we'll tell you why he's cutting his downgrade. it's monday, april 8th, and "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's take a look at u.s. equity futures. things are looking like we're going to open down dow futures indicated down by almost 100 points. s&p futures off by 5 points and nasdaq down 13 points. we are coming off strong gains on the markets on friday all three major averages posted at their highest level in three months we are talking about the s&p 500's longest winning streak in 18 months. it's been up seven out of seven sessions the dow and nasdaq have been up

six of the last seven sessions after friday's job number you did see all three of those major averages ending higher on friday and up for the week as well. let's take a look at what happened overnight in asia the nikkei was off by .2 of a percent and shanghai was flat and hang seng up half a percent. early trading taking place in europe this morning, red arrows across the board not major declines biggest decliner, the dax in germany off .4 of a percent. stocks are pretty weak in spain where they're down .6 of a percent. in the meantime, let's take a look at the treasury market in the united states. on friday you saw the 10-year barely eking out a 2.5% yield. this morning it's just below that, 2.499% crude is trading near five-year highs. crude oil is trading -- >> it is trading.

>> it is trading here you go. wti right now at $63.36 a barrel. talking about trading. it's not trading yet but a lot of people talking about when it's going to get trading. pinterest kicking off its investor road show it gibbs today "the wall street journal" says it is expected to place the ipo below the last valuation which was $12 billion. leslie picker has the story. >> down round ipo. still very early in the process. sources close to the matter tells me below that $12 billion round. this is par of the march of the unicorns which is continuing with pinterest with pinterest expected to launch the ipo road show at any minute a source close to the matter says pinterest is expected to set an initial range below that last private funding ground in 2017 which valued the company at

$12 billion. now there's nothing else quite like pinterest in the publicly traded markets which makes it a little bit more difficult to value. it says it's not quite a tool like search or ecommerce, but it's not really media either it's something in between which it calls discovery discovery doesn't come cheap pinterest lost $63 billion last year it's in the early stages of monetization those and other metrics will be plugged in to help investors assess whether it helps investors buy with the price rate that will be given this morning. they will give a new kind of discovery which is what wall street is looking for. >> let's talk about the down round and what it means. first of all, do we think this is impacted at all by lyft, which is to say there are questions that lyft was a

successful ipo, not successful ipo. i'm putting it back into the category of a fine, straight ahead ipo. no >> lyft at this point, it's pretty standard. it closed a week above its ipo price. i don't actually think coming out at a lower value situation indicative of this we want to be more conservative on this one. pinterest is an add-based company and they wouldn't be comparative. >> the other component is as these road shows go on, lyft was an example, so many of them are, typically you start lower than where they end. >> it is a game of psychology, especially with these companies where in their private rounds, there isn't oftentimes much math involved it's usually kind of throwing a dart at a dart board and making

sure everyone is cool with the price in which they're paying. in the public markets, it doesn't operate that way people use models. because of that, you need to play into the psychology of people you need to play it conservatively so people buy it and make the ipo successful. you don't want to price it too low that people don't think it's a hot deal that will pop on may 1. they want to see demand. the way to show demand is raising the pricing and range above. >> you think low now, higher in a couple of weeks? >> poe 2e7ksly, maybe not. interestingly, one of the biggest issues of pricing below your private round is there are oftentimes all of these different liquidation preferences and private valuations which essentially if the ipo comes out below the latest funding round can be punitive for the investors. >> do we know what kind of

rachets are involved >> i asked this morning and it sounds like we have a very clean capital structure. >> thank you for that. by the way, speaking of lyft, leslie, lyft we should tell you threatening legal action against morgan stanley fascinating story. letter sent to the bank. lyft has been accusing morgan of marketing products pre -- not typically what was happening -- >> they were not -- >> did they have no underwriting role >> no underwriting role. >> they were writing for uber. >> there's a conflict there. >> apparently in the contract if you were allocated part of the ipo you were not allowed to short your stock or do anything that would hedge your stock, change your stock -- >> change your economic exposure. >> so what happened apparently,

at least what lyft is accusing morgan stanley of doing, is sending out these letters saying we will effectively hedge your shares for you we will short your shares, we'll do all these sorts of things. >> were are they going after morgan stanley instead of going after the people who violated in terms of the agreement >> that's a very good question >> so i think the reason is it's hard to pin down exactly who was doing this. >> morgan stand live -- >> the people that were violating the terms of the agreement. >> you need your brokerage firm. >> and which is why people couldn't short it until the second day it was monday night when you could short it >> yeah. >> they're saying morgan stanley should be doing due diligence. >> morgan stanley said it didn't -- you read the statement. they are doing this knowingly but they didn't do it to anybody that the company disclosed was a buyer, which would have been the top buyers, so that's it, or

anybody who purposefully disclosed. >> the stock, right? >> lyft -- >> they weren't part of the interim. their brokers got some allocati allocation they didn't get any lyft whatsoever >> were they officially doing it or saying we'll back you >> morgan stanley? >> yes. >> morgan stanley is denying creating any special product they did say they helped investors in normal market making activity short the lyft shares again, lyft should go after the people who they had these agreements with, not the bank. >> right. >> but interestingly, i think what lyft is trying to do, and i think could have an impact, is trying to put morgan stanley in a box when it comes to future ipos meaning if you are a startup company thinking about being an ipo and you see morgan stanley doing that, you say these people

have bad behavior. >> except you're making the market over. >> that depends if they were making market or they're denying it if you read the statement so carefully, there's something slightly amiss. >> there is a nuance. >> something slightly different is going on there. >> we were able to review the letter last week and had some conversations about this over the weekend. interestingly the lyft camp is ccing on the letter all of the investment bankers involved in underwriting these deals. >> warning to you for next time, right? >> which would be more of the kind of division with the whole -- >> very much like the sopranos. >> one and the other i like 1.5 points a week put money out on the street, that's good business really good business. >> 1.5% over stock. >> if you don't get paid, there's things you need to do that up the program.

>> a little further than what this deal is >> yeah. right. it involves more than just threats. >> we'll just have to stay on the story then we'll see. >> pinterest, lyft, morgan stanley. >> binging the sopranos is not healthy, that's all i'm going to say. the 80 episodes are spread out over seven years so the arguments between -- >> and the violence. >> the violence. watching that for a month, it's like i -- yes. am we were at this place and someone said, is that joe kernen's younger brother she goes, don't tell him he goes, and you're so thin. so i don't know what you're seeing out there and there's no good way --

>> the camera adds ten pounds. >> could he say, wow, you are fatter, older in person, i wouldn't have liked that do i like your younger and thinner in person? >> i do. i do i'd much rather hear that. i hear the same thing. i'd much rather hear that. >> in person you'd rather -- >> where is the lighting guy younger brother? and then he came over, oh, my god, it is you you look -- i'm like -- >> then you just have to open your mouth and start talking and then he believes you >> but just -- let's go. and for me in person, i don't think i look that great so i have no idea what i look like -- >> all right when we come back, ge shares are under pressure after a downgrade by jpmorgan analyst steven tusip. oh, this morning is off by more than 5.5%. this morning ray dalio will tell us why he thinks capitalism needs to be reformed

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jpmorgan is downgrading ge from 6 to 5 the stock is $9, almost 9.5. that would be almost cut in half in fact, it would be based on where the stock was before looks like it's right around 10. tusa says many investors are underestimating the severity of challenges and underlying risks at ge and they're over estimating the value of what he calls small positives. >> this is interesting warren buffet calling on wells fargo this time to look beyond wall street for its next ceo the legendary investor who is the bank's largest investor said the next ceo shouldn't come from

wall street. former chief executive tim sloane stepped down last month >> a lot of people thought he might get someone from jpmorgan. >> miss lake. >> marianne lake people mentioned ruth borak. the ce google. i think the job of cfo of goo e google. >> this article mentioned -- buffet mentioned that this article mentioned that maybe the head of pnc bank would be somebody who could be interested in that. he would be coming from a more regional bank factor i read the article i haven't talked to buffet about this at all. i read the article this morning.

the one thing i would say is they're characterizing this as him calling for this my guess would be you can't be an active supporter. i think his point would be he's not involved in choosing the new ceo. i don't think this is guidance from him my guess is this is a conversation where he was asking what it would take and he probably said something along the lines is in order to be not under fire from congress and the regulators like they have been, they may not want to choose somebody like this my guess is this is not him calling directly for that. that's a bit of a mischaracterization. that's their words, not ours they're not his words. >> i knew i had done this. it's early in the morning. i made a list as i was reading that article of a couple of

people what do you think of indri indrid nouie i was trying to think of people outside the financial sector women too, specifically. >> why >> because i think there's a sense -- >> how about elon? >> in this day and age -- >> if he's open. >> there's just a sense that that might be something they might be looking for. >> if you look too far afield you'll have a problem because i think you have to have somebody who has banking experience. >> that's a unique concept not a retailer >> how do you like this one? katheryn marinella not seemingly wall street. used to run first data >> i think both of those would be interesting to be added to the board. i don't know if you want a ceo

without banking experience. >> even though because her name has been popping up on a lot of things, ann from bank of america. >> that's interesting. >> she has done a lot of things that have seemed very progressive. >> that's interesting. >> a perception of the bank. a couple of women to put on the potential list. >> i like ann. that's aninteresting idea. in the meantime, nissan shareholders voting overnight to remove carlos ghosn as a board member he was rearrested in japan last week on suspicion that he diverted company money for personal use he says that he's innocent and that he's the victim of a board room coup. executives apologized for the scandal and at times were interrupted by hecklers. and we should tell you pinterest just setting the price range for the ipo. we just talked about it moments ago. it's going to be offering 75 million shares expected to price

between 15 and $17 per share a little bit of math for you during the next commercial break to get you exactly what that means in terms of the total price. joe? coming up, there's a new leader in the music streaming wars, at least here in the u.s that story after the break "squawk box" coming right back oh, wow. you two are going to have such a great trip. yeah, have fun! thanks to you, we will. aw, stop. this is why voya helps reach today's goals... ...all while helping you to and through retirement. um, you guys are just going for a week, right? yeah! that's right.

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the movie "shazam" the live of jim neighbors topped the weekend box office it brought in a better than expected $53 million in north american ticket sales. it tells -- oh, no, it's not about gomer pile it tells the story of a teenage foster kid who transforms into an adult super hero taking second the stephen king reboot of "pet sematary." it brought in 25 million in its debut this weekend they would know that would be different. "shazam". >> they know that you're talking about gomer pyle. >> brian stelter is no longer watching. >> is he the one who called you up >> oh, yeah. he had no idea he's moved on to -- >> bigger things >> yes >> pinterest just setting the price range for its ipo.

