good morning stock futures are higher as ukraine, russia resume cease-fire talks face-to-face this time in istanbul fred smith is stepping aside as ceo of fedex. we look at his legacy. and china's largest covid lockdown in two years is under way as the city of shanghai is beginning phase one. shutting down half the city at a time we will take you live to china it is tuesday, march 29th, 2022. "squawk box" begins right now. good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square.

i'm rebecca quick along with joe kernen and andrew ross sorkin. let's see what is happening at the markets for this hour. there are green arrows across the board. dow futures up 150 s&p up 19. nasdaq up 66 we saw green arrows s yesterday. nasdaq was up 1.3% yesterday you add that to the 2% the nasdaq gained yesterday. if you are looking at where we are from the all-time highs, dow is 5.4% from the all-time high s&p is 5% from the all-time high nasdaq is still in correction territory. it is 11.5% from the all-time high it is making gains back from the low levels we have seen. check out treasury yields. yesterday, we saw wobbling with the yields 10-year came down 2.5% it was down 2.44%. this morning, back up to 2.51% the other story is the 5-year

yield. yesterday and this morning, you can see the 5% yielding higher than the 10% and 30-year bond. crude oil is a huge story yesterday with the shutdowns in shanghai questions about demand being asked and that brought crude oil down by 8% yesterday the low levels of crude with the high levels of the stock market yesterday. it is is flat this morning crypto prices. bitcoin is up $48,000. that is the fuirst time that happened since december 31st in the green for the year. bitcoin is down this morning. time for the update on the war in ukraine in-person talks continuing in

ist istanbul ukrainian officials say they did not open humanitarian corridors for evacuation of civilians yesterday because intelligence suggested that russian forces may plan an attack on the evacuation route the uk defense ministry saying russia has been reorganizing and resetting its forces that wall street journal report of abramovich playing the mediator role and potentially getting poisoned along the way was a surprise >> you go to cease-fire talks. leadership changes at fedex. fred smith will step down june 1st. the ceo of the company he founded. he will be succeeded by the chief operating officer raj subramaniam. he previously served as chief marketing and communications

officer and top executive of fedex express. he joined the board in 2020. shares jumped sharply at the onset of the pandemic. like so many other stocks declined 15% over the past year. >> the stock was up on the news. i wonder if that is because fred smith is staying on as executive chairman keeping him in the fold and knowing the steady succession plan you are not losing fred smith in the deal. >> great american success story. we talked about it so many times. there was no fedex and just a post office. who thinks about the heft and weight of the post office. you do it and it is possible to do it and beat the post office at its own game. >> ecommerce takeoff during the pandemic. it helped the stock. questions about oil prices and that is a trend for transport

it's we will see. the s.e.c. charged three engineers at twilio over insider trading. the charges include several friends and family members regulators between march and may of 2020, the engineers accessed financial information from the data base and through a private chat group and shared withothe s and executed trades. the stock sky rocketed the s.e.c. said the scheme netted the group more than $1 million of profits and the justice department endorsed for large digital platforms from amazon and google from favoring their products over consumers this is the first major time of support for legislation that the biden administration would have in a letter to the senate judiciary committee. it views the rise of the platforms as a threat to open

markets and competition. amazon, google and others make it harder to offer popular ser services they argue it is fair for them to profit from the popularity of their creations. >> i get that argument >> i get that rgument. i always had a very unpopular view i think in certain cases, you want these apps. not just app, but the ecosystem to work together it works best when there is one operator doing it. i get what it means for competition. it's a hard one. we have more coming up tech stocks up 5% from the month of march despite rising interest rates. what is working for that sector? we talk about that next. and the new tax proposals from president biden and the crackdown on big tech can jay clayton. you are watching "squawk box" on

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dairy queen is beefing up the burgers. owned byhathaway it is rolling out burgers as part of the burger line. the flame thrower burger and a bacon two cheese deluxe. it marks the biggest menu expansion in two decades. >> i dogo to the dairy queen by me they don't have food it's an older one. >> i am not opposed to it. >> a great one by me >> i think there's one in summit. >> it was big during the pandemic with the outside window you don't have to go in. >> i haven't been to a dairy queen in quite some time >> i thought it was weird.

burger flavors >> ice cream >> flavored meat >> i thought you meant ice cream. >> dave & buster's sliding in pre-market. the fourth quarter results missed expectations. the ceo said despite continuing headwinds from covid, including vaccine requirements in certain markets, the company saw strong sales in stores in fiscal 2021. when we come back, disney did not waste time after the florida don't say gay bill was signed into law yesterday. we have the details next. programming note for you cnbc's healthy return summit tomorrow ceo of walgreens and johnson & johnson and united health. if you like to attend, you can register at cnbcevents.com

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been signed into law disney says our goal is to repeal this from the legislature or struck down by the courts we remain committed to the organizations working to achieve that. in the meantime, major tech stocks with a comeback over concerns of rising rates and war in ukraine names like that's and gamestop all up significantly the 10-year yield is up sharply. is the tech back or speculation returning? joining us is the chief investment strategist at icapital what is happening? it is true they have gone up in tandem. they came off at the same time prior. maybe everything is relative. >> tech for now is back. i stick with momentum in tech. andrew, a couple of things happening. first of all, if you go back into last month, if you look at

the amount of short its accumulated, there was an immense amount of shorts there is only an amount of time. hedge funds are covering the shorts at the same time, if you look at individual investors, they are stepping in and buying the dip they have been buying the dip all year what names are they buying the ones you mentioned and familiar mega cap tech names what is interesting, what is up from march 14 lows or so, the ark names and mega cap names that is where the retail investor is stepping in and buying that makes sense if you survey the economy, whether an individual or institution or the fed, there is a great deal of economic uncertainty. what do you do when you are uncertain by the economy, but

want to buy the dip? you buy the things you have high conviction in and it is back to tech it is back to grow that is why it has been the catch-up trade i think there is more to it. the nasdaq is still -- >> what do you think is driving the change in sentiment? rates are not moving the other way. >> they're not moving the other way. it is interesting. rates backed up. tech rallied part of it is because you have seen a significant reset in bond valuations and also significant reset in tech stock valuations if you look at the bond are market, the long-term pretreasuy is down 11% year to date we had the worst quarter of returns in the bond market going back to 1986 there has been a lot of hawkishness priced in already. the markets are now assuming the fed will get back to neutral by the end of the year. i think that's probably about

right. that's what the fed is trying to accomplish i'll tell you there's been some whispers about the second derivative of inflation slowing down here. in case in point, oil down 7% on the day yesterday. other factors we look at a lot of hawkish is priced in. you look at tech valuations. if you look at the software names. valuation has been cut in half 20 times evida mega cap is back to 2019 lows. you put those two things together and we are probably in the best 30-day rolling period for seasonal returns. that is what is giving the retail investor the confidence to step in this is a rebound. i would not get too comfortable

staying in the trade you stick with the momentum. >> you would not feel too comfortable staying in the trade. what do you mean >> it is nice we are bouncing off the low levels on these technical factors, but if you take a step back and look at the yield curve and consumer confidence and where the economy is headed, i don't think it is to a particularly strong place i do think if you look at one-year recession probability, they are rising. you don't pencil in recession with unemployment at 7.5%. you think about what is next with unemployment at 3.5%. you look at consumer confidence. a ten-year low real wage growth it is negative right now you put those things together and you can't just get very comfortable with the economic outlook. i do think we have to allow for the probability of recession to go higher. we have to allow for the periodic growth scares that we will likely have throughout the

course >> what point do you sell out of the tech stocks you just bought in the mini rally of sorts >> i think we have a window of opportunity here i do think the next few weeks and maybe next 30 days it ends up being a good seasonal period. also, we are heading into the earnings season. the expectations for earnings have been set lower. the highest number of negative announcements. i think the bar is set lower maybe the earnings season is positive for stocks. i think one place where investors will have conviction about earnings is likely to be in tech. i think the next 30 days could still be a nice time for the tech stocks. what i would do here is i would think about layering in hedges you don't want to leave the market too early you don't want to leave the party too early. by the way -- just quickly -- by the way, the markets don't peak until closer to recession.

