wonderful time of the year, 2019 "squawk box" begins right here good morning and welcome to "squawk box" here. i'm andrew ross sorkin along with joe kernen and melissa lee. becky is off it is april 15th we are celebrating -- no take a look at u.s. equity futures this morning looking at a dow that would open up 41 points higher. nasdaq opening a little higher we're showing you what's going on in asia overnight a bit of a mixed picture there european equities right now are also trading as we flip around like vanna white, flips around

green arrows across the board. finally the ten year note, treasury yields at 2.56. we've got an update on trade talks between the u.s. and china. reuters is reporting that the u.s. is backing off demands as a condition for a trade deal those subsidies have been a key policy deal. the government awards subsidies and tax breaks to state owned firms. the report says u.s. negotiators have focused on other areas including an end to forced technology transfers, improving protections for intellectual property and widening access to chinese markets. president trump renewing his criticism of the federal reserve in a tweet if the fed had done its job, which it had not, the stock market would have been 5 to 10,000 points higher quantitative tightening was the

killer and should have done the exact opposite. >> i don't know how to feel about any of this. obviously we have the great hyperbolic exaggeration of things which we're sort of inured with by now could be a million points higher, really i would be happy given the -- what the forecast was, the market's done pretty well. i did see jim grant if you look at -- i don't know where i saw it he said it's almost criminal the suppression of interest rates by global bankers i see that on one hand and then on the other hand i think about how we know what we used to think normal rates were and when we went into the financial crisis and we went to the emergency levels, we thought by definition we need to go back there and normalize and the more

we're in this environment, the more i'm thinking that that may have been flawed logic president trump doesn't understand any more than we do out of the mouths of babes, maybe it wasn't if we go back to normalized, 7%, 5%, 6% maybe whether it's the aging of the population, whatever demographics you want to look at or the disinflationary environment that the globe is in whatever you want be to look at, i'm not sure that a step wise move 16 rate hikes back to 5%, i'm not sure that was ever the right move. >> i think you bring up jim grant in combining the two together -- >> right opposites. >> central banks are suppressing interest rates for good reason because of an actual slowdown. >> there's no slowdown. >> is this a major shift for you

though, joe? >> it's that -- >> is that a major shift for you? >> no. for six months to a year -- >> for the past ten years you've been on -- right >> i'm not sure what -- i mean, if you look at the last 100 years what the 30 year or 10 year was, it is down at 2 or 3%. i grew up in the '70s and '80s -- >> double digit. >> i was in the business and we thought if you could get -- jimmy rogers said we would never see a 5% long bond in his lifetime never see that it could never happen and here we are all i'm saying, i thought in staccato fashion i thought we would -- as soon as we could, as soon as the economy recovered, we didn't need emergency, get out of qe, shoot the balance sheet. >> you can't do that if the rest of the world is slowing and the rest of the world is leaning

towards easing monetary policy. >> we moved rates all over the boa board, 10, 15% now if you double it, you go from 1.5 to 3. what do you think? is something different >> i think something is different. >> you think we should keep them low? >> i've always been more in that camp. >> should you keep the pedal -- >> keep cutting? >> keep the pedal to the medal if there's no inflation or is that somehow going to come back? >> i think there's going to be you need to keep it low and there will be a comb uppance but it will be better if we do nothing. i'm moving on. >> i'm now worried about this, real quickly, did you see greenspan? he's been saying this for a while, eventually the explosion in entitlements is going to

hamper growth in a significant way. >> 100%. >> we're having this argument, we're going to have heidi heitkamp on, it's tax day, barney frank arguing with nordqvist about whether we're progressive enough even though 1% is the bottom 90. what would we do if we raised taxes? pay down debt, expand entitlements more? >> i'd like to get rid of the debt. >> talking about free college. >> i'm happy to talk about that. by the way, i do believe people are talking about that democrats have been talking about the debt for the past couple of years. >> that is a crock of shitzu

10 to 20 trillion. >> we have a lot to bring you this morning it's another big hit you have to watch. >> that's what i think, democrats -- >> take a look at boeing american airlines is becoming the latest airlines to cancel 737 max flights well into the summer removing the flights from their schedule throughout the summer american says customers can request a full refund if they choose not to be rebooked. united has removed the max jets through june 5th and southwest through august 5th it's been grounded worldwide and the company has slowed production and stopped deliveries as it works on a software fix it's performed 100 flights and

will submit a fix. shares of boeing have fallen 10% since the planes were grounded. >> which sounds like a lot which is not. >> right. lyft is temporarily pulling its e. bikes from new york city. they have been pulled off of the streets. this says it is out of an abundance of caution because the front brakes are stronger than expected. >> that includes the city bikes? >> yes >> that's what we're talking about. >> $93 trillion green new deal sound like talking about -- no >> does the modern monetary policy -- >> no, it does not. >> complaining about the tax cuts in the trillion dollars,

that means you found religion on debt all you want to do is spend. all democrats want to do is tax and spend. >> i do not want to spend. >> how are you going to get free child care how are you going to have free education? >> it says '08. >> how are you going to do all of these things if you don't spend? >> he's been pent up all weekend. monday morning, look what happens. >> this is a story this is one of the most beautiful, chilling wonderful stories. >> now you like golf >> i do. >> did you have a tear in his eye? >> i had a tear in my eye when i saw it i had a tear in my eye when i watched the nike ad. >> no, it was great. >> it's all good dom just had on john cook. i played with him a few times. tiger woods stunning victory at the masters. for the first time in his career tiger overcame a third round deficit. every other major of his 14 he

was ahead going in the last round. anyway, he made three birdies including on 16 where his tee shot was within a couple of feet that's a foot of the cup we did have two holes in one on 16 that gave him a two shot lead and a shot to spare on the final hole which was good because he got 5 on 18. one stroke victory 11 years after the previous one. first masters win since 2005. >> unbelievable. >> around any had four, tiger has five and jack nicklaus has six. >> even on his phone call, did you see him on the air after >> he was on what? >> i watched some clip later where jack nicklaus was on a phone call. >> i don't know. it was a big win for nike who stood by tiger through thick and

thin had this ad ready to send out shortly after tiger's big finish they estimate the value of the win for nike at 22.5 million monster energy is worth nearly $1 million bridgestone's sponsorship worth $134,000 and now we're on to three to go to tie jack and it's not impossible there were putts where i was watching and there were a couple i thought when he was younger he would have made -- he would have won by more than one stroke. i thought, he's still missing some of it he said he was patient and people sort of fell by the way side beginning with number 12. did you see what happened on number 12? >> i'm not sure i did. >> my question for you, is he

officially back? >> he was back last year he was second in a couple of majors. >> no, no, not in the sports world. there was always sort of the hesitancy for some sponsors to sponsor him, for certain people to get behind him. does this fundamentally rewrite everything that's happened over the last decade? in the business world. in culture >> i would think so. >> that's what i'm asking. >> everybody loves a comeback. >> everybody loves a comeback. >> this is the ultimate comeback. >> this is a long time coming. no one thought it would -- >> yeah. >> there was the personal stuff that hurt his brand to some exte extent. >> that's what i'm referring to. >> after that it was all health stuff. >> right. >> he's had back operations, spine is fused, his knee all of these setbacks and he's 43 or something. he's not that young but his swing is back. i still think putting.

he won one of these -- one master by like ten strokes or something. this was -- he looked -- i was nervous on 18 when he was -- i mean, if that would have been me, he had about a 40 yard -- he was 30 yards short of 18 he had to get down in three. get on the green in two putt he didn't smile. he was not finished until he was finished he's tiger woods. >> can you imagine at his height he made $110 million a year. $30 million from nike from that relationship >> he'll have $1 billion he'll be the first billion -- >> did you see michael phelps? >> yes standing behind him screaming. >> that was cool i had it dvred. >> i didn't see a commercial but i didn't miss a swing. i didn't look at my phone. >> wow. >> you couldn't look at your phone. >> because i would have seen something. >> he looks at his phone during

our show but not during -- >> because i would have seen on twitter people talk about what's happening. >> right. >> i had an hour to go in a tournament my son's going, do you know so and so just -- no. >> ipo countdown with pinterest set to go public after a stumble with lyft, leslie picker has insight. chicago fed president charles evans will join us in an exclusive interview. we'll talk about whether the fed is too hot, too cold as we head to break, take a look at the biggest pre-market winners and losers in the dow. xfinity watchathon week has sadly come to an end.

what, what, what! no!

but don't let that stop you . jesus, what happened? ...and more. it's just the tip of the iceberg. upgrade now to get more into what you're into. thanks! just say "watchathon" into your x1 voice remote to upgrade and keep getting more of what you love. welcome back to "squawk box. multi-billion dollar deal waste management buying advanced disposal services. price $3 billion in cash deal is worth $33.15 per share 22% above friday's closing price for advanced disposal services. ipo countdown. pinterest is set to go public.

leslie picker with the valuation. >> is pinterest $9 billion valuation expensive or cheap that's the question investors are asking as they try to decide whether to buy shares in the ipo this week. ipo values are decided on a relative basis how they compare with their peers that are publicly traded but unlike, say, a retailer or manufacturer, pinterest is somewhat unique to the public market. the site provides various how tos, recipes all supported by ads. for that reason, investors are using a basket of companies for pinterest's valuation. search and social media companies trade on average 6 times. because pinterest enables users to buy things on its platform, investors are looking at a basket of e. commerce companies which trade closer to four times. bothbaskets are discount to th 8 times projected revenue that

pinterest is seeking even though the company is targeting an ipo valuation that is lower than its latest private round, that may not mean investors think it's cheap, but they may still be willing to pay that premium for growth since pinterest's revenues show gains of 60%, guys. >> that's the key in terms of the 8 times the premium that it's valued at right now >> people are willing to pay for the revenue growth which may not be as high as the other columns. >> exactly you look at the traditional search and social media companies, at this point in the game they're large conglomerates. pinterest is in the position where it may not grow 60%. projections showed 50% it is much quicker than other ad-based models. >> still under 60. it was 57 last week. >> it's definitely causing

investors and companies to pause when it comes to raising the range. it doesn't mean that they wouldn won't do so, but they've raised their price range and priced at the high end of that range it's causing investors to wonder whether or not they have more leverage in terms of the pricing discussions that happen because they can say, you know, look, we're underwater we don't want to pay more for the other things that are on the road just because you want to kind of get that last dollar in terms of pricing. >> are you finding from the people you're talking to that it's really a competition between lyft and uber or is it lyft versus the other ipos >> what's interesting is that it used to be, especially when both companies were private, what's bad for lyft is good for uber and what's good for uber is bad for lyft now it's the opposite.

i was curious whether people thought it was because of what was said in the fielings. the uber filing brought lyft's shares down. i think over the next couple of weeks as uber continues the ipo process, the trading in lyft is bound to be volatile. >> leslie, thank you coming up when we return, we're going to tell you about a planned apple service to make more money on the new media streaming program. we'll tell you about that. later, it is tax day are tax preparers feeling better or worse off since the new tax law took effect? former senator heidi heitkamp is here to discuss in just a moment let's build a better world for investing.