it will be offering 75 million shares expected to be priced between 15 and 17 dollars. leslie pickers going through the filing as we speak. >> andrew, that's right. at the midpoint that would imply an ipo size of $1.2 billion, so one of the more sizeable tech ipos we've seen in recent years. we told you earlier today that this ipo valuation would come in below its latest funding round, which was $12 billion back in 2017 that appears to have been confirmed. if you look at a method of valuing this company based on an apples to apples comparison, they are seeking at the midpoint of the range just shy of about $11 billion for a valuation, which is a slight discount to where they were at in the private markets. now as you mentioned, they are seeking to sell about 75 millio shares shares outstanding on a market cap basis they say they have about 529 million shares so on a market cap, and that's what we'll see when the shares

begin trading -- >> right. >> -- at the midpoint we're looking at $8.5 billion for this company. >> what's the high side? >> sorry >> what's the high side? >> the high side would be -- >> did they get to 12? >> no. 9 billion. on the high end of the range we're looking at slightly more than $11 billion on the high end of the range no, they haven't yet gotten to $12 billion but as we've all learned mr. these ipos, it's still very early in the process. this could give them leeway to raise it if they see enough demand from shareholders, but it's also, like we talked about, a psychological benchmark for investors where they may see even though there really isn't -- it isn't an actual discount for them necessarily. they may not view it that way, but psychologically it may seem like a discount because it's at a discount relative to the latest valuation. >> why wouldn't that be a valuation? >> the way they value ipos based

on a basket of comparables, it may not be cheap in the publicly traded markets. >> that's below the last private round, that's still a discount. >> that's a discount but they may not see it as a cheap stock. just because these investors invested privately, they were the ones that were up over their skis to me it still seems expensive i'm not sure they'll feel that way. >> what were they talking about? >> institutional investors the way they look at it is they will take -- i'm making these up as i go along, but ad-based models like snap chat, facebook, and twitter -- >> that makes sense, right >> right. >> so the private market may not make sense. >> exactly. >> the private market valuation was, you care what the valuation is and how i can try and figure out if that makes sense based on whatever metrics i get from you and whatever comps i can look at. >> exactly so that's why institutional investors may look at this price

range, even though it's a discount in the private range, it's significant to me. >> i gotcha. >> that's based on how they value it. >> the question is were the private markets making sense in -- >> 2017. >> $6 million valuations for uber. >> exactly as we know, a lot of these private valuations have been sky high the unicorns have spent years to build up their financials to own up to it. >> no rachets in the filing? >> not that i see but that requires a little bit more of a cliff notes. >> we'll take a look at that a lot more on "squawk" this morning. getting ready for the trading week ahead the kickoff to earnings season you don't want to miss our big interview at 8:00 a.m. eastern time coming off of his big interview on "60 minutes" last night, ray dalio will be here to talk about the future of capitalism and his $100 million gift to the state of connecticut

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> . welcome back, you're watching "squawk box" live from the nasdaq market site in times squa square. good morning u.s. equity futures down triple digits, 109.99 the s&p down 364 the nasdaq down just under seven points, 684. with us, jpmorgan portfolio manager, chief equity strategist is also here i'm actually curious if you think given that we've just had

this conversation about the pinterest ipo being a down round, whether you think that says anything about the larger markets right now in terms of enthusiasm. >> you know, i think with a market closer to highs than not and yet more focused in trying to understand business models and numbers, i mean, it speaks to markets being perhaps a touch more skeptical and a touch more willing to do the harder work rather than just saying that the trend is necessarily a friend that you might see happening more in the private markets. >> i was going to say, does that speak more to the public markets or the private markets >> so the ipo market has been hot, which is good you'd expect the markets doing well, but the way the lyft ipo came the other day with the moving the price up and then the stock trading off was very reminiscent of what happened with facebook a couple of years ago. same sort of thing they could have priced it at a better price they, in my opinion, got greedy.

stock came down. got to a better value and that money came in. that process took a couple of months for the whole thing to wash out. >> in terms of what last week felt like we were in a risk on world, gotten better, i would have thought this ipo and the multitudes that are coming after it would have been higher numbers, not lower numbers >> i think ultimately investors have to make sense of what their options are. and certainly when you look at ipos there's a lot of art. there's a little bit of science, a little bit of art in terms of trying to go from pricing very specific negotiator transactions to actually letting the market opine versus what an informed investor is going to negotiate with an individual management deal. >> when you see on the screen the s&p is now within 1.5% of its all-time high right now. does that suggest to you that we're at the end here of something or is this just the

next rachet up >> i think stepping back from the small segment, which is ipos to the broader market, i think markets kind of continue to move higher over the course of this year certainly we'll be listening later this week and next week and weeks to follow what did management see in terms of their outlook and what do they think about their sustainability and profitability and from that i think the answer is going to be positive. >> what's the big catalyst >> so, andrew, the thing you have to remember is that 20% correction we saw in the fourth quarter, multiples contracted from all the way down -- from 18 to 14 times earnings the market was pricing in the certainty of recession so now this 22% rally, we've only gotten the multiple back to 16.5 times the inflation metric which is the key driver of what that pe is, we're sitting at 1.8% core pce. we may not get back to 2% by the end of the year. so a return to an 18 multiple,

another tumult at this pointle points or so is a perfectly reasonable assumption. >> is it either equity or sector you buy right now? >> the areas that are still attractive, relatively chief in our view on the industrial side you have financials, energy, industrials. we like domestic small cap and we still like emerging markets those are areas if you had new money to sort of deploy now, those are areas that are attractiveness. >> would you touch tech? >> i think you have to touch tech it's 21.5% of the market if you don't like technology, you don't like the market. >> the multiples came back. >> thank you, your eminence. >> you know -- >> ah -- >> ah. >> okay. go ahead >> feeling comfortable >> no, i'm good. >> what was that >> i think with technology what you have seen is tremendous earnings growth over the years you've certainly seen valuations

expand over two or three years but ultimately coming back to just the scale of a market or the technology's contribution to the market, effectively your decision on the market is your decision and the two are intertwined. >> we talk about china trade every day. is china trade built in, that is it's done? >> i don't think it's done there are ways to try to access this idea of us getting to a deal with the chinese. we're talking -- you're asking about ideas. i think the railroads get very interesting here you wind up having nice leverage to an expanding u.s. economy when you look at the context of what the deals that are being proposed are, this idea of leverage to the u.s. being a commodity exporter, particularly agricultural and some raw minerals, these wind up coming and being transported by rail. >> you don't like all transports >> not all. >> phil, a looming pull back in earnings this is wall street journal.

>> sure. >> poses a threat to the stock markets. so i just don't understand what they mean -- i read the article and they're talking about estimates coming down for earnings and it's starting you know where it's starting doesn't mean negative earnings it doesn't mean a drop in earnings, it means slower growth. >> so we're going to start to get the earnings season this friday we are expecting that the first quarter will be down 3 to 5% the first quarter. >> we are. lower earnings. >> lower earnings down on a year-to-year basis. >> year over year, not quarter to quarter. >> year over year. the first quarter will be 1.75% down from 2.2 the first quarter. the issuedriving gdp lower and earnings lower in the fourth quarter is very transitory in our view those numbers will get back on a positive track in the second quarter. that may not necessarily be a consensus view. >> it's not. >> you think down 3 to 5 or flat or up two? >> i think consensus is up 2 to

3? >> is that where we are? >> down year on year. >> a drop, not slower growth >> it goes to 16 -- it actually goes down? >> yeah. but full year we think we get back up 5% year over year to about $170 in earnings. >> then you're going to have to have outperformance second quarter. >> absolutely. >> massive hockey stick. >> the first quarter of last year, was that -- >> was very strong you've got a number of issues, the government shutdown, the weather, the consumer pulled their horns in all of those issues are going to combine to create what we thin is going to be a somewhat sloppy first quarter. the key is not going to be the earnings, it's going to be the management guidance. how transitory are those issues versus the sustainability of those issues so the guidance is going to be as important as anything else here. >> jack and phil, thank you guys >> appreciate it. >> nice to see you. when we come back, potential trouble on the horizon for the

new nafta deal we'll show you what larry kudlow said about trade over the weekend. later, we have a big interview coming up with ray dalio and connecticut governor ned lamont we'll be talking about the 1$100 million gift to the school system stay right here. you are watching "squawk" on cnbc

welcome back, everybody. let's take a look at shares of boeing this morning. they are down sharply. the company on friday after the closing bell said that it's going to be slowing production of the 737 max aircraft. you can see that they are now saying that they're going to put out 42 planes a month, down from 52 that it had been saying before this morning there's a downgrade coming from bank of america as a result of that bank of america now saying that they expect the disruption to be much longer than they originally anticipated. they're saying six to nine months of disruption before they were thinking three to nine months

they are saying the 737 is the most profitable program for boeing it makes up 40% of ebit. they are looking at a target of 420 down from 480 and they're cutting their rating on the stock from a neutral to a buy. stock is down 4.3% this morning back to $375. >> and the dow would be up without that. >> right >> we'll have much more on boeing coming up in a little bit. coming up, we're going to hear from ray dalio's "60 minutes" interview last night on what he calls needed reforming to capitalism. discuss that next. what's ahead for our big interview at 8:00 a.m. eastern with ray dalio and the governor of connecticut as we head to break, here's a quick check on what's happening in the european markets right now. at&t provides edge-to-edge intelligence,

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billionaire hedge fund manager ray dalio out with a grim outlook for the american dream. he's done pretty well. here's what the founder of bridgewater told cbs's "60 minutes" last night. >> capitalism needs to be reformed it doesn't need to be abandoned. so like anything, like a car, like anything, a plane, a school system, anything, it needs to be reformed in order to work better >> here to talk about the future of capitalism, jason furman, former cea, chairman at harvard kennedy school professor and

phillip swaggle, maryland school of public policy professor i'll get to you in a second, jason, because i agree, you know, be worried because i agree with most of what you're saying. start with you, phil what dalio basically did was raise important points -- income equality, lackluster public education, stagnant earnings for much of the population, all these things that we are very familiar with -- and then the challenge in my view, or your view, is a policy response. it has nothing to do with capitalism, which is simply where the means of production, it resides in the private sector but as far as public policy, i certainly see that's what he's talking about. i don't even know if he really understands what he's saying there, but he basically said we need smart people to come up with things and then called it reforming capitalism, right? >> yeah. look, i like what jamie dimon said in his annual letter to

shareholders, that the alternative to capitalism is worse, and we know it doesn't work and i'd like people for dalio to really dig in to say, okay, what can we do about k-12 education, right? what are things that will work, that can be scaled up? >> that's the public sector, isn't it that's not even the private -- it's the public sector. >> the challenge i see is i look at our education system -- we have amazing universities, including public ones. look, i teach at a public university it's a great one jason's at a private, a super university and compare that to k-12 you know, some -- there's a difference there in the standards. >> and jason, you say the same thing, you don't want to talk using the word capitalism. but we don't like crony capitalism okay, i'll talk about that you don't want certain types of capitalism as we see as practiced around the world, but is anyone really saying that we want to change the system where buyers and sellers meet in the free market and then decide on how to, you know, how to produce

things, and that's how capital is allocated is anyone saying that we need to move away from that, jason, or is it policy >> yeah, look, i'm thrilled ray dalio diagnosed the problem in this way i wish more people did over a decade ago, alan greenspan said that inequality was a threat to democratic capitalism that's a quote but you know, i don't find the capitalist versus socialist debate very useful for anything. you look at the scandinavian countries -- >> it's not critically important? >> they're rated higher on business freedom than the united states there's huge room to move on all sorts of things, including taxes, and still call yourself and actually be a capitalist system you look at the people running around calling themselves socialists they're not really advocating the nationalization of -- >> reproduction and raising taxes. did you watch the "60 minutes," guys, last night did you stay for the -- did you stay for the next piece? "60 minutes," no idea the irony

of following ray dalio with -- i'll see your dalio and i'll raise you five ken langones. ken langone came on afterwards this is ken's book, "i love capitalism!" so, for nyu medical school, he put up $100 million, and he raised another $350 million, so that it's tuition-free now, this is a guy -- you know, he started a company that has 325,000 employees. i think bridgewater has what, 1,700 or so. he created $225 billion in market cap even dalio's answers, don't they involve either using philanthropic funds or tax funds to fix the system? and aren't those funds generated from capitalism? jason? >> capitalism is -- markets are great! in fact, i think we need more markets -- >> what about capitalism needs to be reformed, jason? he said that and he gave no details, but what needs to be reformed >> i'd say three things. i'd say we need, one, more

competition. >> okay. break up the big companies, you think? >> two -- even with more competition, it's not going to necessarily work for everyone, so you need a way to make work pay. >> that's policy. >> we came out with an idea to subsidize work and finally, capitalism isn't going to solve some of our biggest problems unless we ask it to. climate change is one of our biggest problems. >> okay. >> we need to ask capitalism to solve that with a carbon tax, plus more green infrastructure -- >> i don't know how that helps phil, how about you? it's policy, isn't it? i don't know, we're talking around the edges of -- i'm not sure what it means to reform capitalism do you know? >> okay. can i pick up where jason left off? because he and i agree on so much. >> that's nice. >> and we've written together. as he said, i look at carbon tax and climate. that's something where clearly markets work and market can solve the problem. and the challenge that our political conversation is going in the opposite direction, right? the people running for office for 2020 are busy saying, look, markets don't work in carbon, we need to have these mandates and

inefficiency and things like that and so, again, the socialism versus markets and capitalism, i would just like markets to work -- >> should we -- >> yep. >> i want to ask dalio whether -- so, he's worth $18 billion. and in a large part, people like ray and other billionaires, if you took them out of the income inequality metrics, it doesn't look nearly as bad i mean, in large part, people like that have really -- they take care of a million people earning normal amounts, and so that's a large part of the income inequality. i wonder if he would make it harder for him to do what he did. i wonder if he thinks he's a net positive to society, because i think he is, and i hope we have more people like langone and dalio. jason, am i wrong there? >> look, i think a lot of capitalists are net positive to society, but -- >> but is it a zero sum game is it $18 billion not spread out everywhere else? >> i don't think it's a zero sum game, but look at the fact that median household income -- >> no, i know, i know --