hedges through options or maybe do out and think about buying the long, long duration treasury that has been sold off so hard you start inching into hedges incrementally. >> we'll leave it there. interesting view this morning. thank you. i appreciate it. coming up, the latest on the cease-fire talks between russia and ukraine. that's next. later, white house economic adviser brian deese will join us to talk about the tax proposals and including a 20% minimum tax on wealthy households. as we go to break, a look at the s&p 500 winners and losers >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure

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good morning welcome back to "squawk box" here at nasdaq market site in

times square i'm andrew ross sorkin along with rebecca quick and joe kernen green on the screen. dow jones industrial average up 122 points s&p looking to open 17 points higher 18 points higher cease-fire talks between russia and ukraine overnight the ceo for the center of european policy and analysis with johns hopkins university. thanks for joining us. we start with the prospects are for some type of cease-fire, professor. i think just from looking at your notes, you might look at the reason putin engages in this is to buy time to continue with what he has been doing is there any chance something positive can happen? >> unfortunately, the peace talks between ukraine and russia so far haven't produced any

tangible results or breakthroughs as both sides said we have seen russia use these diplomatic negotiations as a way to delay a military and regroup. they have taken very heavy losses in ukraine and some estimates suggest they lost over 15,000 troops and 7 commanding officers these are huge losses in military terms now looking for an opportunity to take time out to regroup militarily these talks could be a smoke screen for that. the reason i say that with skepticism is because we really haven't seen any goodwill on the side of russia with the peace talks. they are increasing the bombardment of ukraine and intensifying what is already a really dire humanitarian situation. >> was there ever a time, professor, where it would be possible to allow russia to get something from this? would zelenskyy ever agree to --

president biden called it a minor incursion. is there such a thing as a minor crimea land grab the eastern regions? zelenskyy says you keep what you have there and we won't enter nato now ukraine is emboldened by the gains they made. i don't know if that is not on the table. if that is not on the table, how doze putin save face >> it is not clear that was on the table for russia this war started in an unprovoked manner when russia amassed 200,000 forces on ukraine's border and said they would not invade then headed directly for the capital with the invasion. the goals were much bigger than retaining the regions they had already taken over and occupied in eastern crimea.

at this point with the destruction across ukraine, not just in the east, you know, i find it interesting we are trying to give mr. putin an offramp. we don't know what that is for him. we need the russians to come to the negotiating table. here is what they need to do so far, they have not done that. we have seen more intensified bombing and indiscriminate shelling it is really in russia's court to say what their off-ramp is rather than look to united states or ukraine to offering opt options. i think president zelenskyy is serious. his people are suffering he is also very clear any compromise will have to be ratified by the parliament and also referendum by the ukrainian people >> and as ukraine has these -- i

don't know if they are surprising resistance where they take back territory that they already lost -- we hear it that maybe they can win this war. is a win possible when putin has these things that we can't even or don't even verbalize that he has in his armament. how would he accept defeat without nuclears or chemical or biological weapons >> i think ukraine winning is possible not just possible, but it has to be our vision. the united states vision and supporting ukraine, obviously. the vision in the european vision they have to win because they are fighting for their country i think we have from the very beginning thought it was a matter of time until they lose u.s. intelligence anticipated a

one-week war and takeover of the capital of kyiv. that hasn n't happened because ukrainians are fighting effectively. the reason i say ukraine can win, but must win because what is happening in ukraine is not just about ukraine it is about a complete rewriting of the post-cold war order we have a military war in europe we could not have imagined this a month ago. this is a new world that we're living in. it has huge implications for the united states. we have to remember what we are fighting for here. it is not just about ukraine. >> it has been more than a half a century. you point out the idea of what you call the liberal international order. economic inter dependence prevent conflicts because it was important to both sides to stay economically connected to the rest of the world.

now we know that is not true in terms of putin's actions here is my question. we know that about russia. that doesn't apply what about china will they say that is the world order? that economic independence is so important? are they ready to throw caution to the wind? >> beijing is looking at this very closely many people have drawn parallels with between china's aspirations and desire to potentially militarily invade and occupy taiwan to russia's occupation of ukraine. china is supporting this war, but not as loudly as some expected, but providing financial lifeline against sanctions as you mentioned russia, without chinese support, would be cut off from the global economy. china is allowing russia a

lifeline they have not cut off the russian access to the chinese foreign surcurrency reserves. a lot is in beijing's support. it is smarter to look at russia as a loser here, frankly in the long-term, if putin accomplishes some quote/unquote, win in ukraine, this is not a pariah state we have seen this in the last couple weeks russia is a good investment. a lot of critical russian oil assets that can be unloaded on the cheap. a lot of russian mineral and chemical resources on the cheap. beyond that, it is hard to see growing alliance will benefit china. at the end of the day, china's economic prosperity and growth is not tied to russia. it is tied to the united states

and tied to the west certainly how the war ends and how the war proceeds in ukraine will determine a lot of chinese actions in the medium term >> what is the best-case scenario and the worst-case scenario uneasy truce for years or shooting war for months andunfos war can go on for months we see these conflicts emerge and before you know it, 20 years have gone by we have seen that with the united states in the middle east and other countries as well. russia involved in long wars in countries. chechnya in the 1990s. that is still a problematic area for many reasons the worst-case scenario is the bloody stalemate for a very long time where neither side has a

decisive win, but going back and forth with huge losses i think the question mark in that scenario is how long can russia hang on economically? the sanctions are starting to hurt starting to effect the ability to maintain the expensive invasion i think now we're in the game of chicken, if you will, where the russians are seeing how long the military regime will take. the west is waiting to see if russia runs out of money or badly hit by sanctions they change their minds that's where with e are today. the diplomatic solution doesn't seem to be on the table right now. i think president biden was right in the speech in poland. we have to see ourselves for the long struggle. i think this is where we are. >> speaking of poland. they are having enough trouble with ukraine does that give us some consolation that maybe it isn't

just a domino thing where he tries to reconstitute the entire soviet union if you can't get ukraine, he has bitten off more than he can chew >> that is the point our actions in ukraine now, meaning european actions and nato and united states actions will determine what mr. putin does next. we have to be clear about that we have seen that over and over again. the way russian plans develop and usually not with a strategic intention at the end or tactics thought out. they are waiting to see he what the west is going to do or the united states going to do. then recalibrate responses we are seeing russia taking losses greater than anticipated. if we continue to keep that up and ukraine makes gains and counter offensives, then some nuclear strike or some attack on nato member state is looking

more and more ununlikely if russia is allowed to proceed, we are facing a very, very real threat to countries like poland and the baltic states. >> professor, thank you. johns hopkins. center for european policy analysis thank you. when we come back, lockdown in shanghai. the biggest shutdown in two years. eunice yoon will have a special report next. later, don't miss the interview with senator elizabeth warren here to talk about the billionaire tax. you can watch or listen to us live any time on the cnbc app.

