advantage. we have new details on which major bank dumped shares in the archegos collapse of wednesday april 7th, 2021, and "squawk box" begins right now. ♪ good morning welcome to "squawk box" right here on cnbc i'm andrew ross sorkin along with joe kernen and becky quick. u.s. equity futures take a look at where things stand this morning, joe we've got the dow up marginally about five points, nasdaq up 6 points, s&p 500 up just a little bit. treasury yields right now, we'll show where you the ten-year stands right about now as you look there, we're under 1.7% and we've actually moved down a little bit, we're at 1.642%. and, joe, we've got the "squawk

stack" to look at. i don't know what subtractions or adds you want to make >> yeah, i was good with what was in there, norwegian news, reopening. bitcoin news and imminent, ipo next week. the ten-year, andrew, let's summarize. i heard just briefly from tepper yesterday, odd question, i'm not sure, something about who's my daddy or something and i guess i was supposed to say you're my daddy, because, remember, we were at 1.6, i looked up when that was -- i looked up when that was, andrew. that was -- let's see, march 8th. march 8th. >> okay. about a month ago, yes >> one month ago, here's the --

so, we've got -- he was right about the yields because we were up four basis points that did stabilize for the past month. he said and the idea that the japanese would shop buying which we have seen because our yields are better and then on "the wall street journal," he was talking about beyond balls to the wall he said the throttle actually went through the wall, what he said on that friday. when, remember, the nasdaq was about 12,110012,100 >> yep >> here's the journal, he said white hot stock. i would call that a call -the-market gains and the ten-year basic had done what he said he was going to do. >> what are you talking about? i came in midsentence and you're talking about going past balls

to the wall? >> yeah, that's what tepper said >> he had said it on the friday which would have been -- i think march 5th, because i think that was a monday so, we were just pointing out white how -- it was a good call, white hot market for, very bullish, the yield will stabilize a little and we've seen -- >> and we've seen it stabilize a little bit, yep. >> but i mentioned to andrew, i got this cryptic note, i'm not sure what he asked yesterday, he asked if i was his father. and i am adopted so i don't know what he was saying >> who's your daddy? >> yes i think he was saying the yield basically -- >> i think he's saying i'm right. >> it's a victory lap. >> right but he is right. >> he didn't really say that was on the record, but that's not giving too much information out. he's not my daddy. i'm pretty sure it doesn't match up agewise >> thank you >> with that call, he was,

definitely was >> okay. >> so, we did the stack, becky, we had norwegian on there because it's one of the big gainers for reopening. we had the ten-year. and then we did put -- they left bitcoin on because of this next story that andrew is going to bring us were you playing with -- did your cat get out or something? what was happening >> no, the microphone didn't work today we can't figure out why, to get through technical difficulties but it works >> it works fine works great. you're back. where did you go did you go anywhere? >> just saw my mom and dad saw my mom and dad it was my mom's birthday last friday >> and we're all -- people are in a good position in terms of immunitywise, that part of the story? >> getting there, getting there. >> andrew is halfway there, we found out yesterday. that was the big disclosure we had yesterday. i said i'm fully there

so -- >> i'm not quite >> we're all working on it, joe. >> and the president said maybe everybody will be eligible in a couple of weeks. right? >> right >> yes by the 19th, april 19th, that's even earlier by the way, he moved up the date -- new jersey moved up the date, but now new jersey is just at the very end of the line, too, in terms of where they're going to have everybody available. >> well, out yesterday, there were 40,000 people at a baseball game, becky, we talked about that in texas. >> i saw, yeah >> and lebeau said he rides in the middle seat. if i was on a plane and lebeau got in the middle seat next to me i'd be unhappy even if there was no pandemic, you know what i mean >> he's a very tall man. >> yes let's tell you about one of the big pieces of news that came out last night, a lot of investors looking at it because an eeye ipo in the offing,

coinbase reporting $1.8 billion in generated revenue for all 2020 coinbase reporting 56 million users on its platform. and the $54 billion in trading and a surge, particularly bitcoin, coinbase is led by founder and ceo brian armstrong. he plans to take that company cub next week, april 14th. on the nasdaq, poised to be one of the largest listings of the year, some say could be as high as $100 billion. a big part of their business has become institutional if they become a institutional player, it turns the dynamics

and the game lots to keep your eyes on there. >> oh, the expense side looks pretty good at coinbase, from what i can tdetermine, in terms of people they've hired to answer the phones or answer questions or send out tax information. or anything. i think it might just be him, as a matter of fact >> no. there's a big system there look, the -- the large -- >> it's a joke, it's a joke >> the large question about coinbase and the valuation of coinbase over time is whether everybody else gets in the same business >> right >> right now, they have almost a monopoly in trading bitcoin and cryptocurrencies if you told me that fidelity was going to do it and you could get it on td ameritrade and goldman and everybody is trading the currencies, that's the long-term sort of competitive question hopefully, we'll be able to ask

him the questions. >> the code is very cool the code is cool what's it called, a qr, with all the -- you can use it to look at a menu >> qr. >> you have one of those for your wallet. and someone else has one so, if you ever want to do anything, if you want to gift it to a kid or something like that, you just click on that thing, ready to go, you press one button it goes and it happens it's pretty neat it's pretty neat the way it actually works so their software is amazing, i'll give them that. you don't really need to -- i guess you could send an email. this next story, i just thought of this right away i'm not sure whether he's parsing his words or whether he's saying fine, close some of the loopholes, if you want to call them that for my company. but raising rates does nothing to amazon, rates at 35, at 20, at 40, it doesn't matter if you pay zero amazon's ceo jeff bezos said he

supports raising the corporate tax rate because it does nothing to his company he stopped short of backing president biden's tax plan he said amazon supports the administration's bold focus on invests and infrastructure in his words, he said we recognize this will require concessions in terms of how it gets paid for. we're supportive of a rise in the corporate tax rate, and i won't add, it said as well if you don't change any of the tax laws that we have. but the tax law doesn't matter for amazon, right? >> i know, i thought the same thing. >> didn't you? >> yeah. it's okay, to raise it >> i know. president biden proposed a $2 trillion infrastructure package and a corporate tax hike from 21% to 28% the president has repeatedly singled out amazon in using

loopholes for not paying taxes loopholes i guess you could call it that. >> the definition of a loophole. >> the definition of a loophole. but it's the way that the tax system is set up for companies like amazon, that it's in the tax code that that's how much they so. >> the question we should weigh in on is if there's going to be a minimum corporate tax, if he's actually in favor of that. which, by the way, he may very well be. >> might be. >> that would be a very different story, and then we wouldn't be having this conversation >> that's why i say, he parsed it that way. if he says tax amazon, give me an amt of 10% that would be big news but who knows. >> the problem with the tax law, too, they're talking about raising ratings and doing other things, it just makes it more

complicated that corporations won't be paying that rate. we've talked a long time for simplifying the tax code for individuals and corporations every lobbyist who wants some favor in there ever congressman who wantssome pet project in there, that complicates things and makes it so you have to raise rates even more so you get more towards the revenue numbers that you're looking for. >> yesterday when kevin brady was on, andrew kept pushing him on hiring 15,000 new agents. and the pushback was, doesn't matter how many you hire, it's so complicated you'll never get out. >> which is i will say, because it's unfair for me to say now, but i said on the air yesterday, the map -- he's definitively wr on that. >> for becky's point, you get some money back. into but there's somewhere between 50 billion and $600

billion of revenue that you could be picking up that -- and this is not money that is a quotient of loopholes. this is money that should be coming into the government and if we actually collect a portion of that money, it would change even the conversation we're having right now about rates. >> i happen to agree with both arguments, i think you're right, andrew but brady's point, too. you could hire more and make sure you're getting after people who are getting around things but at the same time, simplify it anyway, they're playing us out >> and he doesn't want to hire any more people, that's the thing. >> amazon is hiring people >> it's a bit of a -- anyway, go for it >> yeah. anyway, when we come back, we do have much more on the corporate tax debate robert frank has a look at which e st of the tax code companies armo concerned about "squawk box" will be right back.

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welcome back to "squawk. we've got breaks news. the annual letter of jamie dimon is out a 66-page letter dimon is optimistic about the economy at least for the next several years.

here's what he's saying, he's saying this boom could easily run into 2023 because of all of the spending that could extend well into 2023 then goes on to talk about stocks he says while equity valuations are quite high, by almost all measures except interest rates, historically, a multiyear booming economy could justify their current price. he also goes on to say that qe and deficit spending response to the covid-19 pandemic is of a completely different magnitude and without some of the offsetting drags that trailed the great recession as he tried to make a differentiation between what's happening now during covid and what happened back in 2008 dimon says he sees some froth and speculation in parts of the market but he didn't specify exactly where. however, he did say, conversely, this boom scenario, it's hard to justify the price of u.s. debt most people consider the ten-year bond as the key

reference point. of course, we show it to you every morning on the screen. he says this is because of two factors. first, a huge supply of debt that needs to be absorbed. and second, the not unreasonable possibility that increase in inflation will not just be temporary. so two sides of the coin there dimon noting extension competition from silicon valley as well. this was actually the most stark thing i actually read in the report he effectively says that silicon valley is coming to eat the lunch of wall street and talks about the regulatory impact of that he says that banks already compete against a large and powerful shadow banking system both in the form of finteches and big tech companies, amazon, apple, facebook, google and now walmart. he adds walmart in there for good measure that is here to stay, he says. as the important of cloud, ai and digital platforms grows,

this competition will become even more formidable as a result, he said banks are playing a smaller role in the system then goes on for several pages to talk about the regulatory impact of that and how regulators have hamstrung wall street in their ability to compete. in whether the finteches and silicon valley should be regulated as well. dimon talks about being a proponent in making the energy less carbon intensive and then goes on to say, quote, abandon companies is not a solution for those economically productive. the key metric that the company plans to use for evaluating performance is what will he calls carbon intensity which is a measure of ghg emissions per unit of output using intensity will allow us to evaluate the relative efficiency of companies to adjust for

factor such as size clearly shown performing at best or getting better he plans to look at this clients in that context. in the meantime, dimon makes pretty big proclamations about policy, both here in the united states and in foreign relations as well. here's his warning that he says, quote, china's leaders believe that america is in decline i think this is a part of the letter that may get a lot of attention. he said the chinese see an america that is losing ground in technology, infrastructure, and education. a nation torn by racial and income inequality. and a country unable to coordinate government policies, fiscal, monetary industrial, and regulatory in any coherent way to accomplish national goals unfortunately, recently, there's a lot of truth to this he then goes on to lay out a