>> -- has grown really slowly for the last 35 years. it's not just people at the top have done better -- >> it's education, right but is it charter schools? >> what? >> is it public schools? is it charter schools? is it choice in education? is it private-sector solutions to education these are all things that we need money -- >> but joe, isn't it all of the above? >> maybe, but i don't know if it's reforming capitalism. >> i don't think it's a debate per se about -- >> well, what would you do >> -- capitalism -- >> what's your answer? >> i think it's a tax story. it's what ray talks about, an ultimate tax story -- >> and spend it on what, on education? >> and figure out a way -- you talk about equal opportunity if that's what we ultimately want in this country, it has to be about education -- >> so it's not capitalism, it's tax policy i agreed -- >> placed on families that can't afford health care otherwise and that goes to the equal opportunity piece of it. that's all part of it -- >> sounds like policy, not capitalism. >> i'll bet when ray is here live, he will say it's all about policy. >> okay. all right. good, then maybe we need to reframe the debate

thank you, jason and phil. there we have it, right there, reforming capitalism anyway thank you. we're going to have langone -- i wish we had langone on today. >> we'll have him. coming up at 8:00 a.m. eastern time, we will bring you that live interview with ray dalio and connecticut's governor, ned lamont, after dalio pledged the largest donation in connecticut's history, $100 million to the state's public schools to try to equal out meso of that equal opportunity issue. back in a moment ♪ ♪ ♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. plants capture co2.

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after a strong start to the new year, analysts are warning of a bumpy earnings season we'll talk markets and your money, straight ahead. american airlines extending the grounding of the 737 max as boeing works to fix a software issue. the latest on the boeing investigation and the state of the airline industry, just minutes away. and we're counting down to our interview of the morning ray dalio sounding the alarm on capitalism, income inequality, and education. we're going to discuss those issues and the state of the nation's financial system with jeb hensarling and barney frank as the second hour of "squawk box" begins right now.

>> announcer: live from the beating heart of business, new york, this is "squawk box. good morning, and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity futures at this hour down triple digits in large part because of the pullback, 4%-plus, in boeing shares. that dow component this morning. but the s&p and the nasdaq are both in the red as well but not that the same extent as the dow because of boeing. let's look at what else is making headlines this hour pinterest has set its ipo price range of $15 to $17 a share as it gets set to begin its ipo road show. it plans to sell 75 million shares the stock is expected to make its new york stock exchange debut next week, but based on this early round, or based on this early setting of the price, that would be below its last round that it went out in the capital markets at $12 billion

this would value it more around 8 1/2, at the high end more around $11 billion as joe mentioned, boeing shares are under pressure this morning. the company is scaling back production of its 737 max jet to 42 planes a month down from 52 as it works towards returning the jet to service after two fatal crashes. this morning, bank of america merrill lynch downgraded the stock to neutral from a buy because they said the disruption is now longer than they had initially expected they were initially looking fo three to six months of a disruption here. now they're looking for six to nine months. in the meantime, warren buffett is urging wells fargo to look beyond wall street for its next ceo, at least that's the characterization in "the financial times. buffett is the bank's largest shareholder and he told "the ft" that the next chief shouldn't come from inside wells and probably shouldn't come from jpmorgan or goldman sachs. former ceo tim sloan stepped down at the end of march after lots of pressure coming from politicians and from regulators. >> what do you think, by the way, we were going over names before -- deep bench and

american express, would that count in the context of wall street, you think? >> probably not. probably not. >> there's a lot of people, a lot of very talented people -- >> -- from the banks that the regulators are. >> we were tossing out names last hour, potential people. >> one of the people mentioned in that "ft" article, which is interesting, is the head of pnc bank, came from jpmorgan before, but pnc more of a regional bank and not under the same pressure as the big banks all right, billionaire hedge fund manager ray dalio out with a grim outlook for the american dream. here's what the founder of bridgewater associates told "60 minutes" last night. >> i think the american dream is lost i think, for the most part, we don't even talk about what is the american dream and it's very different from when i was growing up. >> what's not working? >> it's not redistributing opportunity. we can call it a wealth gap. you can call it an income gap. and so, i think that if i was the president of the united states, or it has to come from

the top, what i would do is recognize that this is a national emergency >> dalio also weighing in on the debate over the future of capitalism the world's biggest hedge fund manager saying that the system is broken. >> capitalism needs to be reformed it doesn't need to be abandoned. so, like anything, like a car, like anything, a plane, a school system, anything, it needs to be reformed in order to work better >> american capitalism is not sustainable. that's what i hear you saying. >> i don't think it's sustainable. we're at a juncture. we can do it together, or we will do it in conflict there will be a conflict between the rich and the poor. >> we will hear much more about this coming up later this morning. ray dalio will join us live at 8:00 a.m. eastern with the governor of connecticut, governor ned lamont. in the meantime, attorney

michael avenatti facing extortion charges, upped the ante in his feud with nike over the weekend. avenatti tweeted a link to 41 pages of documents in which he claims that there is evidence showing the retailer bribed players to attend nike colleges. in another tweet, avenatti says -- "nike should be criminally indicted on well over 200 counts and should also explain why they misled their investors/the s.e.c. if i'm lying or the docs are not leg legit, i challenge nike to issue a statement claiming no bribes were ever paid -- just do it." checking shares of nike this morning, they're unchanged at this moment at $85.40. analytlso a new cnbc flash d poll showing some showing oppositions to the nominations of stephen moore and herman cain to the federal reserve board steve liesman joins us with more details on that. >> thank you respondents to the survey taken

over the weekend and generally believe steve moore and herman cain will be confirmed by the senate but that they should not be so, we asked, will the senate approve? 51% said yes for moore, 19% no 49% said yes for cain, 28% no. but going on to the issue of should the senate approve them, 34% said yes for moore, 60% said no 40% said yes for cain, 53% said no kathy bostjancic, economist from oxford not mincing words, saying "both moore and cain are highly unconventional and politically biased choices and if confirmed would be very disruptive." you could answer more than once on this. 72% said cain is too political 79% said that of moore and personal issues, 56%-46% and not qualified, 76% said cain and 71% said moore strategists think the

president's criticisms of the fed along with these nominations are reducing the fed's central bank's independence. 47% said yes 45% said no effect still, 65% say the president's comments will have little effect on monetary policy, but that's down, by the way, from 3% in november 22% say they will hike -- said these comments make rate hikes less likely, and that's up from 14%. while most respondents think the president should not be commenting on monetary policy, the percentage is declining, from 83% who thought it was inappropriate in july to 61% now. so i guess they're getting a little bit used to it. but we will publish this later you should see the remarks most of them are very strident here is one, however, from donald luskin, chief investment officer, saying "trump is holding the fed accountable around as the man who managers fed governors, that is entirely appropriate. >> i'm trying to think of what's different about this because presidents always make political

appointees to these positions. i guess what's different is the president is so outspoken in his desire for the fed not to raise rates. instead of doing it quietly like presidents in the past have done, he's been very out there, very public in all of his criticisms >> i think the question is sort of what banner do you fly, right? is the first banner you fly your political banner or your economic banner, right and i think what's sort of been interesting about moore and cain is they're more political from that there's an article here comparing with what reagan did -- here's steve bliss -- "the difference with reagan is by being so public and blatant, president trump makes the fed look more political to the public and that ultimately undercuts the fed. reagan stacked the board, very quiet about it the president's out there -- >> stealthy. >> yeah. and look, and the other thing is, on the policy issue, this group does not believe that the fed ought to be embarking on quantitative easing. >> does not need to be. >> right, which the president

wants the fed to do now. >> you mean they want them to wind down the balance sheet and he does not want them to. >> well, they want them to do what they've announced they're going to do, which is -- by the way, it's worth pointing out, we, poll after poll -- this group approves of the president's handling of the economy. 50%, 60%, sometimes 70% approve. so, the fact that they're on the other side of his appointments here i think is notable. >> what do you think the chances are that either of these appointments gets struck down? >> i have much better feel for the incredible unknowns of the economy than i do the unknowns of the senate confirmation process. i believe the senate generally has gone along with the president on these -- >> right. >> this would be an embarrassing thing -- if they're nominated. remember, they have to get through the process. this is another thing that's different, becky, from what you were talking about i've talked about this on set before, the idea that they had this very deliberative process and people were not really announced until they came through that process this was president trump saying

cain and moore and now you guys take care of this -- >> the vetting. >> the vetting, right. >> stick around, steve for more on the fed and markets, let's bring in terry spath, chief investment officer at sierra investment management, also keith banks, bank of america vice chairman of global wealth and investment management welcome to both of you what do you think, first of all, just about the fed, whether it's being politicized and whether that's a concern to markets? what do you say, terry >> yeah, so, i would agree with you that presidents have always appointed these nominees, and so, it's always been a political process. i don't think it's new but i would agree with the statement that it's being a lot more obvious to the public i actually think it's kind of funny, actually, that herman cain and steve moore and even larry kudlow, kind of like the mod squad now, the hipsters that are, you know, juicing the economy, potentially or dooming us to an inflationary environment. we'll see what happens i think they could probably get confirmed, but they won't be politicized, i hope. that's what i hope. >> keith, your thoughts?

>> i think just the way in which president trump has brought the fed into the conversation and his views on what they're doing right or wrong makes this more political almost by definition chances are they'll go through i don't have an opinion on the two as to whether they'll be good fed chairs or not, but i mean, i think time will tell. >> are there equivalencies, meaning in terms of people who have been nominated historically, that you'd look at and go, okay, that's kind of like a stephen moore at the time or herman cain at the time, or are these such outliers? >> not necessarily equivalencies, but i do think that the fed takes their mandate to be neutral to the political spectrum very seriously. and i do think that their goal is to do the right thing and you know, depending on what their point of view is, i think that lends some color to what they end up doing. i think it's worth pausing we had four rate hikes last year that flattened the yield curve pretty substantially, and i think it's time for things to catch up a little bit. and so, i think a pause is necessary, but i think a cut is

absolutely absurd. >> i've got to say, i'm a little more worried than both of our guests here, because a couple things one is, i believe this introduced effectively third-world volatility into the united states, where in the third world you worried about fed chairmen being fired, you worry about them being overly influenced turkey, we just went through it with them and you saw what happened to the lira so, this idea -- if you think about the idea of what happens when, or if we were to have a recession. would it not be incumbent upon the president at that point to fire the fed chairman? now, that's a separate question of should he be fired in that instance or not. but the idea that, all of a sudden, you have -- >> wait a second, i thought fed chairman couldn't be fired you serve your term and that's that. >> that's a question, whether or not we're going to have -- what would the president do if we had a recession at that point? he's already made clear that the fed is essentially the fall guy -- >> but i think we may be jumping ahead, because it sounds to me like president trump has basically said i'm stuck with you -- >> he has said that. he has said that -- >> he agreed that he can't fire