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the nfl is adjusting the rooney rule. enhancing opportunities for women of color in the league all 32 teams must employ a female or member of ethnic or racial minority to serve as assistant coach. they will receive a one-year contract and work with the head coach and offensive staff to gain experience. in recent years, coaches had backgrounds running the offense.

if you wonder why. let's get a check on the markets. you will see the equity futures sharply higher dow up 163 points. s&p up 19 points the nasdaq is up by 51 points. this comes after gains for the markets yesterday, but the nasdaq was the big inwinner up 1.3%. crude oil prices down significantly yesterday. the lower crude prices with the highest levels on the market yesterday. wti is up by 1%. $107.13 a barrel. shanghai remains on lockdown and mass testing implemented as officials try to control the growing covid outbreak eunice yoon is skrojoining us f beijing. good morning >> reporter: good morning, andrew shanghai is tightening control on day two of the lockdown today, the officials announced

more explicit rules for residents in the lockdown east side of the city saying people cannot leave homes unless they go for a covid test. that means no walking in hallways, no throwing out the trash, you cannot walk your dog. the clamp down is meant to minimize the impact on the economy. ports and airports and stock exchange are open because of the shanghai economic role shippers and manufacturers and logistics companies complaining they are having a lot of problems in the supply chain the warehouses are shut because of the lack of staff truckers are unavailable cross border supply with the disinfection and increase of health checks is raising costs mersk is down 30%. shanghai is trying to offset the

problem rolling out relief for companies today. $22 billion will be given to tax breaks for companies measures to cut costs are unveiled pushing online food delivery companies to cut fees. subsidies are offered for retailers and frontline workers to ensure staff can get regular covid tests and afford them. chinese state media has been playing down this disruption quoting a local economist saying gdp will be cut .50% in q1 and q2 overall, and for the overall economy, the impact, they say will be minimal. however, evidence that the officials are starting to rethink some of the covid protocols. zero protocols becky, this might be of special interest to you. shanghai updated the guidance

for its covid strategy they include this line the city would support the import of covid vaccines and therapeutic drugs. this is the first time the idea of importing vaccines is actually put in mainland chinese government guidance. this comes when china has started to experiment and using pfizer covid pill in hard hit areas. other parts of china they have started to roll it out. you are starting to see, perhaps, the reality on the ground because of the spread starting to push the authorities to do something that they haven't done before. of course, that is embracing the idea of using a foreign therapeutic. >> eunice, the wording on that is that the shanghai government making a plea to the beijing government or national government on this level is it putting forth an idea they are in favor or is this a signal

this will happen imminently? >> reporter: it is only in the shanghai dguidance they have been touting the approach as a possible testing ground for the rest of china so, if you couple the state media rhetoric on shanghai and the new guidance, you are starting to see the expe experimentation which could lead to a slight opening of the door for the therapeutics and vaccines from other countries to come to china. >> eunice, how much of this is a function of pressure from the people >> reporter: a lot a lot. so much complaining online and people on the ground so much frustration. a lot of jokes about -- a lot of ways people have been describing

those who continue to tout zero covid that i should not repeat on national television there is definitely a lot of frustration with people. >> people on the ground driving the policy what what is moving the needle here >> reporter: i think a lot of it is the complaints that authorities are seeing from people from regular people. one of the hard hit areas, there was a lot of anger about the way the local community and the community level officials were giving out food. you know, you make the order and say everyone has to stay home. now the government and the community officials are all going to bring you food as you stay home. there is not enough food there are not enough vegetables. people are starving. they get angry and just in the past couple of days, a lot of

those officials have lost jobs and apologizing. you are seeing that. there are other reports of people who -- a lot of reports of people turned down at hospitals because they needed their cancer treatment or they have some other blood transfusion they needed. all of that is spilling out on social media and it is is raisig the level of frustration among people >> eunice yoon in beijing. thank you. when we come back on "squawk box. the white house releasing the latest budget proposal yesterday. taking a target on corporate buybacks we break it all down next with former s.e.c. chairman jay clayton. "squawk box" is coming back right after this

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newoffs ofanic wusition buying about lhc group for $5.4 billion in cash it will become part of united health opum. >> preventing executives from selling stock after a buy back program for three years. joining us right now to talk about this is sec chairman and former cnbc contributor john

clayton. we've been togging about what this means and why and i guess the implication is they're buying these stock buy backs >> the combination of a stock buy back at the same time that executives are selling, that is an issue that needs to be addressed. but let's look at buy backs first. buy backs are an extremely important part of capital allocation across our economy. restricting buy backs beyond making sure they comply with any manipulation rules and they're undertaken at a time and nimble

capital in america is what has driven our response to covid it is what has drivelen growth over time in combination with nimble labor, and tech, education, health care, it's made america what it is, restricting that reallocation of capital, you need to think long and hard about that. so let's just be straightforward. i'm a big believer in facilitating companies if you're an investor that's what you want. if you're an individual market investor who might want to reallocate capital having a buy back program in place is a great way to do it insider sales, let's talk about insider sales. we have and i think for very good reason allocated

compensation heavily for equity. we wanted to align our insiders with long-term stock holders at some point individuals should have some opportunity to diversify away from that i hope that over time fred was able to take some of his equity and diversify as any individual. >> look, i think that's part of the problem here they're talking about lock ups for three years after a stock buy back which seems like an extraordinarily long period of time. i get the idea, but you don't want the insiders who have decided the stock is at a good price and selling their own shares at the same time. you know, that seems problematic to me, the idea of telling them they can't sell any shares for three years after a buy back seems ridiculous, too. >> and the sec is doing a good

job, but i see no problem. let's say here in the next earnings season an executive says you know what, out in july after the next earnings maybe out in august, i'm going to start selling shares pursuant to a program that's -- >> but, jay, you've seen the research the research is crystal clear. it's empirical the numbers are obvious. the waiting towards sales during a buy back program by senior executives in corporate america is -- it's not like a statistical anomaly, it's like statistically obvious there's a problem. >> andrew, that's driven by a number of factors. companies can't put buy back programs in place until they're in a window period, okay very good corporate hygiene. you wait until you announce

earnings and executives can't sell unless you're in a window period so of course authorize going to be coincidence between putting in place a buy back program and executive sales. they're both done in windo periods which depending on the company over the time you announce earnings until you close it could be a few weeks, could be a month but you're basically shrinking -- >> i'm just suggesting to you if you look at the window periods most studies will show it's something on the order of five times the volume of sales. so the question is do you want to create some sis incentive or incentive so that shows shareholders are not

self-dealing and pushing out their investment for song longer period of time three years may be too long. i'm not suggesting three years is the magic number, but there has to be i would argue potentially different number than where we are today. >> what about a decision i make in april or may that i'm going to sell shares in august or september or later long before a buy back program may be decided or put in place and that decision has been already made. >> you can put it in place but if, for example, the buy bac program doesn't go the way you think even though you don't

really know what's going to happen or not, some of these guys then take it off the table. we don't force people to keep buying or keep selling, do we? >> no, i think that that is a very good point, and this is one of the things the sec is rightfully looking at. what should the rules around the program be and when can you restart them? if you have a long-term strategy for diversifying that should be something, and look, from a government's point of view this is something that board of directors should be watching closely. >> it seems it's a particular problem for companies that use a lot of stock for compensation for numbers for their employees whether that's a big tech company, whether it's a startup tech company, whether it's a financial company. look, they're issuing a lot of shares so they have to buy back those shares if they don't want the flow to get unreasonable and

unmanageable >> exactly but do you believe there's any benefit to incentivizing effectively dividends or buy backs, as a way of allocating capital throughout the system to the extent we're trying to get it into other places like rnd and other opportunities rather than back into the stock, which is what happens. and there is a difference between a buy back and a dividend. >> well, of course i'm a believer that a special large dividend or periodic dividends set as part of investing and attracting investors. you know, it work. but in terms of spels dividends versus a stock buy back the efficiency from a tax perspective, for tax paying investors is better. >> sure. but that's because we've created a tax incentive, if you will, for buy backs and create tax

disincentives for dividends. >> i don't think repeal of tax dividends is on the table. >> you made the point you want to use stock for compensation because you want the investors aligned with that. if you're doing a dividend that's not going to necessarily help you you can't issue stock for compensation i mean it's a complicated matter i think you're right in saying this is blunt instrument way of trying to address it i guess the question is what are the unintended consequences from using that blunt instrument? >> okay. let me be clear. i think that buy backs are incredibly efficient and to andrew's point the reallocation of capital through buybacks, i would argue is more efficient than bluntry returning cash to all shareholders there's a much greater likelihood the shareholder that cashes out by selling into the buyback has another option by selling that cash.