plan which nmight be described a the dimon plan, a martial plan, to prevent that from happening. it's a fascinating letter. 66 pages, we're going through all of it. there's a whole section that relates to s.a.l.t. taxes which we should debate with robert frank when we have the tax discussion with him. this is one of the meatiest i've ever seen and goes to a lot, a lot of issues. >> i mean, jumping back, the two things that jump back the moment are the china foreign relations that you mentioned love to hear more about the s.a.l.t. just what you said in terms of the regulatory oversight you could look at that and say, okay, he wants everybody else to have the same equal regulations so he's not at a disadvantage. i think it's fair to say, the dimon periodically looks at these broad base, if he sees a

part of that, he might see that as a concerning place where you could see major problems that could eventually do what all of this regulation is supposed to keep from happening. the too big to fail situation. where you make sure we know where the risk is, and make sure you monitor that risk. if there's a substantial amount of the financial industry is now not part of that regulatory overview, that would be a warning about potential problems that could come up >> that's part of his analysis -- it's a part of his analysis that there is this existential risk that's outside of banks and that's true but part of the analysis is, i think, he thinks that the banking system is better positioned and has better safe guards to be able to do a lot of what fintech is doing and do it better and do it with less risk. that's a huge part of the argument he makes. he also, in some ways, is calling for a little bit of a letup on some of the capital

requirements and other things that are going on in the banking business with the argument that it's un -- that it's unproductive use of capital. there's a piece in the letter where he says, at some point, we're going to wake up and say there's $4 trillion that's being locked up right now. and that you want that money in the system, in a more productive use. >> don't notice it right now because things are so flush. >> there's a lot going on. the one side -- go ahead >> you had me at the beginning where he was actually talking about business and debt and the economy. and it was like, wow, maybe this is not going to be a larry fink/blackrock lesson in preaching. this is pretty good. i like what he said about -- when jamie dimon looks at the amount of debt that we're taking on and what the fed is doing and still predicts a boom for

several years in a financial crisis when you add demand because of recession or whatever it is, you don't know when it's coming back. this is unique because we know there's a pent-up amount that's going to suck this out of the system it's going to bounce back and maybe we can't handle it for him to be bullish all the way to 2023, i was thinking, wow, he's talking business and economies and rates and maybe we can forego all of the preaching from the ceos. 66 pages but you're not going to go over every page, are you, andrew >> i will say -- >> okay. >> he's fearful of the possibility of what he describes agency a paul volker moment. >> i would think so. >> and he says if there is a paul volker moment then -- >> he did say it's different

than the last financial crisis because this is unprecedented in terms of the snapback in demand. to me, woe're at 6% unemploymen already. that's amazing from where we were >> having studied these pages, there are two conflicting ideas going on one is we're going to have a great economy true 2023, given the amount of money that's being poured into the market the other side of it is that longer term, we have big, big, big problems almost entractable problems. i will also say that jamie dimon has always been very positive about america. you know, he still -- a lot of policy prescriptions are how do we fix things. i think when you look at what he's talking about relative to what china is saying and everything else. and the fact that he's accepting it he actually says this time is different in the context that we have always overcome our problems over history in america.

and he actually says this time may be different >> right >> meaning we won't. >> politically -- >> well, politically, but economically and all -- >> right >> and i think there's a lot in there. and so, i think there's -- there's sort of two messages there's an immediate market message. but there's a longer term sort of warning about what we really have to think about. >> well, once, you decide that you want the two sides to agree on policy, and that's something that we need to do to move forward to handle these big issues, you got to decide on which policies you're talking about. and each side has totally different remedies for that. just saying we need to come together and do that jamie has always been a democrat, just barely, he said i'm not sure he's saying republicans need to get on board with everything that the biden administration wants to do right now. he's not saying that, is he? >> no, no, he's not saying that either >> that's what i mean. we have to decide on which policies -- whether small government, less taxation.

more freedom, whether -- you know, we're back to square one on deciding how to effect these things to compete with china >> andrew -- >> yeah, go ahead, becky >> no, go ahead, finish your point, first >> i was going to say, he goes through a pretty robust plan as you might imagine, talks about education. how do you get graduation rates up not just across the country but in innercities goes through the health care issues in the country, cost of health care. by the way, there's a mention of what jpmorgan is going to do now that haven, of course, the program put together between jpmorgan, amazon and berks shire hathaway and talks about what they're pursuing there you should read the letter if you're interested, it's worth every second because there's lots of wisdom in there, sand also just a gareat sense from on

of the great business managers out there about what's going on in the world >> andrew, you mentioned he's worried about the paul volker moment if the fed has to act >> right >> is he worried about that or what caused the paul volker moment which is massive inflation? >> i think he's worried about both >> yeah. >> i think he's worried about both and he does talk to some degree about the idea that the metrics would -- that we use, we collectively as a country, we talk about them in the show. the indexes and whatnot, to represent inflation may not really capture what real inflation is >> i agree with that 100%. i've heard so many stories about people who are willing to pay much more for things than you would ever anticipate. things like used cars different places you just start hearing some of those things welling up because people have money. they're able to pay for these things they need these things i would share his concerns on that >> ten-year still is in bubble territory, absolutely, compared

to where inflation and inflation expectations are right now >> to get to a volker moment, you remember the prime was 21 1/2 we gait a little breathing room. >> you talk about taxes, but given the information we just had about taxes, jamie dimon does make a particular note, frankly, about the kind of questions we were talking with kevin brady about yesterday which to say, he says that the government desperately needs to spend more -- the irs needs to spend more to actually try to be able to collect some of these taxes. >> right, or the kardashians could maybe just write a little bit of a check and that gets rid of a whole deficit >> that is a very bad segue, joe. we've got to say, coming up, keeping up with the kardashians. one family member joining the

billionaires club and another drops out. maybe the kardashians can help with that bill as well we'll talk about that when we return ♪ ♪ (upbeat music) ♪ ♪

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kim kardashian west is joining the forbes list of billionaires, "forbes" says the 40 year old's wealth subpoena because of her beauty line kkw and her shapewear line skins her sister kylie jenner has dropped off the billionaire's list her current net worth is estimated around $700 million.

joe. >> awesome what a country there's still some things that -- i was still -- god bless them, what a family. but i'm still trying to figure it all out almost famous for being famous, right? you get famous, then you use the fame to do things. and you become more famous and it's kind of cool. kind of cool probably too late for us to try that. cosmetics, andrew? a lot of money in cosmetics. >> shapewear line. >> men's cosmetics what do you think? >> i have to be honest with you, about 20 years ago, i wanted to do men's cream -- i was convinced i had say friend that was -- >> or the shapewear line >> i had a friend that i thought maybe i should have gotten out of journalism. 20 years ago, if i had done it,

it was opportunity >> i think you chose the right path coming up, much more -- really, i can't imagine. my life without -- it would not be -- definitely would -- neither of our lives would be the same, would it much more on the corporate tax debate coming up be fnkas a look at which part of the tax code countries are most concerned about when we return hey lily, i need a new wireless plan for my business, but all my employees need something different. oh, we can help with that. okay, imagine this... your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, asap! so basically i can pick the right plan for each employee... yeah i should've just led with that... with at&t business... you can pick the best plan for each employee and only pay for the features they need.

coming up,when we return, corporate showdown, robert frank is with us with a special report on what companies are most worried about. and later, frank luntz, you don't want to miss this, we're talking about what they're using for vaccination. it's a huge debate we'll be right back. we wanna buy your car. so go to carvana and enter your license plate answer a few questions. and our techno wizardry calculates your car's value and gives you a real offer in seconds.

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welcome back, everybody. amazon's ceo jeff bezos says he supports hiking the court tax rate, but global companies are also worried about something called gilti an ominous sounding prospect and robert frank joins us now to explain what it is good morning, robert, how are you doing? >> good, becky you look at these big companies like amazon, facebook, and big pharma, they could have a lot to lose from biden's overseas prospects than that 28% rate the reason why is something called gilti, the global

intangible low-taxed income or gilti. it's an overseas tax created as part of a plan to make companies more competitive overseas and to prevent them from load all of their profits into the cayman islands or other low-tax jurisdictions. right now, the tax on gilti is 10.5%. biden plans to bu s to double t 21%. and because companies can only deduct a portion of taxes they pay to other governments, the effective rate would be 26%. critics say that would put u.s. companies at a business disadvantage and lead to more inversion and corporate takeovers. authorities say it's way too low and doesn't generate enough. now it's estimates that biden's rate would cost companies an extra $650 billion over ten years. that is more, by the way, than the revenue that would come from a 25% corporate tax hike

so, guys, you guys were talking about amazon and all of the loo loopholes. this is one area, where especially for tech, these overseas earnings are crucial. and we're talking about now going from 21% to 28%. but doubling from 10.5% to 21% so, you know the lobbyists are out fighting it. >> that's interesting. that might explain why jeff bezos is saying okay, we'd be okay with the corporate tax rate maybe he's got his eye on this instead. how do other countries deal with this do they have a similar tax >> it's a complicated question how do we tax overseas earnings. most oecd countries use a basic territorial which is means they only tax those which are earned not with the profits we have a hybrid system where

the countries do pay -- let's say they're in germany, they pay that tax and then the 10.5 is added on to that right now, most countries are at an advantage over u.s. companies. that's why it's important, yellen has advocated for a global minimum tax unless you have all of the countries playing by the same rule and increasing their tax as well, this doesn't work. and this would put u.s. companies at a huge disadvantage >> robert, thank good to see you. the business roundtable is voicing its concerns over president biden's proposed corporate tax rate in a at the same time, the brt president josh bolten said the administration's proposed global minimum corporate tax rate threatens to subject the united states to a major competitive disadvantage joining us now to talk about this sand much more is former ey

chairman mark weinberger mark, let me ask you, jeff bezos is saying he's okay with higher corporate tax rates if that's what it takes to pay for infrastructure are you? >> well, becky, the benefit that jeff bezos is that it's a company that's so dominant it doesn't have to worry much about global competition but when you're competing around the world in markets, whether the tax rate matters or not, a 28% rate, becky, would be when you add the state tax, 32%, 33%, top rate that is, again, amongst the highest in the world certainly higher than any of our trading countries obviously at the g7 when we lowered our rate back in 2017, there were ten other countries which followed us which is over time no country with a global minimum -- you just heard from the last speaker there's no

other country that has a taxation of domestic companies outside the borders. now, we're talking about having one but doubling it to make it even less competitive in the vast majority of markets around the world. >> mark, what's the bigger problem here would it be raising the corporate rate to 28%? would it be this gilti plan we were talking about with global taxes? what do you see ages the threat i can understand why jeff bezos would say it's okay to raise corporate rates. part of what he said was, all sides have to give something in this maybe he's looking at the idea that maybe you raise rates to 25% which has been the sort of compromise that'sbeen thrown out to this point, but hope to get something back with the global tax how do you come down on this >> well, becky, honestly, it depends on what the structure and the make-up of your revenues in the company is. if you're 100% domestic company,