the fed chairman. >> he has said that, but can you imagine what he might do in the instance of a recession? i think it's fair to say that the president would consider that and would force more blame on the federal reserve and then all of a sudden, it becomes an issue for congress, right? and that's really where the danger is, is if congress starts to get involved in the making of policy, it's congress that grants -- >> congress has been thinking about that since the last recession. >> exactly. >> they have been kind of looking back towards that. we'll see what happens, but i think that's a couple of steps removed from where we are right now. >> well, that's what the whole issue is ooze not a near-term issue i don't think there's any issue right now. it's down the road what happens with the next president? you get a democratic president, should they be criticizing -- >> it's funny, like if congress gets involved. oh, my god, don't ever give them any policy i mean, isn't that sort of what they do? they do everything else for us, right? >> except there was a decision in 1913 -- >> no, i understand -- >> i don't, actually, because in 1907, we went through a series

of bank panics -- >> because we give these guys the ability to do everything else, which is scary enough, considering that -- >> it is scary enough. it is scary enough -- >> i'm just joking wasn't blinder pretty -- i mean, i read his editorials, and he's about as far on the other side as you can possibly get. >> no doubt about it and by the way, janet yellen probably a liberal democrat -- >> i wasn't going to say anything because -- janet says politics aren't necessarily anything like her husband, but her husband is a noble laureate that's like stiglets lefty almost, isn't he san francisco fed -- >> yes, yes. >> and we don't talk about it a lot of times when they're from that side, but if it's the other -- it's a lot of things. >> the difference may be the public -- >> crazy right-wingers unhinged >> educated -- >> wingnuts. >> if i could jump in, because i agree with you that -- >> stephen moore is educated you don't like his policy -- >> moore is a smart guy. there's no doubt. >> they're all smart guys, and some have ph dchs and some don't. if i could jump in, i don't

think that the president will fire anyone at the fed, although he's absolutely introduced volatility to this conversation, but don't you think he's introduced volatility across the board? >> yeah, lots of situations -- >> it's in general, trade, the markets, on the fed. so, i think that it's like strap on your seat belt kind of volatility that's going on right now in general. >> that was exactly my point, it's third-world volatility. by the way, another point of this is to introduce the politicization that's already overcome the supreme court into the federal reserve. the question i don't quite understand is where is the dogma on this? i don't quite understand if you're conservative what you want from the federal reserve. is it consistent across -- >> no, it's not. >> -- over the course of who's in charge of the white house. >> went from toxic to -- >> to now we're all in favor of it -- >> no, i don't think -- >> and low rates we were worried about all of the excess in the market from low rates. >> all right >> keith, let me ask you this -- >> sure. >> just in terms of where we are in the cycle, because there is all this conversation about late

cycle. you think we're in a new mini cycle, which gets us back to what's going to happen with all of this, too where do you think we stand in that cycle what's happening >> we believe that when the fed came out and said we are now going to listen to the markets, and they basically allowed us to reset, i think we were very close to that point. after a 25 basis point hike in december with the belief that we'd get more in 2019 at the same time we're getting balance sheet normalization it felt to us that the risk for recession had gone way up. once the fed does a pivot, this 180-degree pivot, we think that really kind of reset where we were and we think right now we can see a run that can go on for a considerable period of time. this inflation will remain low we don't think we'll see rate hikes this year. in fact, some think you may see a rate cut time will tell but we think as a result of the cycle clearly extends, extends probably into 2020, at least, and i think that's a pretty good environment for equities in the markets. >> all right, keith and terri, thank you both for coming in. >> i just want to make one quick

point -- >> they wrapped me a while ago, but go ahead can i stop you >> can we hold the fed accountable, as luskin suggests, without politicizing the process? i think that is something worth thinking about >> my guess would be no based on what i've seen the last ten years -- >> very skeptical. >> no, look, i think -- >> it's worthy to hold the fed accountable -- >> but i think congress is always going to be politicized and it's congress' job to hold the fed accountable -- >> and anything the president says is political by definition, so i should give up on that. >> well, i think it's very difficult to make an apolitical statement when you're going to have political bodies being the ones that are -- >> herman cain, okay so, he was a business guy, godfather pizza, was at the kansas city fed for what, three, four, five years, vice chairman. i know, not in -- >> maybe. >> but is it purely academics that always make the best fed chief or someone who ran a business might be -- >> it's the other -- it's the other thing, joe they're holding the politics on the chest, not on the sleeve. >> okay, that's the other thing. we're talking about qualifications i'm just assuming they're not.

anyway, coming up, the friendly skies seem to be getting friendlier the latest airline quality t oer is out, and he's got a loofth stuff, obviously. stay tuned you're watching "squawk box" on cnbc ♪ [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated.

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coming up when we return, results from latest airline

quality survey plus, boeing downgraded this morning as that investigation into a software problem continues. we're going to talk to airlines. we'll tell you which ones rated the best and the worst, and we'll talk about boeing next then later, bridging the gap between wages and education. the world's biggest hedge fund manager pledging $100 million to connecticut public schools and declaring income inequality a national emergency we're going to speak to ray dalio live, and connectit cu governor ned lamont, in just a little bit 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.

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welcome back, everybody. the annual airline quality report is out, and there is some good news for travelers. phil lebeau joins us right now with more on that. phil, good morning. >> becky, for all the complaining that we hear -- and believe me, i hear a lot of it whenever i'm traveling, people saying they're not happy with their airline service -- the latest report from wichita state and emery riddle shows the quality of service is the highest ever rated by this study that has been done for 29 straight years basically, they're looking at the federal data -- on-time arrival ratings, whether or not -- how many people are bumped a couple things stand out -- highest rating ever.

complaints from passengers down 23% from 2018 and bum paegz -- the number of people who are on oversold flights -- down by 50%, not surprising, given the fact that the industry moved to either curtail or eliminate oversold flights altogether. so, which airlines did the best in the most-recent airline quality rating at the top of the list is delta, moving up from number two in the previous report. jetblue is number two, then southwest. who comes in at the bottom of the rankings and by the way, they also point out to us that these airlines, their service is all much better collectively than in the past. spirit, american and frontier bringing up the bottom speaking of delta, don't forget that we get the quarterly report in terms of earnings from delta on wednesday morning we're going to be down in atlanta. we'll be seeing what the company has to say about the first quarter. and one other note when it comes to the airlines, guys. take a look at shares of southwest. raymond james downgrading shares of southwest to a market

perform, in part because of the risk from the 737 max. remember, about 4% of their fleet is the max and of course, those are grounded at least through may is what we're looking at here remember, american over the weekend, guys, said that they're going to be pulling it off the schedule, at least until early june so, we're continuing to follow that story and the impact it has to the airlines. >> okay, phil. your whole profile, i think, lately is just, i mean, it's skyrocketing, you know what i mean between tesla, boeing, all the things that are going on >> yeah. >> it's like you're on like every hour, on the hour. and then that's not enough, not enough for me, anyway. anyway -- >> well, thank you, joe! >> you're welcome, phil. >> that's a nice way to start the day. >> it is even a monday, which is hard enough, is it not? although, it's getting warm. getting warm >> it was 54 first time i've seen the 50s. >> it's going to be -- the weather -- i did hit a few balls yesterday, phil, so things

are -- it's just -- >> as did i, joe, as did i did not do very well, but that's all right. it's the first round of the year >> you know what -- >> hey, it's opening day at wrigley. all is well, right >> did you see the reds? did you see their record ooh. 1-8. >> hey, the cubs aren't much better. >> they won a game, though 1-8. it's like, why look? anyway, thanks, phil. >> you bet. boeing shares are falling this morning the company is scaling back production of its 737 max jet to 42 per month from 52 and this morning, bank of america merrill lynch downgraded the stock. they had a buy before. it's now neutral over the weekend, american airlines extended flight cancellations through june 5th carter copeland, president and lead aerospace analyst joins us now. what do you think the stock's reaction is going to be from here after this initial 4% drop? do we know the numbers fully right now and how to adjust them down in terms of earnings per share based on the lower

production >> well, until you know the timeline with more specificity, joe, i don't think you can really get a handle on exactly how the numbers will move. now, the company is going to report earnings here in a couple of weeks, and they'll have to take a stab at either trying to bound whatever that impact is by assuming a fixed period of delay or suspend guidance outright i think if we're talking about, you know, a three-month delay, you could anticipate that the company will recover by year end in terms of, you know, getting the planes back in the air and getting production back up but if you stretch beyond that, you begin to introduce a lot more uncertainty. >> i just wonder whether it's in the stock or not i mean, that's always a question, isn't it, carter >> yeah. look, i think as we've been saying for weeks in talking about the headlines here are going to push this stock around and i think keep it somewhat rangebound but the stock's been pretty resilient. i think at the end of the day, you know, the stock is already

down measured in sort of billions of dollars, way more than you can count in terms of nonrecurring costs that the company will incur so, is it in the price yeah, fundamentally from a long-term view, it probably is, but you know, it would be foolish, i think, to think that the stock won't bounce around on headlines. and even though i think most folks should have considered that a slowing of production was something that the company would have to do just based on the working capital that the 737 program consumes, you know, it still is one of those headlines that i think sort of grabs folks' attention >> yeah. do you foresee a day where boeing says, okay, it's fixed, and everybody says, it's fixed i mean, is that possible that it's that clear-cut? >> i don't think it's that black and white. i think at its core, we're talking about engineering issues and, you know, changes that actually are somewhat black and white in terms of how they come out in the eyes of, you know, aerospace engineers. however, i think the overlay

here of sort of regulatory pressure, both for faa in the u.s. and then also in europe, there's this sort of time it will take to evaluate the proposed changes and fixes, and i think that sort of drags on in a way that's a bit longer than the sort of simple black-and-white engineering answer so, no, i don't think we're going to flip a switch and one day say this is all over i think we'll gradually get to a point where we get back to what i would characterize as normalcy. >> you think of how many flights have gone off without a hitch around the world it seems like, you know, at its core, moving the engines and doing the things that boeing did -- it is a workable solution to what they had to do for the greater fuel efficiency. i mean, i wonder whether there were sensor issues or -- i'm wondering how you get it to the point where there's just no -- you know, no matter what happens in the first five minutes to the

pilots and things -- there's got to be something that makes it so they can handle whatever situation is thrown at them, from sensors or whatever. >> yeah, look, at the end of the day, i think they're going to be data driven. the proposed changes are all meant to address the sort of chain of events that we saw in the two accidents. >> exactly. >> and so, are those going to get addressed? at the end of the day, i think investors should believe that boeing knows how to make airplanes, which is the bet that i think folks who are buying the stock and have been buying the stock, despite the headlines over the last couple of weeks, are making, is that they'll ultimately get there and they'll make the fixes i mean, after all, this is a company that's been making airplanes for more than 100 years. >> but there's another place to buy them and if it ever got to that point, that could make a real difference, you know if suddenly people said, hey, forget it, i'm just going to buy from airbus or whatever. >> only problem is you've got to wait too many years to do that. >> right. >> so you know, it's a tough problem. >> right, exactly. all right.

thanks, carter >> thanks, joe. >> okay. coming up when we return, investors looking ahead to earnings season with a bit of caution. take a look right now at the futures. dow off close to 100 points if we opened up right now nasdaq off, well, call it a little -- four points right now. s&p 5002 1/2 points. we're going to have more on the markets in a few moments. plus, the ceos of the nation's biggest banks are set to meet with lawmakers on capitol hill a preview of what to expect this week is coming right up. "squawk" returns with that and ren st ment. measure up? a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org

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get more into what you're into. just say "watchathon" into your x1 voice remote, or download the xfinity stream app. xfinity watchathon week, free. now through april 14. still to come on "squawk box" this morning, bridgewater's ray dalio will be with us live this morning capital, income inequality and much more. that interview coming up at the top of the hour. "squawk" will be right back. kevin, meet your father. kevin kevin kevin kevin kevin kevin kevin kevin kevin kevin trusted advice for life. kevin, how's your mom? life well planned. see what a raymond james

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welcome back to "squawk box" this morning the market is percentage points now from all-time highs, so what can you still buy? time for stock ideas with steve grasso, director of institutional sales at stuart frankel and company, also a cnbc contributor. we'll do this rapid fire. >> yeah, let's do it. >> you like match. >> so, match everyone thought facebook was going to put match out of business, but with privacy issues, match has really had another, a second awakening, and they own every dating site not that i would know. but when you research this thing, it's over ten dating sites! >> the catalyst is what, though? it gets you where?

