter for jp morgan shareholders the jp morgan chase ceo says that lower tax rates were a long time coming and that they've helped boost competitiveness and his own bank's bottom line he says that the bank has grown despite what he calls unprecedented challenges, and that it plans to maintain a fortress balance sheet he also says he is fine with government regulations as long as it's good regulation. he does address the issue of share buyback saying that they are an essential part of proper capital indication, although

secondary to long-term investing and he says that the bank sg prepared for, but he is not predicting a recession these are just a few of the bullet points in a very long letter to investors. jaime dimon writes this letter himself. he has long taken on issues that go far outside just what the bank is doing. he kind of sees himself as speaking out on what he thinks is right in capitalism, what he thinks is right in business, and what he thinks wrong in business, too. >> weapons inspectored to oint pout two things. we have this conversation on the set a lot. one of his subsections is called the american dream is alive, but fraying for many those on the issue of capitalism for socialism. it says i'm not an advocate for unregulated unvarnished free for all capitalism we shouldn't forget the free enterprise capitalism are at some point inextri -- >> freedom and free markets. >> then also talks about the

middle class incomes that have been stagnant for years, and i think what he is trying tosnoo unfortunately, there's a conversation that -- among millenials did. >> that's the keyword. that's the keyword do they know from what they speak? will they eventually figure it out? >> i'm want advocating for this, jose joseph >> what are you doing right now then we're having the conversation. we're having the conversation. >> i'm reading from the letter >> well, the letter just said that they're linked and freedom and free enterprise is -- >> if you -- >> how is it that mean capitalism is on its lest last leg? >> right now there's a debate going on in america about whether capitalism is working

for people in this country that is a fact >> i think that is a -- >> you think it's a falacious debate, but that's the debate being ahead had. >> if we know theanswer -- >> as a result -- >> we can debate anything. >> what he is trying to do in this letter is say why capitalism is the better way that's why i would think you would think this is a good letter >> i do. and i did. >> he is acknowledging there's a larger conversation being had. >> we've had the conversation. >> by the way, we might have to approach capitalism slightly differently. >> where are these sections? i'm looking through a 74-page report, and i'm still trying to find this. >> i will get you there. >> you don't need to debate it because it's so simple there's two different approaches there's redistribution, which where you split up a smaller pie more evenly, or you grow the pie and hope that through wage gains and tight employment and the organic way that we're now starting to see some increases in wages, that's where he still

have the highest gdp by a long shot because of -- it's $60,000. we're $10,000 in china right now. we still have people live in poverty in this country, but we're working on it. capitalism has taken more people out of -- millions of people sflo can i just bring up a point that i think is important, too we talked about in the past about what happens if there's another downturn he is not predicting a recession, but he says they're prepared for it if there is one. you can expect the banks to be far more constrained when the next downturn begins banks will be constrained both psychological and by new regulations from lending freely in the marketplace as many of us did in 2008 and 2009 all the new rig las vegass, the banks will have to maintain more liquidity going into a downturn

and be ready for stress tests. not to mention psychological and from what what happened to them last time around when they were punished he says jp morgan chase will be unable to take the actions we took back in 2008 as described in the side bar above. that's something that i think is really important for the next time that happens. they won't be able to mitigate the effects as effectively adds last time. >> that's -- i mean, i know the part of the democratic party that you're alluding to, and that's why it's unfortunate that a guy like howard schultz, which actually has a more even approach to these type of things, that's why the republicans are so excited that you give credence to bernie sandsers' ideas and aoc's ideas and the far left of the democratic party, which is more -- it's never going to be in this country, andrew. it's not you can see that the --

>> i'm not advocating for it to be >> you talk about millenials think we should have a discussion about socialism versus capitalism. that's because they're wrong >> it doesn't mean it's fine, but jaime dimon has a whole section in there that's about capitalism versus socialism. okay he is not pretending that there's no debate. he is not pretending like you that there's no debate in america. >> i'm hearing you debate. where does he -- what side does he come down on? >> he ultimately comes down on capitalism, but the issue is -- he is not saying just go along with this unfettered capitalism. he is saying -- >> did i ever say unfettered >> you are saying not to even contemplate that there's a conversation to be had that's the issue >> versus capitalism and socialism, i stantd d by that. there isn't the conversation to be had between the benefits of the two. >> where is the section? i'm still looking. i'm still looking for the section. where is it? i'm reading the american dream it doesn't go deeply into this there. >> you want to adopt certain

forms of socialism which ones what's your answer for how we should approach this how do we settle the douebate? >> i'm stig looking for where he lays this out in the letter. >> we've talked to him all the time >> we have to go we're going to come back to this in just a little little bit. the section is called "is capitalism to blame, is socialism better?" coming up, president trump expected to meet with china's vice premier this afternoon. eunice yun is here at the nasdaq and will give us an update next. as we head to break a quick check at what's happening in european markets right now at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london

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high level trade talks between the u.s. and china picking back up today. president trump is expected to meet with china's vice premier in the oval office at 4:30 eunice yoon joins us with more you're in town >> i am. >> you did a hit in engelwood cliffs. >> i did i came over here >> what time are you on? >> 6:00. >> 5:30, yeah. now it's 6:50. i'm completely confused. >> what's going to happen? >> so, i think that there is going to be a trade deal of some form or another, but not necessarily one that's enforceable. we don't really know that, but very likely the chinese vice

premier would go into this meeting with president trump and explain some of the changes that china has made, say that they're willing to make big purchases. a lot of the talk has been that this could be a six-year deal, $1 trillion worth of stuff and then just recently we've seen a lot of what would from the chinese perspective look like concessions but from the u.s. perspective look like incremental changes. for example, the nod to the cloud computing industry and opening there for some american companies or, you know, the discussion recently about fentanyl substances all going on to the drug substance abuse control. >> it's all important. >> it is. >> i talked to senators and people here watching that very closely and say, look, that's important. >> yeah. >> what i like is kind of the 2025 deadline to it. it's our own version of china 2025 what are you going to have done by then? how much will be done? if you can't aforce along the warks by 2025, here is the deadline. >> the tough part is going to be the enforcement mechanism

because the chinese have said over and over that they are not happy with this idea that the tariffs would be looming over their head for a very long time and in case they don't make good on what the u.s. wants that they could be slapped with that you know, they want to make sure -- >> is 2025, is that the chinese side saying we want 2025 because by then president trump will be out of office, he will be done with the second term if he's re-elected >> it's unclear. >> or there's so many things to read into. >> i have a feeling from the chinese perspective they don't want to say 2025 a whole lot because we have seen that term made in china 2025 disappear from all of the various documents. >> yeah. they should be on top by then in their view, i think. >> they should what? >> be on top -- >> winning >> dominating. >> yes, yes, yes, yes. so that's one -- >> throw a wrench in the works. >> that's one of the concerns that the chinese -- >> can't we all win? >> i don't know.

it depends on what the u.s. wants. if the u.s. wants $1 trillion worth of stuff that's been bought and that's going to be the main focus and you don't have to worry so much about china pushing head wan economic agenda that china will come nate technology, everyone can win. >> global trade can be win-win i don't know why it has to be zero some. thank you, eunice. when we come back, tesla missing vehicle expectations in the first quarter and the stock is getting severely punished today. elon musk, down 8.5% elon musk is expected in court today. we'll talk about the future of the tesla right after this verizon got us vip tickets three feet away from justin timberlake. and to say vip is an understatement, because i sawww justin timberlake.

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invest and protect for the future. so they'll be okay? i think they'll be fine. voya. helping you to and through retirement. breaking this morning, ethiopian releasing its preliminary finding in what caused last month's bowing deadly plane crash market reaction and what it means for the company straight ahead. tesla stock tumbling the auto makers new warning and reaction from the street. state taxes gone wild. new york, new jersey and other states using stealthy tax increases like congestion pricing. [ horn honking ] >> to a mansion tax, a closer look at how states are battling a budget short fall coming up. as this second of hour "squawk

box" begins right now. ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. ♪ >> good morning. i'm andrew, along with becky and joe. let's look at u.s. equity futures ahead of the market open about two and a half hours right now. the dow would open about 28 points higher right now. nasdaq would open 9 points higher and s&p 500 would open just a little over 2 points higher. new this morning, ethiopian transport minister said the airline pilots in last month's crash were unable to prevent the plane from repeatedly nose diving despite having followed the proper procedures as recommended by boeing. this is just the preliminary report. >> right all we have at this point is some comments from the press conference that happened two or three hours go

i think people want to see the actual preliminary report to see a little -- >> and the data. >> and the data underneath it. clearing boeing as well as investigators in the u.s. and around the world have seen this. let's talk about what was announced this morning in ethiopia as becky mentioned, they dud announce the ethiopian france port minister did announce that the pilots, 737 max for ethiopia airlines did follow procedures according to the data boxes recovered at the crash scene, they followed the procedures shortly after takeoff, were unable to control the 737 max and as a result that flight lasted only six minutes. so when you look at where things are for boeing right now, keep in mind this comes a day after ceo dennis mullenberg was on a test flight out of the seattle area on a 737 max, that 737 max already had the corrected software installed in it he says that the pilots went through all the procedures that it worked as it was supposed to work, but they're still ways,