you care about the corporate tax rate statistically, about 5% of larger corporations profit with overseas five years ago, about 30%. it's probably more today we have to compete if the fastest growing markets around the world. so you increasingly have to look at your relative competitors outside of the united states that's where the gilti tax or the minimum tax comes in and makes us less competitive in those markets. it depends on where you make it and which one affects you more both are incredibly important. you can't ignore them. janet yellen is right. if every country around the world increased their minimum tax or at least put one in, then maybe it would be a competitive disadvantage but they don't have one. talking about doubling ours when there's none anywhere else in the world it's not the right way to do it and you should engage multilateral if that's what the

broader business community and leaders around the world want it >> mark, you probably don't have a monitor, but i'm smiling, i just want you to know i'm smiling when i say this, but when the business roundtable went all in on, you know, throwing the milton friedman stakeholders and esg and signaling, you guys were noble. that was virtuous. now, when it comes to actually doing something that might cost you money, whoa, hold on there we like our statement, but you're not really going to do anything to us like this, are you? it kind of changes when something actually -- there's actual consequences to being so altruistic >> i'm glad you're saymiling wh you say that, joe and you criticized them in your words. >> exactly now, it's going to cost you something now you're pushing

back, that's my point. >> no the issue is, corporations, when they get a tax increase, aren't going to take less vacations. they aren't going to eat less meals. they're got to reduce the amount of money paid in wages >> exactly they're not increasing as much in expenditures. it would help the workers and the business community would have to give up. >> right well, you should have thought about that -- talk is cheap, mark these are some of the consequences that come with being so woke. if you're going to be woke, you got to be woke, wake up. get on board >> i'm happy you're smiling, joe. you're smiling >> i'm smiling remember when it happened. you're right, i did criticize it good luck. >> you can't take care of your shareholders if you don't take care of your stakeholders. >> i understand. i understand andrew, i was going to talk to you again about that business that you were going to start do you wish you had --

>> skin cream business >> if you were a billionaire in that business, do you wish you would have done it or do what you're dngigoi rht now >> i love what i'm doing, joe, if-i was a billionaire, i'd be a guest on the show, happily >> and you'd probably be a republican.

electric power train company is form willing an innovation council that will be made up of leaders from across a number of industries who will test and review the new hyper truck tech. not easy to say, to help the further electricfication of the industry joining us is the founder and ceo of hylion. still on the board and founder and engineer from carnegie melon. thomas heely how are you? >> good morning. thanks for having me on. today was a big announcement for us we pulled in the largest names in the industry including companies like anheuser-busch

and penske and ryder and they're the first guys to run our electric power train technology when we start rolling out demos later this year. we're thrilled about this announcement we have the best names in the industry here working with us. >> not everybody is familiar with what you do so these -- you may eventually make an electric truck but at this point you take existing semis and change the power train for almost a hybrid electrical and slash natural gas power train. it has been done immediately to existing trucks? >> that's correct. so we're taking a little bit of a unique approach here where we're not trying to reinvent the whole vehicle. when we looked that shift towards electricfication it's in the power train. so we're staying focused on revolutionizing that and taking

an approach. we know we have to reduce the operating cost for fleets. we know we need to reduce emissions and taking natural gases our way to recharge the battery pack and so with that, we don't need to build out all new infrastructure there is natural gas recharging station as cross the u.s. >> i wish we had a longer chart. i don't know if anyone looked. the stock was as high after the conversion and went up to $50 or $60, did it not there it is. that explains exactly what happened that was -- those were heady times, were they not thomas, is this more appropriate or do you feel it's undervalued? >> yeah. so we see this is really a long term journey we're at a point where we started rolling out our hybrid power trains and fleets. the hyper truck later this year going into next year, we're going to be rolling that out this is a long journey we have a long ways go in eterm of really getting volume shipment and taking fleets and getting products in their hands and letting them experience it

we see the upside potential here of where we're heading this industry is huge. it's about a $800 billion market opportunity for us and now it's about us and actually executing and driving that long term value so we see that there say lot of upside potential in what we're doing. >> the battery is recharged to 1,000 mile -- kit go that far. with natural gas, so it's not plugged in you have a natural gas unit onboard as part of the power train that then powers -- charges the battery? >> that's correct. so, you know, when we looked that shift towards electricfication, there are two big issues electric vehicles are notorious for not having great range and you need a lot of recharging infrastructure to get them to drive across the kun tru let's rethink this and bring the generator with us to produce

electricity. and we found that by using natural gas and an onboard natural gas to electric generator, we can actually produce the electricity on the vehicle for cheaper and cleaner than you could actually buy it off of the grid. so once you get to those economics, you ask the question, why would we ever plug it into the grid why not produce it locally >> great thomas we need to be updated on your progress you know, we need to keep it a little short today fascinating. i don't know where this stock should be or where it's going to go $1.8 billion market cap at this point. very interesting and we'll have you back and see how the progress goes. big news today thanks beck >> still to come this morning, digging into one of the hottest sectors so far in 2021, the automakers outperforming many of last year's pandemic winners at this point. a top analyst is going to join us on what he thinks is behind 'lbeig bk.on wel rhtac

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j.p. morgan chase ceo is bullish on the u.s. economy. what he is telling shareholders is straight ahead. vaccine passports, getting pushback dr. scott gottlieb joins us to talk about the issue and where we stand in the battle against covid-19 and investors piling into the auto sector despite a chip shortage we'll go under the hood and find out what is fueling this rally as the second hour of "squawk

box" begins right now. ♪ ♪ i can't drive 55 ♪ >> good morning. welcome back to "squawk box" right here on cnbc take a look at u.s. equity futures at this hour well, we're in the green still not by a huge amount but dow will open up 12 points higher nasdaq eight points. s&p 500 up about 1 1/2 here's what's making headlines perhaps the biggest, new york is the latest state to legalize online sports betting. exact details though on how sports betting will be administered haven't been released it's going to take a few months right now to get up and running. meantime, the u.s. army beginning tests on a new covid-19 vaccine this one is a protein based shot that researchers say could protect against a number of

different covid-19 variants. if the study is successful, the army will will seek to partner with the drug company for further tests and developments and jamie dimon had an annual letter out an hour ago that an economic boom could last well into 2023 in large part because of the continued government spending dimon says the boom will be fueled by variety of factors consumers flush with savings, government spending i mentioned, vaccine success and general end of the pandemic euphoria at the same time, though, he has concern there is a risk manager may very well be about the potential for run away inflation. talks about the moment of a paul volker moment which would thurn thing turn things into a recession and the greatest warning long term has to do with where china is

relative to where the united states is and all of the challenges and problems that we have and still need to confront. >> yeah. they definitely don't have the same type of political problems we have over there if they want to do something, do they they can make a decision and they can do it we have to bring both sides along, theoretically, to eventually do it >> budget reconciliation you don't. >> no. so it was end of pandemic euphoria i see what you meant when you said it, i thought you meant of the pandemic euphoria but it's all the -- end of -- so there will be -- just when it's over i mean, we've never -- it's been 100 years since anyone experienced this and that's weird when my kids say, you know, my senior year. god, its gone. you know -- and i go, every person -- every kid in the

world, that's what pd happened it happened to every person on the planet it's just -- i don't remember anything like it but, yeah. the volker moment, i thought that we talked about last time for people that weren't watching at 6:00, did he say the word volker in the letter >> i'll read it to you he said in an inflationary case, fiscal and monetary poll say may very well be at odds i'm reminded of when paul volker effectively raised interest rates by 200 basis points on a saturday night also in this ok, the cost of interest on u.s. debt could go up fairly dramatically make things a little worse. rapidly raising rates to offset an overheated economy is typical of a cause of a recession. one other negative, he says, in this case, we will be going into recession with an already very high u.s. deficit. so as i said, very bullish on where we are right now

but as a risk manager warning on where we could go depending on the inflationary story he also is concerned about the metrics around inflation >> do the math on -- >> what really gets counted. >> 200 basis points, add up the new debt total and then raise that -- what is your monthly net come to >> i don't even want to think about it >> that's what i mean. >> a long time before the fed gets to that point hough they would have to stop -- they would have to taper first and stop buying all the as is thaets they're buying that is the first thing. that in itself can create a lot of problems for the market i think jamie is probably looking more realistically at the real economy, not the stock market the stock market will probably really set up and pay attention as soon as they think there is a taper under way f there is a real interest rate hike, that's what hits the real economy

>> what way pay on debt is more than everything we spend, right? what we pay -- >> every percentage point you go up for the deficit is a big deal at this point. >> right >> then we can't do other things that we like to do, schools and all that other stuff, health care that we would like to do because we're paying on the debt so that's a problem if rates were to -- let's get to -- >> one other mention it hasn't got a lot of attention yet. i talked about it in the last hour is the idea about sale taxes. jamie dimon not in favor of bringing back the salt detuction in california, new york, illinois and the like. he makes a bit of a pointed reference at it at those states suggesting effectively that it would be a benefit to the wealthiest interesting position to take as the leader of a major corporation in, of course, the

state of new york where so many of his employees are based and will, of course, be impacted by this of course, so much of their business also not just employees in new york but in many of the high tax states that have been impacted by salt so interesting to see him take that position. >> we heard about those that rely on real estate and other places who have said it's essential for the return of cities for the very strong return to see the return of salt deductions i don't know how likely it is to see that get passed. >> don't count jamie dimon to be helping bill rude enlon lobbying that >> he didn't make any mention of that, did he >> no. but you remember, he said, i would say, two years ago he said

he was still in for five. >> let's get to dianne olick >> refinance applications which are most sensitive to weekly rate moves fell 5% for the week. 20% lower than the same week a year ago that's the slowest pace since last june. that's because the average rate on the 30 year fixed rose to 3.36% from 3.33% doesn't sound like a lot with rates rising steadily, refi volume is down 30% in the past ten weeks. mortgage applications to buy a home down 5% they were 51% higher than the same week one year ago wait, you have to cross that out. that annual comparison for the next several weeks will be very

large. remember, the housing market is essentially stopped at this time last year when the pandemic shut down the economy the weekly drop is more. prices are red hot there is very little out there to buy mortgage rates moved lower a little bit after refusing to breakthrough recent highs. so this could bode well for home buyers in the coming weeks beck. >> i >> diana, thank you very much >> in the meantime, the minutes of the fed's last meeting will be released this afternoon many will look for clues about the next rate hike but there is something else that investors should focus on as well steve liesman joins us right now. he's got more on thafrt. let's talk about this and then maybe can you comment on jamie dimon's thoughts and what we should be watching >> yeah. becky, the big debate in fed policy right now is whether the fed tapers bond purchase this is year or next does it raise rates in 2022 or