>> well, the catalyst is they own the dating sites and now with people, divorce rates at all-time highs and millennials not getting married, this is a growth rate for them they're able to monetize. >> they're a legal monopoly, in other words. >> they're exactly a legal monopoly when i looked at it, i said, how is this allowed? >> right. >> when you look to see the footprint that they own, it was amazing to me. >> okay, macy's -- >> but hang on a second, match is also up 28% year to date -- >> well, that's why i'm asking. >> so tread lightly there, but consistency, you'll see the stock move sideways to higher. >> which one is match? >> match.com >> no, no, it's -- >> do they own them all? >> there's ten other tinder -- >> tinder is the one -- >> our producer's on bum blare because he's -- >> no, that's the one where the woman -- >> is there swiping or -- >> yeah, there's swiping. >> there's swiping for all of them at this point. >> swipe or no swiping. >> that's the way we remember it >> "dora the explorer. >> yeah. >> macy's on 34th street here. >> macy's, the valuation on the market cap right now is under $8

billion. where in the world of reality can macy's be worth $8 billion herald square alone with worth more than that so, i would think that it's probably a $20 billion valuation. you have room there as well. >> you think it's a real estate play is that what you're breaking it down to? >> it's always been a real estate play and people try to force that, but their online sales are growing now, along with target and walmart, and amazon online is sort of stagnant, believe it or not. >> so you're not saying it's a real estate play you're just saying that the real estate -- >> it's a real estate kicker at some point, but it's a consensus short. everyone who comes on the show or other shows will always say short retail, short brick-and-mortar that's been the consensus trade. >> what happens if they come out and close more stores and sell off properties would you change your mind at some point if it's a gradual sort of erosion like that? because that's the one thing i worry about. if it's not played properly, if you -- >> sure. >> -- slowly kind of cleve off-pistes of it -- >> i agree with you 100%, but the problem is, the stock will

rally off of something like that the stock will pop and then all these consensus shorts will be forced to cover >> okay. real quick, mcdonald's. >> mcdonald's, increasing the dividend, solid earnings, dynamic yield, artificial intelligence company that they just bought. >> right. >> they're moving towards weather. you're going to see more mcflurries on their drive-throughs, management is different than at macy's it's all about rescscus >> if i called you around christmas, what would you say about the stock? >> it's lagging the market it's got a $210 recent target upgrade. i would say probably 15% higher than it is now. >> the one and only. thank you. coming up, a big week for the big banks as ceos get ready to meet with lawmakers on the hill about the state of the industry we'll hear from jeb hensarling and barney frank after the break about the nation's financial system, wealth, taxes d anmore good luck, becky "squawk box" returns after a break.

t. rowe price experts go beyond the numbers to examine investment opportunities firsthand, like biotech. because your investments deserve the full story. t. rowe price invest with confidence.

xfinity watchathon week. television is back! now through april 14, enjoy free access to the best shows and movies from hbo, showtime, epix and more. what! so, you can get more into what you're into. whether it's more laughs, oops. epic escapes, or high-flying thrills, get more into what you're into. just say "watchathon" into your x1 voice remote, or download the xfinity stream app. xfinity watchathon week, free. now through april 14. the ceo of the nation's biggest banks are heading to capitol hill this week and wilfred frost joins us now with more, plus earnings are coming

>> friday, busy week for the banks, for sure. but the big focus will be on wednesday -- >> just did that. >> i know. it's crazy how time flies. i do think in quarters, as well, which highlights what a geek -- >> it's like we do it every three months >> anyway, the ceo of the nation's seven biggest banks head to washington on wednesday to face the house financial services committee it's down from eight as outgoing wells fargo ceo tim sloan will not be attending but in attendance will be the ceos of jpmorgan, bank of america, citi, morgan stanley, goldman sachs, mellon and state street it's titled holding mega banks accountable, a global review ten years after the financial crisis, which suggests broad possible range of questions. the absence of wells fargo removes what otherwise would have been the most likely focal point for lawmakers, one head of communications the bank saying the obvious punching bag is gone focus, therefore, broadens out this is the first congressional hearing for most of the big bank ceos

solomon, gorman, corbett, scharf and o'hanley, whereas dimon and moynihan have been on the hill the question for investors, number one, does it lead to unearthing of fresh information relating to possible acts of wrongdoing in the past one mdb for goldman sachs might be in focus. does it alter the outlook for regulation for the banks probably not in the current environment. and three, does it increase pressure on any boards to change management again probably not, especially with wells fargo out of the lineup. all seven of these ceos fairly strong positions in terms of their board's eyes the hearing 9:00 a.m. on wednesday. and then, joe, as you said, earnings kick off friday all over again. >> i like it, though, having you. >> it's great. >> wilfred frost is here with jpmorgan's earnings. >> well, yeah, that's what you tend to say on a friday -- >> yes, it is! >> we used to have to do it ourselves. we like having you here. >> i like do the earnings. >> how are you feeling >> it's a good sign of the geek coming out. >> don't have a scratchy throat or anything, do you? >> i don't think so.

>> you're feeling good. >> yeah. am i looking bad >> just want to know we can count on you. >> i'll be here friday. >> excellent. joining us to talk financials, taxes, and much more is jeb hance yarlensarling, cha financial services committee and barney frank, former congressman from massachusetts who also serviced as financial services committee chairman both are now cnbc contributors welcome to both of you barney, i thought i'd start with you. the title for this hearing coming up -- holding megabanks accountable ten years later -- what do you think about that is that something that you would be in favor of if you were sitting on the committee >> well, i'm not sure what the exact focus is my own sense is that we should be looking at how things have been working since then. i think we have made great progress in holding them accountable. and in fact, changing some of

the practices that had caused us a problem. so, i would not myself be focusing to a great extent on the errors that they had made. i would like to look at how things are going i think the general sense is that the regulatory framework we established has been a pretty stable one and a pretty solid one. you know, i know there are people on the right who think we have overregulated, but they also tell us that we now have the best economy we've ever had. and if, in fact, we had somehow damaged the critical financial mechanism of the financial services industry, you wouldn't have such a good economy you couldn't do one without the other. so, we did make an adjustment to help some of the smaller banks, but i would be focusing on how things have functioned, and i think the verdict is that

they've been functioning pretty well. >> you know, it does seem that, potentially, if the right things it's been overregulated, the left, just based on the headline of this hearing, thinks it's been underregulated. would you agree with that? >> would i agree that that's what people think? >> would you agree that that's what the democrats maybe think, the left wing of the democrats maybe think at this point? >> well, the left wing does. i don't think that's most democrats. i think there has been an overestimate of the left, as you do it. i think most democrats on the committee believe that the balance has been struck correctly. now, that doesn't mean you wouldn't find individual instances where there was abuse. and what you have, and maybe this is what people might have in mind -- there was a general feeling in the public that the banks that did do things that were wrong, and the financial industry as well, there was not sufficient law enforcement action, that there was not

sufficient legal -- >> punishment. >> -- sanction >> right. >> and that is separate from whether or not the regulatory framework is an accurate one. >> jeb, let's talk a little bit about what these ceos are going to be facing when they go before the committee on this. tim sloan just stepping down, and obviously, that came after lots of pressure from maxine waters, from other politicians, and from regulators. what does that mean for these ceos now >> well, i think what they have to realize is, number one, there is very low probability that any serious legislation is going to get through in this congress, and i haven't seen any indication that it's going to come out of the house financial services committee so, in some respects, chairman maxine waters has already said this is something along the lines of she wants banks to use their record profits for certain underserved communities, which has everything to do with politicizing the allocation of credit

so i think you're going to see a lot of political theater, and in some respects, the question is what are these ceo's going to do are they fearful what's going to happen to their reputations? are they fearful what's going to happen to their stock prices clearly, there is a scalp in tim sloan. should they have had that scalp? i don't know you know, it's taken a long time to clean up a bad mess at wells fargo, but it's also very problematic to have members of congress choosing ceos of banks. and when we talk about, or when maxine waters talks about record profits for underserved communities, we have to remember that half of these banks, these publicly traded banks, public companies in america, you know, that's 401(k) money, that's i.r.a. money, that's pension fund money, that's 501 c-3 money. so, maybe democrats on the committee think they're going after jamie dimon's bonus, but what they're really doing is going after their retirement plans of many hard-working

people in mesquite, texas, that i used to represent in the fifth congressional district so, when all is said and done, i think there's going to be a whole lot more said than done in this particular hearing. >> barney, what do you think tim sloan, should he have gotten chased out >> well, first of all, i'm feeling a little nostalgic i haven't heard about the poor, hard-working people of mesquite, texas, since jeb and i served together and it's nice to be reminded, jeb. >> we'll do this more often, barney. >> yeah, jeb i, first of all, there's a great exaggeration i agree no legislation is going to come. the main reason is that none is called for there was when we passed the bill as it worked out in practice that's what happened i think there was more of a burden on smaller banks than we anticipated. we never thought the smallest banks were going to have a problem with the volcker rule because they didn't engage in the activity the rule prohibited but they were telling us they were told by their lawyers to spend a lot of time and energy proving they weren't doing it. congress exempted them from it

i didn't like everything in that bill, but i thought that was a good piece so, there is no sector of the financial services community clamoring or arguing for any major change there was some regulatory differences. as to wells fargo, yes, i think it was important that he step down he had clearly been unable as the ceo to break a pattern of abuse of consumers remember that wells fargo was found to have abused consumers in several ways, in dishonest ways, with fake accounts, with charging people money they shouldn't have been charged. and yeah, i do think that there needs to be some responsibility. >> barney -- >> i agree with jeb that the members of congress shouldn't be picking ceos and they're not. nobody's trying to pick his successor. >> let me ask you about that issue, about them picking ceos or not, and i'd also be interested to hear from jeb. warren buffett quoted in the "financial times" over the weekend saying that whoever is

chosen next to become tim sloan's successor maybe shouldn't come from wall street. and he said that not, i don't think, necessarily as an investor, per se, but much more about the way the winds are blowing in washington in terms of serving or placating. would you prefer somebody who comes from outside of the world of wall street i mean, there's a real issue here about whether you want someone with experience who's worked in the world of banking and maybe somebody who's worked in corporate america but hasn't but may, somehow, therefore, may be more palatable to washington? >> well, i don't think ex-members of congress should pick ceos any more than current members. and i think that, in fact, when it comes down to it, it depends on the individual. but i would say the importance of a new ceo is not so much to placate congress by the way, as somebody just alluded, the control of the currency -- donald trump appointed control of the currency was harshly critical of

wells fargo and highly critical of tim sloan after he testified. so it isn't just democratic members of congress. there is a general, understandable concern, and it does have to do, clearly, with the culture. it wasn't one single thing there was clearly pressure on the employees of wells fargo -- i assume most of whom are very decent, honorable people -- but they were clearly under pressure from the bank structure to do things they shouldn't have been doing to generate profit so yeah, you do need somebody, i would think somebody from outside the bank, but not necessarily outside wall street, who is ready to change that. i haven't got a particular candidate. i was actually just thinking about, well, if i did have to say, and i didn't think anybody was going to pay any attention to me, i think maybe sheila bair ought to be considered a george w. bush appointee who is a very tough, very fair regulator who served on the board of santander, who knows banking and regulation and would clearly send the message that the abuses have to stop.