>> one is a forced to redeploy mechanism. one is a not forced to redeploy mechanism. >> i think it hurts average savers how you're looking at this long-term. >> there's a lot of people who get paid in stock. >> sure, but i think that's a small -- >> if you pay your executives in stock, you are diluting one way to remedy that dilution is to buy back shares. so it's part of the ecosystem

aligning interests through equity compensation. >> i think we all agree that you don't want executives selling at the same time they are ordering buy backs from the company i think we all agree with that there may be a different way to solve for that, but it is an interesting conversation, and jay, we'd love to have you back to talk more about it. thanks for being with us today it is just after 7:00 on the east coast and we have a big line up still to come in the next two hours we'll be hearing from galaxy digital, senator pat toomey and eliz elizabeth warren >> futures ahead of the market 2 1/2 hours before we open up will open higher. s&p 500 up about 18 points nasdaq up about close to 15

points on today's agenda we're going to get a look at march consumer confidence this will be the first read how people feel that second leg of inflation following russia's invasion of ukraine. also a take loot a the price of oil this morning it got crushed yesterday on china's new covid lockdown and take a look at crypto this morning. 47,072 >> president biden making his case for his nearly $6 billion budget >> senate minority leader mitch mcconnell took aim at the

elimination of tax breaks for the oil and gas industries in particular and he said the white house should be encouraging production not penalizing it >> president biden would rather grind his ideological ax and escalate his holy war on made in america fossil fuels this -- this is the failure of an administration completely disconnected from reality. >> republicans also dismissed the president's increase in defense spending as puny and funding for other domestic programs as waistful the president's budget calls for a #.8% boost in defense spending, education spending would go up by 20.9% the sva would get 20% more

yesterday president biden said keeping americans safe and reducing the deficit were two of his biggest priorities >> america is more just when it is more secure we can restore fiscal responsibility and safeguard our security at home and abroad. >> but even some democrats, guys, acknowledged yesterday getting any of this passed will be an uphill battle. back over to you >> that's right. and i wonder about politics all the time and there's times when we're going to labor over the specifics of this and that's th fifth, you know, arcane proposal that never had a chance we all need to --

>> but it's the proposal you think doesn't have a chance and all of a sudden there's some deal that cuts -- it gets cut. >> and it changes the conversation i think part of it is where the conversation moves because it's a journey and i think conversations we were having a decade ago were things people thought were completely off the table and are now totally on the table so i think over time you will see that conversation shift. >> i appreciate the conversation because i like talking about why this is a good idea to have stock buy backs, why you shouldn't be stopping that if you think about the flow of capital. i think it's a reminder why our system works >> we need to decide if the 16th amendment is real or not we need to decide if they said you're able to tax income. i don't know even know if this holds up in the courts if you try to do -- why don't we do the court test first before we just

do back flips -- >> because it's the process and the way it goes, but i think it's valid to have these conversations to understand why our system works >> why our system works? >> yeah. why it does work i think there are a lot of things you don't want to mess with >> i don't know how. i ges there's a way. >> i think there's a valid conversation to be had whether executives are selling into the buy backs. >> i don't immediately assume all ceos are robber barons -- >> the question is whether if you have the option to effectively boost your shares whether you should be allowed to sell into that i think we all would say you should not be able to do that.

the question is you have to push it out to some degree. >> there's lots of things you have to do i think what happened you get into the details and everyone says i can't do anything and nothing happens and then we sit here >> but i think the original intent of this law, the idea to say you can't sell for three years is just to make sure you shutdown stock buy backs forever and tell executives you're -- >> i think we're going to talk to brian deese about this in a moment none of this prevents people from pursuing buybacks at all. >> it does if your entire compensation is in stock and you can't sell it. >> it doesn't prevent it at all. >> no way that a stock buyback would have an impact for three years. it's a punitive issues just the

fact they did for three years is punitive to make it so you'd never want to do a stock buy back there's no way a stock buy back lasts a year even or three years. >> the pi back program is typically announced and lasts auv times a year to begin with so you don't want people selling during that -- first of all, it's not like rolling so you can never sell your stock. you get a traunch of stock, in year one 2022, you can sell your stock in 2025. >> there's a stock buyback for apple that is constantly -- >> i understand that whatever compensation he has in that year he gets pushed out for three yeez it's not that he never gets paid, it's the same way your restrictive stock gets available to you every three years >> i was going to say you're

already waiting for the vesting period >> if you're a long-term investor and you believe that's the right decide then you wait beyond that. you wait beyond. >> three years doesn't make sense to me. >> that's the choice you make on behalf of the shareholder rather than for yourself. maybe it's two years, maybe it's a year >> maybe it's three months >> well, i think you're not going to be able to make it work for thoree months >> we have a zeitgeist in this country and senator elizabeth warren is one who thinks all buybacks, even if a ceo doesn't have a stock all buybacks are boosting the stock she said that before i don't think that's why companies do buybacks all the time to goose the stock. but that is going to be the rationale, and immediately the knee jerk reaction from the entire progressive wing of the party, then i guess every time you issue stock it's some morally wonderful thing.

it makes no sense. the company needs toby able to manage its balance sheet in the way it sees fit. if they have enough work force they don't just hire people because they don't need them if they're already deployed enough you don't just say do more, do more. >> nobody is preventing you from buying back the shares they're taxing it on 1%. >> the idea it's always goosing the shares >> thats why carl icon and every activist investor in america goes to companies and says please buy back. >> there's somebody on twitter who pout out the idea if companies couldn't -- it's complicated stuff and that's why ware arguing >> by the way, when it's the right decision for shareholders,

companies should absolutely do it no one is saying don't do it not in the same way -- that's one of the insider trading component. so you just have to figure out the right timing i said this yesterday, three years may be too long. maybe it's three years, maybe one year i don't think it's three months because i don't think you make it work for three months one man's view coming up, galaxy digital mike novogratz on bitcoin. ♪ ♪ connecting to opportunity is just part of the hustle. ♪ ♪ opportunity is using data to create a competitive advantage.