2023 that debate obscures a profound outlook underpinning the stock market and that is how patient powell convinced markets the debate is going to be. hard to get excited about it it shows measure of success by powell that fed chair's bernanke and yellen did not enjoy the spread between the fed funds and the two year note showing where the fed is now versus where the market thinks it's going. that ranges from 25 to 60 basis points during much of 2011 and 2015, a sign the market was always anticipating rate hikes the spread right now, it's at the highest level of the year but just ten basis points. the two year, remained tame. now just 16 basis points even after passage of president biden's big relief bill and that blowout jobs report we got on friday luke crandall, he follows every move by the fed. he tells me the fact that we think the big issue is whether the first-rate hike is two years or three years away is a sign of how extraordinarily successful

the fed has been at convincing the markets that they will be highly patient one of the policy changes powell enacted, he ended pre-emption, the idea of raising rates before inflation happens. aiming for inflation above 2%, focusing on employment short falls and including minority unemployment gaps in this calculation of how far -- or when to hike rates paul mccauley tells me the death of the doctrine of pre-emption is the bedrock on which the current stability is based none of this says powell's policy is right. he should stay easy. only that he's convinced markets to an extraordinary degree that he means business. becky? >> and, yet, steve, we hear from jamie dimon this morning that he thinks inflation may be stronger than the traditional measures that we rely on. the things that we watch and that he's concerned that if inflation does start picking up, you could see, andrew described it again this moment where

overnight paul volker raised rates by 200 basis points. and what that meant for the economy afterwards the crash in the economy that came with it so there are certainly those who have been around for a long time who are watching this and wondering if there's going to be a moment that hits >> i think that's right. i think jamie has correctly identified one of the big risks out there for the market and that is that the inflation that fed and everybody expects ends up not being temporary i'll say when i look at the two year note which is 16 basis points, it popped up to 18 on friday which is like, you know, big deal and the ten year note now 162, it's hard to see a lot of inflation built in i guess i'd also challenge jamie, which he's always up for a good challenge, to show a metric that does a better job at telling me where inflation is in the economy. i keep looking for it. there are multiple inflation metrics out there. most remain tame they're going to pop-up for a

basis points reasons or base reasons and others for the next several months but the idea that we have some sort of insipient inflation under the raid ashgdar, i guessi challenge that >> is the fed and sell tral bankers around the world, are they big enough to really hold down interest rates from where they should be based on inflationary expectations? if you believe some of the scary inflationary expectations, there's no way that the ten year should be where it is right now. it's like a point below where historically it should be. unless as you say, those inflationary expectations are really not necessarily valid >> yeah. >> i'm not saying they're invalid. i'm saying, you know, the market hasn't really decided there is massive inflation coming, at least the broad consensus of the market and you're right, joe. i don't think central banks can hold back the tide of the

massive global bond markets if they decide there's going to be inflation and insist upon compensation for both the supply that's coming and the inflation that will erode the returns. if that really happens, the fed is going to have to respond and they cannot hold down rates. you know, the way i think about it, it's like 80% the market, 20% central banks and setting of rates. >> okay. steve liesman, thank you, sir. great to see you when we come back, we're going to go under the hood of auto stocks and find out what is driving shares in the sector higher look at us, joe. remember we drove those cars around and shares of moderna moving higher as well the company's covid-19 vaccine being rolled out today in the uk that approval comes about two weeks earlier than had been expected we'll talk to dr. scott gottlieb about that and so much more right ren quk x.he o"sawbo

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welcome back to "squawk box. one of the hottest sectors to start the year is automakers check out the names doing so very well. ford and general motors up 50% then you have others up 15%. last of the high flyers, zoom, apple, chewy, peloton all negative in 2021 joining us right now to talk about what is driving the sector is john meurphy. good morning, john you have seen the remarkable reversal of fortunes the question is whether you think the valuations make sense right now. >> great thanks for having me, andrew you know, it's very interesting time in the industry what you have seen in the stress of last year is the experiment we've all been pushing for for the last 20 years, you know, for the industry to restrain production as demand is recovering they've been forced to restrain

production because of supply shortages and demand really recovered. evaluations right now make a lot of sense based on what's going on in the industry we saw record profits in second half of last year. a big question is, you know, is the industry going to maintain this discipline going forward? and have they learned their lesson in this forced experiment that we've all been looking for for 20 plus years? i think that the simple answer is probably yes. because they're going to be task tasked with a lot of investment in the future. they have to generate a ton of profits at the core to fund the future. >> when you look at the future of the businesses relative to tesla which has now come down a little bit, what's -- you know, we look at the stocks and talk about this five years from now since all of this is a five year bet. who is the winner? >> well, i think you're going to see a mix of the incumbents. the manufacturing capability is

incredibly important in the future you're still going to need to actually manufacture the vehicles that run the supply chain. i think you'll see a lot of the incumbents do very well. gm is top of list there. i think you're going to see tesla continue to raise capital and invest for the future and be given a lot of special treatment by governments to really push the industry forward we'll see where they all come from not a lot of revenue from the smaller companies. i think you'll see a couple of those pop-up as well i think you'll see incumbents and a few of these startups make it through as well >> speak to us about the used car market it is hot, hot, hot right now. i understand that. i understand why given the constraints in the marketplace but it doesn't seem to me that investors are taking into account and maybe this is not a us are being of the next 12 months but five years out which

is to say what happens to all of the kbcombustion engine cars >> i think when we hit the tipping point on evs versus ice vehicles is it 20%,30%, 50% penetration you're going to run into this issue at some point where the industry is going to need to transition honestly, there are not a lot of great answers right now. i expect to see pressure on used pricing on the ice vehicles. but the fundmental transportation they provide is still going to be very important. they're not going to go away that quickly and there will be a bid for these vehicles the second thing that is really important is the industry is being professionalized you have car vanna that came in and pushed things. carmax is pushing hard and the in you vehicle dealers are pushing very hard because they're looking for more profitability, right they can do it in the used

vehicle market you're also seeing in the used vehicle market is this professionalization that makes the consumer more comfortable buying the vehicles. they're not buying them from a guy on the corner. they're buying from a really professional dealership. it gives them the opportunity to have a new car experience in the used car market where they're serviced well and point of purchase and over time in the service lane so there is also, you know, sort of that underlying professionalization that's going on it will persist way into the ev future that will be good for values and good for the industry >> fair enough john, great to see you it's been a wild ride to watch the automakers and i'm sure we'll have you back to talk more about it thanks. >> thanks so much. >> joe >> thanks, andrew. coming up, dr. scott gottlieb on the idea of vaccine passports. plus, jim paulsen on the markets next move. check out shares of genworth financial falling in premarket it pulled a plug on a deal

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still to come on "squawk box" this morning, dr. scott gottlieb joins us to talk about the buzz around vaccine passports and the pushback from states that's next. first though, april is financial literacy month

cnbc is sharing messages from business lead beers about finana education. here is a ceo. >> math is at the center of financial literacy i love baseball. i used to keep track of all the players and batting averages and rbis and all kinds of statistics because i did the math i had to learn it. i did it so that was very important in terms of the relevance to me and my business career because i learned how to do things and process things quicker in my mind so that when you're in a meeting, can you apply it.

welcome back to "squawk box. here is your market minute one of the big things we've been talking about the last several months was this idea that market rally is broadening, smaller companies are participating. over the course of the last week, it's a return to the mega cap technology and media companies that is driving a lot of the action towards record highs. you can see here apple, microsoft, and alphabet over the last week. apple is up about 3.5% microsoft up over 5%, and alphabet up 7% as well three of the four biggest companies in the s&p 500 moving

to the higher up to the upside driving the markets higher watching the premarket action, some of the reopening stocks coming into focus today. the biggest premarket movers among them in the s&p 500 this morning so far norwegian cruise line holdings up 3%. carnival cruise up 3%. pen national gaming and caesars on the casino front showing gains there as well. keep an eye on leisure and hospitality and then one other place to watch, the price action in bitcoin this morning. we're now near the lows of the session. currently off about 3% right now. 56,342 the last trade there according to coin metrics. decently off the highs here. some traders watching what is happening with possibly a double top formation. watching bitcoin, they're moving lower. 56,342 the last trade there. i'll send things back over to you. >> dom, thank you for that great. unbelievable what's going on right now. coming up, when we come back on the other side of this break, the uk rolling out the moderna vaccine. the idea of a vaccine passport

and where the hot spots are in the united states. dr. scott gottlieb joins you right after this break to discuss so many of these topics and more be sure to check out cnbc's tech focus program. tech check it premiers monday, april 12th at 11:00 a.m. eastern time "squawk box" returns right after this labradoodles, cronuts, skorts. (it's a skirt... and shorts) the world is going hybrid. so, why not your cloud? a hybrid cloud with ibm