maybe a couple of weeks from filing with the faa an application for them to approve the software fixes and speaking of the faa shortly after boeing put out these pictures of dennis mullenburg on that 737 max the faa announced that it will be teaming up with international regulators to review that software fix and then they will sign off on it not just by themselves but with other entities around the world. guys, that's a tip of the hat to where they were a few weeks ago where they felt like they got egg on their face by saying, no, it's safe to keep flying it and everybody else said, no, we're grounding it. >> this brought up issues whether the faa would be seen as the gold standard around the world. by going and working in conjunction with them, that will take out any of the questions. >> in a practical sense that means this will be drawn out do not expect this to be rubber stamped and ready for approval within a few weeks. >> what does that mean for the

airlines there are three airlines here in the united states. >> right. >> that have a number of planes that are grounded as a result. >> they've already got it off their schedules through may for the most part. don't be surprised if we see them take it off their schedule through june relatively soon. >> i'm going back to southwest, they told us last week, i think it was last week, that they had a number of groundings through the end of march and i believe 2,100 of those groundings were because of the boeing max 737. >> right, primarily because of the max. they're taking it off the schedule will we see a huge hit to the bottom line in terms of the q2 numbers? not a huge hit it will be noteworthy. they will say we have lower revenue because of x, y and z. >> when all is said and done, will it be -- you hear if there's a fix, it implies there was something wrong in the first place. >> correct. >> or is it that there was something wrong if you didn't have adequate training that the -- >> combination of both

combination of both. they already said that with the announcement -- >> how does boeing come out of this with the least amount of damage >> it's all about production they still are producing these at 52 a month. if they lose orders f they have mass cancellations, let's say this drags on for three months, hypothetically, and then you start to have airlines saying, we can't sit here and wait around, we're going to cancel our order. most don't believe that's going to happen because where are they going to go? go over to air bus and wait five or six years >> do we think the training issue is an international issue only >> yes -- no, well, it's more of an international issue than it is here in the united states look, there's a shortage of pilots worldwide and that includes here in the united states and look at it from the perspective of a smaller airline somewhere in asia, traffic is growing, demand is growing you want to get these planes in the air as quickly as possible it doesn't mean you're not training your pilots, but you have to work to meet the demand there and get these pilots

trained. and that is an issue that will be here -- >> when these planes get back in the air. >> correct. >> you'll feel more comfortable going on a u.s. version of it with a u.s. pilot versus if i told you you were on a trip somewhere in asia? >> that's a weird question from the standpoint of now you're implying that the pilots are not trained as well around the world than they are here in the united states. >> no. i'm asking whether on this specific plane the training that's required not just required but even above and beyond whether you think that u.s. pilots and the regulations and the culture and whatever else you think goes into this is different than it is abroad? >> i think it's more stringent here in the united states, plus you have a more veteran true, if you will, or community of pilots internationally, it's not up to that level. >> the other story we're watching this morning, tesla

shares down by 8.5% when we just checked a moment ago. >> take a look at this mall. this is the model 3 deliveries this is what it is all about bernstein out with a note today saying, hey, look, this wasn't a horrible quarter, but it wasn't good either. the model 3 deliveries that everybody is focussed on, the expectation was that it was going to be close to 54.6 or 55.1, came in just over 50,000 vehicles delivered so this sets up the question of whether or not if you are a tesla investor do you take away from this that they're seeing a slow down in demand worldwide. the s and the x, those numbers were really low. and that's what bernstein focuses on this morning. and i suspect that's what most of the commentary will be on also, remember that tesla said in announcing this that because of these weak deliveries, they're going to have an impact on net income in the first quarter, most are saying it's about a 1 billion hit. that brings up the liquidity issue. >> which gets uts to the court

case later today. >> phil, stick around because we want you to be part of this conversation jean moneyster, founder and managing partner at loop ventures good morning to you. you looked a the numbers you heard what phil just had to say. does not look positive at all. >> no, andrew, we want to find the underlying truth with the tesla story. ultimately these numbers are not good in the near term. i think 2019 will be a rough year for tesla i think these numbers indicate that there is a lot of layers to the numbers, too i want to try to simplify and i totally agree with phil on this is that the ultimate kwee question here is what is the underlying demand. we can focus on what's happened with logistics, what's happened with production, what's happened with the mix of model sx and model 3, all those factors but at the end of the day, as someone like myself who believes that tesla will, in fact, prevail over the long term, what the key factor here is what's

going to happen with demand. i want to put an extra point on that is that the company did reiterate this expectation of 360,000, 400,000 deliveries in 2019 if you look at the 60,000 deliveries and make an assumption what does it take for them to hit the low end of that. it essentially implies a run rate of 99,000 vehicles per quarter. now, they did do 91 in the december quarter, but again 63 in the most recent quarter i think what that sets this up for is that they probably are going to miss that number. that 360 to 400 number somebody who believes in this story, i still ultimately believe that this is electrify indication of vehicles and autonomy is undeniable theme and investable theme i am taking away this is an indication of probablysome rougher news that's going to come most likely in the september quarter for reasons we can get into

my take away is let's talk about what demand is going to be this year. >> let's talk about what demand will be this year and specifically in terms of where the stock is right now, 12 months out, where are you putting it >> i think 12 months out it will be higher. i think between now and then it probably goes lower, not just lower than the 8% today. i think we have everything from the street resetting some of those expectations i appreciate the optimism around elon musk and reiterating that 360 to 400 number. i sense that will be the focus over the next couple quarters. anxiety, this federal tax credit steps down from call it $3800 to half of that. >> happens in july, right? >> that's correct. so we'll continue to see that september quarter is all of a sudden now the focus quarter here so when andrew to answer your question what do i think of the stock? i think it goes lower in the near term. i think it goes lower than 8% today. ultimately i think the opportunity here is significant

beyond what this near-term noise would lead us to believe. >> is there a catalyst what do you think is going to gin up demand f you will obviously we have this backlog of demand and now we all of a sudden have a demand question. used to be a production question >> right the catalyst is pretty straight forward is that cars should simply be electric there's no reason why they should be gas. obviously that's a big market, call it 90 million vehicles, 63,000 here. so unfortunately there's not one point where we can say it's the introduction of the model y or the pickup truck it's not about that. this is about thematic investing. unfortunately with the hyperanalyzed stock like this, the winner investors, i think, will be the ones that are not as focussed on necessarily a catalyst but this inflection point that ultimately comes around electrify indication. there's a lot of levels around that in terms of how they get there, proising, profitability, all those, but the simple way i

would put it is that this is not going to be a step function up in terms of demand for electric vehicles, but it is undenial and tesla, i think, has leads in terms of technology that will place it well ahead of the incumbents. >> gene, this is phil lebeau, do you get a sense that elon musk and his team at tesla truly understand what the underlying nand is or do you look at this and say they put this target out there at 360 and we know that elon doesn't like to change his targets or admit that perhaps they might have been overly optimistic so they're going to stick by this. i guess what i'm getting at is do they have a sense of what the underlying demand is >> so i've not talked to him, but i strongly believe they don't know what the underlying demand is. now, that sounds very negative, but i think that that's the reality of how a lot of companies operate. i think sometimes we put their visibility on a pedestal and it's one thing to manage iphone

inventory with different carriers it's something else to manage what is a shift in terms of how people are buying cars and keep in mind when you think about the demand equation, the layer of calculus that they're dealing with here is that they had a product that was announced that had two years of pent up demand with the model 3. they had the launch of it in europe and china so all the indications that they're getting for on orders here, it's really difficult to try to see what the baseline demand is. i absolutely agree with you is that they wanted to keep a brave face on today and that's why they kept that 360 to 400 number and again, just want to emphasize, i think this company is going to turn out in a great place longer term, but i think 2019 is going to be a tough year. >> gene, two very quick questions. one, the design of the flag ship vehicle has not changed. and we talk about a catalyst do you think that there needs to be an update to that vehicle, i'm talking about the s? >> yeah. they definitely do i was expecting that as kind of

a one more thing when they announced the model y, but that is, as we would say, long in the tooth. i don't think that that explains this -- the dip in s&x demand. i think there are several other factors we can get into, but i don't think it was because they need some terms. >> we have this court case 2:00 p.m. elon musk is in court today, could be held in contempt what title he could be stripped of, what that could mean we know what the best case scenario is nothing happens. what is the worst case scenario in your mind >> lot of people say he gets stripped of his title. that probably is the worst case in the near-term but keep in mind that there is a large pool of investors who are betting against elon and who would actually invest in the tesla store if it wasn't for him. this idea it's black and white if elon is involved or not involved is more of a gray question i think the worst case scenario is that he gets stripped of his title. i don't think that will happen

if i was going to make a guess, i don't think they'll announce anything today, rule on anything today. i do think his tweets were not cleared and that probably represents some form of contempt of court, but i think that it's going to be a minor penalty. >> okay. gene, thank you. phil, thank you. >> thank you >> appreciate it. coming up, the battle for legalizing marijuana for recreational use we'll speak to the head of a group lobbying against its legalization then, later, new york state senator talks rising taxes the new congestion pricing system and property sales taxes ch well. mu more. you're watching "squawk box" on cnbc