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e*trade now from morgan stanley. crypto currencies having a bounce back this week. bitcoin back over 47,000 joining us now is galaxy digital founder and ceo. mike, good to see you this morning. and to say bitcoin bounced off 33,000 or 34,000 a couple of times since the war began we've seen that happen i'd hesitate to say that's -- is that long-term support what is long-term? where are we right now

>> early in the year i thought we would be 30,000, 50,000 but i also thought stocks would be a little softer than they are, and i think maybe what i got wrong with all these selling and fixed income that money has got to go somewhere. we certainly see increased adoption in crypto janet yellin pivoted and was much more friendly for crypto than she'd ever been that's basically, you know, politicians listening to their constituents and getting to the president. so there was no magic there. there was i'm getting calls from senator after senator, hey, can you help educate, can you help me figure this out, so i think people have realized crypto is really popular, and i think you're going to see the democrats take a softer stance it was very interesting in that presidential decree they had been running for the crypto policy until then, so that's a

positive but mostly we're just seeing adoption sovereign wealth funds getting involved pension funds getting involved and so, you know, we're still early in this adoption cycle and so i'm much more optimistic than i was even, you know, six, seven weeks ago. >> and when do you expect a spot etf? when do you expect some really clear regulatory action? when will a lot of that overhang be lifted you think? are we within a year of that >> i think we're within a year because i think genzler has come in and he really wants to regulate crypto. he's been doing it by enforcement, but at one point he's an intellectually honest guy. at one point you can't keep postponing forever the process has been slow for companies trying to go through it much slower than normal but it has to have an end.

so i'm hoping within the year i'm not widely optimistic anything happens anytime soon. you know, there's going to be congressional gridlockin terms of-on congress is going to get any one of the agencies a road map on who gets to regulate. i think we're kind of in this stasis position, but it does feel like things are moving in the right direction albeit it slowly >> shifting gears a little, mike, how would you get at some of the unrealized gains that a lot of the really wealthy in this country have? and the outsized gains have gotten larger and there's a lot of reasons, i ges, with the pandemic there's the fed, obviously people who have assets, assets appreciate. and do you have that constitutionally the government only has the ability to tax income, or do you think it has the ability to call unrealized capital gains income >> i guess let's start with practically. it's just a crazy idea of

practically. i think stocks i've owned from fortress to galaxy have had wild volatility there were times you declared by income at the end of the year and i had to pay 20% on that and i'd be bankrupt forsix months because the stock fell so much you know, it makes no sense. people don't have -- the difference between liquidity and paper wealth is at times gigantic and so i think it's just practically, you know, an impossible idea. like, two things there are so many ways that people can avoid taxes that they need to close the loopholes to start with from step up basis tool carried interest. there's so many low hanging fruit but no one wants to do the hard work because it'll piss off one or another constituency. you look at the benefits real estate gets versus other industries in depreciating assets so i kind of think we should step back and say how do we

raise revenue if that's important and do it in a fair way and, you know, picking on the 700 richest americans and say you've got to pay a portion of your unrealized capital gains doesn't seem to make sense >> and i know you want to help out, do your part. washington's record tax wind fall, we did snap back economy is roaring, a lot of reasons why tax receipts are going up so much can we spend it better you do all the things you want to do. do we definitely need to raise more revenue from people that have done really well? is that the way the do it? is there the expense side of things you look at, nondiscretionary, for example? >> one of the realities with the advent of trump and we had our first populous president in a

long time. now we have a populous left president in biden if the economy is roaring which it is you can't even find a hotel room in new york, you're supposed to shrink your deficit immensely, not increase spending i think democrats and republicans should think where we spend the money, roughly 20% of gdp should get collected over time and there's a fair debate should be spend it on social services versus defense, versus tax break for -- >> going to spend more on defense than -- that's what tends to happen. now we're going to spend more than we've ever spent. >> we are in a populous era and it started in 2015 really with brexit, and it'll be interesting how we navigate it i think the deficit should

smaller and continue to shrink and i think the budget should be smaller. it's just a lot easier to say spend more >> do you compartmentalize the possibility of things getting much worse between russia and the west do you just assume it's not going to happen? >> listen, i think the market is giving a less and less probability things are going to go haywire >> why >> i don't think if it's just fatigue or ukraine saying it's got the upper hand and russia is going to have to negativeigate some space saving victory and try to lick their wounds i think there's still a lot of tail risk there because, you know, putin is a mercurial uy, and he's a guy who's got a big

ego. and so -- but it's interesting how the market's kind of just moved on i do also think the sanctions are going to have a much bigger impact on our economies, right inputs to stuff that makes electric cars, inputs to our food, potential famine in africa, you know, come the fall. >> what's china trying to do do you think china looks at what's happening and horrified or look at it and say, you know, people are -- if we're changing the new world order and a cup of civilians, you know, die that's not our problem, what do you think they really think? >> i think in economic terms they just thought, oh, wow, look what happened to russia when sanctions got put on their whole game falls apart because they rely on so many thing. if china gets cut off from the global economy, they're in bad,

bad way. the u.s. is in a good position we grow enough food to feed our people we have enough energy to populate our -- to run our economy. we're a really self-sustaining place. we've got big oceans on each side china needs a lot of stuff and so i think this has got them very nervous i think this entire episode ha probably put the chance of them doing something in taiwan way down not way up. and so my guess is they're looking at russia and saying at one point our people are going to say why are we doing this, right? and so there's this balance between being tough and being china focused but also not losing -- losing the support of, you know, all your young people who are watching this play out on social media. >> all right, mike novogratz, wide ranging discussion, very

muted, almost normal outfit today. okay, coming up in just a minute brian deese from the white house joining us to break down president biden's new vedget proposals as well as the mo to restrict buybacks. "squawk box" coming right back after this

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coming up, an industry pioneer stepping aside as fedex founder fred smith calls it quits. don't worry he's still sticking around as executive chairman we've got more details after this break and later oil prices dropping this morning as ukraine and russia peace talks begin in turkey we'll speak to goldman's head of commodity research jeff curry about where oil prices may be headed, maybe some other commodities as well. wti this morning up about 1.07 per barrel "squawk box" will be right back. to go beyond ordinary etfs. and strengthen client confidence in you.

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♪♪ flexshares etfs are built with advanced modeling. to fill portfolio gaps and target specific goals. strengthening client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. welcome back to "squawk box. this morning big news in the corporate world today. fedex saying its ceo and founder fred smith stepping down as ceo june 1st, and its president chief operating officer will take the reins >> good morning to you, andrew

if you look at fedex shares you've seen they've had major improvements and fred smith took this company and listed it on the nasdaq he first conceived fedex while a student at yale. he then went onto serve in the marines. he actually launched the company in 1971 and began operations in memphis in 1973. he's widely viewed as an innovator of time definite delivery when it absolutely positively has to be there overnight. >> they sold you this good, that time guaranteed. that innovation i think was one of the enablers of the last three years worth of the supply chain efficiency >> i spoke to one of the ceos brad jacobs. he really sums up the consensus opinion. he says fred smith has been the preeminent visionary in the

transportation industry. raj served 30 years of the company and analysts investors see him as a leader that may be open to some new ideas it's now trading at a conglomerate discount. its ground unit is operated primarily by contractors and also a spin-off of the fright division that will be one of the largest truckers in the u.s. back over to you brian deese is going to join us to break down president biden's new budget proposals and later don't miss our interview with senator elizabeth warren about taxing the countries richest. stay tuned squawk coming right back

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welcome back to "squawk box. president biden revealing his new budget proposal for the upcoming year. joining us right now is the national economic council director good morning to you. we've been having a raging debate on this set for the last hour and a half and perhaps all of yesterday about the buyback program and the billionaires tax. i want to start with the buyback program and get into the tax issue on the billionaire side. but can you make your case if you could so we just understand it why a three-year window, which is what i think the white

house is pressing makes sense and whether it creates -- and whether it also creates its own unintended consequences for executives and their own incentives >> sure, well, thanks for having me on. our current system overencourages buybacks. there are tax dividends. our proposal is design today try to smooth out those problems and try to have more efficient allocation of capital. so first equalize the tax treatment of dividends and buy backs, and secondly say if the company is going to engage in buybacks, then executives should have to hold onto the stocks so their interests are aligned with at least a punitive rational for the buyback program. we would do that by saying on the back end of buybacks

executives would have to hold onto a stock for a period of time as you'd say we'd start with three years. but we think that will produce a better allocation of capital and help to address what we've seen over the course of time which is less productive investment, less rnd and frankly worst performance for shareholders we've seen recent research that shows companies that engage in more frequent buy backs actually produce lower returns for shareholders across time so i think these are sensible proposal we're not suggesting you should ban buy backs or restrict them outright but by equal liesing the treatment to other forms of distributions we'll get better allocation across the capital markets. >> what do you say to investors, to business leaders who say, look, i'm trying to allocate capital as best i can. if i don't see a better opportunity in rnd or hiring people or making an acquisition