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welcome back, everybody. the situation is putting pressure on the federal government to consider changing how it distributes vaccines. new york, michigan, florida, pennsylvania, and new jersey together reported 44% of the nation's new covid-19 infections 200,000 new cases and the latest available seven day period joining us now is dr. scott gottlieb, former fda commissioner and cnbc contributor and serves on pfizer scott, why do you think it is that the five states are seeing the biggest -- almost half of the infections in the united states >> look, i don't think it's one fauktor in the states. i think it's a function of fact that it got in earlier in the

states it's been spreading for a longer period of time that is true of the states in the south as well, florida and southern california had early outbreaks. i think the fact that the northern states haven't really benefitted from a seasonal backdrop yet although they're starting to do that now. i think in some of the states they opened schools for the first time this spring you had social networks that were sheltered from the virus now coming into contact it with. if you look at massachusetts or even michigan, the biggest cohort of new cases is among 10 to 19-year-olds. it is the children who are getting infected probably bringing the infection back into the communities. so we know that's also contributing to this spread. i don't think it's one factor alone. i think it's a confluence of all those those things people are now starting to get reinfected people previously infected from coronavirus last spring are getting reinfected with the new variants perhaps people who are vaccinate ready getting infected we don't believe that is

happening. we're tracking that pretty well. the vaccines we would be detecting that we're not doing a really good job looking at people that were previously infected are getting reinfected that could be contributing to it that is another thing we need to look at. >> governors and mayors are lobbying the forecast will go to shup the ship them more of the accine i understand to ship it to hot spots. that brings up the idea is are you penalizing the places doing a good job of getting it out there? what is your take? what should with he do >> i think we should be doing this you know, i don't think that you're going to be rewarding bad behavior from a policy standpoint because some states haven't implemented good policies i don't think this is necessarily a policy failure i think it's a function of the fact that we're seeing regionalized epidemics which is probably what life is going to be like going forward. there is going to be pockets of hot spots in the united states we have to learn thou deal with that the reality is this is going to be resolved within the next, you know, four to six to eight weeks. and so it's not as if if you give a state more vaccine right

now you're going to be rewarding behavior that things are going to create more hot spots, more states deciding to do certain things because they novak seen is right around the corner in case they have an outbreak i think across the whole nation infection levels are going to come down. we need to snuff out these fires while we can if we don't do it soon, if we don't put more vaccine to these spots really soon, its going to be too late. does it take time as you know, for the vaccine to really start having an effect you need to have a maturation of the immune system after someone is vaccinated. it's not a function of taking vaccine away from states right now. what you're doing is giving some of the kincremental supply to th states and cities having localized outbreaks. create federal strike teams where the federal government goes in with extra vaccine with some resources to distribute it and some of these cities that you're seeing outbreaks like metro detroit. >> it seems like it's a problem we're discussing right now but that is not likely to reoccur any time particular

season as you mentioned, you think there is a glut come april or may. where anybody who wants a vaccine can get one. >> that's right. i mean this is really a temporary problem we need to solve for. i think also when you talk about well are we going to be rewarding, you know, bad behavior among policymakers? even setting aside the fact i don't think this is a result of bad policy decision that's the stau states and cities have made. this vie us have going to dissipate coming into the summer it's not as if you're going to take an action and people say i can relax my restrictions and grapple with that in three or four or eight weeks. across the country, i think prevalence levels come down. we really need to deal with this now as a temporary phenomenon. try to get the outbreaks under control so they don't continue to see the rest of the country >> the white house weigheded in yesterday and said that it will not be mandating vaccine passports. something that's been a hot button issue

you have governors in the southern states, governor abbott from texas who came out swinging against this desantis in florida looked like he would do the same thing where do you come down on vaccine passports and without a mandate coming from the federal government, where does that leave employers or companies that might have wanted to use these things are they dead in the water >> i think we've been thinking about vaccine passports through the long lens. i think the way they're likely to be used is to create two lanes of access to different venues one that's going to require maybe some testing, some secondary screening. and the other is going to be a fast lane. if you can demonstrate that you've been vaccinated, you won't have to bring proof that you've been tested you won't have to go through secondary screening. it's like an ez pass then you can stop and stand in line and pay the tollbooth i think that's the way we need to think about the vaccine passports.

reality is right now the only people who own the information reliably that you've been vaccinated is the state. that makes no sense. people think they have proof they've been vaccinated because they have a pauper card. that is not good enough. it can be printed off the internet right now so you actually don't own evidence that you've been vaccinated sometimes your doctor knows because the pharmacies have been notifying physicians sometimes the health plan knows if you're medicare advantage, they've been notified. the only people that have proof that you've been vaccinated is the state. that makes no sense. this is about empowering consumers with the vaccine status >> doctor, separate question i don't know if you were watching yesterday joe and i were talking about the possibility of excess vaccines and how they should get distributed around the world if, in fact, we should do that there seems to be sort of a multilayered conundrum here or questions. should some of the vaccines be returned to a pfizer or moderna and let them distribute them

let them capture some of that profit with the idea that then maybe in the fall there will be addition vablg seens potentially that address the new variants, provided back to u.s. citizens do you give it out for free? and do you do it your snefl do you not? do you keep the entire stock for yourself because wyou're worried there is new variantors a third booster takes care of it and now we're talking about whether you can surge the vaccine vaccines we have now to the right states there's a lot there. can you break down your thoughts on it? >> look, i think we should be thinking about a program for distribution of covid-19 vaccine around the world there is plenty of supply coming into the market. the u.s. government is going to stockpile a certain amount of supply to visit on hand to give people boosters in the fall. but beyond that, there will be supply that we can give to other nations. probably first in line should be mexico, our neighbors, to try to help our neighbors and make sure this he can get the epidemics

under control. there is supply for low income countries. the u.s. government to facilitate getting that into markets whether it is coming out of the supply that they stock pulled tlshgts some there they could probably share or the supply coming online with the manufacturers, i think you need to provide logistics in those countries. you need to provide indem any fiction so manufacturers don't spend the next 20 years in court. i'm on the board of pfizer, they would participate in any effort to make vaccine more widely available. the companies are already donated through covax. there is vaccine being made available. that is not a high through put operation. they can provide a real benefit. to do this on a massive scale is going to require the logistics and resources to the u.s. government we should be thinking about that kind of a program. >> scott, the cdc last week was talking about how if you have been fully vaccinated you don't have to come back and quarantine at home after you travel domestically

internationally, that's not the case there are stricter guidelines because we're still on alert with that. how safe do you think internati international travel and when do you think the restrictions should be lifted >> i think europe is about a month behind us right now. hopefully we don't have any kind of real true fourth wave epidemic this summer i don't think we will. i think we're seeing the last throws of this right now and the hot spots hopefully will resolve over time as we get more vaccine into these parts of the country. i think that you'll see international travel open back up again it comes back to what it's been. if you're in a high prevalence environment and high likelihood you came in contact with the infection, people can still get sick because they're at lower risk of getting the infection and trans mitting it lower risk is no risk. the consideration needs to be around if you have people around you who haven't been vaccinate who had are vulnerable to the infection, you can still be an

asymptomatic carrier you need to be careful in that regard that's why vaccinating people should take precautions in a high prevalence environment. those are the kind of consideration i will be making >> scott, thank you. great to see you this morning. >> thanks a lot. coming up, jim paulsen on jamie dimon's bullish call on the american economy and why he thinks the s&p 500 can rally as high as 4400 now before suffering a correction that interview is next before we head to break, some news from beyond meat. the plant-based food company announcing the opening of a new manufacturing facility in china. its first outside the united states the food company said that new factory would significantly increase its ability to deliver quk x"ilreonthe gi "sawbo wl be right back. for skin that never holds you back don't settle for silver #1 for diabetic dry skin* #1 for psoriasis symptom relief* and #1 for eczema symptom relief*

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jamie dimon is bullish on the economy. an economic boom could last well into 2023. writing in his words, this boom could easily run into 2023 because all the spending could extend well into 2023. and while equity valuations are quite high by almost all measures except interest rates, historically a multiboom economy could fight the current price. joining us now to talk markets

and dimon's comments is jim paulsen for the loop hold group. earlier in the show i gave some strong kudos to teper who a month ago said it was going to be a strong rally as interest rates would stabilize for a while. i have to go back five, six, eight months longer for you who have bounding the table. this is a call going back even a year of you've been really, really bullish and really, really right. that's last thing i'm going to say to you >> true though you even said this year it will end higher this the become obvious once we

run into the reopening now you're saying that we could add maybe get to 4400 before any pullback if we get that high, then the 10% or 15% pullback doesn't even become when we first talked about it because we're getting back to where we were when we talked about it. >> they're at 4100 for the year and we're practically there right now in the s&p 500, joe. and i just always kind of felt -- we're going to get a correction this year and i felt, you know as the year progresses, i just can't think there is massive giddiness that breaks out at some point as people get their shots in the arm and as companies reopen and jobs are brought back again and we kind of feel like we succeeded and victory over covid-19 i still think that lies ahead. and i just think the stock

market could get giddy too yet and i don't know if that will work out that way. i wouldn't be shocked if there is a correction starting right now. what do you think about beyond this year? and even if we have a 10% or 15% do you want to stay the course there is multiyears ahead in this bull market that's the big issue for investors. you have to live through this year it could move higher and, you know, i still think we're underestimating just how much growth is going to grow this year the fed in their latest came out around 6, 6.5% i think it is north of 8%. and you look at s&p 500 and

earnings estimates, joe, they're now up to about 180. i still think they're going to be 200 so if earnings estimates are going to continue to climb that, could add to bullish fever we have a little bit of the things most sensitive to the economy. and if that fever comes back, there is now more room for the upside for the stocks. i think you get yourself in to play the short term correction moves. i think and decide what they want to do going into the next year i lean towards this earlier in the year >> i mean, the reopening could be above what normal used to be in the fed the by that, i mean people that weren't as affected by the pandemic restaurants this he got money.

then you have all the government stimulus for people that needed help you add that all up and the whole reopening, as you say, the s&p 500, you can -- the earnings could be 200 instead of 108 or even north of 200. you're underestimating how powerful they are. and then some of the fundamentals may catch up with the multiples. >> well, i agree with that, joe. i think one of the hesitancies that investors had and legitimately so is valuation valuations are not very high take the trailing 12 month pe multiple right now it's like north of 30. the market is up around 4,000 or so, whatever we're going to be selling at 20 times trailing earnings going into next year and 20 mult simiple is over avee what they have been the last 30

years since 1990 so suddenly, this incredibly overvalued stock market doesn't look nearly as overvalued. it looks a little high nothing excessive. people's perception of valuation could change and rates are still sub-2% and slightly above average. and we have raging economic growth and earnings growth looking into 2022. so that's kind of where i'm at i you do believe inflation is a long term risk there is massive policy tightening and could be required prematurely end this recovery. i don't think that's necessarily has to happen. you know, i really believe, joe, that the leadership today has decided to run this hot. and we've been haunted by the inflationary ghost of the 1970s

for four decades we've been running the economy always with the idea that inflation just lies right around the corner the last couple decades, we accepted global stagnation we just went through the weakest economic recovery for ten years. and inflation is nowhere to be found. and there are two precedents for running hot. we ran it really hot from 1950 all the way to 1980. and we only overheated in the late '60s through the '80s but from 1950 to 1965, we ran it very hot gdp growth averaged 6.5% a year in and the average yield was over 3% on the ten year. so we ran growth far in excess of yields just like we are now and, yet, for 15 years, we had virtually no inflation and solid economic growth and wonderful stock market and yields stayed within range of about 2% to 4%

so there two different precedents there are the 70s when everyone is focused on or the start of the golden era of capitalism, 1950, 1965 where we ran it hot and it never overheated. at least for 15 years. >> well -- >> jim, just tell me real quickly. okay thanks jim, tell me real quickly, what was the difference between the 70s and the golden era of capitalism what was done differently? if we could take a pass at this point with had rung hot, what would your lesson be to make sure we don't go down the path of the 70s >> well, that's a great question, becky. and i recently written something about that i do find a lot of commonalities to where we are today to the 19 -- early '50s the biggest one, they both started with massive policy stimulus world war ii stimulus happened and harolded as what ended the

great depression finally but it also is what started the golden era of capitalism and we now just had a massive policy stimulus in 2020. global stagnation and larry summers that talks about that we've been dealing with. secondly, we came into the 50s with massive savings they went up into the 40s and 50s and climbing into the 70s. we now have massive savings again today. the biggest really commonality is we have lousy demographics in the 50s like we do today we have labor force growth that ran like 1.25% on average over this first 15 years. and we've had labor force growth around that 1% area as well in the last five years or so. and going forward, we had -- we have aging demographics to day we have an aging demographic in

1950 it wasn't until the 1960s into the '70s that we had a youth movement take over the labor force. the labor force grew 2.5% in the 1965-1980 period a little over 1% in the 50 to 65 period and that's where we are today. >> all right we have to go. >> i think the biggest difference is dem graphics that's what grove inflation in the 070s and we don't have that today. >> i'm going to send you awe novel or some fiction. you spend way too much time just reading all that stuchlt wow you know a lot about what happened i mean, how about some hemingway? >> i'm stuck in the basement with covid-19, joe >> watch that ken burns documentary. read something for fun, paulsen. good lord. you must be a lot of fun with the family anyway, thanks, jim. >> thanks, you guys. >> let's talk about the '60s do you believe what happened anyway, thanks >> okay.