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thwho hold themselveshe to a higher standard. they are called "cfa charterholders." demand the best. demand a cfa charterholder. cfa institute. apple could reportedly invest up to half a billion dollars in the upcoming video game service, apple arcade hsbc specialists are saying apple will bring in more revenue than the apple streaming service. it's set to launch this fall apple shares are up 25% year to date what's interesting about this is you might think, oh, this sounds like a positive note from hsbc

last week they downgraded apple to reduce. so you have to keep this in context when you hear from the analysts. >> where are we now. 937. back 937 nice run all the way down in the 60s? >> yeah. yeah meantime, stocks to watch this morning shares of publicis up more than 4% they're buying marketing and data company epsilon from allianz data systems for $4.4 billion. i thought of epsilon as one of those companies that gets data information. catalent is set to buy paragon

bioservices. looking at -- when you think about it, four days the masters, right? one stroke a day, there was like 20 guys that one stroke difference per day tiger was 13 under the next guy was 12 under. a bunch of guys 11 under think of the margin of error and how good they are. whats difference of winning and losing the master. stocks have been on a run since the christmas eve selloff. will earnings eason help or hurt the rally. as we head to break, here's a look at friday's s&p winners and losers [knocking]

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you're watching "squawk box," live from the nasdaq market site in times square. good morning welcome to "squawk box" right here on cnbc i'm not going to tell you what joe just told me take a look at u.s. equity futures right now. dow looks like it will open 40 points higher. nasdaq, we'll call it virtual virtually .5% right now. wells fargo, the stock has been downgraded wells fargo was downgraded to two other forms, evercore and buckingham they beat the forecast but it lowered its outlook for net

interest income. i'm going to go to this. a couple of times donald trump, president trump has to say things what do i know about branding, maybe nothing? but i did become president if i were boeing i would fix the boeing 737 max, add some additional great features and rebrand the plane with a new name >> well, that opens up a whole other can of worms in terms of recertification. >> no product has suffered like this again, what the hell do i know that was his last tweet. i don't know boeing is something -- we'll talk more about this during the day. it's one of the lead stories in "the journal." >> american, southwest. >> going to a marketing meeting with them later today. >> all right earnings season picking up speed this week with reports on the way. big banks, transports and the first of the faangs. here to tell us if earnings will

lift stocks to the record highs, that's a loaded term jill carey hall. david bianco jill, in terms of the reporting season, rachetting down with analysts to where we are now below flat and we're at minus 3 or 4%. so everybody -- why we call it negative growth, i don't know. we're talking about actual lower earnings not just decelerating earnings growth your view is that we beat that and are able to post flat or just slightly higher or just flat with last year? >> yeah, just flat with last year. >> which would be a beat >> exactly so about a 3% beat our view is expectations have reset pretty sufficiently. they came down 7% in the three months before reporting season which is a much bigger rachetting down of expectations than you usually see the good news is when you see something that dramatic before,

earnings beat expectations by 3% when you look at the macro data, some of the results from the early reporters, it would suggest you see something like flattish -- >> when did the stock market sniff that out it has had a great first quarter. >> right. >> did it look past the forecast for down earnings and realize it's not going to be as bad? and also the flip side of that is you think the best -- we've basically seen the best from the year in the stock narkt? >> right i think a lot of the optimism has been around the green sheets on global growth, optimism on trade. essentially looking past the earnings what will be key will be management guidance this earnings season. we've seen that come down the past several months. same thing with cap exguidance the uncertainty overhang has really been what could affect earnings going out over the

year i had he be hesitant to spend and what they're saying about china could drive stocks some of the areas that have seen valuations come down a lot, positioning come down a lot like industrials, tech that have seen the bigger risks, these areas could see bigger reactions >> 3,000 you figure we might get a print like that on the s&p this year but we don't necessarily stay there and 2900 is fair for 2019, is that what you think? >> right 2900 has been our year end target there's risk that the market could peak out somewhere around 3,000 this year. it could be an up side we think the risk/reward, you don't want to buy it on the whole sale you want to focus on pockets of the market >> david, your 2750 to 2950 range is for --

>> for now. >> short term, intermediate term >> spring. >> for the spring. spring ends in >> in june and i think 2750 to 2950 lasts basically -- >> 2750 -- >> 2750 is a pretty good jump. >> 5% pull back between now and the summer would that surprise you? >> i'm not expecting a pull back. >> you're not? >> why put the point in there. >> because that's the fair value range. >> 2750 to 2950. i think by the end of the year once we see signs in the third and fourth quarter that the u.s. economy is doing well, s&p earnings growth is back to 5% or above, i do think the s&p makes it to 3,000 by the end of the year early 2020. >> does the economy need to improve globally to get back to 5% year over year? or are the comparisons easier? >> i would say forget about acceleration, deceleration the economy in the united states and china seem to be stable at a

healthy pace of growth i'm feeling extremely good about the length of this expansion i think it's going to be a 12 to 15 year expansion. >> where are we now? >> i think we're in the 12th hole i think we have plenty of time left. >> i feel like people who are uncomfortable with this tenth year anniversary of the expansion should start getting very comfortable the labor markets are extremely stong and china is showing plenty of green chutes the fed understands this is neutral for now. we have a lot of good things happening. we need to accept the good environment. the s&p has a little bit of up side for the rest of the year but more over the coming years >> right i talk about this expansion being 12 or 15 years approximately in total if we get through late 2020 and

we get the political outcome that suggests there will be no material increase in taxes, i think this is an exopiniopansiot goes beyond 20 years. >> i would think you would be expecting much more up side this year. >> sounds fine. >> right but then the price targets indicate not very much -- the risk/reward is not there i don't get it if i'm an average person out there i'm thinking, why should i be in the markets at all if you're telling me the up side is limited, the risk/reward is not there. >> i think at this point it's about picking your spots there are equities that sell health care is an area that we have recently lowered from overweight to neutral because the risks that multiples see overhang as we head into the elections. >> political risk for health care >> political risk for health care but there are areas of the

economy, we had recently upgraded consumers to overweight it's also an area that typically under performs later in the cycle in the fed's tightening. if the fed is on hold and the consumer we're still expecting a healthy back drop, that's a sector we see up side in the near term. >> the up side we're describing is healthy up side too many people have been thinking of a healthy up side. be in the market pick your spots, as jill is saying we like emerging markets asia. if you are looking for something as outperformance, united states, big banks, we have been on top of growth stocks, we like them still and i think they continue to outperform for the most part i think it's the communications sector that has the most up side. >> what's known as faang. >> it is basically like that

>> i don't like to call finalities we have friends and we talk about our lives and kids are married, where we are. it's like we've teed off on number 14. i don't like that. 14, you're winding it down, right? i like to think i'm at the halfway house after the front nine i just went to the bathroom. starting to head out to the tee on number 10 that's probably not very realistic. >> i like the snack shack. i like the snack shack. >> what hole >> 12. >> i'll take that. what would that be, 2/3. >> another 40, 50 -- >> not life, this is the stock market. >> we talk about it in terms of life to get a feel for where we are. it's not good at 14. >> jill and david, thanks. sorkin, you're like on number 7 or something you're so lucky. >> what are you talking about? >> what do you mean -- >> why am i at 7 >> because you could live with modern -- >> you didn't hear a word i said

before. >> no, i've got it. >> you could live to be -- 18 holes. >> you should live every day as if you're on 17. >> no kidding. >> you never know. >> nobody does. >> nobody does coming up, major shakeup in hollywood as the contract fight between writers and agents hits a wall bank of america, morgan stanley and others set to report this week this morning, goldman sachs and citi instant analysis on both stay with us you're watching "squawk box" on cnbc

welcome back to "squawk box. negotiations between hollywood writers and agents collapsed on friday night the writers guild asked the writers to fire their agents and a number of prominent ones already have david simon and daniel chung did. they are asking for changes to the deal that have been in place since 1976 they want agents to eliminate a 10% commission fee for packaging writers with other clients they say the packaging deals are ben fill theal to get into the production game putting them on both sides of the house, if you

will >> and they try to talk the writers down. >> it will be interesting to see what happens to hollywood in the next month or two or next several weeks to see if a new deal gets put-back on the table or if hollywood slows down to a crawl. >> they are flad ft for a few years. you would think it would be the best of times. >> the commotion this is going to cause is going to be real because a lot of these shows, there are new shows going on the air, old shows need to staff and how that's all going to happen getting complicated quickly. and, by the way, potentially you could see writers not only -- i think there's a view that some of the writers are going to come back to the agents but i wonder actually if this is prolonged,

whether the writers just go with lawyers, go with managers or do something else. >> okay. >> there's a legal issue with using a manager in california. super hero movie "shazam" topped the weekend box office. it brought in $25 million in the second weekend it's the story of a teenage foster kid who transforms into an adult super hero. meantime, it was a disappointing debut for lions gates "hellboy." reboot made $12 million in the first weekend in theaters. it follows earlier installments of the franchise from 2004 and 2008 anything can be rebooted, i guess. so "game of thrones," was that on last night >> i don't know anything about it. >> we didn't get a chance to see it we had it on dvr i did see the new penguins disney movie with my kids.

it's coming out later this week. it's spectacular. >> animated or real penguins >> real penguins >> like march of the penguins? >> how they're able to create the story. >> documentary >> it's not a documentary? >> it is, but they create a story out of it. it's so well done. check it out if you're interested in penguins. >> there are lots of penguins story. this was quite spectacular. >> you know who was there? >> who. >> my favorite, jane goodall she was on "squawk." you were there in davos. unbelievable. coming up, it is tax day april 15th our next guest, former senator heidi heitkamp says the gop should be worried americans appear unhappy with the tax overhaul we'll discuss the rcpeeptions of that tax cut next.