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welcome back to "squawk box. you heard the complaints from joe about apple's air pods and the problem he has with keeping them in his ear. well, tim cook and company must have been listening because they just unveiled these yesterday. they are the new power beat pro headphones they feature a sporty design there is no chord connecting the left and right bud they fit inside a small charging case and offer up to nine hours of audio play back on their own

or up to 24 hours of play back with their charging case the power beats pro will go on sale in may and will cost you joseph, $249.95 a steep premium. they're more complicated to get in your ears. >> a year or two ago they would say, wow, they look small. they look big relative to what you're used to. >> these are easy to lose. they just are a little toobig for my left ear, so it never gets in to then if they're in for a while and whether it gets moist or whatever, slippery, i can feel it start -- >> it's not sweat, i don't think? >> it's probably like clean your ears out. >> it's not wax. it's just -- i can wipe it and it sticks again. the feeling -- i can feel it start to slowly loosen where it's possibly it's going to fall out. when it falls out, even if you're in a car or something, it's like under the seat. >> that's when it needs a better way of finding it.

instead of having to be in the case and charged. >> right. >> they fall out. >> if you do find your iphone. >> doesn't it only work if it's in your case. >> nope. if they're lying on the floor, they will beep loudly. if they have battery if they sat out for several hours, then you have a problem. >> you know it's national burrito day. >> your favorite day that is to you what donut day is -- >> it's a pet cemetery opens tonight. i see this on my trending thing. and it's national hug a news anchor day. >> hug a news anchor day. >> go ahead, guys. >> not going to be happening. >> come on come on. >> you guys hug it out. >> no. >> becks get in. >> group hug. >> i don't hug socialists. i do not hug socialists. >> see all by yourself over there. >> come on come on in the water is warm. >> i'm not >> come on. >> i'll hug becky. no, in fact, i won't hug becky

oh my god, i'm joe but joe kernen it's called the stiff arm. the stiff arm hands. you know what nancy pelosi said to pretend you both have colds people try to shake your hand. >> i try to do this the pound. >> and then every time a guest leaves, folks, he gets this stuff and he's like rubbing. >> i'll tell you what happens, guests come on and they're nervous to be around you so their hands are sweaty >> because they're socialists. >> just like your ear canals. >> they should be nervous. >> we've gone way off script. when we come back -- >> you have to see what that means. it means that they're linked inexer bli when we come back, the budding business of marijuana. ceo of acreage holdings telling us it's only a matter of time before marijuana use is legalized. >> we now see a lot of these states transitions because of the economic benefit from

medical use to adult use we believe that, yes, disappointed with new york, new jersey but, in fact, it's really not a matter of if, it's a matter of when we will hear from a group, the head of a group that is lobbying against marijuana quk x"ilbeig bfter this break. "sawbo wl rhtack. i'm working to keep the fire going for another 150 years. ♪ to inspire confidence through style. ♪ i'm working to make connections of a different kind. ♪ i'm working for beauty that begins with nature. ♪ to treat every car like i treat mine. ♪ at adp we're designing a better way to work, so you can achieve what you're working for. ♪

welcome back, everybody. earlier this week, cannabis firm kres koe labs acquired origin house for one of the $850 million one of the largest deals ever in the industry it's the latest example of investor enthusiasm. but our next guest says buyer be ware joining us is president and ceo of smart approaches to marijuana, an organization leading to the lobbying effort against legalization of the drug he's also a former white house adviser on drug policy under believe it or not the obama administration >> they had narcs? >> first term. >> you weren't welcome in the second term. >> i was out of there in 2011.

>> let's talk a little bit about what you've seen and again for background for people who haven't seen you on with us in the past, explain your entry into this, why you're so opposed to this because you'll get people who say right from the get-go, they're going to attack you because you're saying this should not be legal. >> your tweets are probably blowing up and i haven't said a word no, thank you for having me. listen, today's marijuana is not your woodstock weed, it's 10 to 30 times stronger. we're not talking about passing a joint around in a college dorm room, we're talking about 99% dabbing in a vaporizer, almost pure thc compared to 4% 20 years ago. i don't think we should lock people up in and throw them in prison i don't want to give people a criminal record. i'm all for removing that criminal stigma, but i wouldn't throw the baby out with the bath water. we should not be creating a new tobacco-like industry. they are $3 billion in in

canada we know the beverage association, $2 billion. so, i don't think that's a good idea either. we're rushing way too fast on so many things we don't know about. we don't have an impairment for driving. we don't know about the workplace issue. it's been a huge issue with workplace accidents and workplace testing. this is really bad for the developing brain your brain is developing up until age 30 we know we had alex and had him on recently wrote a great book called tell your children, talking about the mental illness specifically psychosis and schizophrenia. until that book tell your children was published we have new research out of britain saying that today's marijuana, the hypo tensy marijuana if you use it today have quinn up theled more four times for psychosis. one out of every two of new psychosis incidents in amsterdam are because of high potent marijuana. it's about wall street, these

investors who are in it to make money. i think that's just a big mistake. >> we just had a ceo from one of the marijuana companies earlier this week. and he basically came on and said, hey, it's safe there's nobody arguing that anymore. nobody has ever died that's what he said specifically. >> phillip morris said that in 196 a and said it in 1985. the heads of the tobacco industries in 1994 said this isn't addictive. 1994 we knew tobacco was addictive in the 1920s. 70 years later saying congress this is big tobacco overall again. the former head of purdue pharma john stewart is now the head of a pot company. that worries me. of course these business people are saying that. although, look at that stock over the last year talk about a nose dive this is a big bubble in the marijuana banking stocks. >> what are the liability issues for companies that sell marijuana right now, legally

>> well, look, i think they're getting away with a lot in the short-term, but legally this is going to be a very huge issue. in fact, our organization is now kind of behind the scenes assembling lawyers we're talking to the people who sued big tobacco we're talking to the people who sued big pharma. i don't know if it will be five, ten or 20 years but there will be major lawsuits. marijuana, unlike tobacco actually impairs you the driver the limousine driver killed 20 people, we're looking what happened here, killed 20 people, what a tragedy, had high amounts of thc in his system you can't say well he might have been using it 30 days ago. no, when it's that high of an amount tested a couple of hours after the crash happened which is what would have happened. that means there were massive amounts. that's a huge liability. >> as you know a drunk driver is not -- is not suing embev. >> yeah, that's true but they are making claims now,

the marijuana industry is making claims like the tobacco industry made claims, they are hiding harms, they are marketing to kids listen, this is about gummy bears, cookies, candies, lollipops. of course they're marketing to kids no, i'm -- actually i get probably an email a week from a pretty well known attorney who either had to do with tobacco or pharma like, hey, let's work together i think there's huge liability sure, if you're on short-term for these stocks, maybe they're good for you a little bit. in the long term, i think this is a big bubble. >> the two states that recently shut down these attempts or did not succeed in attempts to pass them, new york and new jersey. >> yeah. >> that pot ceo said, hey, it's not a question of when -- of if but wen. >> that's because businesses say it he's making money off of other people's use and they encourage heavy use. of course they said that three months ago in albany when we said we want to take it out of this very strong governor's budget, we were laughed out of the room it's not in the budget now we'll have that separate fight

new jersey, phil murphy has been trying to legalize marijuana since before he got into office. and the pta, the actually the black caucus because minority communities know that they are the ones targeted by legal predatory industries i mean, the reason there are eight times as many liquor stores in a poor communityisn' because rich people don't like to drink. >> is there any money on your side of the issue because there's a lot of money on the other side >> it's starting to come in. so sadly we have to sometimes feel the consequences. so i get the calls from the parents who lost kids or spent tuns of money or their kids for getting treatment for vaiping or whatnot and they're starting to give but unlike the pro side, you're right, andrew, they have a ton of money it's an investment for them. the chairman of a pot company, he invests $1 million in lobbyists, he passes legalization, he gets 10 million back we're starting to see some very ethically responsible people and unfortunately people who have had tragedies say, you know what, we have to stop this and fight this

so that money is beginning to come in. >> how many states and municipalities are looking at revenue that colorado generated and salivating over? >> i'm glad you brought that up, joe. the issue with revenue is it's less than 1%of the total revenue. colorado with all the pot they sold and aif sold a lot, that's .7% of their entire budget. >> they spend it all on anti-drug campaigns, measures to take care of the wrongs that are created in the problems that are created by the pot that they're selling. >> thank you it makes no sense from a cost benefit perspective. >> you're in the filling potholes. >> clean up the problems created by selling it. >> the nasty tweets we get, those people that are long pot stocks or stoners or stone long -- >> combination. >> might be both. >> listen, addiction, number one hallmark of any addiction is denial and there are a lot of people -- this is their religion, i get it >> but all you need is, believe me, with what we've seen in the past with things like taser or some of these story stocks where if you say anything about them,

you just get bombarded because those people are long and made some money or whatever and you got that now with pot in addition to people who just want pot legalized. >> all these companies are creating -- committing federal felonies it's still illegal on the federal law. a lot of states are pushing back, like you said, becky, new jersey, new york, connecticut now we'll probably defeat it in connecticut. we just defeated it in minnesota. there was a big push so it's also by the way from a political perspective because a lot of the candidates are now clambering to kind of talk about this issue, it's actually not a very high priority issue for voters you know, they might have an opinion, but it's not driving people to the polls one way or the other. >> kevin, thank you. >> thanks for having me. >> kevin sabet. >> what are the charts saying about the next market move wee oconar from katistkt 're coming right back.