or a lot of these big companies difficult given anti-trust laws in this country. that my only option or my best option is to buy back my own shares >> you know, companies and innovators are constantly looking for in vaurts to grow and innovate and we should be encouraging that in this country. what i hear from ceos and business leaders is that they're eager to try to find ways to put their capital to work, and there's no reason why the tax system or the structure of executive compensation should discourage them from doing so? so this is really about trying to get at the elements of our system that have led to this massive run up in buy backs. certainly this distribution in capital -- >> in terms of the time line, though, this three-year period, is it too long

we were debating that earlier. i would make the argument, by the way, three years may be too long maybe it's a year, maybe six months, maybe a year and a half. hard to see necessarily how it shifts the priority in term of clearly you don't want executives selling into a buy back because that effectively is propping up the shares in realtime the question is how much do you push that off? >> well, you don't want executives selling into a buy back, and you don't want buy backs being motivated by excessive short-term interests that don't align with the long-term profitability of the company or long-term productive investments. and so that's the core question. you know, three years aligns with many typical investing periods that have evolved in the private sector so certainly it's the kind of thing we would be open to looking at and getting into the details on the goal here is to align the interests and motivation with a

buyback with the long-term interests of shareholders. so the idea that a buy back is designed to try to increase the value of the company and be aligned with long-term interests is not radical at all and seems more common sense. >> we had jay clayton on earlier, the former head of the sec where he made a lot of important points you've got investors waiting three years, and he made the point the reason they moved to paying executives in stock instead of in cash is we wanted to align them with shareholder rights to begin with so if their compensation has been moved to stock and then you tell them they have a st stock buyback, excuse the entire situation. there are a lot of companies that had rolling stock buybacks and also made the point, look,

the reason you see executive selling near times when they're also buying back stocks is companies can only buy back stocks during certain periods. after we've heard from the earnings and other things that happen same thing with executives you can't back out of the plan and the plan has got to be month after the stock buyback. it seem like a reasonable way to do it without all these other unintended consequences and doing some of the very things we're talking about which was to align executives interests with the shareholders >> well, i think you have to unpack a cup of different things there's been different approaches to that but the issue of buybacks is separable from that, and we've seen a dramatic run up in the use of buybacks as a tool, and i think that can be connect today the fact the system right now overencourages

buybacks including the tax advantage. so the policy trying to realign and reduce that excessive incentive for buybacks and try to reduce the use of that tool as a default as compared to other tools, we -- it's not anywhere written that you have rolling buyback programs or otherwise. some of that is because there's this affirmative sentence for companies to do that if we can equalize those incentive, create a more level playing field for other types of investment or dividends or other distributions, then you're going to have a situation where buybacks will likely be less frequent, and then the question of how that aligns with long-term incentive packages for executives could be draesed. i think in the main the idea you can use buybacks as a way to create opportunities to sell into those and you have an incentive to do buybacks whether or not that's in the long-term interest of your company it's not serving anybody right now and serving the economy.

>> we talked about something else earlier, too, and that is just exactly what we want to do as a country in terms of spending, private sector spending, government spending. we're going to have record tax receipts you can tie that to inflation, whatever you want to tie it to do we need to raise more revenue or redeploy the way we spend it at this point whether it's nondiscretionary or make sure we're spending it effectively? i understand there's a lot of pressure from the progressive wing to get at a lot of the billionaire money, but is that punitive, or is it -- is it necessary that we do that to fund the government's needs? it seems like we have plenty and should be looking at the expense side of things and i wonder if you think we should be spending another i don't know whatever the latest build back better is going to look like. it doesn't look like what it had

looked like. were you favor of adding that to what we already spent the last couple of years and that you actually can bring down the deficit by spending more you've heard that argument by speaker pelosi >> there's a lot of questions in there so let me try to unpack them i think to your first question the answer is both i think we need to be thoughtful about the expenditure and revenue side of our budget what you see in the budget we released yesterday is deficits coming down by $1.3 trillion this year and that's a function of both. that's a function of rolling off some of the emergency spending programs >> as well as pandemic spending, and that's another -- i don't know if we should be demagoguing bringing the deficit down. we're still increasing everything >> that wasn't a guaranteed thing. part of why we've seen that progress is the really strong economic growth which both allows us to roll-off pandemic

spending but also increases tax revenue. to our your point about billionaires the motivation is to create this tax system that doesn't have these sort of glaring loopholes that allows people to go and earn income for long periods of time and potentially forever without that ever being taxed that actually produces inefficient outcomes >> why go after unrealized gains talk about things that seem to be glaring we just had a guest talk about it the estate tax, carried interest, the issues around the way real estate is taxed in america. there are things glaring across the board that seem like if you could tighten those things up, for example, you could work against people using shares -- taking loans against shares and perhaps taxing the interest and other things, that there are

ways to do this that may not actually create a court situation about whether it's constitutional or unconstitutional to tax unrealized gains, which is something that's never been done before >> i think this is a sensible approach in the direction you're talking about. the issue of unrealized gains never going taxed for imperpetuity is, this proposal can be thought of as basically a prepayment regime associated with that so that people are paying a minimum amount on their income across time, and that actually will result in more efficient allocation of capital because instead of people locking in thoseincome games - >> in terms of efficiency of capital it's going to require -- and i'm not defending it, but a lot of people are going to be selling their shares to pay a lot of these taxes

that's how it's going to have to work, right? >> well, the -- by taking away the lock in effect whereby people can avoid paying income taxes forever, then it will create behavior where people will redeploy that capital for more productive uses it might be that people give to charity more early or more often or they deply that capital into new and other investments. so we think that's actually an improvement and efficiency over the current situation for sure >> brian deese, we want to thank you from the white house this morning. stay warm. i can see the heat emanating, so we'll see you soon thanks again quick check on the markets futures right now indicated nicely higher, 170 points on the dow. the s&p up 23. nasdaq indicated up about 83 points nielsen holdings is being acquired by a consortium of

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check on price of crude at this hour following yesterday's slide and see it's resuming today. closing in on 100 from the other side brent and u.s. both long, prices falling after russian top negotiator called peace talks with ukraine constructive. joining us now jeff curry,

goldman sachs head of commodity and global research. i guess it's both. you've got supply on one side, demand on the other. and they're sort of offsetting each other, and whatever becomes more front and center in traders minds seems to dictate where the price goes >> absolutely. you know, for rightly or wrongly i think the big sell-off we saw yesterday was driven by covid concerns particularly the lockdouk in shanghai i think to your point you've got the offset what's going on in russia i think the key point here is covid demand disruptions are transient while the supply disruptions are far more persistent why? because you're not investing in russian investment capacity which is going to impact supply down the road. the net of this is still very bullish. we stick to a near term target of 120 and end of year target of