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okay okay welcome back to "squawk box. cnbc has an initiative called in the in you it's ready to go the micro investing app. today is tax day, and our next guest is warning that the gop has, well, i'll let her speak for herself when it comes to the gop. in the new op-ed, former north dakota senator heidi heitkamp says americans are unhappy with the tax overhaul and republicans should take notice for more on this conversation welcome to heidi heitkamp, a former u.s. senator of north

dakota and now a cnbc contributor. senator heitkamp, welcome, and thanks for joining us. what say you you say on a day like today when people are writing their checks, hopefully they have written their checks already, that they should be unhappy with the republican party, why? >> well, i didn't say they should be unhappy. i'm saying that the republican party had an expectation that this tax bill that was fairly unpopular when it was passed would become more popular as people filed their tax returns and saw that they were getting more money back, and that certainly hasn't been what you see in the polls in fact, there's a lot of people complaining they aren't getting the same level of their refund is not as high, and they are having to pay in part of that was was because they re-tweaked the withholding tables getting it closer to an approximation. >> can i ask you a question about that i find the argument about the withholding story and the idea that people aren't getting more money back to be the strangest

argumentor argument in town because ultimately it's not -- look, there are people who are paying more in taxes, i understand that there are people out there unhappy that they are paying more in taxes, that i 100% get what i don't get is those people who are actually paying less overall in taxes but are somehow complaining they are not getting as big a refund. >> that's because you've never administered taxes before and i have and i know that many, many people use the tax system to basically mandate a kind of savings plan and then they have an expectation when they get that, that they will pay off their credit card debt. >> but we do recognize this mathematically doesn't make sense. >> right, i agree, per sense, as i said at the end of the op-ed you can make all those arguments but at the end perception is reality and the perception today is that this tax bill did not adequately benefit the middle class. >> do you think that there's any chance that this tax plan is going to either be repealed,

adjusted or anything even if a democrat were to win the white house or the senate or the house for that matter? i mean -- >> well, the first thing -- >> you have to get all three across the board. >> first thing is you absolutely have to do is somehow make the individual portion of this permanent. it's not it phases out. >> right. >> and in fact some of the changes will actually increase the tax rates for the middle class so let's not even talk about if we should be talking about what should this look like long term. >> heidi, until 2022, 80% of the tax cuts actually do go to the middle class and 2022, if you look at it total then it does start benefiting wealthy again they had to be made permanent. that's the frustrating part p.even the years where it is working for the people, that you know, you would want it work for it doesn't seem that way and that's the thrusts of your piece that remember special is reality and it hasn't been explained well or it's been skewed or

something, but in 2022 it really gets bad because then it -- if it's not changed or made permanent then a lot of the benefits accrue to wealthy individuals. >> yeah. because the gop couldn't stomach the actual cost of this thing, so they -- they wanted to hide the deficit that this was going to bring upon us, and it's not easy to hide when you look at what's happening, and right now when you say, well, the middle class did get a benefit, that's right, but they believe they get a disproportional benefit given what it cost >> senator, we want to thank you for your time this morning p wish you luck. you have your class today at harvard. i see harvard behind you. >> well, we're here trying to save social security, joe. >> you pick on those poor millenials but they are doing a great job. >> we'll all be dead, according to you >> well, we'll -- >> we had some rain last night we had climate change last night. scared the heck out of my dogs

i'm not kidding. they were like up in my room >> thank you. >> becky, help. >> for more on all of this, go to invest new on cnbc.com. i want to talk about a fabulous tax cut idea when we see -- when we talk to brady. >> are you bristling >> everybody. >> i like that. >> coming up, are the tax cuts fair, and we already saw that? why doesn't rcpeeption match reality. we'll debate that with grover norquist and barney frank. you don't want to miss this.

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for exceptional lease and financing offers on the 2019 c 300. earnings in full swing will it be a hole in one for investors? we're going to break down expectations and get results from goldman sachs >> it's tax day, and millions of americans are expecting a nice return, but you may have to hold off booking that dream trip. a breakdown of the new tax code and one of the architects behind the president's tax cut plan congressman kevin brady joins us. >> and tiger comes roaring back. >> the return to glory a look at his historic masters

win and when it means for nike 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" on cnbc. the futures are indicated up 47 now 47 points on thedown the s&p indicated up two, but actually the nasdaq is now in the red down a little bit over a point. >> another of big headlines to bring you this morning huawei open to selling 5g smartphone chips to apple and other-makers according to the ceo in an interview with cnbc. a major shift in strategy for the chinese smartphone-maker

apple has been shifting more of its purchases to intel because of its ongoing battle with qualcomm but intel has been running into delays into producing a 5g chip. not clear to me, by the way, that apple or any other american company is going to be so quick to buying huawei chips and putting them in their phones given the concerns that the u.s. government has, so while huawei may be very open to this, i'm not sure that everybody else will be so open to it. waste management buying a smaller reich. the company just announcing a deal this morning to buy its rival advanced disposal services it will pay $3 billion in cash it's $33.13 per share and you can see right now -- actually both stocks are up on this news, so it's not an arbitrage situation where you're seeing the buyer go down and the seller go up. >> that's cash, right? >> people are happen on all ends. >> it's cash. >> but oftentimes people get

frustrated >> that was a rollup, one of the original rollups. >> yeah. >> with waste management, and they are still rolling. >> and we should note we are, of course, awaiting quarterly earnings from goldman sachs. we'll get those numbers late they are hour. the company expected to report a profit of $4.89 per share on revenue of just under $9 billion. we'll have those numbers and reaction as soon as they are out. >> president trump renewing his criticism of the federal reserve in a tweet yesterday the president said, quote, if the fed had done its job properly which it has not the stock would have been up an additional 5,000 to 10,000 points and gdp would be up 4% squaring quantitative tightening was a killer he should have done the exact opposite we'll hear from fed's charles evans. >> can you imagine dow 36,000. that's where we would be. >> right. >> h.w. was so mad at greenspan,

remember i mean, but -- but he was mad, but he -- he wasn't -- presidents always get mad when rates are going up they always wish rates would stay lower, but there's never been anyone like trump there was never twitter and never someone who would say exactly what they were feeling at the minute, so i don't know how -- it's definitely different how much more we talk about it, but i think presidents have always sort of looked at the fed as sort of counterproductive to their efforts and if an election is coming up you can't be easy enough for most presidents. >> the question is how is our central bank being perceived by other central bankers at the rest of the world? mario draghi over the weekend was questioning the independence of the federal reserve he said he was concerned about the independence of the most important central bank in the world and that would be the central bank of the united states, the fed. big question. >> all right and now the story that, of course, i mean, look at any newspaper. pictures of tiger in his red, his victory red buzzing this morning. tiger woods stunning victory at the masters.

for the first time in his career tiger actually came bafrom bind in the fourth round of a major to win making three birdies in his final six holes including on 16 where he put his tee shot within a foot, really close, of the hole, but justin thomas had a hole in one and so did bryson desham bow they put it in a place where if you hit it it comes down and a lot of them came close gave him a two-shot lead and a shot to spare on the final hair as he toepd in for a bogey on 18 for a one-stroke victory it's been 11 years since his last major, fifth green jacket and first in 14 years and he passes arnold palmer who had for you masters win. tiger has five, jack has six so that's the only person with more also a big win for nike which had this ad ready to send out on social media channels shortly after tiger's big finish apex marketing estimates that the value of tiger's win for nike was $22.5 million

sounds very familiar we will talk nike and tiger woods in just a couple of minutes. >> okay. >> it is tax day, and the one and only rob frank is here he knows everything about taxes. he joins us with a look at how the new tax code is affecting returns. >> i am the ultimate tax nerd. >> how are you feeling you're a little wound, aren't you? >> a little wounded, like everybody else. >> don't you live in new york. >> i live in a high tax state. the first day under the new tax code and while most americans got a tax cut there is a big gap between the winners and the losers the average american got a tax cut of $1,200 for 2018 generally the more you earn, the bigger your tax cut. the middle earners will see a 1.4% gain in after-tax income or about $800 bucks while those in the top 5% will see a 3% gain, averaging 14,000 now the top 20% of earners got 60% of the benefits this year from the tax cut, but biggest losers will also be high earners if they live in high tax states.

8% of taxpayers in new york, new jersey, connecticut and california will see tax increases and the higher income, the mar you paid in added taxes. joe is nodding his head. more than half of all the tax increases in the new law, that's the tax increases, will fall on the top 1%, those who earn their money from salaries rather than companies or pass-throughs or investments also got hit the hardest. the biggest winners from the tax cut this year are wealthy business owners and investors in low tax states like florida or texas or washington state who also benefited from the market gains. the biggest losers are the top earners who make their money from salaries in high-tax states like new york or california. >> i just think in general liberals should be much happier about sticking it to the rich because people in new york and new jersey and high tax states they got absolutely hammered like 20% higher taxes, don't you think? well, you know >> why would you think that liberals should be happy about

this. >> they want to tax the rich. >> don't play dumb with me. >> if you're going to act like that, i'm not even going to talk to you i know we've got three hours you ask these questions. >> you can answer why -- why republicans wanted to do this. >> you were born at night. >> it was last night >> you know what i mean. the rich people in new york and new jersey are -- >> the democrats are pushing to change this. >> yes, of course. >> why why? >> because they don't like rich people unless it's their own rich people. >> exactly for more on whether the tax cuts are fair, let's welcome barney frank. barney has to be happy former congressman of massachusetts who is chairman of the house financial services committee and grover norquist, americans for tax reform what's the problem, grover all these rich people in new york and new jersey paying more. why aren't liberals happy with that >> overall taxes are down 25%. you've seen h & r block lay out on their website exactly where the tax cuts r.new york and new

jersey get good overall tax reduction. we went through the series of fibs a couple weeks ago where people said refunds were down. refunds are up or almost exactly the same as usual. the democrats are in complete denial jim tankersley of the "new york times" have said the democrats have said there isn't the tax cuts and they he writes a piece they are in complete denial. the democrats did this in 1948 when he told everyone it wasn't a recovery going on, it was bi-coastal and lost 49 states in the next election. at some point reality catches up with the democrats' rhetoric and they have made a big mistake in telling people that they didn't get the tax cut that they saw n.new york you can solve your problem with s.a.l.t. by electing governors and mayors who keep taxes low it's your own fault. >> barney, i think one of your main gripes is about the -- the truly regressive taxes like social security and sales tax, things like that. >> yeah.

>> those are still prohibitively high for a certain group of people is that where your real beef is? >> that's one of them. 50% of the revenue comes from the individual income tax, but 35% comes from the social insurance taxes, and those are very regressive. >> right. >> the rate and the amount, by the way, two-thirds of the total there is paid by people who make less than $200,000 the economy is very clear. growth today is different than growth 40 years ago. it has two impacts up, it increases overall wealth. no question, and that's a good thing, but it doesn't it in an increasingly unfair way. by the way, donald trump is one of the people who makes that point so the question is should we in the tax code try to offset that to some externgts and when the great bulk goes to the wealthier people in terms of dollars it doesn't have that

now i understand of the improvement investment and a deal could have been reached when capital gains taxes and other incentivizing taxes could have been lowered but not the top rates that went up, and that's my final point. mr. norquist has always been very honest about this he thinks government does too much he would like it to be substantially reduced. the fact is because we had the magnitude of revenue loss that we did from the tax cut and the claim it would produce more ref new in the end has not been the case it's not producing sustained 3% growth and even donald trump is acknowledging that he blames his own appointees at the fed for the failure of the tax cut to do what he said it would do, but one of the major costs of the tax cut is infrastructure we very much need an infrastructure program it would be great for productivity we don't have it one of trump's promises because the revenue that was needed for it went to the tax cut. >> grove, i wanted to ask you about this there's a bill out there

it seems bipartisan, and i'm surprised by it, that effectively makes a permanent ban, barring the irs from ever developing its own online tax filing service this would have been a free service that would have made paying taxes cheaper and easier, especially for people of the bottom and the middle who are spending in often cases several hundred a year it would actually be a tax cut for most americans to do this. why try to block something like that >> look, two things. there is free file where people -- who have low incomes can file for free an all the companies, the for-profit companies that do this make that available, and the democrats have been trying to kill that, so it's actually available for low-income people. the real goal of the democrats, and we saw this in california, is they want the government to do your taxes for you. >> yeah. >> like europe does. they send you a bill, go ahead and argue with the government, and when california put that together, you know what they scored it as, as a significant revenue raiser because they

intended to write your tax bill so it would be higher than you would expect to pay now. this is a way to raise taxes and to completely strip you of all privacy period. >> grover, do you have any ideas of how to make it easier and cheaper for american taxpayers to pay their taxes so it doesn't cost them anymore money than it already does >> yeah. >> without doing what you seem to think is a problem. >> well, you can get free help from the various companies that do this if you're income is under a certain level, so for low-income people they have free file. >> what about the rest americans? it would be so much easier, people whole with w-2 filers, get a postcard and it says what the number is, you sign it or you go off and you do your own tax plan. >> the federal government takes about 18% of everybody's money there's no pleasant, cheap, easy or uncomplicated way to do this. you want simplicity, you want fairness, make the tax bill lower. the idea that -- >> just lower?