>> we've got a big hour ahead, joe. coming up after this, former dallas fed president richard fisher is going to give us had is take on president biden's infrastructure plaand lkn ta about jamie dimon's concerns about inflation as well.

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good morning the u.s. economy will likely boom that is the message and quote from j.p. morgan's ceo jamie dimon. his closely watched letter to shareholders dropping this morning. we have the details. meanwhile, more insight into the meltdown in mcapital management morgan stanley dumped billions of dollars of the stock tied to the firm the neutral before the rival start aid fire sale. and diversion in tech. maybe we can call it old growth versus new growth. pandemic winners suddenly aren't looking so good anymore. some of the faangs are back. dan niles is going to join us to break down why as the final hour of "squawk box" begins right now.

good morning and welcome back to squaw"squawk box. welcome back hopefully you didn't go anywhere u.s. equity futures are not the real story this morning. kind of flat up about five points now in the green on the dow the s&p 500 totally flat flat line. the nasdaq trading lower they're notably moderated as some -- people thought were down about 1.6 or below 170 we were below 1.75 in the last week but then it moderated again. now back below 1.7 >> okay. joe. let's talk about the breaking news this morning. a very bullish call on the u.s. economy, at least for the next couple years this is courtesy of jamie dimon in the annual letter to shareholders in it, dimon says he sees strong

growth ahead for the u.s. economy. thanks to the government's strong response to the coronavirus pandemic he says, "i have little doubt that with excess savings, new stimulus savings, huge deficit spending, more quaun take theive easing, the u.s. economy will likely boom. this boom could easily run into 2023 because all the spend kog extend into 2023 the government spend unwilling res spending that the longer term effects from a reopening boom won't be known for years he does caution and warn about the potential for inflation and what that can mean as well as well as warning about the longer term issues that the united states is grappling with and whether we will be able to compete over time even with china. so a lot embedded in that what i

believe is a 66 page letter that gets into taxes and health care and education and so many other issues >> a list of so many bullish things there, andrew and, i mean, roaring 20s type stuff he's describing. and i just can't help but think -- i mean i remember in the past when i felt pretty good and been out socializing and whatever then i feel even better. then i get to report where i feel so good that i can't believe how good i feel. and then the next day i realize, wow! it's really proportional to how i feel right now where i was lastnight.

doesn't that mean we're going to be feeling awful for a couple years? not by 2023, apparently. maybe that is the volker moment that he's talking about. >> look, as you know, at some point the rubber is going to hit the road but, you know, we've been talking about that i was talking about the -- that for the four years prior the. >> a lot of -- >> where you stand is where you sit. >> a lot of it is different this time thinking it sound like. let's -- richard fisher may be listening in on this let's see if he will join us to talk more about jamie dimon's comments richard fisher is a senior adviser to barclays and cnbc contributor. i looked up that kennedy speech. we're all mm peers, do we all buy into that richard?

there is just no problem no problem let's do it. let's run it hot and the more sbend, the better we're off. the better off we are. >> we have to work on your spanish. i thought of a great quote too much of a good thing is wonderful. i'm not so sure about that i do agree fully with jamie dimon. he does point out and you didn't mention this number, he thought that inflation could run at 3% or 4% or higher. that's the trap. question is how does monetary policy respond if that's the case and proves not to be trans itory which is what the fed is banking on here. remember, monetary policy acts as a lag if they move to correct it will

take its time to work through the economy. but that is one of the risk that's jamie points out. but that letter is superb. and i agree with almost 100% of it pretty impressive. >> is there -- does it sound like a -- it's different this time it does contrast what happened ten years ago and our response and sort of the overhang from that might not be -- it might not be repeated this time around. we have more favorable things happening. >> there was an electrical in t"the wall street journal" abou

what happened to the last tax cuts i think that should be regarded. it helped accelerate the economy at the very end, bring all demographic groups into the workforce and off the government dole and we got very low unemployment numbers, very high employment numbers and every demo graphic that's what we would like to see happen again we'll just have to see what comes out of this package. obviously, this is important to redo our infrastructure and update it. not all the bill goes to infrastructure but by my calculation, about a trillion goes to electricity, water, and surface transportation and that's a big chunk that we need to update the question is how do we pay for it of course, that's going to be needed >> that would even be -- a lot of people are not going to want to raise taxes, richard. especially pointing to what we've been through with the pandemic would it be even more irresponsible to just free wheel all the spending and not raise

taxes? that would even be worse that would -- so you think -- you think we do need to raise taxes to pay for at least some of this? >> in what form? this is all being discussed right now. there is -- seems to be a consensus. not simply with joe manchin, et cetera, the senator from arizona, but the democratic senator from arizona, but also in the corporate community as i talk to cfos and ceos around the country and listen carefully to what goes on in the board meetings that i sit in on. people are assuming a 25% corporate tax rate how do you deal with other individual tax rates we don't know what they're proposing. it could be damaging if it ends up countering the impulse to create more jobs by squeezing margins. they have to be very, very careful on this front and see what comes out of the process. the good thing is they're going to take until the summer, i believe, to get this all squared away

and we'll see what actually comes out in the end and they're going to have to make chaufrpgs to make this ping e. thing worng the markets are a powerful force. if they go too far in terms of financing it, you just pointed out, the ten years come down to 166. the 30 year, by the way, is up but the longer end of the yield curve will probably experience some pressure and that will put more pressure on financing government spending going forward. >> what's your feeling on -- on the transitory nature of the inflation right now and whether we can count on that we've had liesman talking about that just had jim paulsen talking about it can pure money printing cause inflation? it's relative to everybody else. maybe you don't get more than the rest of -- or do you need a wage price spiral for really to get out of control what would cause the volker moment that jamie dimon talked about? wouldn't we see it coming since

we're so low i mean, once we get back to 3% or 4% on the ten year? >> well, what creates inflation is excess demand relative to supply you have to ramp up supply to meet growing demand. we're seeing a snap back in demand here as people go back to work they have job. they spend money if they spend money, they consume. that drives the u.s. economy it's a very simple equation. you have to have the supply kinks come out of the system you have to be able to meet their demand and if you don't do that, you have inflationary pressure obviously even chairman powell has said for short term we expect those two linkages to be rough. therefore, we'll have an inflationary pressure. it will be trans itory and if it's not, we will have the tools to address it which means they would wait to see if it's transitory. the question is, if you wait and proves out to be transitory but repettive, then the question is how do you respond

and you are respond took late? the new model of waiting to see the whites in the eyes of inflationary pressure above the 2% target that is not tra transitory, you're taking a risk they could well be right and we'll see what obtains here. for the short term, expect inflationary pressure. what does the market discount? transitory or long lasting or repeative? there still doubt in the marketplace about whether it can be transitory. that's why it settles back down. it keeps pressing the envelope after settling in. >> with as much debt as we have if we see t2% or 3% increase in rates, there is nothing left once you pay the debt service to do any of these things >> right >> it's going to be hard to get growth you would see growth dampened. so that would be a real problem if that starts to happen

>> it would be but when you have growth, joe, you have tax revenue and that helps finance the government so let's hope we have significant growth we're going to see, for example, my state of texas i think in the second and third quarters, you're going to see double digit or very high single digit growth rates. the you're going to see that in different sectors of the economy. so even the imf just updated their estimation to 6.5% they're usually late that's for the u.s. economy. and we'll just have to see that will be a good tax revenue enhancer even without raising taxes. >> was abbott right? you're not one of the states that has any covid-19 right now. there are five states where all the covid-19 is. you got baseball stadiums open was he right to open at all the criticism he got he got absolutely eviscerated for doing that >> well, i was one of the advisors that suggested he do so and we'll just see how it works out. i'll let you know after going to the ranger game on the 18th. >> good deal

so you were one of them. we're going to remember that writing that down. writing that down. >> all right we'll see if it works. we have to put people back to work, joe. >> i agree i agree. richard fisher, thanks >> thanks for having us. >> you're welcome. >> all right becky? >> thanks, joe when we come back, news just breaking on an investment that ups is making in some next generation delivery technology you'll have to hear the details. we'll have those in just a moment plus, what is behind the divergence in it pandemic stock growth winners and more traditional growth stock winners? top tech investors dan niles will join us to talk about where he sees some real value right now. stay tuned you're watching "squawk box" and iss bc