♪ still to come on "squawk box" today, state taxes gone wild what lawmakers are doing at the local level to fill budget short falls. tesla and elon musk in the spotlight. we'll talk about today's court hearing and the auto maker's

production short fall. and more on the boeing fallout and the preliminary report released by ethiopia on last month's crash. the details are straight ahead "squawk box" will be right back.

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do you have a browny time now for your morning market movers dom chew joins us now with more. hey, dom. >> joe, i didn't have a browny, but i feel like before they took away my background it used to be the big sunshiney thing where i would sell breakfast things with jimmy dean sauce sajs now i have pops and drops. we'll kick things off with a couple notable facebook is up a percent or so in the pre-market on about 65,000 shares of volume the social media giant was upgraded by analysts to a buy. they had a neutral before. the target price also goes to 200 bucks from 175 they like among other things investors getting a bit more comfortable with the risks created by data and privacy concerns over at facebook as well as more stability and some of their usage trends. those shares up right now. also keeping an eye are shares of disney. up fractionally on just 4,000 shares of pre-market volume. analysts at goldman sachs

reinstate thard rebuying house of mouse alongside a price of 142 bucks. given the fox acquisition and optimism about upcoming disney plus video streaming service half a percent there we'll end with a decline, shares of micron lower by 3% on roughly 130, 140,000 shares of premarket volume after analysts at morgan stanley downgraded the stock to an underweight from a prior equal weight they site the recent run up in shares so those shares off 3% joe, i'll send it back over to you. >> great, dom. time to get technical now. joining us to discuss the recent breakout in the markets, katie stockton, founding and managing partner at far leaf strategies in the past, katie, the support levels we had were violated. you remember when it happened. we were looking for the high 20s or low 25.90 and we got much

lower than that. we still count on technical analysis to give us definitive numbers, or is it just like anything else, it's an art, not a science? have you lost any faith whatsoever >> oh, not at all. it's my day job, right to me the levels are always important and when you do see the violation you have to make sure you have these qualifiers in place so you spend more than just a week below, couple weeks below and that would be a confirmed breakdown. it's how you qualify the levels. now that we've seen short-term momentum improve on back of overbought conditions and consolidation late february into march. now that's been worked off we've seen short-term momentum improve and now we're seeing levels cleared on the upside. >> versus december 26th, just saying we've seen some improvement. i mean, that's what you call improvement, that's like a rocket ship. >> right the relief rally was very, very impressive we saw momentum kick in a few

weeks into that relief rally and it really continued. so we have to believe it the relativitystrength expand and reached new highs. >> 2800 was an area that we talked about a lot, that it had trouble getting through. are we -- you're confident we're through that >> i am. >> is it a support level now or is there -- >> we need to look past the s&p 500, i think what i would love to see is the russell 2,000 clear its 200 day moving average you can see a very common technical pattern on that chart called an inverse head and shoulder that tends to be bullish we see the breakout. i would love to see confirmation from the russell 2,000, the s&p 500 to me has already broken out we're starting to see breakouts overseas, too. >> what number is up for the russell? has to get what did you say? >> i think it's around 1600. >> right >> okay. short-term bullish, long-term neutral? >> long-term neutral. >> why >> that's because of the breakdowns that we did see in

q4 and the fact that they affected long-term momentum we have not seen long-term momentum turn with this relief rally, but we've seen intermediate term momentum that's probably only a matter of time. >> before it gets bull snish. >> probably, yeah. >> really? >> so these indicators the end to have a lag to them and that lag is helpful in that it eliminates some of the noise of the market the market has been very noisy lately to me, when we see new highs from the s&p 500, we'll get that long-term momentum by signal. >> so the long-term indicator could be in a short-term position so a long-term indicator could change so it's not long-term it's long-term neutral has to stay at neutral. you can't make it positive. >> it went negative actually back in october. >> yeah. >> so then with the lag of a couple months, again. >> the prospects -- is there -- i hate to keep talking s&p, but do you have -- are the old highs where the resistance is now. >> yeah.

2941, that's the september high essentially. and then beyond that there's no resistance left on the charts. >> never been there before. >> right, uncharted territory. >> what's your gut telling you about where we could go this year. >> beyond that this year i feel 3,000 is definitely attainable and we'll see a close above that at the momentum has turned to some degree. so, that seems attainable, but beyond that, 3280 -- >> you don't have a yield curve or dollar worries or anything like that? >> the dollar looks like it might break out to me, so i'm watching the dollar index around 98 that would obviously affect some relative strength in emerging markets at least. >> katie, thanks we'll see you again soon hopefully. i don't know where we'll be, but we'll be somewhere. >> hopefully here. >> yeah, hopefully somewhere that's what i hope for everyday. coming up when we return, state taxes, they've gone a little wild. democrats haven't done -- ell, they have -- they don't have the power to pass tax increases through congress they are raising them at the

state level. new york just passed congestion pricing. also, a mansion tax on the board here new jersey's governor wants a millionaire's tax. we'll talk about this and hear about this state tax burden and talk to new york state senator michael giar rhtft tanisig aerhe break. so with xfinity mobile

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in fact, all controlled by democrats are pushing for higher taxes on the wealthy in new york, a new mansion tax on multimillion dollar properties that starts in july is expected to raise more than $300 million a year and will help the state fund its latest $175 billion budget. now, new york governor phil murphy is also pushing a broader millionaire's tax to pay for preschool and education. the state already imposes a top tax rate of 10.75% on those making more than 5 million he would actually expand that group to include those making over 1 million now murphy said it would, quote, ensure tax fairness for the middle class in connecticut, supporting a statewide property tax and also increasing its top tax bracket by half a percent to 7.5%. illinois governor and billionaire j.b. friend of this show wants to replace the state's flat income tax where everyone used to pay 4.95% with a more progressive income tax where those who make the most

pay the most and in california a new bill would put a state estate tax on the ballot that adds to the 14 states that currently have a state estate tax new mexico just passed a bill that would raise the top tax rate making 315,000 to 5.9% up a percent and in washington state, legislators are seeking a new tax on the sale of stocks and bond over $200,000 which it said would raise 2.7 billion over the next four years. a top democratic legislature there saying the tax would, quote, not even make a dent in their wealth >> okay. thank you, robert. we want to continue this conversation bring in a politician who just helped pass the new york state budget which includes plans for congestion charges and new real estate tax is joining us right now is michael gianaris good morning to you. >> good morning. >> it does feel like there is a move afoot not just here in new york but across the country and especially in democratic states to raise taxes the question, of course, is do

you have any anxiety or worry that this is going to drive out business, that this is going to drive out tax revenue? >> well, we always are concerned with finding the right balance, but here in new york at least, all of the revenue that will be generated from those listed in new york will go towards funding the mta and the subway system which everybody knows is in desperate need of help so we know we need upwards of 40 to $60 billion for the mta capital leaves and we have to find that money somewhere and trying to do it in the most fun way possible. >> is it the most fair way possible to raise people on using the subway and the train system >> there is a fare increase that went into effect we're trying to find the money with people will feel it the least as well. interestingly enough, the budget we just passed the revenue increases had great input from the business community in new york and this seemed to be their preferred method of raising revenue. >> they rather you do than tax them directly i'm sure

if you ask new york city the majority of people in new york city are not in favor of it. >> are in favor of what? >> the congestion price. >> right new york city business community is seen as a way not to just raise the revenue make max, you look out your window, no cars on this street, if there were, you would see how difficult it is to drive around this city right now. >> there's still a lot of details that are not clear i come in from new jersey from what i hear it's going to be people coming in from the holland or lincoln tunnel get a rebate back but people coming in from the george washington bridge would not. >> that's yet to be determined there's a committee that's been set up that will suss out the details and figure out the fairest way. >> it strikes me that would create some other problems a lot of people who would be avoiding the g.w. bridge going down to if lincoln tunnel and creating a real mess there. >> that's what we're trying to avoid and implement this the fairest way possible to raise the money we need to actually -- the key here is there are many more people who get on the subways to get to work than are

driving in their cars, never mind the fact that it's better for their environment to have people on mass transit than vehicles and lot of reasons to do it this way everywhere it's been done it started out less popular, ended up quite popular. >> london. >> stockholm and one other city i'm forgetting but the congestion has been reduced dramatically in those cities and raised revenue. >> singapore was the other one that raised it now, but the problem is, you know, you're right, the subway needs money. but for those who can choose where to live, many of them are choosing florida and the governor had an interesting op-ed, he said, look, the problem is florida is a state that receives more from the federal government than it pays. new york puts in 36 billion more every year how do you compete with florida? you're right, we need money in the state for certain things, but there are people who have a choice and they are moving to florida. >> and this is the policymakers dilemma constantly how do you raise the rev you knew to keep a city this big and this vibrant functioning the way it needs to

function and deal with competition. i dare say no disrespect to florida my parents have a condo there, but most people all things being equal would rather be in new york there's a value added to being in new york. the question is how much can you really stress that by -- >> are we close to that tipping point? >> i don't think so. i don't think so new york's economy. >> you think we can tax them more in new york >> new york's economy has been doing very, very well over the last decade. as long as that continues to happen, there's a breaking point. >> great to attract a really big business here that would pay 25 billion in taxes and use some of that. >> i thought you wanted them in new jersey what happened? >> there's an idea you would have had 25 billion out of the 40. >> right good for us that google is doing just that right here in manhattan so we'll be able to generate hat. >> is there a good chance the revenue will be less than you expect because i'm already hearing that the new jersey governor wants his piece of this, too. they want it going to the new jersey transit and path system. >> i don't think they get to decide what new york does with its revenue.