that's the answer. >> how about simpler. >> the reason it's complicated is because they are trying to get every nickel out of you that they possibly can. lower simple flat rates. >> you have no rival idea about how to make it easier for americans to pay their taxes because ultimately your idea is to make it harder for people to pay their taxes and hate for taxes and push for lower taxes. >> i've heard tra argument from liberals, i'm sorry, it's nonsense the idea of having somebody to do a free file for you right now, that exists already what i don't want is the government to do your taxes for you, make it mandatory, which is the ultimate goal and then when they overcharge you, go ahead. fight city hall. see if you like that this is a really dangerous place to go, and there's a reason that the big government advocates really want complete access to everything about you it's the end of privacy if they ever got it. i don't think they will. >> kind of tempting though. >> just not having to do anything. >> congressman frank, thank you.

super grover norquist, thank you. >> can i just note that you asked grover about a bipartisan bill and he said it was all the fault of the california democrats. >> i gave the example of what they said about it. >> but it's bipartisan. >> i warned you. >> you blame the democrats for a bipartisan bill. that's not helpful. >> barney, thank you as well we will continue this conversation in debate i know for many -- well, meantime, some breaking news electronic retailer best buy has announced that the company has named chief financial officer cory barry as the new ceo, appointment effective as of the company's meeting on june 11 the current ceo will become executive chairman it says now is the right time to begin a leadership transition, and we should -- >> joe, they have done a pretty good job. >> done a great job with that company after, you know, many people thought it was left for dead. >> the last guy they didn't --

it was the founder and then i forgot -- anyway can't remember anything. i couldn't even remember archipelago. >> earnings season is here and market watchers are expected a rough company for many companies. we'll get an earnings season outlook and and coming up house ways and means' kevin brady joins us xfinity watchathon week has sadly come to an end.

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welcome back to "squawk box. drug-maker catalent is buying paragon bioservices for $1.2 billion. >> okay. coming cup when we return. is tiger's win at the masters also a win for nike? we'll take a look at the possible impact on the retailer. we'll do that right after the break. what an amazing performance yesterday, and then later goldman sachs results expect to hit the wires. the numbers, mket aconndarreti a all of it straight ahead dear tech... you've been making headlines. smart tech is everywhere. but is that enough? i need tech that understands my business. i need tech that works at scale. dear tech... dear tech... dear tech... we're exploring quantum to develop next generation energy. we're using blockchain to help make sure food stays fresh. we're using ai to help create more accessible health care.

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time for a look at morning movers dom chiu joins us now with more. we'll talk at the end, dorms if we get a chance about yesterday. >> we will, certainly, because my movers today, joe, are more golf accept trick than they normally are let's take a look at what's happening at shares of nike which are currently up maybe shy of a percent on relatively light trading. certainly something to watch because nike, perhaps one of the biggest ben push physical from the big tiger woods win at the

masters and not just tiger but many other tyky sponsored athletes having big days as well nike shares. golf is not a massive part of nike's business but we could see a little positivity around there. the reason why it's important, guys take a look at the other pubically traded golf stocks in the universe out there to watch right now in the u.s calloway golf, nothing moving but they could be a beneficiary if the game of golf overall starts to take a peek higher as you start to see over the course of the past year, it's a nice run up to the highs and then it's been a fall-off and somewhat stagnant in the last three or four months maybe this is a catalyst for golf to get bigger and better. this goes for titleist come acushnet, a more stable trade the past couple of months but it hasn't done anything over the course of the past year. if the tiger woods can break these guys out, that's something to watch as the game of golf really tries to right size

itself and then grow remember, this is an industry that was wrought with a lot of challenges last year because of bad weather. this could be a time when golf catches a break if tiger woods catalyzes the golfing community to get out there. >> you had cookie on john cook was one of tiger's -- i didn't hear the audio but he was one of tiger closest -- still it i played with john in the bob hope, one of the nicest guys, great family man, a lot of kids and a great guy. >> one of those guys a multiple winner on tour and was a nike-sponsored athlete and one of the things we spoke about this idea that nike has really had a massive resurgence, even though it got out of the business of making golf balls and golf clubs and that sort of thing, but what it comes down to is whether or not this could be a massive move higher for the golf industry overall. does it grow the pie that's going to be the ultimate game here because guys like taylor made. i was messaging with the taylor made ceo last night and you can

see he was very excited about what happened with tiger woods they have the new set of irons that tiger woods had the hand in krafgt and making that will sell for $2,000 a set can you already tell that bridgestone golf balls might be the more popular golf balls because of what tiger has done with them at the masters even if you're not nike, even if you're not bridgestone, i can tell you right now that golfing ceos are probably ecstatic no matter who they are. >> dom, you know how when we play like on any given hole you might beat me by two or three strokes. >> i think that you're overselling my golf ability. >> but per hole we have a stroke difference after 72 holes, tiger was 13 under. you had three guys that in 72 holes there was a one-stroke difference, and they are not winners. i mean, rickie fowler was 10 upped, so his major is still eluding him, and it was three-stroke difference over four days and 72 holes is the

margin of difference between who wins the parity and the skill of these guys is beyond belief, but three guys were 12 under. >> no, no, and that's the reason -- not just three guys. three really good guys. >> dustin. >> dustin johnsson was unthere, xander schauffele, one of the younger talents and has to be a boon in the cbs masters ratings. it wasn't just tiger a duel, a one or two-stroke differential between five or six of the top 20 golfers in the world all at the same time and weather might have been a factor when they got off the tee at 12 and into 13, the rain was coming down at a pretty decent clip you thought maybe that would have added a little bit of a dynamic, but mother nature really kind of held off. >> 12 was so great. >> it was a buzz saw. >> you don't know which way the wind is going. >> and rae's creek goes diagonal so if you lose it into the water it's going off the bank. >> the move that tiger made

after seeing what happened with poulter the group before and with koepka and molinari he went safe and went left on that hole. >> by the way, you know who is a big winner in this, david zaslow. >> $8.8 billion which was a miss compared to what they were expecting. diluted earnings per common share, 5.71 so that looks like a beat compared to what analysts were expecting for the quarter, so it looks like we've got a beat on goldman sachs. >> 1.5%. >> yeah. >> i'm just waiting for -- you said 5.71. waiting for it to couple taking a second here how big a beat was that? >> the estimate was -- >> i've got 4.89 so that's a pretty nice beat there. for government to work, the revenues are not off much.

what was it? >> 8.99 was the estimate 8.8 is what it came in 8.8. at this point, anyway, looks like it's up 1%. >> joining us new, mike thompson, president of s&p investment adviser group and guy adami. i'll start off with guy. >> great to be here. andrew is wounded by the whole thing. he can't speak. >> johnny retired. >> unfortunate for him, but i'll talk about goldman sachs i think it's higher because book value on goldman sachs came out of 209.11 and the street is going to take it right to book value and that's where it's going to trade banks have become utilities and trade at book value. would i rather look at tangible book tangible book in goldman is 1.92 and that's what's going to happen i don't see any reason to get long on the banks unless book values grind higher and somehow these guys and gals will figure out how to grow earnings over

the next guim of quarters. i don't see it happen. >> mike thompson, financials, so far many have come in better than expected. what are you expecting for financials overall does this normally -- does this ever set the tone? i feel like not since before the financial crisis have financial set the tones for earnings season. >> financials, technology and consumer discretionary usually it's a trifecta. a lot of jock exaround, a real tough quarter read because we had a lot of constituent changes which are screwing up the comps can and, of course, we have tax code in aggregate s&p is basically looking to come in right now at negative 2.6 that's not going to stand. it's not going to be a negative earnings recession there's not going to be a negative earnings recession. a lot of people are parading that out and they are not looking deep into the numbers. financials you had a couple of big outperformance on friday and in the financial sector that. actually took the overall aggregate from down 3% to up -- down 2.6%, okay.

>> right. >> it went from financial sector earnings growth from .1 to 2.4, just with the two reports from friday to end the revisions. >> can i ask you as a question says here, net revenue and underwriting, $923 million 24% lower than the first quarter of 2018. they shay it's due significantly to low revenues and a decline industrywide in ipos and revenues and debt underwriting and goes on to say the firm's investment banking backlog decreased compared with where it ended 2018. >> yeah. >> given -- given the number of ipos and -- isn't that almost -- >> one would think goldman sachs would be doing better than your point, and i think that's fair to say, and i say this with all humility and i worked there for a long time. goldman sachs in 2018 and '19 is not goldman sachs of 1995 and '96. a much different firm. there were 6,000 people that were there there's 40,000 people there. you can't grow that and have the

same culture, plus respectfully mr. solomon is whittling down everything that was a money-maker years ago and he's getting to a firm which is a fee-based utility that the rest banks seem to be goldman sachs today is not goldman sachs that you remember it to be, the billions remembers it to be. >> the show. >> the show. >> i had to bring that up. >> right, but the old -- you're talking about when we used to talk about goldman sachs in the context of morgan stanley, and they are almost two different firms. goldman sachs is moving more towards morgan stanley. >> more back to the old days of goldman sachs. they are the lead underwriters for all of these major ipos that we're talking about every single day. >> to answer your question, i understand why the stock is trading higher, but in the broad scope of things, i don't understand why banks are trading at premium -- well, premium mulls pat. you say the multiples are ridiculously cheap they are all utilities look at j.p. morgan, for example, tangible book and jpmorgan came out at $-5-57.5.

you're close to one times tangible book at jpm they probably deserve it, but how much higher are they going to do? >> did you see any breakouts, sort of the markets stuff that they are doing, the new consumer stuff that they are doing. >> i would imagine that would be lumped in. >> i would assume so when do you think that will move the needle if at all >> i know they are extraordinarily excited about it i can't speak intelligently when it moves the needle. obviously something that they want to move towards they want to be a bank in every sense of the word. get away from risk that it was 15, 20 years ago and get into a bank where you can have a revenue stream and you can understand what's going on and you fly under the radar screen of everything that's out there the bullseye is no longer on their back. >> in terms of the rest, earnings season, a lot of people are looking to industrials to help, you know, especially when it comes to the guidance for the full year, what they are seeing in terms of china and global growth what are you expecting in terms of what they will report >> nominally positive right now.