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but kids also need computers. and sometimes the hardest thing about homework is finding a place to do it. so why not hook community centers up with wifi? for kids like us, and all the amazing things we're gonna learn. over the next 10 years, comcast is committing $1 billion to reach 50 million low-income americans with the tools and resources they need to be ready for anything. i hope you're ready. 'cause we are. we've got a news alert on u.p.s. the company is buying electric vehicle take off and landing aircraft to be tested for use in the network. frank holland is here with the story you'll see first on cnbc what are these machines? what are we talking about with the vehicles, frank? >> hey, good morning, becky. we first ups does plan to combine e- commerce with the express division cnbc is getting a look at how

u.p.s. is buying from the beta technologies they take off like a helicopter. they fly like a plane. u.p.s. will use them in smaller markets for express b-to-b deliveries they can deliver to the top of manufacturing sites, hospitals and other locations for a premium. >> create flexibility where the aircraft can be flying constantly where you don't have to be tiedtied to specific airport genes to building to building this is where it gets more interesting. we can take merchandise directly to our customers, wherever they may be >> they have an electric battery, five propellers and 50 foot wing span they carry 1400 pounds that is just about half the max of a small plane fully charged, they can travel up to 250 miles at 170 miles per hour the focus here, obviously on speed. but also on savings and sustainability the batteries for the planes are

rechargeable and compatible with the trucks last year u.p.s. said they would buy 10,000 for delivery use. they could reduce the turn around time because they can hold shipping containers and small planes cannot. >> creates efficiency in the network for us when you start removing the handles, frank, and when you don't have to spend time, you know, loading and unloading single packages into the aircraft, you're reducing the amount of time that it takes for us to process this volume. >> and the evtols will be delivered in 2034. official terms are not being released. >> so frank, what i think of these evtols, are they doing the work that normally would be done by the planes at u.p.s. or the ones doing the work the trucks at u.p.s.? what are they replacing? >> they're essentially replacing the trucks excuse me, the planes in this trial. planes right now they fly to a

small airport. they get unloaded, get loaded into a package truck then delivered. sometimes it's a flight from, you know, a location where they pick up packages to an airport, flying to other airports and loading into a truck and going to the final destination right now replacing planes but, of course mshgs more uses are being looked at, tested and, of course, u.p.s. is looking at drones in the long term. >> frank, thank you. great to see you this morning. >> thank you frank mentioned beta technologies you can catch that company's ceo on "squawk alley." that's coming up at 11:50 eastern time this morning. joe? >> thanks, becky coming up, the biden administration says it's against the idea of federal vaccine passports. that doesn't mean that we're talking about vaccine verification in the most constructive way frank lu ntz will join us to tak lae me w to makitor patable after brake. rter softwae delivering cleaner power.

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welcome back to "squawk box. the white house is ruling out requiring federal vaccine passports in order to travel during and after the pandemic. greg abbott banned them and ron desantis made same lar move last week joining us to talk about the rhetoric and language aren't vaccine is frank luntz

he has a new op-ed out this morning. he argue that's leaders should stop saying vaccine assport. great to see you, frank. what do you mean by that >> well, i mean that is when people hear the word passport -- only halfof americans have one so for the other half, it's foreign concept to them. if you require a federal passport, people hear as a mandate, they hear that washington is collecting your information. that's not what they want. they don't have a problem with a vaccine verification or a certificate a passport is a formal document. it collects information in a formal way and you got a pig ssignificant percentage of americans that don't want that the concept is supported by 3-1. but not a washington mandate the words you determuse will dee

how your employees hear it look at the difference between the biden supporters and the trump supporters this is a very big deal. the foundation has all of the survey research that we've been doing for the last four months on the website i urge business leaders to go it to we're providing a lexicon of how to communicate the principle of going back to work, back to travel, back to our lives, getting our freedoms back. and one more point i give the biden administration credit for an uncredible rollout where people are getting shots in arms at a historic level. and to the trump administration for providing the vaccines in the first place. for speeding up the process that they cut the bureaucracy but they didn't cut corners. and this is the kind of language that the -- still has the people to hear to give them the

confidence to get the vaccine. the idea that the virus is still dangerous, still impactful, still random, and can make a difference >> frank, let's just talk about the language for a second. when did you that study, and the screen that we just showed showing support for -- i just want to be clear about this. the phrase vaccine verification, you're suggesting the american public is in favor of the phrase vaccine passport they're against. even though i think we're on the same page that there really isn't a difference if you're a business leader thinking about bringing people back to work whether you're going to go back to 50%, 75%, 100%, hybrid, what not, you believe that you can have the support of your staff and team using the phrase verification but not passport >> exactly it's different, andrew, between

a death tax and estate tax it's the difference between school choice and parental choice and education it's the difference between a scholarship and a voucher. it's a difference between to use the company that donald trump once banned, it's tdifference between coke light and diet coke the verification that says to people that they carry it with them it's not mandated, it's voluntary. and it states something they can show others. a passport says the government, washington, collected the information. verification is something that you have to demonstrate voluntarily that you've been vaccinated it's exactly what the american people want. andrew, language in this case matters. and the right language is the difference between getting vaccinated and not getting vaccinated frankly, it's a difference between life and death it really does matter. >> frank, in terms of businesses and business leaders mandating

some kind of verification on the way back to work or potentially verification going into a staud y stadium, getting on a plane, things like that what support will there be for that ultimately? >> ultimately, there is going to be about 15% of the population that's going to be opposed to it because there's going to be about 15% that refuse to get the vaccine. we're going to come very close to herd immunity i think it's going to happen within the next 120 days i don't think it's going to take until september for this to happen but the idea and you just showed -- please, if you can pull up the words. because the words are what the ma matters most here. the idea has significant support nationwide all it is showing people that you're safe, that they're safe and it provides a sense of comfort, a sense of peace of mind and, yes, those words do

matter and last thing, we will educate not indoctrinate this is very important also for the biden administration to hear that if they make it voluntary, the public will follow if they emphasize that 90% of doctors have been vaccinated, they will follow all of these details -- >> frank let me ask you this. i don't know if you saw it axios had a study, rather, a survey, a poll really in your business about hesitation today saying that a majority of those who want to wait and see about the vaccine are more inclined to take the johnson & johnson one dose than they are the pfizer with the number three one coming in as moderna. why do you think that is is that about brand? >> it is about brand but i don't accept that information. i know that the hesitancy among trump people is more for the

johnson & johnson. the hesitancy among the biden people is more for the two vaccines rather than the one it's different for different people we have to personalize and individualize our language we have to think not from what our perspective from the perspective that people that we want vaccinated. and for business leaders, they have to put themselves in the minds and concerns of their employees. >> right >> that's what really matters. not their perspective as the ceo. the perspective of the people come to work and really bust their butts every single day in factories in, offices, because they're at the front line of this and the decisions they make are going to affect all of us for the long term. >> frank, before we let you go we've been talking all morning about jamie dimon's annual letter and he talks about salt, the salt deduction in it he, of course, one of the major leaders in new york and he's not in favor of bringing back salt it was bate of a surprise, i think, for some major leaders in new york who have been

campaigning to bring it back on behalf of their employees. he says it's not a winner in so far as it benefits, you know, the wealthiest among us. he is right about that how does that poll nationally? how does it poll in blue states? >> the public is nervous very concerned that they're about to see a significant tax increase and a lot of people are very frustrated when they see all the spending they know there is going to be a tax increase to pay for it they wonder who is paying for it the biden administration asserts again and again that people under $400,000 are not going to pay for it they assert it's going to the corporations the challenge for the salt deduction is that it it's coming from the states already high tax and the feeling is why should low tax states have to pay and subsidize for high tax states? there is greater competition now between states than there's ever been california is the perfect

example. i read about another business that is leaving the state for texas or for florida or for some place that is a lower tax state because they cannot afford to stay there anymore and s.a.l.t., i think that dimon believes that s.a.l.t. doesn't shift the burden of the high taxes to states that simply don't want their people to pay for it i hope that dimon is right i hope that the situation now stays the way that it s i hope that we pay attention. [ inaudible >> okay. >> frank luntz, always great to see you. appreciate you bringing this news us to important stuff. thank you. becky? >> thanks, andrew. still to come this morning, what you would rather own right now? would it be peloton, zoom, and docusign or maybe facebook, google and microsoft we're guessing your answer might have changed a few tombs over the last year.

dan niles will join us to break down the divergence of two different kinds of growth stocks it's a conversation you don't want to miss "squawk box" wl rhtac ilbeig bk.

welcome back to "squawk box. we're taking a look at the subtle turn to more quality and do you havive stocks as the s&p 500 continues to trade above 4,000. mike joins us now. hi, mike. >> hey, joe. the market is kind of slowed down a little bit and taking a pause to maybe take in the view from the record highs above 4,000. short term indicators suggesting that the market just got a little bit overheated. it is not really causing much net damage yet at all. you take a look at the pattern, especially since october you have trading range, pullback, rush to new high fly and out and style and sector work here you have high quality which is stable. they've been outperforming relative to the last month and then something like spacs which, of course, more of a risk appetite play. its no the filtering in to general sense of credit stress or macro concerns. if it you want to look at the way different grades of fixed income are foremaning, high yield debt, really holding up. trading much p more in line with

equities than it is with treasuries so even though treasuries kind of get a little bit of a bid in here, that sportd the lqd, ib vestment grade corporate grade index. the high jeeld is really very steady it's not so much saying there is a concern about the slowdown in growth or credit risk. it's much more about, look, we might have gone a little far, a little fast in the stock market. maybe time to get our feet back under us, becky. >> mike, thanks a lot. good to see you. >> thanks. let's talk tech. right now and the divergence that we're noticing in the sector there is a new class of tech stocks they're down for 2021. in the meantime, the traditional growth names, microsoft, google, faceboo facebook, they're doing much better alphabet up by 26%, facebook up by 12% and microsoft up by 11%. joining us to help us understand why this is happening and what's ahead for the broader tech sector is dan niles. he's the founder and portfolio

manager of the satori fund dan, maybe it's obvious. some of the stocks that did so well while we were in lockdown are kind of falling by the way side the other technology naumz are going to keep going as we continue to reopen the economy what do you think? >> you're exactly right. if if you look at last year and if you look at the stocks as i call them, microsoft and apple plus the traditional faang names, they were up 55% last year but really led that group are the names that benefitted from us being locked down we had to work from home my kudz ids are at home going to college. i had to buy new macs, ipads, iphones as well as you're buying everything online through amazon amazon and apple ready led that group. if if you look at this year, however, the group instead of being up 55% last year is actually lagging the s&p 500 by 1% or 2%

apple and amazon are down slightly for the year. the laggers from last year, facebook and google that rely on advertising and advertising not advertising if people can't travel anywhere or get on airplanes, et cetera, that dropped a lot. those two are the laggers last year as you right ploly pointed out, they're lagging this year. so i think that's where you want to be in tech in general is in the reopening plays. last year, you wanted to be in the pandemic beneficiaries >> you written recently that tech stocks are overvalued like they've never been overvalued before what metric are you basing that on >> sure. what you're referring to as we put out something on dan niles.com that has a lot of charts around what we're talking about. but if you look at one of my favorite measures which is you take the market capitalization of the entire united states

stock market and you divide it by gdp and look at that ratio, that ratio is at about 1.8 times. that ratio at the peak was 1.4 times. if you look at the 50 year average, 0.8 so you're discounting a lot of recovery this year based on where the multiples are. obviously, interest rates, treasury yields look like they're going up there's raily good chance that fed tapers at the end of this year and those two things are related. where the fed is and the multiples that people will pay for stocks the market pushes to new highs in the near term because of stimulus and then you have i a very large problem as you get to the fed tapering >> as you pointed out before,