>> sounds like there's a battle because it's new jersey residents paying out of it. >> there will be a conversation executives of the two states to figure that out. >> let me ask you a philosophical question. >> yeah. >> it goes to the breaking point issue, which is what do you think the upper limit is on total between federal and state taxes that the quote unquote wealthy can absorb, accept and be willing to pay before they move to florida? >> you ask me like a particular percentage >> no. >> it's hard to say. >> no. but i think there is a breaking point. i think right now 53 to 55%. >> on the low end people are trapped. you don't get the option. >> the question is on the high end what you think -- where you think that breaking point is 60 -- you know, 60% the number aoc with our conversation about 70%? because i think people -- >> her mother moved to florida by the way, too. >> what that ultimately looks like in terms of where not just

the democratic party but where the political conversation is going on taxes on the wealthy. >> but you can't just pick a certain percentage it's not the only variable involved, right? there's a value being in new york there's an ability to generate more wealth. >> doesn't people stay and hits a number they all leave. some leave at the lower number, more leave at the next number, more leave at the next number. >> it's a constant evaluation and you see year to year. >> i don't think the politicians think about you think you're going to raise more revenue and i like to look two or three years later where you see, oh my god, we actually ended up with less. >> we do that, joe we look not just two or three years later we look year to year. >> look at illinois. the more you raise marginal rates the more people leave and then the pie shrinks. >> nobody wants that we all understand that there's a point and i don't think we reached that yet -- i give you the opposite point of view which is we need revenue. you can't have a city operating or functions without mass transit that works >> new york is one of the

highest places -- >> i hear that, but if you can't get to work on time because the subway doesn't work, the infrastructure in the city needs help and we need money. where are you going to find that money? >> senator, thank you for coming come on back. >> i will. >> continue this conversation because it's not going away. all right, when we return, tesla, boeing and other names making headlines this morning. plus, jamijamie's annual letter creating a buzz. "squawk box" coming right back to inspire confidence through style. ♪ i'm working to make connections of a different kind. ♪ i'm working for beauty that begins with nature. ♪ to treat every car like i treat mine. ♪ at adp we're designing a better way to work, so you can achieve what you're working for. ♪ verizon got us vip tickets three feet away from justin timberlake. and to say vip is an understatement, because i sawww justin timberlake.

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♪ new questions for boeing, an early report on last month's ethiopia plane crash says the pilots did what they were supposed to but couldn't get control of the plane. elon musk's twitter habit on trial. they're due in court today hoping to stop him from being held in contempt over what could be a costly social media post. and hollywood's rex-it the battle you haven't heard of that could impact each and every one of your favorite tv shows. the final hour of "squawk box" 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 there aren't a lot of cars out there. >> that's the way we like it. >> yeah. no cars are allowed. >> right it's a pedestrian background >> is that why >> yes >> whole congestion pricing thing seems stupid that makes sense anyone ever they they don't talk about cutting spending it's always spend more, just tax rich people? is that sort of the -- >> i will say -- >> how much does florida spend, they have 2 million more residents but spend half as much. >> this is also decades of underinvesting in the subway system and dealing with stuff that's over 100 years old in some of this infrastructure and been short sided. >> same politicians again and again. >> you need to focus on how to fix these systems dilapidated. >> do you want to move here? >> no. >> people would rather live here than florida >> phil doesn't care he's in chicago. pick your poison

>> look at the flows of where people are going right now >> futures are up 21 points. the nasdaq down 2.5. s&p up 55 cents. david teper is getting a lot of neighbors. >> not too close, i would imagine. >> probably not too close. >> andrew is going to push back. >> they're not headed to new jersey, that's all i'm saying. >> the ten-year is at -- >> not buying in apartments in new york either. >> 2.5%. that's where the treasury yields are. >> let's get to the stories that investors are talking about. japanese authorities rearrested carlos ghosn on suspicion of aggravated breech of trust prosecutors are reportedly building a new case against him over payments made to an auto dealer the arrest comes a day after ghosn tweeted i'm getting ready to tell the truth about what's happening. press conference on thursday, april 11th in a statement overnight, ghosn said prosecutors have now denied him that opportunity, but he's determined the truth will come out and that he will be

vindicated target will move its minimum starting wage to $13 an hour in june up from the current $12 an hour that the retailer pays its new workers right now. target first said it would reach a minimum hourly wage of $15 by the end of the year 2020 and disney's avengers end game is setting one-day ticket sales record for the fandango ticket buying service even though the movie doesn't hit theaters until the end of the month they did not disclose how many tickets were sold. president trump tweeting in his words despite the unnecessary and destructive actions taken by the fed, the economy is looking very strong the china and u.s. m.c.a. deals are moving along nicely. there's little or no inflation and usa optimism is very high. so, i was actually practicing my

u.s.m.c.a. >> other way s the other way, you're going backwards. do it again. >> you watch me on the screen. u.s. or is it the other way? >> you're right. >> it looked so wrong. >> u.s.m.c.a. ♪ usmca >> i'm not doing it. >> come on >> that's too much personality for you? that really would out you as a fun-loving guy or something? you think you look funny or don't dance? what's the problem >> all of the above. >> all of the above. >> we're getting -- actually this is -- as long as -- >> it's hard to transition from that to plane crash story. >> we could do tesla first. >> no. >> let's just do boeing. >> all right >> then we'll do tesla. >> we're getting details i didn't know trump was going to tweet. we're getting details of preliminary report from that 737 max jet in ethiopia we talked about in the in 6 and 7:00 hours. and i'm still not sure what the conclusions are and i don't

think we're going to know for a year. >> we won't know definitive conclusions. we have a few more details for the most part what we got out of ethiopia this morning confirms what we reported yesterday, what other media outlets have reported and primarily it's this, that the pilots on the ethiopian airlines 737 max did follow boeing procedures for how to handle the mcass system after taking off. having said that, we don't have other details in terms of, okay, if they follow the procedures, why did the plane continue to violently go up and down and oscillate the way it did for the six minutes that it was in the air before it crashed? so limited details from boeing keep in mind, late yesterday the faa did announce that it will be forming a joint technical review board, if you will, along with nasa and the regulators for the aviation communities in europe, china, all the foreign -- major

foreign entities they're all going to look at this software fixed together before they sign off on it. it won't be the faa alone. >> phil, we talked about this before this is the preliminary investigation. the underlying data from the black box has not been released. however, we are hearing some varying stories, some different story lines out there and that comes from -- >> ethiopia they have the black box data so who have they shared this with do they share it with the journalists over there do executives with ethiopian airlines, do they share it with a other airlines there's a game going on here >> they have the actual data. >> and boeing knows -- >> how come the faa hasn't gotten -- >> the faa has it. the faa and ntsb, there are people there who have access to some of the black box data there's a number of places where this information is leakable. >> so you have two pie lots,

right? >> right >> how important is the training for the first officer, who was really -- >> well, the pilot -- the first officer is important. >> but because i keep -- people keep saying 200 hours is like basically you're brand new >> you are. >> you are brand new >> essentially >> would he have had the -- so he would not have been the point man for responding to the trouble. >> the pilot is the point man. >> the captain. >> yes, obviously. >> then the first officer is assisting, too. >> you can't say that's grossly undertrained for flying this thing. >> yeah. it means you're a new pilot. what that also brings in, joe, i can't say whether or not they were properly trand. >> no. >> but the other question this brings in six minutes in the air. who knows what these guys -- what their reactions were. that's part of what people are frustrated with.