>> nominally positive. >> we, have you know, up about .4 for expected earnings growth i think, and, you know, look, i think what we have with industrials is reflective of tougher kompz and an economy that had been expected to grow at 3% is growing at 2.5% this earnings season is not as bad as everybody is making it out. people are forgetting the distortions of tax reform and the underlying -- there's a bizarre twist to this is that the -- they did a big rearrangement of the git sectors, the index providers moved companies like alphabet into communications services away from technology and moved facebook they moved netflix they moved comcast and disney. it's like if you don't get into the weeds of that and normalize for that, you actually don't have nearly as i would say weak numbers as you're suggesting by the headlines so people come on reading the headlines. this is not real the story here. >> yeah. goldman sachs is losing what had

been as much as a 1% gain on the back of its beat on the revenue line as well as the eps line in the pre-market remember though last friday when we had better than expected earnings from the likes of jpmorgan, we saw the whole sector rise, and true to form, that's what the pattern that we've seen for many, many years, and that is the first ones to report set the tone for that sector and then after that all bets are off. >> wells fargo is a well story i don't know if citi is out yet but citi to me is going to be fascinating in terms of what their exposure is. again to me if deutsche bank were a u.s. bank we'd talk about it every single day on our show at 5:00 which all the folks at home now should watch at 5 p.m. "fast money" a wonderful show. i think citi has tremendous european exposure, and there's no -- they have not figured out the problems in the european banks in my opinion. >> yeah, and we're still awaiting those results as soon as we get them we'll bring them to you. thank you, mike thompson, and

guy is going to stick around. >> why not. >> when we return, chicago fed president charlie evans is going to join us for an exclusive interview. we'll speak to him in just a little bit we're back in a moment

welcome back to "squawk. a lot more coming up in a little bit. reaction of goldman sachs' quarterly reports and other fixes for your portfolio and yes, it is tax day some people celebrating and other people mourning. house ways and means ranking member kevin brady is going to join us to discuss the president's tax cuts and more, and then later the chicago federal reserve president clivn e evans joins us for a exuse interview. "squawk box" with all of that in just a little bit. back in a moment

other people mourning. back in a moment internet that puts you in charge.

alright boys, time to eat. that handles anything. [ crowd cheering ] that protects what's important. and reaches everywhere. this is beyond wifi. this is xfi. got a check on shares of goldman sachs reporting moments ago beating on the top and bottom lines estimates were for 4.81 and it came in at 5.71. $8.11 billion was the revenue so a little short they had been up by as much of a percent right after recording results. we'll be hearing from david solomon as well as the whole outlook. a lot of questions about volatility in the quarter. the vix is at a six-month low so we'll see how that's doing on the trading side of thing. >> we're going into a little "squawk "picking the head of technical anal sits

and partner at strategic research and one of his picks is morgan stanley i want to start with that because maybe you can juxtapose morgan with how you think goldman sachs, having that conversation with guy, that says morgan stanley is like the old goldman and goldman is more sort of like the post-crisisish morgan for a moment. >> certainly trades that way both of these names, goldman, morgan, 40% declines last year these were devastating bear markets. we think they are bottoming. morgan stanley back up its 200-day moving average for the first time in a year maybe this is a sign that the yield curve actually steepens here and a sign that rates actually go up that's the message coming from some of these banks here. >> and you like morgan >> i do. >> but goldman on your list or is that -- >> absolutely. i think the whole space, the banking and brokerage base. >> it's a broad call for us. we think rates are starting to bottom here. we think frankly signs of cyclicality are emerging >> you take morgan because >> i do. i think it's emerging as the

leader to outperform goldment. it's turned after this 40% drawdown it's starting to exhibit some leadership that's the type of stock that we want to own here. >> let's talk about another one on your list which is disney obviously a big stock in the news that's already moved. >> yeah. >> i mean, it's moved about as much as you could possibly imagine, but you think it's got more to run. >> i disagree it's moved that much done nothing for five years. >> sure, by $20 billion in a week is not bad. >> up after five weeks of nothing. we think this is just getting started. has the benefit of a very good sector behind it the whole media consumer group is getting better. another name it hasn't paid people for half of a decade. starting to outperform netflix here, too, which is important. outperforming its own consumer peers so signs of leadership coming from a very big important stock. we like it here long. >> explain how you think this is going to trade i'm assuming there's a honeymoon period here as everybody awaits this actual projects right, disney plus, and is it a buy on the news, sell -- you know

there's going to be a moment here. >> this is a name that was improving long before any of us new about disney plus. a stock that's been getting better all year. >> okay. >> it's been between 70 and 120 for the better part of the last five years we think 75 in the next couple of years is where it goes, a major breakout, something we dream of. >> when you see a breakout in disney, not a raised outlook, but on expectation that disney plus will have this many subscribers at this price point, how do you treat that? >> from a couple of years of trading sideways within a certain berngsd as chris just pointed out. how do you treat it? now disney is trading it close to 22 times forward earnings, right? that's a staggering number for the space and that's a staggering number for disney probably trades at twice a multiple maybe they deserve it, i don't know to chris' point and to your

point through 120 was a huge breakout they return earnings on may 8. they better crush numbers on may 8. otherwise it backs and fills to levels we just saw yes, it had been trading along this range and finally broke out. a lot of people piling into the name, but you have to look at valuation at a certain point, and what did they really change other than that announcement that would be my pushback. >> can we talk alibaba >> we can. >> what's the story here >> i think it's improving china. everywhere we look signs of china going better see it with drill stocks and semis going up, iron ore i want to own chinese consumer down 0 last year, that stock priced in a lot of bad news from that part of the world i think it's improving here in 2019 suggests china and the consumers are getting better it's a good way to get exposure. >> you like a lot of casino stocks that have had massive runs later >> we love them domestically and we like the macaw ones as well

it's what we would describe good proxies of chinese consumers lvmh, chris dior, european autos all turning up here as well. this is all part of the same trade. it suggestses the cyclicality here we think the economy and china is getting better. >> thank you, sir. nice to see you, chris. >> thank you. coming up, goldman sachs, the results, the numbers, the instant reaction and the market reaction is straight ahead, and to celebrate tax day, house ways and means committee and ranking member and one othf e architects of the tax act kevin brady will be our special guest "squawk box" is coming right back xfinity watchathon week has sadly come to an end.

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upgrade now to get more into what you're into. thanks! just say "watchathon" into your x1 voice remote to upgrade and keep getting more of what you love. it is tax day 2019 let's bring in one of the architects of president trump's tax reform bill, kevin brady, ranking member of the house ways and means committee. congressman, it's good to see you. we've talked about it a lot today already that the perception is still out there that, i don't know, refunds are lower and it's only 17% think they are paying less -- less taxes, so the perception still needs to be worked on.

people don't really understand i think what happened. >> yeah. look, joe, i agree, and i think a liberal writer for voxx, backward compliment, told liberal democrats praise them that they had convinced the american people that president trump had increased their taxes and the facts showed that people actually got a tax cut that's still a narrative that works, but i think over time that will change you know, most people came -- i hate tax day myself. it's never anything to celebrate, but i know that the tax freedom day which is the day since new years you and i have been working to pay our state, local and federal taxes, it actually is tomorrow that's a week earlier than it was under president obama, so we are making some progress and giving people back more of what they earn, but i think a lot of people went into the tax season acting as if it was last year, keeping the same receipts and

going true the same process and for kathy and i we realize there's a lot of things we don't have to do going into tax season next year that will be helpful >> i still worry about 2022 and the way that it was -- the way that it was designed because a lot of benefits do start accruing to the people that -- that it wasn't intended to accrue to after 2022 that's what, 80% goes to the people that you're intending now, but by then the lion's share goes to wealthy individuals. >> well, no, that's not only the case -- that's not the case. >> okay. >> secondly, it -- part of the key here is to make our tax cuts permanent. that's what the house already approved last year. >> what if it doesn't happen >> we think that's very important, but there's no question millionaires' share of the tax burden increases from 19.3 to 19.8% under the new tax code as you know in, states with high tax states, i don't think the wealthy are talking at all about tax cuts, so, look, that

narrative is wrong both in fact and in storytelling. >> what should we do in your view is the tax code progressive now? 1%, 40, amend they pay more than the bottom 90% is that progressive enough, or -- i mean, democrats don't think so. >> yeah. absolutely it is it's one of the more progressive tax codes on the planet, and the wealthy pay a shocking amount of the burden, and so, yeah, i think that -- that whole narrative that the wealthy needs to pay more just isn't the case. i think we need to lower the tax rates at every income level which is what we did under this new tax code, and, again, think about the share of taxes today for most americans, tomorrow is the first day you start working for yourself since

new year's day most us can't remember what we did then we've been work for the state, local and federal taxes. that's more than our food and housing and clothing combined. in new york, you know, perfect new york high tax state new jersey, you're still work into may before you begin to work for yourself my view is that we are an overtaxed nation, and rather than looking at a competition of how more -- how more do we increase the tax we need to look at how to make it more efficient. >> want to ask you a question about that we talked to barney frank and grover norquist and the idea that congress doesn't want to allow the irs effectively to make it easier and cheaper for citizens to pay their taxes, this idea that the irs could never develop effectively a free program or make it -- or put it all on a bill effectively so that taxpayers actually don't have to do all of the math and hard work themselves why? >> yeah.

so as we work through irs reforms bipartisan which is going to the floor just passed the house again last week that second area is where there is real concern. should you let the irs in effect do your taxes and send it to you? there are real concerns about -- >> there are real concerns by h & r block because it's going to hurt their business, and they have been lobbying you guys left and right about this very issue. >> yeah. so i will tell you, i see it differently. h & r block, which by the way has said we have about a 25% less tax liability this year than last, their focus is on how to simplify the tax codes, working with the ways and means committee. that's been the case and we already do have a number of free file programs available, and a lot of help for the low-income and others as well plus, now, 90% of americans are going to be able to file their taxes without ever having to itemize so i think we've taken pretty important steps as it is. >> congressman separately,

you're working with congressman neal on an important retirement savings legislation program, but i also wanted to point out that congressman neal has been pushing to see the president's tax returns. where do you stand on that on tax day today? >> well, absolutely object to that the law today protects americans from having their tax returns seized or made public for purely political reasons. chairman neal on the house ways and means is sort of this rush to impeachment investigation to seeking the president's tax returns. this isn't about whether the president should voluntarily release his returns like other presidents can you have a view one way or another. this is whether congress for the first time unprecedented should use the law that protects your privacy to go after someone for purely political reasons that's dangerous precedent. >> i just wanted to ask because nancy pelosi said over the weekend that she would like to

have legislation that would effectively force everybody who is in the white house to release their tax returns across the board for now and into the future what do you think that have idea >> well, i think speaker pelosi can begin with her own i think there should be parity between those who serve in the white house and those who serve in congress as well, and so we can start right there. >> how about taxing unrealized gains? if you had to write that law for ron wydon how would you do that -- objection i can't see how you would do it to figure it out, but why would someone who -- he went to college, right? he's and educated guy. >> yeah. >> how could you possibly propose that with a straight face, congressman? >> i don't know. >> how would you implement that? >> thank you for saying. >> one, it's impossible, and you don't want to do it anyway to be honest look, you want people investing in the future. >> it's out thereto. >> you want people using their

dollars, and there's no way to do it nor should you want to. >> okay. well, i don't know ron wydon, senator wydon anyway, thank you, congressman i don't know what elizabeth warren wants to do. >> coming up at this point when we return, a lot more coming up. waitinong quarterly results from citi group and those numbers and instant reaction right after this quick break this is my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets.