135. i think one of the key points here is it's not so much about the supply and demand of the commodity itself it's about the supply and tdemad of the capital used to create this commodity and even the commodity itself, liquidity is collapsing at a time it really needs this liquidity. >> since the -- the incremental wild card is russian oil and i don't know how many barrels out of 10 or is it one out of ten, so it is important what's happened in the last three months to a month? initially it was still flowing to some extent and maybe you had to sell it at a discount, but then we worry about things taking hold over time. how much has it depleted at this point what russia is supplying to the world where are we how far down is it, and what is

that likely to look like a week from now, a month from now, three months from now? >> the bottom line we put the disruption around 1.4, 1.5 billion per day. call it modest all the pipelines are flow in fact you have more oil going down the pipelines, more gas going down the pipelines today than you did before. the disruption is in the black sea because that's where the ships go out that's where the problem is. now, there's two disruptions there are ones associated with russia specifically which is where that 1.4 million barrels per day comes from, but then there's the more recent disruption there in the caspian due to the mishap on the pipes that's potentially another billion dollars per day but it's likely to be temporary i think the key one to watch here is what's happening to loadings in the black sea, which

by the way they popped up yesterday morning. i'm going to read anything into it but overall call it a 1.5% disruption to global supply. which that's meaningful. >> other supply constraints for russia whether spare parts or just western companies assisting in the development of all the rich natural resources that russia had, how long before that starts to -- i mean that's a matter of years, i would think but if you don't have any russian -- if you don't have any western help in developing all these reserves and you can't get parts for pipelines or to upgrade the old producing wells, all that's eventually -- how much more could come out of what russia produces? >> that's the long-term risk here that's the underinvestment piece. the core of our super cycle thesis in commodities is this whole idea of revenge of the old

commodity, under investment in the entire old economy is creating supply constraints to create this long multiyear cumody super cycle what's happening in russia with technology pulling out, capital pulling out, it only -- it exaggerates this story and makes it much more of a supply disruption over a 6 to 2 month horizon than what was previously invented they're looking at it end of year supply disruption, you know, it could be more than 2 million barrels per day. remember russia is the second largest commodity producer in the world. it's oil, metals, grains the one we'd be focused on the most is what's happening in the grains markets >> why isn't that a negative for global growth because you're not

going to have these things that you need, but also for -- it just sounds like a recipe for stagflation, which is the worst thing -- the combination of those two things is not good for financial assets or anything else >> well, depends on where you live in the world. you take a place like, you know, north america or even the western hemisphere, it's long everything disrupted you look at the u.s. other than it being short just a modest amount of oil, it's long gas, long chemicals, long grains, everything being disrupted at this point right now you put in canada the whole north america's long everything, same thing with the western hemisphere it's not where is it really going to be acute and bad primarily in europe, japan, korea and places like that that do not have a acommodity endowment. but the rest of the world that has substantial commodities they're going to have that supply that will prevent those

disruptions because when you think about stagflation or demand disruption and commodities, it's the lack of supply that creates the reduction in activity not so much the higher prices the higher prices or the symptom of a lack of supply that's constraining economic activity >> okay so then let's say you're trying to position yourself for not just oil but for the super cycle? what would you tell u.s. investors, what companies would benefit? >> obviously we're going to advocate buy something like the b comindex or the gsci and get director exposure to the commodity itself nobody has to buy in equity. which means if you want to play this story and get the up side you buy the direct commodity

itself then you can think about equities, credit and so forth like the u.s. emps, they would be a good way to leverage it the equities are definitely going to be at play here i like to remind people nobody has to buy the equities and that's what this esg constraint is teaching us, but people do have to buy the commodity it itself >> that wasn't implicit in what i was seeing tell us again which indexes you belong right now >> there's really only two you could trade that have the volume there. one would be the b com, the other would be the gsci and it's fought a lot more energy weight to it, but those are the two broad commodity index to get this kind of exposure. >> do you see financing opening up as it just becomes clear? you know, there's no atheist in

faugs holes. do you see esg people saying i gave it a good shot but i've got to go? i think of defense contractors right now. how do those look like that weren't financing lockheed or raytheon, et cetera? >> the retail flows tell you everything the institutional flows into these sectors are, you know, constrained right now but the retail flows are significant and that's what's been driving these stock prices more recently i think your point about your financing more broadly, it's a broad problem that's impacting the commodities sector, you know, across the board the problem is they keep risk limits based upon dollar notional what's happening the risk tolerant is not going up as fast as the price which is then making the number of barrels go

down so we're not raising the risk up high enough relative to where the price is, and as a result units are going down, the barrels. what matters to the global economy are the number of widgets, the units and so by constraining credit and risk to a notional level we're reducing the amount of units in the system. you can see this in the metals they're having to liquidate inventory because they don't have access to the credit and financing. this is becoming a serious issue. >> what they're doing with amc helping getting finance basically for a mining company >> and if we are going to be driving evs, we're going to need all kinds of -- is there going to be capacity constraints there, too >> in fact, when you look at the demand pull-on all the green metals which are copper, metal,

lithium and cobalt, once we start to mainstream evs way overwhelms the capability to supply you already have no inventory and no spare capacity across most of these green metals and we haven't scratch the surface as we start to look out to 23, 24, 25 and beyond. >> what's the answer to that we're at 2%. what happens when we get to 30% evs? >> that's copper, our target is $15,000 a ton and trading somewhere around 9,500 or $10 24 $10,000 a ton. >> we've got to send ben affleck back up there to mine an astroid, what do we have to do >> or, hey, get technology >> invest in that, too

i actually had a thought i mean, i don't know how many times we can say good intentions where that path leads. i was thinking bad intentions lead to hell maybe they don't always and sometimes the bad intentions are the ones that work out >> or maybe all roads lead to hell >>obe maybe all roads lead to hell all roads lead to the undertaker thank you, jeff curry. we'll seeyou around. >> we've got some break news in the last half hour take a look at futures right now because we're in the green we were in the green before but now moved up even higher the s&p 500 up about 29 points we've got some news out 06 the talks between ukraine and russia driving stocks higher and crude lower. ukraine proposed adopting neutrality to change for security guarantees and monitoring the negotiations and we'll bring you new developments as they come

when we come back we'll talk about these new developments and also about president biden's budget with senator pat toomey that's next. also senator elizabeth warren on the wealth tax ayoposal and much more st tuned you're watching "squawk box" and this is cnbc this is the new world of work. each day looks different than the last. but whatever work becomes, the servicenow platform will make it just, flow. whether it's finding new ways to help you serve your customers, orchestrating a safe return to the office...

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joining us right now senator pat toomey of pennsylvania he is the ranking member of the senate banking committee, and senator, thank you for being here we want to talk about the budget buts first we'd like to talk to about some headlines just been hitting. markets are trading higher on this news, this idea you could potentially have some sort of substantial peace talks happening between the russians and ukrainians the russian defense ministry is saying to create conditions for dialogue they're going to be drastically scaling down but not stopping military activity around kyiv and other cities, and that's certainly promising at this point. what are your thoughts on this very early news on this? >> that sounds hopeful, becky.

hopefully the russians have elevated lying to a fine art so who knows whether this is intended to deceive us what we do know for a fact this invasion has been a complete disaster for them. they've performed miserably epiand the ukrainian defense forces have performed just unbelievably heroically. and maybe -- maybe the russians are looking for a way out. that would be really good news >> in terms of how we have done to this point, we are seeing the president ask for increased defense spending in part because of this. is this enough to satisfy you? >> no, not at all. i think president biden made some good moves sharing the intelligence about the russian intentions early on i think was a useful device, but frankly there's a lot more military hardware we should be providing to the ukrainians, and we should be really working hard to lead our european allies in ending the purchases of russian oil and

gas. i mean, as we chat this morning the western world is funding putin's war machine, buying the oil and gas that he takes the proceeds and uses in substantial part to fund this outrageous war. we've really got to stop that. >> i don't think there's much argument on the other side of the table, the other side of the aisle in terms of trying to wean europe off russia's oil and natural gas. it's just not something that happens overnight. it will take years to do that. >> well, i think we've got to do it more quickly than that, becky because of the people of ukraine don't necessarily have years they're losing people by the day, by the hour >> i understand the urgency. >> knowing by 2030 >> how do you fix this overnight? well, one of the things we've got going for us is springtime is arriving so with the warmer weather there's a big seasonal decline in demand for gas between the