>> gentlemen, i want to thank you both for your time really appreciate having both of you here sorry that we have to end it now, but jeb hensarling -- >> give my regards to molesty. >> will do it. coming up in a moment, a ne news-making interview with ray dalio and connecticut governor ned lamont they'll both be here live to talk education, income inequality and capitalism, the future of it and the american dream. check out futures this hour. dow jones looked like it will sden off 100 points. naaq off 6 1/2 points. we're back with ray dalio in a moment you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you

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we see hat emerson,kthroughs when issues become inspiration, creating a better world isn't just a result,

it's a responsibility. emerson. consider it solved. pinterest is on the board. the digital image-sharing site issuing a target range for its ipo price. we'll bring you the details and the numbers. disney gets setto stream the entertainment giant expected to release details of its video on demand platform this week a live report on what to expect is coming up. and is capitalism thriving or failing fresh off a $100 million donation to connecticut schools, hedge fund titan ray dalio joins us with that state's governor to make the case for reforming the american system. >> capitalism needs to be reformed it doesn't need to be abandoned. >> the final hour of "squawk box" begins right now. ♪ the jig is up, the news is out, they finally found me ♪ ♪ the renegade who had it made

>> announcer: live from the most powerful city in the world, new york, this is "squawk box. ♪ i'm a wanted man good morning me and ray -- ray and me -- ray and i! ray and i are on the same side the exact same he's here. welcome back to "squawk box" on cnbc we're going to use the money from capitalism to equalize the opportunity. how's that okay, good i'm joe kernen along with becky quick and andrew ross sorkin and the futures right now are indicated down 107 that's mostly boeing boeing was down 4% earlier we haven't checked the stock recently, but it was like 16 points, wasn't it? so if you do the dow multiplier on that, it accounts for most of the losses you're seeing in the dow -- >> accounts for basically all of it. >> all of it. >> and the s&p -- >> that was also red -- >> thank you to peter schachtman >> treasury yields 2.50% or so

we were at 2 1/2 yeah, right at 2.5%. here's what else is making headlines this hour. pinterest has set an ipo price range of $15 to $17 a share as it gets set to begin the ipo road show. they plan to sell 75 million shares and the stock is expected to make its new york stock exchange debut next week boeing shares, as joe mentioned, are under pressure this morning the company is scaling back production of its 737 max jets to 42 a month down from 52 a month. this is all happening as it works towards trying to return the jet to service after two fatal crashes. this morning, bank of america merrill lynch downgrading that stock to a neutral from a buy. they say the production cut signals that the disruption will be longer than initially expected initially they expected it to slow things down for three to six months now they're saying it's probably more like six to nine months the 737 is the most profitable program for boeing and warren buffett is urging wells fargo to look beyond wall street for its next ceo. buffett is the bank's largest shareholder and he told the

"financial times" that the next chief should not come from inside wells and shouldn't come from jpmorgan or goldman sachs former ceo tim sloan stepped down at the end of march and hedge fund titan ray dalio who's made millions through the buying and selling of securities says capitalism is not working and that income inequality is a national emergency. many politicians in the democratic party agree with him. we're going to be speaking with the governor of connecticut, ned lamont, in just a few minutes. you gave $100 million to connecticut. we'll talk about that in a second, but we start with bridgewater associates founder ray dalio and the warning he just issued on how american capitalism isn't working for the majority of americans. good morning. >> good morning. >> hot off of your big segment on "60 minutes" last night we're glad to have you here live let's talk about that, because i think a lot of people, millions of people watched you last night say that american capitalism -- capitalism was broken. we've been having a debate on the set about what that actually means and how you ultimately fix it so, when you say capitalism is

broken, is it the capitalistic system you think is broken, or is it the policies around capitalism, around taxes and what washington can do that you think is broken? >> i didn't say broken i said that it needs to be reformed i'm a capitalist i'm a professional capitalist. the system has worked for me i didn't have anything and then i got something through the capitalist system. and capitalism means the ability to save and invest in capital markets and private enterprise and all of that, and i'm supportive of that then there are the outcomes, right? and so, the question is equal opportunity, or the american dream. so, i was raised with equal opportunity. i went to a public school system, and i had parents who took care of me. and then i was able to come in with an equal job opportunities. and what i'm saying here is if you look at the outcomes, the outcomes of the majority of people -- i looked at the bottom 60% of the population, and i said, is it working for them

just facts how has it been for income how has it been for equal opportunity? and those that -- this has been something for a long, long, long, long time. so, is that deniable that it is producing those outcomes and it is not only producing those outcomes -- this isn't controversial -- if it's producing those outcomes and it's also producing a terrible split in our country and we're going to have more problems ahead because of technology and other things that are coming at us, in terms of having impact that are going to be like that if we don't step back and say, how do we reform it -- reform means improve it. >> but here's the question i want to talk about improving it, but is the concept here that we need to work on policy in terms of redistribution that effectively helps with education, health care, and all these other things, or is there something wrong with capitalism? and do you, therefore, then look at yourself as a by-product of capitalism that isn't working for the rest of the country? >> i look at myself as a by-product of capitalism when it

also gave equal opportunity, the american dream i was very lucky to live the american dream by having the proper care and the proper public school education, and that -- >> what's changed? >> i'm sorry >> what's changed? >> the whole -- look at the statistics in my piece on linkedin -- >> no, what about capitalism has changed? >> what's changed in the capitalistic system? >> what's changed -- >> all capitalism is, is the private -- then i'll let you go -- but it's just the means of production in society are in the private sector it's not state-run the government sector. so, from when you succeeded with capitalism when you did to where we are now what about capitalism has changed? not that -- tax policy might not -- >> a number of things have changed. first, capitalism works to produce a profit, and the motivation of the profit is also the reinforcement of the system.

you contribute, and as a result of contributing -- >> buyer and a seller. >> now, for a variety of reasons having to do, for example, with the development of technologies in which it's profitable to replace people as a result of those technologies -- >> automation. >> -- we are losing a middle class. so, the amount of money that goes to that middle class and then goes to those school districts has changed significantly as a result of the process, which i think is a good process, of improving profitability -- >> creative discretion -- >> -- by then being able to have that technology change, or even going global it's a great thing i'm a globalist, global. but it has the impact as a result of creating a wealth gap. and such other things along those lines have changed the resource allocation so that that resource allocation is leading to a result. so, i'm a mechanic an engineer when it comes to capitalism >> but your fixes are not to

capitalism your fixes are to things like tax policy, are to things like improving public education but to do that, you gave $100 million -- >> no, no, no, wait a second you can't separate tax policy from economic policy, okay >> you can separate it from capitalism. >> no, no, no, you can't separate it from capitalism. for example, i'm a practical guy, right, in the markets and what happens is, if you change, let's say corporate tax rates, which we did, which was beneficial to getting us productivity at the corporation level -- that has an effect. it has an effect of how money flows. so we're talking about engineering. my point is, you can't say that capitalism is apart from tax policy monetary policy, fiscal policy, tax policy, are all part of that picture. >> but don't we need -- the engine of capitalism -- don't we need what accrues from

capitalism -- don't we need that to improve -- to use those funds, whether it's philanthropic like you, whether it's tax funds -- don't we need that engine to generate the funds to improve education, to equalize opportunity isn't that the way it works? >> exactly, exactly -- >> then what needs to be reformed about capitalism? >> are you going to let me say something? >> go ahead. what needs to be reformed about capitalism. >> okay, do we agree that it is not delivering equal opportunity? >> you keep saying that, but yes, okay. so we need -- >> okay. >> but you can't do an experiment -- >> can you answer my question? >> right, but how do you know that that's capitalism not all these other things happening in society you need to do an experiment -- >> because, look, i don't think it's complicated >> i think it's pretty complicated. i think it's the public school system, unions. >> can we do this without interruptions? i'll say something, then you say something and we'll do it that way? >> okay, fine. go ahead. >> okay. i'm saying that the outcomes as a result are destroying equal opportunity, okay? we agree on that, right? >> no, i don't think -- i don't

agree that the outcomes for capitalism are what's destroying it i think there are all these other variables -- >> one way or another, you've got to engineer the thing to deliver the results that are there. >> through policy. >> these results -- these results of unequal education, unequal conditions and so on mean that it's a joke in terms of trying to deliver what we need to have done. >> capitalism. >> what i'm referring to, that includes tax policy. >> okay. >> that includes monetary policy that includes the pursuit of profits in a way that we need a plan for so that we don't -- we have an opportunity so we deliver a -- so, it's an engineering question, right? okay, so you and i can disagree. >> i have two questions that relate to engineering. >> if you don't believe that it is a problem, and i -- >> no one's saying it's not a problem. we're saying what is the cause of the problem is not capitalism. >> so, is tax part of that >> yes

sounds like you -- >> so what are we arguing about? >> sounds like you want to tax wealthy people and pay for education. that's fine. >> one way or another -- >> that's fine. >> -- i want to deliver the things that i had. >> okay. >> and that make the system work well, okay because the waste -- for example, the problem in education -- we're going to come up with the governor, and we're going to talk about the partnership that we have and i think that's kind of a model for what can be done and so, i'm just trying to be specific literally, what we have is a situation in which we have a state that is fractured, that the rich and the poor, the gap between the rich and the poor is very large and the notion of bringing in partnership, private-public partnership to deal with education. they have a $900 million-a-year experience for prisons, for people who are incarcerated. as a product of a system that doesn't educate children properly, doesn't give them jobs, an opportunity that is cost-effective that's cost-effective to provide

that the state. we are going to show you that there is a net positive return on investment as well as a social return on investment, and there's a partnership. now, you could say that that's capitalism or not capitalism let's not argue about terms. that is a reality. >> let me ask you this -- >> we can do that. >> dan rifle is an adviser to a number of democrats in washington he says every billionaire is a policy failure, meaning that, effectively, by becoming a billionaire, that the way the policies are set up, whether it's tax or other policies, is a failure. do you agree with that >> no, no, no. that's so screwed up i mean, what happens is we have a system that i think is a beautiful system that connects, but it's imperfect. >> okay. >> it connects productivity or what you're giving to what you're getting back. and those people generally, i said almost are net contributors to the society, and it's a dream.

that was what the american dream was, okay? but in order to have the results that we want, we have to make it a fair game, right >> but let's talk about a fair game, and this one may be complicated for you. bridgewater was subsidized, took a tax subsidy from the state of connecticut, $22 million, i believe, a couple years ago, to stay in connecticut. these are sort of part of the larger issues that are being raised around how capitalism in the purest private sense works relative to how public policy works in tandem with it. >> yeah. so, there's always economic issues for anybody in terms of whether they're going to stay or leave and there are calculations and i ran -- i was ceo at the time i'm now chairman i ran it at a time when there was the question of what it means for each employee and what they pay in for taxes and what that means for equalizing.

that's a practical reality i think -- and another practical reality is donating $100 million to do this >> right. >> this is the practical reality. i think that, you know, let's put that aside that may have been a mistake for us to take i think probably it was a mistake because everybody pays too much attention to that and not enough attention to what it means to pull together to do the things right in any case, that's part of the system in terms -- >> a mistake to take it or a mistake for connecticut to offer it >> mistake for us to take it. >> because of the conversation it's created, not because -- >> because of the conversation it's created, because people pay too much attention to those types of things where when you're thinking about it -- like, the spirit of the people at bridgewater is this is a home, this is a community, this is a place that we don't want to move, but it does have effect in terms of dollars and so on and that was small in the scope of everything in that notion >> right. >> so, the important thing here

is to pull together and to do this my wife has been doing this for ten years. this is not a new program that we're doing. we've been doing this for ten years. and if you look at what the other people in bridgewater have done in terms of the contributions, in total we've paid over $1 billion in taxes over the last ten years, the philanthropic has been about $250 million donations, and i think too much attention is spent on this. so, i think it was a mistake to take it. >> after last night, langone was on so, langone raised $100 million for nyu medical school, and then actually contributed then another $350 million he raised here's his book. it's called "i love capitalism!" you created a company that now has 325,000 employees, $225 billion in market cap that shareholder wealth has accrued his ideas are in contrast to yours. i don't know who's right and who's wrong, but when he looks at education, he looks at maybe private or like choice, maybe charter schools.

your contribution goes to public schools, which i would say that's not the private sector's issue. that's the public sector that has messed up the public school system, right? so, what is the difference between you and ken langone? he says i love capitalism. he's created 325,000 jobs. you say that capitalism is the problem. >> i think -- first of all, i think you're splitting hairs between us >> what do you mean, splitting hairs? >> if you'll give me a chance to answer, i will answer. >> okay. >> i think you're splitting hairs between us, because i think that he's a -- we both capitalists. it's all worked for us he's a very philanthropic man who wants to go for the goals and he's a big contributor in that particular way. the question is whether you make it pervasively effective i personally believe that if you don't make public education pervasively excellent, the way that i had and operate that way, that that's not adequate and when i say "i believe," it's my wife who believes this, too she's led the way.