we get a little bit of information from the black box data we don't have a clear picture yet, a definitively clear picture. >> all right it's going to take some time for that. >> all right >> let's talk about tesla. those numbers out for their deliveries and it was not as high as the street had been expected. >> no. the analyst notes are brutal today. they're all basically saying the same thing, which is, hey, these guys underdelivered. plain and simple look at the deliveries of the model 3. this chart right here says it all. they were expected -- most thought they would come in around 55,000 vehicles they only delivered 50,900 >> down 10%. >> 10% below expectation and that brings up the question, you know, they're going to talk about the challenges for delivering to the foreign markets. yes, and we know they had problems with china, but there's a broader issue here in terms of overall demand for tesla vehicles now the company did reiterate its guidance of delivering between 360,000 and 400,000

vehicles this year so, if they are able to meet that, okay they're going to have to really ramp up the deliveries here in the following three quarters also keep in mind, they did mention that the q1 deliveries being lower than expected, that's going to weigh on net income, which brings up the liquidity question some are saying this was about a billion dollar hit that they took in terms of falling short of expectations when it comes to deliveries then finally, you have elon musk in court this afternoon. now, his attorneys are in court along with attorneys for the s.e.c. on this contempt of court hearing, so you have headline risk that could be wearing on shares of boeing, not boeing, but tesla this afternoon who do not expect the judge to rule from the bench it's possible but it's not likely. >> by the way, that tweet was about production numbers, not delivery numbers but production numbers that they were anticipating for the cars this year >> no. well, yes, the tweet was and also there were a number of different numbers that have been thrown around in these tweets.

real quick on -- with regard to this contempt of court hearing we had gene munster on from luke ventures earlier today and we talked to him about what's the potential risk here for tesla and for elon musk based on how this hearing goes. here is what he had to say >> a lot of people say the worst case scenario he gets stripped of his title that probably is the worst case in the near-term, but keep in mind thats there a large pool of investors who are betting against elon and who would actually invest in the tesla store if it wasn't for him so i think that this idea it's black and white if elon is involved or not involved is more of a gray question i think the worst is he gets stripped of the title, i think that will not happen. >> 2:00 p.m. today. >> for more on elon musks battle with the s.e.c., let's welcome john, with the yale school of management, senior associate dean for leadership studies there and cnbc contributor and, jeff, what do you think? what is the worst case scenario from your perspective? >> i agree with phil's report.

phil has been doing double duty. both have a problem with cruise control, in this case the board at tesla has been on cruise control. they talk about going asleep at one end and waking up five hours later and looks like the cruise control is not that reliable, but to throw their trust behind elon musk and not exercising their diligence. so i think the judge will have to find some sort of sanctions against the company, the board, as well as against elon musk it is absolutely in contempt of court. couple of months ago jim cramer i think on your air called this accurately that she's going to be a tough judge and this was an agreement, a legal agreement he made it's not just between the s.e.c. now and musk and tesla but also with the judge this is the justice system that he is showing such outright contempt over and it was maybe a small mistake some people would say. $100,000 car production level,

but that on top of the 31% plunge i feel you have to agree from the original numbers not just down 10% from the lowered expectations but down around 31% from where we were just a few months ago and the expectations. so i think there's a cloud of disappointment and the judge is going to see that she's got to come up with some sort of ruling against these continuous infractions. i've done it again was what when britney spears did that was 19 years old when she sang that song, musk is still singing that song. >> jeff, how though given the structure of the company, his ownership levels, how do you implement some kind of punishment if that's what the judge decides they want to do that has teeth >> well, this is not like mark zuckerberg who has 65% or so control of facebook. he has some 22%, i believe the advantage that he has that

leverages him, you need a super majority to make any dramatic change on this board so if it was left to the board's own devices you would have to have roughly 90% of the non-musk owners agree to make a change. this is not going to come from the board apparently this board is completely captured by musk loaded with friends and cronies, but what the judge can enforce is can say that he's unfit to serve as a director, he can't be a ceo if you're not a director. there are many examples of this from ken lewis, as you know from your work on too big to fail at bank of america, to the government of course had eliz bit holmes designated this dozens and dons of examples where this has happened. and that's more than just the million -- the multimillion dollar fines that have been inconsequential so far. >> jeff, we heard from gene munster and his take was that, look, even if in his idea the

worst case scenario where elon is not allowed to do anything or have direct contact, that's not a terrible thing for the company. what is your general take on that >> i was pretty surprised in your interview that's what stood out with me most when i heard gene munster say that. i heard it live. i was just as startled sure, some of the short sellers would have their eyes opened up by that and maybe think differently about the company's prospects, but i do think as your emails and mine will show as soon as this email is over that there are an awful lot of tesla fanatics out there and that they can't see him inseparable from the company he is absolutely a certifiable genius as larry ellison will tell us from his board who of us have challenged the all mighty have ever landed a rocket on a robot raft in the ocean. he has done amazing things with his technological genius

he had no cars in 2011 and now he's producing somewhere close to half a million a year that is amazing. however, ken of digital was also a genius nick lie tesla himself was every bit as much of a genius and tesla died with ultimately in failure and was found by a maiden in new york living alone as a hermit that you can see these dragon slayers early on start to resemble the dragons early on in their careers and he has these self destructive instincts. i think munster is on to something. make him chief technology officer. bill gates had that title. stepping out of the ceo's role, there are opportunities. >> jeff, great to see you. thank you. phil, we'll see you later. coming up when we return, you probably heard of brex sit t what about rex-it.

a hint, it could impact the scripts of your favorite tv shows. a true hollywood stories of changing times and marketplace tension that's pinning two powerful groups against each other. stay tuned you're watching "squawk box" right here on cnbc

interesting our viewers, we have a lot of viewer, any way, senator rick scott a viewer and one of our guests tweeted he was watching our discussion with the new york state senator and he said interesting discussion this morning. joe, becky, andrew asked how can new york compete with florida when they keep raising taxes answer, they can't i explain why in my wsj op-ed piece from yesterday or the day before. >> when he did the op-ed he was watching our conversation from half hour ago and immediately tweeted out. >> we were talking about who is going to live in it. we didn't comment on that gratuitous shot he took. did you hear at the end of the discussion >> you take gri gra tu us to discussions in new york city. >> i did take a shot i took a shot back they're also not buying big apartments in manhattan. >> right he thinks that the sopranos opening where they show those

factories. >> we have a guest here and very important -- >> anybody from new jersey is watching, i hope their find your squawk account any way, @andrew -- any way you did that with denver once, said there was no city in denver. >> he is right i love denver. you usually get the last word in hollywood guild of america and association of talent agents are at a standstill in less than 72 hours the franchise agreement between if two organizations will expire if they're unable to reach a compromise the industry is bracing for what insiders are calling a rex-it wre. joining us now with the latest on the battle between agents and writers cynthia littleton, a business editor at variety and cynthia authored a book about the writer's strike which happened back in hollywood back in 2007 which centered around really digital and streams and everything else.

and we're still kind of in that. there's a lot to talk about here because the agreement they want to replace was in 1976 so there hasn't been one since the world is totally different at this point. and i think whether anything happens is clouded by that 95% vote that was taken that they want talent agencies and agents to act ethically, a code of good conduct. and they voted 95% that they want to hold agents to that. what are the chances that that's enforceable or going to happen >> well, it will be -- you know, it will be interesting to see how things unfold the next couple of days the deadline is midnight saturday as of now, they have no more talks on the schedule, but they're starting to be chatter about some back channelling in an effort to see if they can find a deal. this is a dispute involving hollywood talent agents, the ari goulds of the world, the best deal makers in hollywood so there's a lot of pressure i think on that side to find a creative solution.

>> there's something called packaging where they put everyone together and they get paid a fee that may or may not trickle down to the writers. that's what the writers are complaining about, while the numbers are bigger now because there's so many different outlets what think actually get paid has gone down in recent years because of these packaging fees do they want that? or do they not want talent agents to own production companies? >> well, the packaging fees and the productions are the two main issues it's an interesting fight because these packaging fees, this has been decades old, goes back to the days of radio, that there has been this protocol for the way talent agencies are compensated. >> 80% of the deals. >> the deal is that in some cases the compensation comes from the studio versus the traditional 10% tied to the income of their clients. in this case, the writers. and the guild is saying this has been going on for decades and the guild is saying, wait a minute, this is corrupt, this is

criminal and so there's a lot of tension right now in terms of even how this is characterized >> let me ask you a question, william morris should say represents some people at this table and there's other agents and i should say my wife works at uta and lots of people involved the reason i say this, some of these companies ultimately want to go public endeavor is specifically in the news right now if you took packaging out of the mix and you told them they couldn't package and you told them they couldn't have a production arm, what would that do to the economics of those businesses >> well, endeavor the parent company of william morris, they would have to most likely they would have to spin off the talent agency and just keep that a separate -- keep that a totally separate entity. it's believed to be worth for the biggest agencies, caa, wmee, worth 40, $50 million a year and the way that this all goes down

is if an agency packages the show, they waive the 10% fee the agency is not willing to give up packaging. we could just commission everybody on the show and make about the same they're fighting hard. >> cynthia, thank you. >> appreciate it. when we come back, more "squawk box. jamie diamond out with his annu ltetohahoeraletr srelds. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering.

still to come, the latest read on jobless claims out in just a few minutes forecasters are looking for 218,000 first meti filings number get the numbers, the reaction right after this quick break