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citi group out with its earnings wilfred frost with the numbers. >> a beat, 1.87 per share versus 1.80 revenues in line at 80.5 billion. why the beat a number of reasons. firstly expenses year over year down 1%. the tax rate has expected to come in a little lower than expectations about 21%. analysts were looking for about 22 they were guiding to 23 and people expected it a little lower than that, but it's coming in at 21%. it looks like a worrying number but it's not credit costs up 7% year over year they will talk on the call about that being due to loan growth and seasoning and talk about very stable credit quality, a key factor, of course, on friday

with beats for jpmorgan. credit costs are fine and the net interest margin ticking up slightly to 2.72% and, again, if that messaging comes across on the yield curve and they haven't changed their guidance on the net interest area then it continues that positive theme from p & c and jorg an on friday as for the trading, fixed income currencies and commodities is actually up slightly year over year which is good for this quarter. they were expected to be down sort of single digits, and equities is down significantly, down 24% year over year, but that's a smaller part of the buy for them so overall that trading revenue coming in better than expected investment banking continuing the theme from all of the moments that goldman sachs had as well. that's up around 20% it was expected to be up single digits so overall a decent little eps beat coming in from some one-offs like the tax rate and decent performers across the board but up only slightly, down

a third of 1% and it was up, of course, nicely on friday in line with the other banks guys. >> let's dig into citigroup's number with us is cnbc "fast money" trader guy adami. >> hi, joe. >> look what this says here. we've got to say good-bye right after this i want to make this -- >> i want to -- i wonder what you do have to do. the show is not until 5:00 p.m. >> i'm going to go -- dominic chu and i are going to go hit a couple of golf balls isn't that niese nice? i'm going to put on my nike garp. >> have you been positive on citigroup or the banks. >> when citi troughed down to 50 bucks or so. >> we or you >> i speak -- when we're right about things i try to say we, when we're wrong i try to say i. >> i think it would be the opposite. >> talk it just too cheap in terms of where it's trading its book now the stock is up 34% in two

and a half months, and you have to ask yourself is it too much too fast i would say yes. a lot of these banks have gotten ahead of themselves. jpmorgan trading now close to 1.9 times to tangible bok. that's probably a beak valuation. maybe it gets a little richer. i just don't see the runway for these to trade much higher in the foreseeable future in my opinion. >> and that's not an indictment of the economy, of anything. the banks have run just like they ran too fast to the downside. >> the yield curve steepens. >> we're still talking at 14 and is a basis points. >> don't we get to that point just to play -- don't we get to the point where a little bit of steepening means a lot just because expectations are so low that the yield curve will actually steep. >> fair enough. >> and that's fair, and you're right. i don't think that the yield curve is going to continue to steep and i'm surprised that the yield curve is flattened i thought the yield curve would flatten out months and months ago.

i thought it would happen around 3.25%. if you think about it intuitively that doesn't auger well it's not an indictment of politics or anything just if you look at the numbers and say how is the yield curve flattening in the greatest economy of all time at 2.5%. >> of the ecb. >> there's something really wrong in europe and that's a longer conversation that will manifest itself in how citibank trades. >> why 815, seriously? got to go to your daytime job. >> i do have a job during the day as hard as it is to believe. >> i. >> we. >> because that's a mistake. >> i have a job. >> you said if you said i it's a mistake. >> it's called being a team player as opposed to golf which is an individual sport which is all about me. >> there's a me in team, not in i. >> we've got to the say good-bye to guy i like saying hi, guy, and nod

good-bye, guy. >> don't be upset at me, joe i adore you, you do. >> you just prefer melissa on "fast money." >> well, obviously. >> i don't know. i just thought you could say that, but then take mow aside. she will never know if you say you like me better. >> good point. >> thank you. >> would that make you mad >> yes >> all right we may see you again. >> or not. >> so you tonight, guy. >> see you, mel. >> on "fast money" at 5:00 coming up, highlights from an important interview you won't want to miss cnbc sitting down with the founder of worldwide telecom giant huawei as the government has fears that their products are not secure and chicago fed president charles evans will join us on set in ju ast few minutes. stay tuned you're watching "squawk box" on cnbc xfinity watchathon week has sadly come to an end.

what, what, what! no! but don't let that stop you from watching the best shows and movies from showtime, hbo, epix... jesus, what happened? ...and more. it's just the tip of the iceberg. upgrade now to get more into what you're into. thanks! just say "watchathon" into your x1 voice remote to upgrade and keep getting more of what you love. welcome back a quick look at the futures right now ahead of the market open let's show you what's going on dow looks like it will open up

higher, nine points higher got to call basically the nasdaq lunch because it's down almost two points, which is not much a the s&p 500, about one point right now. check out shares of citigroup out with earnings literally moments ago. that stock up just marginally. the bank missing on the top line and beating on the bottom line in the first quarter goldman sachs also reporting a mixed quarter earlier this morning. you can see there shares of that company off just marginally. they actually rose just briefly on the news. guy made the comment that he thought all these comments were basically going to trade a book, and that's what you're playing for. >> all right some breaking news from electronics retailer best buy. the company naming chief financial officer corie barry as its new ceo. her appointment effective after the company's annual meeting on june 11. the current ceo will become executive chairman he says now is the right time to

begin the transition >> remember when he took over, i mean, the thought was that amazon, everybody was going to go to amazon to buy all the electronics. >> i remember. >> and, you know, a company like this would have no future. >> you would go and shop. >> he real turned that around. >> go into the magnolia site and pick it out and order one on amazon. >> i had bought something at best buy. >> richard anderson? >> i think it was him, and brad was the guy before. >> brad anderson. >> richard anderson was macgyver. >> rich dean anderson. >> i bought one, and then i saw that it -- it was cheaper that weekend like by $500, so i went back. >> was there a price adjustment? >> they wouldn't change it they said but you can take it back and we'll take it back. >> physically bring the tv back. >> and then buy it from you. >> which made no sense and they figured that out and then they started doing service with the geek squad and they explain everything and people that might not be andrew ross sorkin, and

somehow there's a place for best buy. >> other good nice about this. the s&p 500 in terms of female ceos has fallen to a terrible, terrible dearth. >> this is the s&p 500. >> i believe they are an s&p 500 company so this will at least help. >> oh, because, for instance -- >> there's so many females retired now replaced by women and in this larger conversation of what's happening in the country. >> gender blind. gender blifnltd i know it's a good thing, but i didn't -- that -- it occurred to you you had suggestions for wells fargo. ten women suggested for wells fargo. >> i did, i did. >> and i -- i had -- i like to be gender blind, but the world is not gender blind. >> no. >> okay. >> the world is a -- it's very profound. >> president trump renewing his criticism of the federal reserve. in a tweet yesterday the president said if the fed had done its job properly, which it has not, the stock market would

have been up 5,000 to 10,000 additional points and gdp would have been well over 4% with almost no inflation. he said quantitative tightening was a killer should have doesn't exact opposite >> all right that -- that fed tweet from president trump was yesterday morning, and in the afternoon trump spent time watching and tweeting about the masters, almost providing hole-by-hole coverage at one point as tiger woods closed in on an historic win. for the first time in his career woods overcame a third round deficit making three birdies in his final six holes including one on 16 where he put his tee shot within a foot of the cap. he tapped in for a one-stroke victory on 18. it was tiger's 15th major, fifth green jacket, 11 years after his last major win also a big win for nike which had this ad ready to send out on social media channels shortly after tiger's big finish. >> so good. >> apex marketing estimates the value of tiger's win for nike at

$22.5 million, hearing just throngs of fans chanting tiger must have been -- >> we haven't gone to the end of the ad. >> so great. >> but at the end of the ad it shows a very, very young tiger woods and he says, you know in, a small child voice i want to be jack nicklaus and it's just touching. >> but i'll tell you, just wait for this to play, it's the next line right here that he's chasing the same dream as a 3-year-old, and that's -- >> he had a lot of talent as a 3-year-old. >> that's when i got the chills. i thought it was just amazing. >> going to beat jack nicklaus. >> three major titles away, right? >> golf -- >> yeah, to tie. >> but golf has a lot of iconic moments, and they were saying yesterday this is like -- this supercedes all the other ones. >> the question at least from the stock side of it is will nike see that boost? there aren't too much comparable data points because the last time he won was 2005, and this

did kick off a multi-month streak of increasing sales they had a note out and in the first half of 2018 when there was really piqued interest on google trends, golf retail did very well. >> nothing compares to tiger, but there was a guy who won three out of the last six majors and who had a nike hat on for all four rounds named brooks koepka who had about 7 feet on 18 and if he had made that, it would have been a tie there. would have been a playoff, but that's, again, nike is brooks koepka as well, but that guy is a machine. just missed. just missed, and then -- and then tiger just barely missed sinking that -- the par putt on 18 it went on the right side of the hole and lipid around aly. i was nervous. i would have missed the one coming back. would have double hit it or something. i don't know it was great it was really good teary or no with charlie, when he was hugging charlie his son. >> i was crying -- the -- it was

emotional. >> it was. >> and i watched the nike ad for the first time on the phone and i -- that got me, really got me. >> okay. >> the telecom giant huawei has faced skepticism in the u.s. for years over the safety of its products even though it pioneers 5g technology. president trump meantime has spoken out about how he wants 5g technology in the u.s. as soon as be po now the legendry founder of huawei is sounding off about trump himself. cnbc has more. argen. >> reporter: it was a wide-ranging interview and we spent a long time talking about the u.s. situation alluded to there. huawei has faced pressure from the trump administration and the administration accused the company of being a national security risk saying it could be used by the chinese government for espionage so we asked the ceo and founder of huawei to address some of these concerns and also talk a little bit about trump's leadership style as huawei gets dragged into this

u.s./china trade war here's what he had to say. >> i would like to express my own opinions instead of as a huawei representative. i would say he is a great president. he is the first president of a democracy to reduce taxes significantly within such a short period of time his tax cuts are helping revitalize enterprises that's why i said he's a great president, but he also has shortcomings if president trump continues intimidating other countries and companies and keeps randomly detaining people, who would risk investing in the u.s.? >> reporter: huawei feels it's been dragged into this u.s.-china trade war and i asked him whether he thought he was a pawn in the entire battle between the u.s. and china he said if the u.s. is trying to use us as the pawn they have the wrong company because we can't influence the outcome of these trade talks even though earlier this year president donald trump said that huawei could form part of a china-u.s. trade war that

of course, remains to be seen as of yet, but he came out swing, and he said the criticism towards huawei from the u.s. is a great advertisement for the company globally actually the u.s. is scared of huawei that's why it's talking about the company so much. very strong words from a founder who is trying to defend his company from multiple attacks, from various governments around the world. there's plenty more of that interview on cnbc.com as well, including talk of being potentially open to selling its 5g chips to apple iphones. that would bring all sorts of political scrutiny to the u.s. government if that were to happen as well. >> can you just help us with that piece of the interview because we talked about that head loin a little bit earlier, this idea that he would be open to that, and i said on the air, i said he might be open to it, but i don't think anybody else is going to be on the other end buying it. >> that's precisely the point. i'll give you a quick run dawn of huawei's consumer business, a

very key business. they have been investing heavily in chip technology we know china is trying to boost some of the intellectual property around chips. last year they released the 5g modem for its own smart phones that is seen as the competitors to see some of qualcomm's competitors. huawei has typically reserved this for their smartphones if apple asked they would be willing to talk about that in open discussions about providing technology you're absolutely right. i don't think that's something that the u.s. administration would want to go for i don't think it's something that apple were want to get in a debate over a public release if there are discussions that are made public between huawei and apple i think you'll hear a lot of words from the u.s. administration discouraging apple to go down that path >> all right thank you for that we will check out the rest of it online in just a little bit, but when we return, how long will it take to get boeing 737 max back in the air a big u.s. carrier is saying over the weekend that it's

cancelling all its flights using that plane, at least until mid-august we'll tell you which airline made that announcement and what it means when "squawk" returns in just a moment ♪ there are roadside attractions. and then there's our world-famous on-road attraction. if you've never seen yourself in a mercedes, you've never seen these offer.