i watch her go into these schools and watch these teachers, and i look at the starvation, essentially, the financial, and in some cases nutritional, starvation that goes on in the public school systems, and i think that that's a national problem but it's not just school systems. it has to do with that notion of getting basic things that you want and i want for our children the thing that you want more and everybody wants more is to have basic -- take care of the basics can i have nutrition can i have an adequate education? if you take care of those basics so, in one way or another, the way that is lost i know ken and i know he wouldn't object to anything that i'm saying and i also would know that if you take a look at it, we each picked the things that are most important to us. >> i understand. i'm just trying to understand the reforms to the capitalist system that you're espousing >> it may be -- >> we have to take a quick pause.

i have one question, then we're going to go and talk education but in terms of taxes to yourself, you said you'd be open to higher taxes on yourself. >> yes, of course. >> what does that mean and the reason i ask is -- and i've talked a lot about this -- you're going to give a lot of money away over your lifetime. >> yeah. >> probably most of it. >> yeah. >> most of that will not ever get taxed. you will get to choose how you get to spend that money in a way that most taxpayers do not do you think there should be a tax, effectively, on the philanthropy, given that the majority of your wealth currently under the current structure will never actually get into the tax system, and therefore, be able to be used through the government, if you will >> i think taxes and philanthropy each have their roles. i think philanthropy serves the purpose of being able to say that this thing, on the money that you've earned, you can focus on those things that you think are most important to you. i think the problem exists when, whether it's an absence of

philanthropy or an absence of taxation, that there is a failure to deliver that result i honestly don't understand what we're arguing about. i don't understand what we're arguing about. that they shouldn't, that those kids or those people shouldn't be raised. the cost is $900 million to the state of connecticut for incarceration. the united states has five times the highest, next highest country's incarceration rate in terms of that. that's a product, and that's changed over a period of time. so, we have a problem, right and then what we call -- >> we need to equalize opportunity, just like you're saying. >> we need to equalize opportunity. >> but we need to use capitalism to provide the funds to equalize the opportunity. that's my only point. >> i think you two agree. >> do you think the system is delivering those results >> i don't think you can do an experiment in a vacuum and say it's because of a flaw in capitalism i think there's myriad flaws for the way -- i think there's drugs, i think there's single parents, i think there's -- it's systemic poverty that's been around forever if you want to tax wealthy

people more and try to fix all these things, then let's do it, fine, but you're not going to make -- >> in this linkedin piece, i take point by point -- i do it from an engineering point of view right now, this is a short conversation that is like this -- if you want to take the time to look at it point by point from an engineering -- how much of it is because of technology replacing the middle class -- >> right, that's a problem, globalization -- >> you could look on the linkedin in piece, piece by piece. find something there that you disagree with, and i'd be happy to respond to it. >> we're going to continue spending more time with ray dalio right after the break and we're going to have the governor of connecticut on as well to talk about the future of education in that state. so, thank you, ray joseph. all right, coming up, we will welcome ned lamont, the governor of connecticut. he'll join our conversation about reforming capitalism as well as public education it's a good idea that follows ray dalio's $100 lln ledge to connecticut

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welcome back to "squawk box. we're talking this hour with

hedge fund titan ray dalio about his warning on the current failings of the american capitalistic system and we welcome another voice to dig into the education component of inequality that we're seeing in this country joining us is connecticut governor ned lamont. thank you for being here ray, of course, is still here. and he and his wife pledged $100 million to connecticut schools this friday. a big decision for you. >> and we did it in a partnership. like, the deal was, we put up $100 million, the state puts up $100 million, and other philanthropists and businesses put up $100 million. so, we get $300 million into targeting that education and this is based on experiences my wife has had over the last ten years of working with that population so, we have a partnership that has brought people together, different people who ordinarily would be alienated they've been brought together to pursue that mission. >> so, governor, talk us through how this happened and how

potentially, it would be scaleable or replicatable in other states and how this is different, effectively -- we were talking about policy and taxing companies and individuals -- how this is different from taxing them this is essentially a philanthropic effort, but how it would work in the public sector elsewhere. >> ray is great, but i've got to tell you, barbara dalio has been doing this at schools across the state for many, many years, working with the teachers, getting their best ideas, and helping to fund them so they can act on their ideas and i got to know barbara pretty well at some of the schools where we crossed paths and our partnership now with the dalio foundation gives us an opportunity to take the very best ideas that we've seen working at some of our public schools and taking them across the state, giving kids an opportunity who otherwise wouldn't have an opportunity. >> what are some of those programs and projects? i just think about it, because mark zuckerberg and priscilla chan gave $100 million to newark they matched it with -- >> just the opposite those are a bunch of consultants -- >> yeah, consultants, they spent

about $60 million on charter schools, but they also paid off a lot of teacher contracts to get out the underperforming teachers so, what are you going to do with the money that's going to be different and make it effective? >> we're taking the very best ideas from teachers. we've got a lot of kids who are, you know, disengaged, disconnected, not on a track to graduation, not on the track to a successful life in the state, and getting them back on track. >> how do you do it? what are some of the best ideas? >> well, rather than jamming people into special ed, we have mentoring programs, we have tutorials and tutors, after-school programs, things that come up school by school as generated by the teachers. i was just up at east hartford high school with ray and barbara the other day, and there the kids were all wearing their leadership institute, where they went back to school in august for two weeks just so they could catch up before september. it makes an enormous difference. it's working we're going to leverage off of what works. >> governor, big education and policy question -- how much of this is a money problem, meaning you don't have enough money to do the things you want to do,

versus mismanagement, people blame unions, people blame broken families. there are all sorts of issues that depending upon what kind of viewer you are watching this morning, you look at education, you say -- there are people who say it's not about the money do you agree or disagree with that >> look, i've held the line on spending and i've held the line on taxes and i have asked the private sector to come up and step up. in terms of philanthropists like the dalio foundation, in terms of major companies coming up and forgiving student loans. money helps. i've got to tell you as governor, i can tell you that money helps. are we going to streamline things we're going to make sure, as becky said, it's not just a top-down consultant thing, but coming up, it's entrepreneurial. i mean, this is what we want to do, give teachers a sense of empowerment, that we love their ideas and we want to give them an opportunity to run with them. >> i'd like to bespecific of the programs that barbara has led and have found highly impactful.

the ability to get kids who would have dropped out of school -- 22% of the high school students in connecticut are disengaged or disconnected, meaning they're on their way to dropping out of high school or they're dropped out of high school the cost of getting them through to graduate high school and into a job is a pittance by comparison to the impact that that's having. $900 million a year is incarceration costs. so, these programs are very effective. and i will say, the teachers are unbelievable they get so undercredited for -- there are saints there are fabulous people who have fabulous programs that they're starving for resources so, there's no excuse not to have adequate resources. there are things like not enough books. i mean, how can we look at ourselves and say that that starvation is not -- >> how do you identify those

kids who are unengaged or under -- >> this is one of the beauties of one of the programs we have data right now the data is scattered all around so to bring those in to collect the data and put them on an ipad, and they literally look at the ipads with the kids and with the teachers, so they know who's going, and they know then the points at which it's failing like for example, they dropped out between eighth and ninth grade. >> right. >> and at that moment, the mentoring program that the governor's referring to is a program that gets them from eighth to ninth grade successfully and then helps to provide that mentoring through the high school year to get them beyond but another part of this is they have to have the goal of a job so to work with other companies in connecticut and other places in terms of delivering a job is what the governor and my wife and the legislature and the teachers are working on together >> let me just add on that, that

it's not just how expensive it is for a kid that doesn't graduate, what that costs the state. i need these kids stepping up. we have tens of thousands of jobs in the state of connecticut we can't fill. our population is flat now is the time to take those kids who otherwise wouldn't have an opportunity, be it electric boat, pratt & whitney, we need folks educated, ready to go. >> governor, can you finally speak to this issue of the american dream and capitalism, whether you think it's working and however we want to define capitalism as part of tax policy and other things because one of the things that's happened in your state is there have been a lot of high net worth earners that have left the state in part because of taxes, in part because of other issues, and that's actually put a real strain and challenge on the system on education and on these other issues >> some are leaving, but folks like ray and barbara dalio are staying and recommitting i'm holding the line on taxes, giving people a sense, i need you to step up and do this look, american dream, let's face it, the american dream is alive and well in china.

there they've got a middle class that's growing, and you know, the next generation thinks they're going to do better than their parents, but that's not true in new britain. that's not true in new london. and programs like this that ray and barbara are doing are giving kids and their parents a sense that things are going to get better. >> okay, governor. thank you for being here this morning. ray, thank you for being here and having the conversation with us. >> well, thank you for caring. because we've got to talk about this issue, particularly in an election year and then beyond that, we have other issues so, thank you for allowing it. >> okay. come on back we will continue this conversation, i know. coming up when we return, a lot more on pinterest's ipo. may look like a downer the company out with a price range for its shares we'll tell you what you need to know about investing in that company. not quite everyone understands exactly just yet, but we will explain it wn quk" tus.he"saw [knocking]

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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 let's get to the stories that investors are going to be talking about today. tesla shares are up in the premarket trading. the automaker's getting a payment from fiat chrysler said to total hundreds of millions of dollars. in return for that payment, fiat chrysler will be allowed to count tesla's electric cars as part of its fleet. that would allow it to avoid a

fine for violating tough, new european union rules on emissions. this one i still don't understand they're paying tesla instead of paying the regulators. it doesn't sound like it changes much beyond that, but we'll have to dig deeper into it. tesla's shares are up 0.8%, fiat chrysler up 1.6%. gasoline prices continue to rise the latest lundberg survey shows prices up 12 cents over the last two weeks to about $2.79 a gallon this comes as crude oil prices continue to rise with west texas crude reaching a five-month high in today's trading right now it's up by about 29 cents to $63.38 a barrel general electric shares are under pressure in the premarket trading. jpmorgan analyst steven tusa cut his rating on ge from underweight to neutral and cut his price target to $5 from $6 before this came out, that stock was above $10. this morning it's now down 62 cents to $9.39 a share that's a decline of over 6%.

tusa says that investors are underestimating the risks and the challenges that are facing the company at this point. okay, it is a very big week for disney the company expected to unveil some details about its upcoming streaming service during an investor day on thursday and julia boorstin is on the west coast this morning to tell us what to expect. julia. >> good morning, andrew. that's right, disney plus. we're about to learn more about netflix's biggest rival yet and the centerpiece of disney's direct-to-consumer strategy. now, most importantly, we're looking to learn how much this service will cost. ceo bob iger said it will be less than netflix. we're also looking for a specific launch date after iger said it's coming in late 2019. we'll also be listening to see whether there's a plan to draw in consumers with free trials, if there are any plans to bundle the service with espn plus and hulu now, we'll also hope to see how subscribers will be able to navigate disney's flagship brands, including marvel and "star wars," and we'll hear more about its exclusive content along with the vault, 7,000 tv

episodes and about 500 movies that will be included. now, analysts are largely optimistic that disney plus will be able to reach netflix's scale. rosenblatt projecting 130 million subscribers worldwide within a decade, saying it will be profitable in four years. barclays projects 170 million subscribers between disney plus, espn plus and hulu by 2025 and goldman sachs weighing in, saying, "although there are inherent risks in entering the competitive u.s. subscription video on demand market, disney should be able to leverage its brand strength and robust portfolio of content to create a mass market streaming bundle with disney. now, this comes at a cost. disney warned that in fiscal 2019, it will lose $150 million in operating income from licensing. joe, guys, it's just a question of how quickly it can make up for that with its own service.