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♪ welcome back to "squawk box," everybody. this is cnbc and we are live from the nasdaq market site in times square we've been watching the jobless claims this morning. rick santelli is standing by in chicago and rick, the numbers these. >> all right we move from originally reported 211,000 last week, that gets an additional 1,000 and then we subtract 10. so 212,000 turns into 202,000. this is actually a very important number because the cycle low is 208,000, so this takes it out that was september of last year we continue to see numbers that we haven't seen since bell bottoms were popular continuing claims, 1.717 million and this is also fascinating because that's a nice drop from

1.75 and a half. so these numbers are definitely lower. now, whether or not that gives some confidence to the participants, of course, that are trading markets in front of the all-important employment report tomorrow, we'll have to wait and see i always smile when all the experts talk about how it's lagging indicator really not going to tell you that much, tomorrow big jobs number is hugely important especially after last week's 21,000 interest rates definitely having a bit more buoyance. we're hovering just above 2.5% i want to point everybody in the direction if you're technically observant right around 255, 256 is where most traders are looking for resistance and should we clear that zone in terms of yields on ten-year, no yields maybe that would definitely lock in some of those intra-day levels from last week in the mid 230s andrew, becky, back to you. >> rick, stay with us. don't move a muscle because steve leesman is here.

we want to bring you back in the conversation mr. leesman. >> rumors of the death of the job market were greatly exaggerated and/or wrong here. i don't think you can do a weak jobs number with claims like that i guess you could, but claims are going the wrong direction for those who think that the jobs numbers is weakening. let's look at the outlook for tomorrow, 170,000 is the nonpharm payroll estimate. maybe there's the weak february number the unemployment rate is seen at 3.8% hourly average rate healthy 0.3% the simplest explanation for the 129 march adp reading is businesses rolled over from the fourth quarter and subsequent talk of recession has reduced their hiring waiting to see what's happening that's not critical right there. that can come back let's look at factors out there on the slowdown. you have the global slowdown that our cnbc fed survey average estimate takes off 0 .3% point

from growth. trade tension 0.2% tax cuts, some people have a negative sign. some people have a positive sign because the corporate tax cuts continue and maybe you get the cap expending. hoo i'm more on the positive side. >> i do, too. >> the weird argument does make sense. it's a delta story big stimulus last year and so that rolls off. >> but jamie continues to write about it today about what a huge impact and change that has had for the bank and what he thinks will be an overall change. >> in my spreadsheetly put becky quick on the positive side just very quickly -- >> that changes your theory at 0% >> no, no no, it changes the average. just very quickly the idea of you have this -- these duelling rate issues which is you have the lag effects of fed stimulus and the current lower rates. so put all that in the pot and you come up with somewhat slower growth that's sort of clear how much

slower growth that's our debate today. >> our guest as steve just mentioned, american action foreign president douglas holts-ekan thank you for being here. >> thank you for having me. >> what do you think about the numbers we saw and get into the broader discussion too the jobs market, what we're seeing in terms of signs we're coming from the economy at this point. >> i think the economy is stronger than a lot of people seem to have faith in it i'm pretty optimistic. i've been watching steve's reporting. i'm about where he is. it's going to slow down. there's no question. the issue is to what and if it slows down from something that was 3.1 to something like 2.5, that's an enormous victory and the job market itself continues to just simply surprise if you went by sort of conventional demographics and stable unemployment rate, we create 80, 90,000 jobs a month we average 223,000 last year that's extraordinary and it's the accomplishment i think people don't talk enough about because the people who got jobs were those least attached labor force that got pulled in, got a job.

that's a great thing for society. and these numbers look like we're going to see more of that. you know, february is an anomaly. you get those. everything else in the february is strong. the top line number made no sense. disregard it. >> what about the retail sales number that we've seen is that really a slow-down in the consumer or do you think that's a problem with how we are compiling those retail data statistics >> i watch that closely because the consumer has been the key. i was talking to steve before we came on, if you look at -- >> there's the chart. >> you asked for see that little misleading, folks i'm sorry. i don't control the y axis on our charts that is still a strong number despite the kline from 5.5, down to 3.5, we'll take that. >> because we don't go to 0 on the bottom. >> i'll work with our graphics department. >> steve completely undercut me here, but the point of this is -- the point of this is there are two stories. one is the downward slope. the economy is slowing and we should expect it to. that's not a surprise. number two, the level of that

thing. we've had strong pce growth at above 3.5% and had it since 2016 just steadily. that's 70% of the economy. you don't get arecession if 70 of the economy is growing that fast. >> we should talk about what causes recessions. we don't know exactly how to predict them, but we know once they happen what has caused them things like massive inventory build, shocks to the economy, it actually takes a lot of big fed rate hikes can cause them. excesses that wear off financial shocks when you look around the economy today, do you see the kinds of things and i know this is a hard question, that once a recession -- >> i'm going to have becky answer this one. are you kidding me >> she's the best. once the recession happens you look back and say oh, that was it. >> so, your first descriptions are the end of world war ii to about 2000 which is fed mistakes and sort of traditional inventory cycles out there in the real economy the last two recessions have

been asset bubbles bursting had the dot com bursting, the global credit bubble bursting, housing market in particular in the u.s., you get the great recession. i've been concerned about that somehow the dynamics of recessions are different they're being driven by asset bubbles and we don't really have the right countercyclical tools as a result. they're not put in place i don't see any bubbles out there. it's one of the reasons i don't see why we'll have this sudden on set of a recession in 2019. there's nothing that leads to that. >> doug, we decided that we're kind of going to stick with capitalism, basically, but we want to -- >> when you say we decided, is that a job vote here >> they. because millennials are very clued to economics but we want to adopt the best aspects of socialism so that we can fix the inequities that are brought about by capitalism. can you give me the five best things about socialism so we can

maybe bring some of those into the capitalist system to make it better >> well, the good news for you, joe, we already have you do not have a complete disregard for those who are most impoverished in society. we don't we have an enormous amount of government policy that's aimed at -- >> the american dream is frayed. >> the american dream has -- >> because of capitalism. >> the american dream is because of capitalism. >> it's both it is because of capitalism and frayed because of capitalism apparently. >> i'll flip it around and have this discussion with people all the time what's the right amount? tell me what we should be aiming for and then we can devise policies to get it because we know that zero is the wrong answer people sitting around in their pajamas are getting the same as people working crazy is wrong. tell me where in between we need to change it and then you can have a real discussion until then -- >> let's have a discussion what do you think the answer should be? it can't be that the top 1%

control all the wealth relative to the rest -- equivalent to the 90% on the other side, right that's not a positive sign either. >> so -- >> let's have a conversation. >> the right number in economics is never 0 or 100% you're in the middle and people disagree this is how i solve this for myself, it's hard. let's not pretend otherwise. here is the part we all agree on, the poor deserve some assistance and a chance to get ahead. let's focus on that. everyone is spending all their time on the upper hend end the vast inequality comes from quarter to a third in americans at fourth grade do not read at grade level. fix that >> we have all these taxes we're going to do on the wealthy, we'll have a huge pot of money how are you going to fix what needs to be fixed so you're not just taking down the top end i was talking to doug. >> why don't we focus, doug, on the things where beam agree. >> yes. >> the polling shows majority republicans agree on things like

maternity leave. >> yep. >> agree on things like paid child care. >> yep. >> these are things, by the way, increase the pot of money joe is looking for to pay for stuff because they would increase, for example, female participation in the work force and they would make the work force a better place for people. >> think of everything that goes into labor force skills starting from the leave to bond with the newborn child to early childhood education to k-12 system that actually educates everybody. all of that will generate better standard of living for people in the u.s. and reduce inequality. >> i want to get back to rick, we had him standing around listening to this. rick, what's your take on everything we just said? >> well, when half the people in the country can't name the three branchs of government, and we're talking about, you know, child care so kids can get a better education, i think we're way ahead of the cart. i think education is a major problem. we have to quit using the word capitalism we need to use the word market-driven. see then young people might

understand as they have their cell phone or smart car or they try to pick all the various clothes, appliances, ear buds that they like, how did all that come about they only think capitalism no, it's market driven it gives young people a chance to understand that in order to have good things that work efficiently that you need, enjoy and use in your life, that happens to create some wealth. they concentrate on what it creates. they don't concentrate on the fact that they certainly wouldn't want an iphone that was as big as an encyclopedia and as slow as a rotary phone they wouldn't like clothe that is a ordered online that didn't fit their amazon boxes going to the wrong house. they understand all that market driven. venezuela doesn't have any of that market driven. we need to concentrate on the education so young people can understand what they like and they don't like. >> tough when everything is handed to you, though.

right? >> that's the name of that tune. and as far as jobless claims, i agree. but i can't stress enough, folks, the market it has a nervous sense to it that we emeal rated to some extent since last year. tomorrow's number cannot be another 20,000 report and everything stay as it is with respect to the markets. >> that's an interesting set up for that rick, steve, doug, thank you guys all >> thank you >> doug had another comment. >> i know. we went four minutes over. >> just four >> just four it's unusual for us. >> for squawk. >> come back we'll have you back soon, doug steve, we'll see you tomorrow. >> see you tomorrow. good to see you. when we come back, is it time to add crypto to your portfolio? are you serious. bitcoin spiking more than 20% over the past week, but does the gain have legs tom lee will join us to tell us what he thinks. also jamie dimon out with iz