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welcome back to "squawk box. the futures right now are flatter than -- actually they are now down the dow is indicated off a point.

nasdaq three and change and the s&p florida. check out shares of citigroup out with earnings just a moment ago. the bank mission on the top line and beating on the bottom line in the first quarter similar to what happened with goldman sachs. andrew >> okay. more bad news for boeing over the week the key u.s. carrier saying it won't fly any 737 max planes until at least this summer phil lebeau joins us with more on this developing story phil >> reporter: andrew, we'll talk about american airlines' decision in just a minute, but within the last hour we've heard from president trump about the 737 max sending out a tweet with basically his opinion of where the situation lies with this plane and what should be done. what do i know about branding, the president tweeted. maybe nothing, but i did become president, but if i were bow, i would fix the boeing 737 max, add some additional great features and re-brand the plane with a new name. no product has suffered like this one, but, again, what the hell do i know here's what we do know about the max. american airlines announcing

yesterday that it will be pulling the max off of its schedule, at least until august 19th that's 115 flights her day about 1.5% of americans' summer schedule, and in making this announcement doug parker, show of american along with the president of the airline said we are highly confident that the max will be recertified prior to this time. prior to august 19th, and if that were the case maybe it comes back to recertification in july. then they could gradually move it into the fleet sooner than august 19th. they will be reporting earnings and for the most part you see a lot of airline stocks that have moved higher within the last week and a half. i think the market has baked into the expectations that they are going to see some lower revenue for the second quarter going into the third quarter i'm showing you united because it also flies the max. it still has it out of the schedule at least until i think may 31st don't be surprised if tomorrow

when the company reports earnings after the bell, guys, that united says, okay, you know what we've looked at, our schedule at the max, we'll extend it out like everybody else. >> hey, phil, the president online, on twitter, saying, look, from a marketing perspective they need to change the name my understanding is they change the name and have to go through a whole new certification. could they up evened that whole process and say look, faa, you can change the name of this plane and then there's going to be arguments about whether there's deceptive advertising here or some kind of, you know, masking the issues underneath it what's your take >> i think even if they were to -- let's say they forced this through and they said, look, let's make a special exception for boeing in a they can rename this plane we won't have to worry about any of the regularity issues that are out there. i still think that when this plane starts coming back, whether you call it the max, whether it you call it boeing's new bird, whatever you call it, there's going to be a stigma, at least initially, andrew. now does it last

historically when there's been airline accidents, whatever the model has been, that stigma doesn't last very long it's like, whatever, i'm on this flight, leaves at 730, great, i'm off. there's going to be a stigma with this plane and to what degrees remains to be seen. >> thecomparable period though phil was you're not use the dreamliner as an example of that. >> we're using all of this. >> if you look at research over the last 30 years, talking to jamie baker from jpmorgan about this he said, look, you go over the last 30 years, regardless of the model, after there's been a very high-profile accident with fatalities. >> dozens of fatalities. >> whatever it is, the stigma does not last for very long. now, having said that, melissa, all of those happened in a pre-social media age. >> right. >> now we're in an age where somebody sends out a tweet or something on instagram or on facebook and says, guess what, i'm flying to l.a. today and i'm on the max, and then it takes off, you know, people start saying is, well, don't go on the

max. that's a dangerous flight. that's going to be the hurdle for boeing. >> yeah. >> phil, thank you phil lebeau. >> you got it. >> is it the boston marathon today? >> yes, today. >> been six years i guess. >> yeah. >> yeah. it's rainy i was -- i saw it on trending. and then i saw arianna trending. don't you think arianna huffington, i'm so out of it. >> she's always trending >> it wasn't her though. ariana grande. >> grande. >> i thought you were -- >> no. >> i was looking for what's going on "the huffington post" and it's someone else. spelled differently. >> coming up, an exclusive interview with chicago fed president charles evans, and later a special interview with the governor of the bank of japan, that's 10:00 a.m. on "squawk on the street" and more on "closing bellth" is afternoon. stay tuned "squawk box" will be right back. pars without the constraints of a full time job?

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live here on nbc from the nasdaq market site in times square. here are the stories that investors will be talking about today, thinking about, goldman sachs and citigroup, both waiting. both reporting results r.mixed first quarters both beating on the bottom line, but seeing revenue fall short of analyst expectations goldman for its part earned $5.71 a share. the estimate was $4.89 citigroup meanwhile reported a profit of $1.87 per share which was seven cents above analyst forecasts, and waste management on the acquisition trail today buying smaller rival advanced disposal services and a $3 billion cash deal. it's worth $33.15 a share. 22% premium over friday's closing price for advanced disposal and we're also watching the shares of electronics for imaging, producer of digital printing technology, private equity firm siris capital buying

imaging for $1.7 billion that is -- how much a share, $37 a share, in cash it closed friday at 29.40 a share. >> we're also watching shares of spotify today trading lower on reports that amazon is preparing to launch a free ad streaming service that would be available through amazon's voice service alexa on its echo devices. there's one included for prime subskrishs and one for $10 bucks a month with a much larger library. the new free tier could siphon off one of the is a million people who use spotify. >> on wednesday we got an interesting bit of news from the central banks, minutes from the fed's march meeting. showing some officials are leaving the door open for more interest rate hikes. cnbc's steve liesman joins us now with a very special guest. >> yeah. i am pleased to introduce chicago federal reserve president charles evans. charles, thanks for joining us this morning nice to have you on set here,

and you can face the from the whole giroud in a interm.i want to ask you a couple questions. can i say wtf. >> you just said it. >> i'm asking if you can say it. >> what's going on, charlie? we were coming down for the count. recession was inevitable, the market had sold off, and now it looks like the data is coming back the market is up 16% what's your view on the economy and the outlook here is there a recession inevitable at this point? >> well, steve, you know, the data has strengthened a little bit in recent weeks. i think the first quarter is looking a little bit stronger than i might have thought at the end of december, early january, some weak data rolled off. the economy is doing solidly, i would say. fundamentals continue to be quite good so anybody who is overly concerned about a downturn, i was never really concerned about that i do think that inflation is a little weaker than i would like to see given strong labor

markets, lower unemployment wait wage growth has picked up 3% to 3.25% and a lot of fundamentals that support continued strength in the consumer. i'm looking for growth in 2019 on the order of trend growth which 1.75% to 2.decelerating from last year's 3% growth, but, yeah, the economy is doing fine. >> if you had to make your best guess as to the next direction of a policy move, which way would it be? >> i don't have to make that guess. that's the nice thing. you know, i submit a forecast. >> yeah, but that's an interesting answer you're saying you're firmly knew travel you don't have a bias either way. >> you asked me if i had to make a guess. i don't have to make a guess i put in a projection of what i think appropriate monetary policy is that is underlying the forecasts that i have, so i said i have a forecast for 2% growth say in 2019, and it's been decelerating, and i think that the unemployment rate is likely to go sideways it's at 3.8.

maybe it goes down a little bit. maybe it doesn't depending on the labor force participation. what is a little concerning to me is that inflation has been underrunning 2, and i had been thinking that inflation was finally going to be solid, hit 2% in a sustained basis. maybe go over a little bit that my projerks and on the strength of that, i had, you know, as recently as september and december thought that maybe a couple of rate hikes were in our future inflation is a little bit lighter. the economy is doing fine. i -- i think i said last couple of weeks ago that i can see the funds rate being flat and unchanged into the fall of 2020. for me that's to help support the inflation outlook and make sure that it's sustainable and a little bit above that would be fine, too. >> is december looking like it was a mistake to hike rates? >> no, i don't think so. i'm quite comfortable with the rate move decision, and everything that we said in

december funds rate is at 2.25% to 2.5% that's what we're targeting. that's a good place to be with the unemployment rate at 3.8%. i think that that can support continued employment growth. i don't know what maximum employment is exactly. i think we can continue to probe wage growth at 3% to 3.5%. it's indicating, yeah, buses tell me that labor market continues are tight. they are having trouble finding workers, but they are bidding that up, and we keep getting employment growth so that's a good environment and until cost pressures lead to higher inflation, you know, i'm happy to sort of be data dependant and look at how things are playing out. >> what were fed funds in '06 and '07? >> 5.25-ish. >> we had the financial cries. we do these -- we were talking about this earlier we do these emergency measures to save the --

>> we had a big downturn, a housing crater. >> do all that. >> i always thought once we're back to normal we step-wise go back to where we were normalizing and back to 5, and now it looks like that's not the case and i'm wondering is it, a, because we did build up a lot of debt that we don't want to -- we don't want to go back up there because the debt service were really be prohibitively expensive. compared to where the unemployment rate, is we should be back to 5 easily, shouldn't we >> there's no way you would put the unemployment rate and the fed funds rate charlie will tell >> you what changed? >> joe, that's a great set of observations, and what's changed is the state of the economy. labor force participation rate has declined quite a lot since 2000 and 2005 and 2006 this was anticipated my own staff early in the 2000s looked at the demographic capabilities and noticed labor forces would start declining and so, you know, that would put pressure on the economy to grow

at the previously higher rates of 3 or 2.75 now labor force growth isn't going to add to trend growth like it did before we used to enjoy 3.25% growth during expansions from '822 to 2007 now we're looking at 1.75% why is that? well, i look for labor input growth bet best of circumstances going forward half a percent and productivity growth to be 1.25%. that's a good rate that's higher than the productivity slowdown years of '73 to '95 it's not as high as the golden years of '95 to 2005 it's in between. and that gets you to 1.75. so in that environment, interest rates are going to be lower. that 5.25% fed funds rate back then was on the restrictive side now we think neutral is about 2.75 and then we're on the low end of that, i'm okay with it. >> what was the inflation rate >> 2.5%. >> so we're only half a percent below that and yet rates are --