back over to you. >> okay, julia, thanks joining us now, bernie mcturnan, vice president at rosenblatt securities what do you think? >> yeah, good morning. thanks for having me. >> good morning. >> yeah, so, we're really excited for the day. i'll be there thursday the four things i'm looking for is, one, when the service will launch so, i assume it's going to launch october 1st of this year. second, as julia hit before, it's when the content will roll out. that will be the primary driver of subscriber growth three is when the service will roll out internationally they have current distribution agreements it's really just an unknown on when those will expire and then fourth is pricing and bundling we think there's a great opportunity to bundle the service with espn plus and hulu. we think the service will cost $6.99, but we note that for competitive reasons, we might not get that information on thursday -- >> do you think it will be bundled with hulu, too, even though comcast owns a big chunk of hulu? >> disney's going to own 70% of

it after close. >> but again, you think it will be bundled, or is that a complicating factor that needs to get resolved first? >> i think there will be an opportunity to bundle the service. i think they'll do that. and i just want to note that on thursday we might not get it just for competitive reasons the pricing and the bundling, similar to apple, video plus two weeks ago. >> what kind of pricing do you want to see? >> $6.99 is our base case. and actually, given that there's such a great fan base -- so, we actually targeted that there's 50 million homes that we view as the low-hanging fruit for the company, and these are households that have already engaged with "star wars," marvel, and pixar at the box office. >> do you worry at all -- netflix is raising its prices. >> yep. >> do you worry at all that they are trying to suck some oxygen, or at least some cash out of american families' pocketbooks so that when additional options come online like a disney, like a warner media product, that families are less inclined to buy? do you think that's part of the strategy >> i've heard people talk about that. >> yeah, so, look, i think netflix is a great service just

because we think disney plus will be successful doesn't mean we don't think netflix will be successful we had disney plus at 60 million subscribers ten years from now, netflix at 90 million subscribers. and what we think is actually going to happen from all of these different services launching is you're going to have a subset of the population who are going to be willing to cut the cord and not engage with the bundling more than create a synthetic -- >> what do you think the total -- you've probably done math on this -- total dollars spent per family in america will be on tv and tv-like services, let's call it, bundled or unbundled, long term. >> yeah. so, right now it's about $120 billion. that's about $75 or $80 per tv household per month right now, and -- >> and that's exclusive of broadband service? >> right, exactly. and we actually think that's going to be flat over time and the main reason is that going back forward, your cable distributor would always give you 4% to 5% rate increases each year with more households opting for direct-to-consumer, that

should have a deflationary -- or you know, a flat impact -- >> so there are going to be winners and losers, and that's going to be the scenario if that remains flat and there are more players that get involved, they're going to be people who lose. >> it's actually we think the cable bundle we have 95 million multichannel video subscribers right now. we think that will be 70 million over the long term, and that's going to open up the consumer wallet to spend on three, four, five services. >> what's the margin on the bundle right now for the cable providers? >> so, it's interesting, because comcast has said they make money off you, and then you have a company like cable one who might charge a lot more and just want to break even on the service so over time it's the smaller companies that won't be able to make money and it's the virtual mvpds right now who have razor-thin to negative gross margins on that product. >> interesting interesting. >> did you have to, like, work 18-hour days to put in all the fox stuff? how are your numbers are you done you got -- >> we got it all in. and look, this is an exciting time for the company because of

the fox acquisition. that's a whole lot of content that disney will be able to add to its service you have "avatar," you have "dead pool," you have "titanic." if they make a "titanic" show, it's probably going to be pretty short. it's exciting, and that's the reason they did the fox acquisition. that's domestically. then internationally, you have "hot star," which is the preeminent streaming service in india with over 100 million maus so you contrast disney's strategy with a buy decision and you have versus netflix who's going build. netflix had a very successful show in india called "sacred games," but we think to be successful, because we don't think u.s. content plays well over there, you have to have a whole lot more of that to drive significant subscriber growth. >> thank you sorkin, i think "killing eve" is back. >> started last night, i think. >> started last night. is that one of those things where you dump it and you can watch everything >> no, i don't think so. >> because it's on a real

network. >> i don't know. isn't it -- i don't know. >> if you don't know, i don't know >> i think it's on fx, so it rolls out more slowly, i think >> i will get you some information during the commercial break actually, our tv expert, what do you know, "killing eve"? >> i'm not sure. i don't quite watch it, but if it's on the bundle, that's going to be a once-a-week show. >> okay. all right, when we come back, after the lyft ipo, we have another hot tech listing investors are eager to get their hands on this time it's pinterest, as the company's road show kicks off. we're going to be joined by a pinterest shareholder who's also its former head of corporate development. stay tuned you are watching "squawk box" -- >> bbc america, "killing eve." people know aflac... aflac! ...but not what they do. so we're answering their questions. aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance? nope. ahhh! do they pay me money directly when i get sick or injured? yeah. aflac! you got it. you know aflac!

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welcome back to "squawk box. futures right now indicated down 113 points most of that is boeing the s&p indicated down four. and nasdaq indicated down 12 andrew, we're going to talk more about lyft -- lyft did fine when it was all said and done by the end of last week, right? $75. >> so far, so good the lyft ipo has come and gone now investors hungry for more new listings they are expected to get a new one soon, pinterest. leslie picker has more on the details that came out this morning. >> reporter: andrew, good morning to you we're standing outside of jpmorgan, one of the lead underwriters in the pinterest ipo. plenty of signage inside welcoming pinterest to the firm. now, this morning, they're set

to hold a meeting with executives and the sales force here to really teach the sales force how to pitch this deal to investors. now, this morning we learned that the company was seeking a valuation of about $9 billion, which is below the latest fund-raising round they had in 2017, which was about $12 billion. the company is looking to sell about $1.2 billion in the initial public offering. now, they also released first-quarter projections as of march 31st this morning. they said that they're planning to have as much as $202 million in revenue, which would imply about 54% growth on the top line, and they're also looking at losses from operations of about $47.5 million, which would be narrower by 14% from the year-ago first quarter now, the company will continue this week on its road show, meeting with investors, looking to pitch this deal, and they're expected to price middle of next week, about wednesday, and start trading on thursday. back over to you

>> all right, leslie thank you very much. joining us now to talk more about this is cameron ansari he is greycroft principal and venture partner. cameron was also head of corporate development at pinterest until 2017 while there, he led nine acquisitions at the company. and cameron, thanks for being here today. >> thank you for having me. >> just to clear things up, having been there for so long, i assume that you have shares that are going to be worth something after this ipo today >> i am a shareholder, correct. >> can only hope. >> okay, so let's talk through a little bit of what we've heard this morning, with leslie talking about i think the midpoint being around $9 billion. that is below the last private round of financing, that value of the company at $12 billion. is that something that surprises you, concerns you, or is this what you expected, given kind of that transition from the private market to public market? >> yeah, i mean, i don't know if i can speak directly to the pinterest valuation in detail, but i think in general, when you're looking at this cohort of companies, the sort of unicorns that are coming out now, between pinterest and lyft and uber and

slack and the others, these companies feel to me like they're built to last and it's sort of not where you start, it's where you finish. ipo pricing, as we all know, is sort of an art and a science it's not precise and you sort of, i think, like real estate, you want to price into place attractive and get a lot of offers rather than price it too high and have the home on the market that's been reduced eight times or whatever. so my sense is they're coming out conservative and we'll see where the demand comes in. >> what'd you think after seeing lyft's ipo stocks bounced back, but on the first few days of trading there was concern it was not going to be anywhere near the price it originally had. >> yeah, i think there were reports of maybe short selling happening or what have you, but i think these things -- you know, the real point that i look at is when the lock-up comes up in six months and insiders and investors can sell, and that's usually when you see these things shake out. >> right that will tell us just how much they're willing to continue to put their money where their mouth is on these issues, too? >> yeah, that's right. >> how should investors be valuing pinterest?

because there were so many questions around that with lyft, because lyft in particular not only is not profitable -- lost almost $1 billion last year. didn't necessarily think that they can show you the road to profitability, at least in the next few years what is different about pinterest, if anything >> right well, look, this is my personal opinion. i think pinterest as a company's been a little bit misunderstood. people have called it a social network. i think in the s-1, they were careful to say we're not exactly a social network, we're partially a search and discovery engine, we're a utility of a kind we're a digital media company. so, i think they're all those things rolled into one what makes pinterest different than a lot of things is it's not where you go to post pictures of your friends and your family it's not really where you go to maybe broadcast to the world something interesting that's happening with you it's about yourself and the interests that you have. if andrew, you like baseball cards, you make boards it's really for yourself, maybe share with a couple close friends where you're not telling the universe you're a baseball card fan. >> why take pains to say you're not a social network that because of the regulations

they'll be facing? >> i think the usage is different. when you call it a social network, people come to the site expecting to see photos of their friends and family i'm going to take a selfie and put it on there, and it's not really what it's for the core use case is really about discovery and being inspired and and feeling inspired >> i want to ask you a gross question, so many unicorns have remained private for so long have the growth already happen >> the opportunity for the public investor to enjoy these growth rides are now in question because they are getting into the game late. >> again, my opinion is there is so much modernization potential left with pinterest, it is super early there. 94% of revenues came from the u.s. and the one product i think there is head room in

terms of the market. all these things i think for them -- >> it is a different type of growth >> you are not talking about growing the audience necessarily but maybe internationally. >> they may not need to. you know i don't think pinterest needs to be 2 billion users like facebook or whatsapp >> why did you leave the company? >> it was a great experience for two or three years to be there to see the road which was wild >> one of the things you did while you were there was taking a lot of acquisitions. was that the key to any of these companies making sure if there are ketel marte pcompetitors, t wrapped in you are not dealing with a huge number of a number of companies that are knock offs. >> you look at google and what they did with youtube and

instagram and facebook is being transformative there are few assets out there like that. one of the reasons these companies want to go public and make sense, you can use help finance some of these acquisitions it is tradeable liquid as oppose to buying company of private stocks that's always tricky. >> is that one of the primary users that you think of acquisitions >> i think it is one of them it gives them the optionalty of that regard. you also provide credentials for a lot of folks that's been there for years and years. >> thank you for joining us. >> hey jim, did you see all of

"60-minute" last night >> i read it >> a lot of people saw the dow but they dpid nid not see the langone. >> nyu med school is tuition free for every student it is just funny i love capitalism, i just would have been funny right after the dalia case >> my wife read the book and loved it i got to tell you, what ken stands for with nyu, listen we are going to help people who

want to be helped. it is remarkable and should be talked about he talks the talk and walks the walk he's amazing my wife would say she's one of the greatest people she ever met. >> true or false, the american dream is alive and well in china. >> it is a communist dicta dictatorship the dream of communist -- you know i am extreme on this position this is 1947, this is a communist government, i loved for those people to be free to see what happens >> boeing, jim, 165 held in the first time around. do you think we are going --

>> the buyers are coming in. i just take it from phil lebeau. once you get the forecast cut because they're making fewer planes, that's really bad for boeing this is something boeing have to reckon with. it is not good >> all right, jim, we'll see you -- >> i apologize of the transcript for one, i didn't read ken >> i watched the dalia's piece and was going to bed and someone messaged me saying langone is going to heaven. i got up and i watched it. >> i sneak a manual. >> that was kind of an interesting guy to have talk about all the stuff. anyway, thanks, jim.

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welcome back everybody, let's check a final check of the markets. the future is down across the board. dow is down 137 below fair value. that's undually affected by the impact of boeing s&p is down. have a great day everybody, join us tomorrow. right now it is "squawk on the street." good monday morning, welcome to "squawk on the street," i am carl quintanilla with jim cramer and david faber at post 9. boeing is down we got a big week ahead. europe is mixed in oil, a new

five-month high. our road map begins with a bunch of thing including the unicorn parade, pinterest, below expectations what it means for the country. >> lyft is new to the public market is threatening litigation against morgan stanley aclcusin that firm of short selling of investors. also what it means for a lot of the private company are on deck to go public >> warren buffett says its new ceo should not come from wall street we'll take a look at who this may exclude and who could potentially fit the bill we'll begin with the markets, dows clo dow is closing in on a new highs, being dragged entirely by boeing which says it will cut production of the 737 max jets s&p is not far behind either on all time level coming off the seventh day win