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the dow industrials broke 35,00033 minutes into the trading day. the dow surged 30% this year powered by big gains and household names like phillip morris, coca-cola and boeing behind the gains has been a near per spect setting of strong corporate profits, low inflation and rallying bond market many market pros predict the dow will break 6,000 if not next year than the year after ♪ breaking news this morning in the form of jamie dimon's annual letter to shareholders the jp morgan chase ceo says lower tax rates were a long time coming and they helped boost both u.s. competitiveness and his own bank's bottom line he says the bank has grown

despite what he calls unprecedented challenges and it plans to main train a fortress balance sheet. he says he's fine with government regulation as long as it's good regulation he does address the issue of share buyback saying they're an essential part of proper capitol allocation although secondary to what he calls long-term investing and says the bank is prepared for but not predicting a recession. under an hour until the opening bell on wall street, dom chu joins us with a look at some of the morning's biggest stock movers what do you have >> we have some of the stocks driven because of the news flow. we'll start with tesla losing a tenth of its value premarket nearly 1.5 to 2 million dollars shares of premarket value. this if carries into the regular session, it could be on pace for its worst day since january 18th deliveries fell due in part to shipment times for international markets, tesla, though, did reaffirm its prior guidance for deliveries in the full year of 2019

still, a big move. we're also watching shares of con stallation brands down around a percent now just a fractionally on 120,000 shares of premarket volume. the beverage alcohol giant posted better than expected profits and seams and yesterday it said it would sale around 30 wine brands for $1.7 billion those shares under little bit of pressure and then shares of bankrupt california utility giant pg&e up by 2% on a light 3,000 shares of premarket volume it named tennessee ceo bill johnson as its new chief executive along with a new board of directors. so a few moves, andrew, certainly one of the upside in bankrupt pg and e. what's working today, we're focussing on stocks. yes, we're talking about bitcoin with the bitcoin bull in the last few days crypto currency surged breaking about its 200 moving day average and it does not appear to be an obvious reason for the rise, our next guest says the surge in bitcoin is credible. the move comes as the s&p is

back near all-time highs so there's a question of just whether there's more risk appetite broadly joining us right now is tom li managing partner so, explain what's going on especial especially over the past week we've been trying to make sense of what's actually happened. >> yeah. well, as you know, bitcoin had a rough 2018 and from much of 2019 it's been steadily climbing. and from what we can gather, it's because there have been positive things taking place like a lot of the old whale wallets are buying bitcoins, so it's been slow accumulation and steady accumulation. >> the whale wallets, explain. >> some of the original owners of bitcoins. some who liquidated at 20,000. >> starting to buy back. and then we saw positive developments like back is coming and infrastructure, fidelity custody. activity has been picking up especially in regions where there's been a lot of inflation

or political issues like venezuela and turkey and i think it finally we had a big move in april 1, which wasn't clear what caused it but it was real evidence that there's a lot of dry powder that the crypto community kept a lot of cash, was waiting for bitcoin to break 3,000. when it didn't and made this move -- >> how important, though, ultimately is it for the s.e.c. to approve some form of etf or other kind of financial instrument for this to actually take off in a meaningful way >> i think it's going to be a hugely positive development. >> assuming it happens. >> if or when the s.e.c. approves an etf. of course there's a lot of hurdles for that to take place. >> what's the time horizon look like in your mind? because people thought that was coming years ago. >> yeah. and you know, i guess we have been too optimistic about it i would say it's a lot later than any of us expect. >> do you not think that some of the rise and the price of bitcoin speaks to what's happening in the stock market writ large >> it looks -- it feels like

there's a catchup rally because the s&p year move to date two standard deviations, you know, it's like the tenth best in the history of the stock market first quarter. if boit coin -- >> you don't think this is a risk on kind of snichgs. >> yeah, i think it is risk on plus the dollar is not going up and if if bitcoin rallied two standard deviations it would be close to 19,000 there is a big catch-up move. >> you also have an argument about what the fair value of bitcoin is today, which is interesting. >> that's right. if you were to take a combination of active addresses and activity per user, that's explained over 90% of bitcoin since 2019 the fair value for bitcoin is 14,000 i'm not saying it has to trade at fair value but -- >> why how do you -- >> bitcoin is a network value. currencies are basically how many people are one to use it and adopt it. >> it's only trading at 30% of its value? >> yes. >> what's the cost right now, though, to mine a bitcoin?

>> the break evens have come down it's around 5,000 or 6,000. >> why is the 5,000 or 6,000 not the fair price no number >> because the commodity during a bull period generally trades two to 2 1/2 times its break even that would get you around to 14,000 around again. in a fair market it would trade below its break even. >> are you buying a ton of this right now? do you actually believe it's under valued >> we put in 1% or 2%. >> i understand that if you have a lot of assets. i still think it's crazy but someone who is saving for retirement and putting that aside, that seems crazy. >> basically the idea that you can afford to lose 1% if that's 1% of your portfolio. >> that's crazy. throw it away on high fees to an investor you're taking a flyer on that. you don't know where it's going to go, what's going to happen. >> in a way, that's right, becky. for the majority of people, 1%

is a small risk bed. bitcoin makes all of its gains in ten days in a year. so you have to essentially hold it or hoddle it, as they say, to capture the gains. >> tom, great to see you, sir. >> great to see you. let's get down to the new york stock exchange. jim cramer joins us now. can we talk about tesla, because i think you've been excellent at explaining what the risk is here. >> as you can tell from the way the stock is acting, if you don't do the right numbers, the right delivery stock, it's hurt. one thing that musk has argued and probably will argue again today in front of judge nathan is when i said there could be 500,000 cars delivered and then subsequently he changed that to maybe 400,000 cars and he meant run rate, that it wasn't material is there anything more material than this number we got last

night? look how the stock acts. it's the worst it's gone down this year. the idea that it's first amendment, the company waived the first amendment. the idea that somehow there was a process and it wasn't needed for the sweep, that is fancible. it's him versus the s.e.c. the s.e.c. turned it over to judge nathan and said basically you approved a settlement. he violated your settlement, not our settlement that's why think musk is in a little difficult situation. >> can we also talk about the job numbers? jobless claims that were weaker than expected. rick santelli was saying if we get another jobs report for the month the market's not set up to handle that or is equipped for that obviously these numbers have a lot of noise in them but what do you think? >> rick is ight.

this market rally, when we saw expansion in china over the weekend, it rallies in strength not weakness anymore when you're not fighting the fed, you kind of want numbers that are -- you know, that are strong did the fed really know something? is it worse than we think? when i listen to phil, there's a lot of good things in phil's world and that matters i'm optimistic about that. what i am worried about is jamie dimon's number if that stock doesn't go up and reports, we're in trouble. >> because the financials themselves >> yeah. look, i look at something like if the financials doesn't catch fire we're not going to do it

just with semi conductors. it's not going to work. >> jim, thank you. >> thank you, guys. don't miss an exclusive interview later today. walmart president and ceo doug mcmillon will join power lunch 2:30 p.m. eastern time a business owner always goes beyond what people expect. that's why we built the nation's largest gig-speed network along with complete reliability. then went beyond. beyond clumsy dials-in's and pins. to one-touch conference calls. beyond traditional tv. to tv on any device. beyond low-res surveillance video. to crystal clear hd video monitoring from anywhere. gig-fueled apps that exceed expectations. comcast business. beyond fast.

jamie dimon out with his annual letter to shareholders this morning jp morgan ceo says lower tax rates were a long-time coming and they helped to boost both u.s. competitiveness and his own bank's bottom line dimon says the bank has grown despite what he calls unprecedented challenges and that it plans to maintain a fortress balance sheet he is fine with government regulation as long as it's good regulation he also said capitalism has been the most successful economic system the world has ever seen, but it does have flaws and leaves people behind he said socialism would be a disaster for our country

but we shouldn't forget that true freedom and free enterprise are at some point inexorably limpinged. . >> i don't know if it's a good thing or bad thing. >> you always say. >> how do you make capitalism work for everybody i think he raises it in a smart and thoughtful way and it's on the table and it's an issue we have to grapple with, not whether we need to pursue socialism, although people are obviously pushing in that direction. what do you have to do to make sure all the boats are lifted? that's the fundamental question and i think we'll be grappling with it the next decade. >> we almost got out of here we had to come back to this one more time. >> it just -- and i had some

smart viewers who wrote in and said instead of asking millennials what they think about socialism, let's ask people who have lived in a socialist country what they think about socialism and get the real answer. inexorably, which isn't that hard to say, people who live in socialist countries understand the difference "squawk on the street" coming up right now. ♪ it's a beautiful day good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber will they announce a trade summit with the u.s. how might investors react? german factory orders plummet year on year

jobless claims