>> we're about .75% below, that and expectations at that time were firmly at 2.5%. they sort of supported that, and we needed to do more now they are under that and we need to have -- be careful in order to get the expectations up things have changed a lot since the mid-2000s. that's the answer. >> if your concern about inflation is strong enough, then that would lead you to additional easing, wouldn't it >> it certainly argues against premature tightening t.argues against moving to a restrictive position, prematurely. i want to look at the data you know, it -- at the moment it looks like inflation is on the light side it is, and expectations aren't high enough, but i had -- you know, in september i thought that we'd in a better position if the data comes in. >> can you make a case for cuts right now? >> i'd have to be expecting some kind of negative shock which at moment i don't see i think it would be unexpected

i mean, most recessions run expected >> right. >> we're going along the economy is doing well. there's no reason to think that the expansion is going to die out of old age the pause could be the one that refreshes and we keep going but i don't want to go to a restrictive position prematurely. >> because the rates are so low, are the odds higher for a reversal of policy because you don't have as much ammunition? >> i don't think so. i'm not sure i understand exactly. >> before you would reverse policy and cut, is the bar substantially higher now than it would otherwise would be >> we have less capacity to cut rates if we get into a downturn, so, you know, on the one hand, you know, it's -- it's just hard to say i think you have -- >> do you have to look and go negative. >> you have to look where the economy is going. >> minus 5. >> if it's slowing down, you want to get out in front of that at the moment i think things are going pretty well and i'm comfortable for the setting with

policy. >> what do you think, by the way? you're talking about new math. >> go negative. >> keep cutting until you're minus 5. they do it in europe, don't they >> they don't go to minus 5. >> minus 40 basis points. >> that's bad enough. >> what do you think largely about the sense in washington among democrats and progressives that you can just blow out the budget. >> mmt. >> doesn't matter. >> mmt. >> modern monetary policy theory. >> you know, sort of a research-oriented economist i would like to see a well articulated model and i haven't seen that. the best kind of analysis i've seen from that is, you know, along the lines of paul krugman and maybe brad delong and others comment begun this you know, there's a line of thinking that goes back to alvin hanson, you know, back in the '30s and '40s about house, you know, it's a state of aggregate demand that puts pressure on resources that can fuel inflation, to aggregate demand can be fueled by fiscal actions, and if you were able to regulate

that in a particular way, perhaps you could use that i think a problem with that, chair powell mentioned this earlier, is, that you know, you don't normally look for congress to do short-term fine-tuning i mean, just the way you get to a bill and get it passed is really hard, so that's why you look to the fed to do things like that. plus, it's monetary policy it's inflation it's inherently monetary. >> charlie, the president commented again over the weekend about the federal reserve saying that the market would be 5,000 to 10,000 points high, i assume he means the dow. >> yes. >> for sure. >> yes. >> and if not for the fed. how do you react to this commentary do you think it's appropriate that the -- that the president comment the way he has been commenting on the federal reserve, and does it change your policy >> it certainly the case that the fed enjoyed, you know, a period of time since the early '90s until recently where, you know, the administration was relatively quiet about the fed

actions, even if they grated on them, they were relatively quiet. the fed chair and treasury secretary have breakfast and lunch on a regular basis, and i'm sure they exchange views there, but, you know, we did for some degree of independence from political authorities. i think what comes to that, is you know, we have to be accountable. we have to explain what we're doing, and we have to follow the mandates of the federal reserve act which is to provide financial and monetary support to deliver maximum employment and price stability, and i try to keep my eye on the ball. >> there's been a lot of commentary though over the past several weeks about the status, if you will, of the federal reserve. just within -- as an institution. the credibility of the institution given some of the comments that the president has made. >> such as mario draghi comments over the weekend >> but list was going to say the nomination of herman cain, the nomination of stephen moore. you've read those stories, people lamenting the credibility, long-term

credibility that they argue could ultimately be undermined by some of this. do you have sympathy for that argument, or do you disagree with that argument >> very much what i was just saying is, you know, we have to pay attention to the data. we have to pay attention to our mandates i think when, you know, we take some actions like in december you asked me, you know, did i agree? was that a mistake i'm willing to explain it's a good decision. we can disagree over, that and since then the data softened a little bit, and now they seem a little bit, you know, stronger i think that supports just sort of let's be data dependant and look at how this will play out and i have an idea it might take longer meantime, people are going to criticize us, and as long as we continue to look at the data, can explain it relative to what we're supposed to be doing we just have to accept criticism, and if you're in this and you don't have a thick stine then you, you know, you really have to consider how to get -- how to grow a thicker skin. >> come back any time, charlie thank you very much. >> i read the tweet. he could have meant the s&p.

could have meant it. >> a million for the dow. >> double where it is right now. >> 5,000 to10,000. read the tweet it doesn't say. >> okay. coming up, we'll dive into the big banks reports this morning. take a look at shares of citi and goldman sachs. goldman sachs under some pressure down 2% jeff hart will join us in a couple of minutes to tell us what they need for the broader market and the year ahead in financials stay tuned you're watching "squawk box" on cnbc you should be mad at people whos forget they're in public.

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opening bell on wall street. dom chu joins us with some of the stocks to watch. we'll if to jeffrey hart of sandler o'neill. great to have you with us. >> we don't have jeff. >> there you are. >> can you hear me >> good morning, i'm back. >> i want to first get to goldman sachs because we're seeing the stock under pressure pre-market what did you make of that quarter? why is the stock down? >> i think the quarter was okay. i mean, revenues were a little bit light, but i don't think that's really the big deal the 571 is a big headline beat, but they had -- at this point on quantified tax benefit which probably brings the number down closer to 5.14 and then the comp ratio came in at 37% we were looking for 40%. it was almost 41% last year. that's really what kind of drove the beat if you normalize those two things back out, i think you wind up getting close to the 4.89 consensus number. still not a miss, still good

results but in what we saw from jpmorgan last friday, we saw from citigroup today, probably looks a little softer than what people were hoping. >> what needs to happen in order for this group to trade higher, jeff >> well, i think we need to -- kind of three things to happen, right. one is capital markets i mean, this was the first quarter. always the best quarter of the year for trading certainly that's got to get better as we go forward there's still some hangover from that being soft. secondly, global gdp, we need resolution on the trade conflict side to get a little more stable on global gdp growth and the third would be global gdp grope. people need to get more confident in growth and confident in that capital markets can have more strength ahead of them. >> we're seeing markets that have been on a tear so far this year i mean, whether you look at the u.s. or china, et cetera, i

mean, i don't know what's not convincing investors and banks in particular that there is no growth, that the growth is not to be counted on if the rest of the world is being bid higher, jeff. >> i mean, it's been a strong year to date for the equity markets, but if you back that back to last summer before the fourth quarter selloff we're kind of treading water and people are skeptical recency sits in people's minds and the last thing they remember is the financial crisis. fears we're coming into a recession i don't think we are, but to the extent that we are it's slow and shallow and the fear out there it's going to be really deep and problematic again and to come extent we might have to keep going forward and prove that wrong to get things to go up which turns into more of an upward grind for the stocks. >> want to bring in wilfred frost who has been working the phones wilf, what have you been hearing? >> i've been speaking to people

at goldman sachs about the earnings and pretty optimistic about the outlook saying the ipo outlook in q1 was very much affected by the government shutdown and also very optimistic that this very strong first quarter in m&a can continue. absence of a big slow down in the u.s. economy that they don't expect they think that will continue as well no further provisions. all of that they say has been provided in prior quarters and very optimistic about the new areas. the partnership with apple and credit card and opening up their trading software to clients. it's fully tested on employees and they'll be ready to launch that with apple mid to late summer and expecting a very strong take up and the way that in due course it can boost their other consumer business markets.

so upbeat comments next time. >> thanks for that wilf. i want to get back to you. you sound pretty lukewarm on banks overall but i would imagine there's at least a few buy ratings in there what is the case -- three things have happen on your list in order for this group to trade higher, why should you buy them right now? >> specifically we're talking large cap and they have a very big advantage and that's scale scale matters more now than ever before we're just starting to see it come through any kind of rev new tail winds, a lot of that is going to fall through to the bottom line and the ability to invest in technology and things like that should drive top line growth too so for those looking at financials in general i'd be looking at the large cap big ones city is one i like a lot and they reported this morning too the numbers look good. the big thing we needed to see was consumer growth and we saw it they delivered again on the big

market skepticism there. so that's one people should be looking at. >> thanks for your analysis. always great to speak to you. >> good to be on. >> jim cramer joins us now, i don't want anyone else to feel bad but i do follow you on twitter. we're going to get to the other banks but what happens to wells fargo. the stock is called down you were tweeting about that earlier. what happened? >> it was going well and then suddenly the cfo guided to a much lower net interest income level than we thought. kind of shocking and it took people's breath away we had thought that th regulators were a little more senquin about the situation. they said we're nowhere with the

regulators and we're not going to make as much money as we thought. it was pretty shocking and very down beat. >> how about goldman and citigroup? citi is fine they are very good earnings for share growth goldman i want to take the other side of what's being said. i think goldman is diversifying well goldman has a very good thing going month to month in the fact that march was by far the strongest month. so i care about trajectory a lot of things going well they have a lot of irons in the fire and they're having a great investment banking period. i know it was up four on friday but goldman is going to be better than people think. >> best buy just got a new ceo

what do you think? >> i like her. anyone that's been on the call, she is special and i think that will be a great continuation they have done a lot in technology to make their consumers have a better experience >> there's a certain segment of the population that needs help when they're buying things they do. best buy you can have a little bit -- if it comes in the mail from amazon i'll be calling the geek squad anyway. >> 15 minutes with one person and she directed me toward one that was i'd say the lowest in terms of price listen that's all he needs and i was like, are you sure you don't want me to get the higher one she said no, none of the things you want it for are helped by the higher one. >> i said this is some place

wow. >> there's a place for that at least for guys like us thanks jim. >> thank you. >> we'll see you in a couple of minutes. make sure that you join us here tomorrow on squawk box we'll be speaking with black rock chairman and ceo larry fink following his company's latest earnings report. he knows so much about so nyma things it all starts at 6:30 a.m. eastern. stay tuned squawk box will be right back.

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we're going to stick with bank stocks. shares of wells fargo down downgraded by a slate of analysts including thoseat goldman sachs. they say it was a neutral rating it was on the conviction buy list expectations about weaker than expected growth and interest income among other things. we'll watch those shares also on the upside, shares of levi strauss on the rise, 50,000 shares of volumes. the jeans company getting initiated by coverage by a slew of analysts, jp morgan among others with the equivalent of

buy ratings. the team at jp morgan mentions the strength of management the brand heritage there they have a $26 price target we'll end with shares of western digital which are up by around 2 or so% roughly call it 20,000 shares premarket this time. the data storage company getting upgraded by analysts a buy $65 price target they cited a bottoming out process and an underappreciation in the recovery for hard drive sales and margins. back over to you. >> thank you for those >> didn't tiger win an open at both beth page and pebble and isn't that the next two majors >> yes >> i want to mention so he's already won at both of those places. >> yeah, the 2000 one for sure. >> there's 6 again that was so good. >> i thought it was going to go

in i did. >> i did too. >> we're going to check the markets but there's not much going on compared to this really anyway. >> just watch the ball roll. watch the ball roll. we're going to run make sure that you join us tomorrow melissa, thank you for hanging out. squawk on the street begins right now. >> good monday morning and welcome to squawk on the street. welcome to a holiday shortened week goldman and city out with mixed results. s&p about a percent from an all time high. europe is green as they clear the way for u.s. trade talks ten year yield near 2.57 this morning. a big day for bank earnings. goldman and city with a revenue miss in the first quarter. shares of goldman are down