dan, it's no the when the fed tapers but when it signals that it's going to taper that you get this, you know, terminal velocity in terms of where the market moves on those things having said all that, though, you do like some of the technology names and maybe that's what we should pull out despite all of these challenges that you see, despite very heavy valuation for some of the stocks, what are the names that you actually like? >> sure. i think you can divide it into three buckets. first bucket is the reopening plays like facebook and google, you know, google has 10% to 15% of the revenues in areas like airlines, travel, leisure. activities that should bounce very hard in the back half of the year the second group is sort of, you know, company specific drivers so ericson, for example. we just had a big spectrum auction. they'll start to build that out. ericson should really benefit from that you look at oracle, they're

starting to become a viable competitor in cloud hosting to amazon and google and microsoft. and, you know, that's got a very low mult tham outperformed this year we think we'll see revenue growth for the first time in three years. the funl group is more of a, you know, take advantage of what happened with the meltdown where we like names like baidu which we tweeted about and viacom for the streaming business and those stocks got cut in half from the highs just a couple months ago and in viacom's case, a couple weeks ago. we think business is very good there. can you make a case that there is close to 50% upside for both of those names that would still put them down 25% from the highs we think they'll do very well actually even if you do go into a rougher back half of the year and at least outperform where you can put shorts against that

to help hedge the risks. are you buying baidu and viacom? >> yeah. we put a tweet out on this we talked about the fact we started starter positions. we've been adding to those over several days we actually bought more yesterday when we thought, you know, credit suisse with the big block trades they had, we think that cleaned out the majority if not all of the, you know, fallout from others. so we actually added to our viacom position yesterday as well so, you know, for us, we like risk versus reward in the sense of valuations being pretty low where you feel great about the businesses and, you know, we feel good about both of those companies. so, yes, we've been adding on the way down even if the market goes down you know, 10% to 20% in the back half of this year. because thaey've been discounte so much already. >> dan, we spent a lot of time this morning talking about the potential for inflation.

it's something that jamie dimon brought up in his annual letter this morning and we kind of batted that around w. a lot of different perspectives on this if there is higher inflation to come, let's say it doesn't come this year or maybe let's say some of the inflation that we're seeing right now turns out to not be transitory, turns out to stick around for longer, what do you think about the technology names with that as a backdrop. if you look at the real high flyers, what you're doing is you're discounting earnings well into the future. you're not buying tesla today because of fact that electric vehicles are 3% of the total market you're buying tesla today because you're looking out 10, 20 years from now and saying why can't electric vehicles be 30% to 50% of the market and so that's where the valuations are coming for names like that or things related to artificial intelligence or, you

know, certain biotech companies, et cetera, where the earnings are really in the future and not today. and that's where the valuations are the highest. you know, our shorts when we have them in tech to hedge, what we focus in on is a lot of the software names where you have names trading at 25 to 50 times revenues most of the names we own in the portfolio are less than 25 times earnings and so for us, those high valuation names are where the most risk is and what's going to come down the hardest. you look at the tech bubble in 2000, that's what happened amazon, i mentioned this before, revenues doubled from 1999 to 2001 the stock went from $106 a shaur share to $6. and so, you know, even the best companies will will get hit in that environment the ones with the highest valuations get hit the hardest >> dan, thank you. it's good to see you today >> thanks, becky

>> by the way, folks, a programming note for you you don't want to miss cnbc's new tech focus show, "tech check. it premiers next monday at 11:00 a.m. eastern time. andrew coming up, when we return, jim cramer's first take on the trading day ahead. take a look at futures though as we're now under an hour until the opening bell we're going to show where you things stand as of now the dow looking like it would open down now 42 points after being in the green earlier nasdaq off a 21 points s&p 500 looking to open off about five points. we'll talk all about that. stay tuned you're watching "squawk box" on cnbc to a world that must keep turning. the world can't stop, so neither can we. because the things we make, help make the world go round. they make it cleaner, healthier, and more connected. it's what we build that keeps things moving forward. so with every turn, we'll keep building a world that works.

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welcome back to cnbc headquarters jim cramer joins me. what did you think of mr. dimon's prognostication? you think it's clear sailing until 2023, jim? do you think policy mistakes could make us hit a couple bumps in the road? >> i think at one point, jamie does say, look, the economy is coming in hot. so we don't know if we need even more stimulus. that's my own interpretation of this i think broadly what he -- this note is about, the two nations it's about helping minorities versus not being strong as a country. and what he really talks about is selfishness the selfishness of the government the selfishness of big business and the rich in trying to help

the poor and i think that was an incredible message it is absolutely certain that he is against a lot of things that go on in the country among the people who are better off including just the notion that trying to get rid of -- trying to bring back the salt exemptioi just pure greed on the part of his neighbor, and i know you guys touched on that, andrew touched on that, i think it is a remarkable note, there are two mentions of george floyd, at what point he calls hideous, this is a very different treatise from what he usually says, this is about how if we don't get it together, china will pass us, even though china has some serious problems of its own. it was a very thoughtful note that everyone who wants to understand what is going on in the country should read. it is a civics lesson that we're all lacking. >> we have democrats that come on all the time and a couple of

them, one from new york, one from new jersey, both say that everything else is a nonstarter with that, without getting rid of salt and they know full well what that would accrue to so how does that work >> yes, so i think what jamie is saying is enough already, enough with the 17,000 lobbyists, enough with the people, from the rich people of new york, to be able to get a break, which of course a lot of his clients in private banking, and enough with the tax breaks for golf courses and private jet, tax breaks for, a number of his clients would love is carried interest, so i mean this is a very anti-self interest know, and very strong, in the sense of it's time to get together as a nation, but we can't do that unless the rich help the poor. and i found it very startling, because that is, you know, coming from a banker, there are many things that aren't necessarily good for his clients, but are great for the country, which then ultimately will rebound to his bank

you know, look, the first 20 pages are how the bank is superior to everybody else and that is just empirical but i enjoyed this note because what it says we have to do better as a country. it's mr. jfk, a mixture of jfk and mlk and i'm in favor of anything that does that. >> i think it is the best letter he has ever written. >> absolutely. >> and you touched on the high points and what is unique about this and who makes it a must-read. i'm curious though what your sense of the inflation risk is, and his warning about that, because as bullish as he is on where the economy may very well be, and even where valuations are, on stocks today, if you do believe that inflation is coming, in a meaningful way, 3, 4%, and then he has hat, he talks about that paul volker moment, how do you position yourself or even think about that as a risk >> i think when he says a the 200 basis points on a saturday night, oh, i remember that, what a nightmare, and i do think

though, what he says is look, if we're so hot, why do we need the next stimulus? and then he talks about how bad we are at infrastructure trying to build the bayonne bridge versus a whole interstate highway system we don't each know how to handle it well. so maybe i think he says what gives what we currently have a shot here, again, that's an interpretation, but i want to go back to what you said, andrew, this is his best, and his best because he basically does lay it out. we got to stop being selfish and i think that the notion of selfishness is not what we talk about enough i mean we talk about i want this and i want this and we should do this, also, i mean look, he's not saying give money to the poor, he's saying how about some accountability about what we give, so it's a stern note about what happens if we don't start doing this right in the context of what the president said, the president's second issue is whether china will pass us and stopping them

but with no sense of how we catch up to china. this note talks about how china can falter and how china can win and how important it is for us to do this it's thoughtful. i don't know how long it took, andrew, i know he has some people helping him but amen, what a great note. >> jim, thanks. wllhank you >>e' see you in a couple of minutes. "squawk box" will be right back. which saved investors over $1.5 billion last year. that's decision tech. only from fidelity. no one likes to choose between safe or sporty. modern or reliable. we want both - we want a hybrid. so do banks. that's why they're going hybrid with ibm. a hybrid cloud approach helps them personalize experiences with watson ai while helping keep data secure. ♪ ♪ ♪ from banking to manufacturing, businesses are going with a smarter hybrid cloud, using the tools, platform and expertise of ibm.

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welcome back, we have been speaking all morning about this brand new shareholder letter from jpo morgan jamie dimon, we called it a must read, dimon says he's bullish for the next few years thanks to the government's response to the pandemic but has concerns about inflation and our next guest has some of the same concerns, that seems to be a theme in terms of how you're thinking about equities, and credit >> absolutely. i think from the stock market standpoint, there are two things to be said that i can go with, valuations are rich, so we wanted to look for opportunity in areas where it's not already mined, and the second is negative real rates here to stay

given the rising inflation and interest rates have not caught up yet, the beneficiary of that actually is probably going to be europe, because europe has been quite in deflation, so this bulk of inflationary impulses that we have got, i think that is actually helpful and frankly, the way to play this, because ultimately, we have to think about how do we make money for our clients, from an investment standpoint, i actually think a contrarian idea is to own utilities in europe, because they are an infrastructure play, in europe, they don't have to be the roads and highways, as much as investing in electricity, and the power grid, and the utilities therefore can participate in that growth, but they also have very high returns in the form of dividend yields, which as investors, we can clip the coupons off. when you take names like indessa in spain and in italy, you can clip coupons of 5 to 9% dividend yields which are fairly secure but that's an opportunity.

>> one of the other things that i was fascinated that you like as a sector is health care relatively unloved >> well, you know, i'm a contrarian so i'm always looking for things that are out of favor or overlooked and i found it intriguing, you know, the cyclical rally has obviously been very long in the tooth since november and i think the valuations and their portion of the market are actually quite rich when you normalize earnings power. on the other hand, nobody thinks of health care as being cyclical because, you know, generally it's not sensitive, except for last year, since the crisis was in the industry, a lot of people postponed visits, they did go for even basic routine diagnostic testing, so i actually think that there's going to be a big recovery from that low base going into '21 and '22 and that's what's priced in the health care stocks, especially the big pharma stocks once again the opportunities

will be overseas not in the u.s. >> rupal, thank you for your perspective, contrarian views but a good contrarian, we appreciate you joining us this morning and commenting on this letter and everything else we will see you all tomorrow and make sure you join us tomorrow, "squawk on the street" begins right now good wednesday morning, welcome to "squawk on the street." i'm carl quintanilla, with jim cramer and david faber futures do indicate a little more grind this morning, after yesterday's action, jamie dimon's annual letter getting much of the attention this morning as he outlines the u.s. economic boom, infrastructure, and a lot more we're going to get to that our road map will begin with that so-called goldilocks moment, the jpmorgan ceo says the boom could last to 2023 and ron goldman sees limited long term damage to the economy. >>