united states and other sources, we can replace i think a large majority of the gas that was no longer coming from russia. there's other ideas that have bip floated. you know, it's very, very costly for the russians to shutdown their oil and gas production if they ever intend to reopen it. and so maybe the solution is to put the proceeds in escrow after all our fight is not with the russian people it's with putin and the leadership maybe they'd continue to deliver that rather than have to do lasting, significant damage to their own production capability. i'm not sure >> it is an interesting proposal >> i'm not sure but he might, and he might not have much choice, and in any case it's pretty hard to defend funding his war machine. >> let's talk some of the some of issues in the president's budget that impact our audience. first up let's talk about this idea of stock buybacks trying to

make smur executives are not selling into the stock buybacks but the manner how they do in this budget could complicate things >> honestly, becky, when i look at the proposals the huge tax increase on income, corporate income, the so-called billionaires tax, the stock buyback, this looks to me like first of all it's not going to happen this is a big gesture to the radical left, right, the wing of the democrats that don't like capitalism, cham probably a third consider themselves a socialist in the first place a stock buyback is economically the rational sensible thing to do and the management 06 a company decides they can't productively deploy marginal capital. and the beauty of the mechanism is you as an investor can decide whether you want to sell or is not. that's exactly what should happen in a fry society and free

market economy this vilification of stock buybacks is completely ridiculous >> you say that's not going to happen is that because of senator manchin or maybe senator sinema? or do you think that extends beyond just the two members of the democratic senate? >> i think it's likely they would oppose this. i think there are others who may not want to publicly declare their opposition but realize it's terrible policy, probably don't want to go there kroeng you get a majority in the senate to vote for that. >> i ges part of that, though, we've been advancing the discussion and having a conversation around these things what do you hear in the halls of the senate at this point what do people say if they're not willing to go on the record and say they don't like ideas, what are you hearing behind the scenes >> i just think there are a handful of democrats beyond just joe manchin and kirsten sinema

who understand this would probably be very damaging. they don't want to offend the most partisan part of their base but i think senator manchin and sinema will probably oppose most of these features. he said something to the effect you can't tax what you don't have not a bad rule we've never taxed on unrealized gains. >> and yet the idea has come back again and again over the last couple of years what do you think finally winds up happening is this a proposal where unrealized gains would be approved and taxed and winds up in the court system or do you think there'll always be enough people who say that's not a great idea >> i don't know. there's any number of ways they could raise taxes and maybe they could get to 50 votes reducing

deductions, for instance i don't know what's going to fly? i think kirsten sinema has said she's not in favor of raising marginal rates on individuals and small businesses where they land, i don't know. it would be better they don't do anything, but it's possible they find some combination of taxes to raise >> senator, i don't disagree with you i think it's a very challenging to do with all sorts of untended consequences once we get down to the brass tacks of trying to figure out how you create a solution wrosh if you will we always say whatever the details are they don't work so i would ask you how you feel about tax in carried interest, closing some of the estate tax rules so we don't have lots of money pouring out there. and there is maybe perhaps in

the context of real estate, there are ways to do this where i think if you believe tax policy is part of our democracy, people want to think to themselves there's a fair system there are probably better way tways to do it than we're doing it today. >> our democratic colleagues usually justify all of their various creative ways of raising taxes as a way to make sure the wealthy are paying their fair share. the top 1% of americans earn about 20% of all the income and pay about 40% of all the income taxes. somehow that's not the -- paying twice the rate of what their income is in terms of the percentage of total taxes is somehow not fair makes you really wonder what they think about the 50 3ers of americans who pay no taxes

there's lots of things embedded in that. >> social security is meant to fund a specific benefit related to the taxes you pay, sales tax and state and local tax. the majority of the federal government is funded with income taxes and that's a fact. >> i hear your point that not everybody has skip in the game there's no reason they wouldn't rates to climb forever and ever. >> how does misplay out because a vote in a swing state is going to decide pretty radical differentiates in the tax policies at this point >> i think it all comes down to what they can maintain 50 democrat senators for. i think anything that gets 50

democrat senator votes and kamala harris breaking a tie will pass the house would then get signed by president biden. but i think that gig is up at the end of this year i think republicans are going to take control of the house and senate and we're not going to have these conversations about crazy new ways to raise taxes on people who already pay a lot in taxes. that's why our democratic colleagues feel a lot of pressure to do something quickly because they know the clock is running. >> senator, thank you for your time today we're going to have a lot more this morning on president biden's plan to hit the country's wealthiest men and women with higher taxesch we heard from the republican side and speak with the democratic senator elizabeth rrwaen another interview you don't want to miss as "squawk box" rolls on

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well back to "squawk box." some positive headlines on the russia-ukraine situation dow jones up more than 300 points you can see the nasdaq solidly higher up 168. s&p up as well, 41 energy prices headed in the other direction after a weak

session yesterday. now just above $100 a barrel on wti crude, 131, 31 well, last quarter slowing subscriber growth at netflix sent that stock tumbling now a new report suggests things could get even worse for the entire industry. julia borstin joins us now with more >> good morning to you, joe. there's a new reports just out from deloit and delves into what's causing a persistent high level of turn, how many people are dropping subscription services every year. there's a 30% rate across all paid streaming services over the last 12 months and that's remained consistent since 2020 and compares to 30% overall turn rate in other key countries? cluding the u.k., germany, brazil and japan now, younger generations are canceling a much higher rate

there's a 51% turn rate for genz and 52% for millennials. they said video games are their favorite form of entertainment saying streaming companies aren't just competing with each other for audiences but also competing for more social and immersive forms of entertainment. while respondents in the u.s. and brazil said they preferred to pay for ad free content in u.k. and brazil it has ad supported content. that shows people are chasing new content. in its last earnings netflix said it expects to add 2.5 net new subscribers during the first quarter of 2022. that is far below the 4 pillion in added in first quarter of 2021, and netflix shares, they

are down about 27% since that last earnings report at the end of january joe? >> all right, julia, thank you i thought streaming was everything it's never so clear and simple, is it? when we come back taxes, government spending and much more in our big interview with senator elizabeth warren next. stay tuned you're watching "squawk box" on cnbc carl, say hi to nina, our schwab financial consultant. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan. we can check in on it anytime. it changes when our goals change. planning can't be that easy. actually, it can be, carl. look forward to planning with schwab. schwab! ♪♪ the pursuit is on. the pursuit of outperformance at pgim. with deep expertise to outthink across multiple asset classes,

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we know millionaires and billionaires would be in line to pay more taxes under a new plan from president biden but they're not the only one robert frank joipz us now with more >> biden's budget plan includes more than $800 billion on tax highs over the biggest earners for the next decade. the top tax rate also goes up under this budget from 37 to 39.6%, and the income threshold for that top bracket actually drops from 539,000 to 400,000. capital gains rate goes from 23.8 to 40.8% for those with more than a million dollars in

combined income and realized capital gains. a lot of changes around the gift and estate tax as well with tighter rules and limits on generation skipping trust and grantor trust. those have become hugely popular in the past decade it would gelt rid of lifetime exchanges for investment in real estate and properties over a half million dollars a lot of charitable giving coming under scrutiny. biden calls for donor advised funds giving more scrutiny and the loophole carried interest once again on the chopping block. we'll see. that benefit actually goes away anyway if capital gains is taxed as ordinary income, so a lot of this struggle in congress is once you change one policy is tends to affect another tax provision. so it gets very complicated when you go piece by piece. >> thank you for that. we're going to continue this

conversation joining us right now for more on biden's new budget and billionaire's tax joining us democratic senator elizabeth warren senator, thank you for joining us i start with this, just how realistic do you think any of this is given that a number of tax proposals and other things that have been -- that have been put on the table before haven't happened >> look, i think that we have a fundamental question that we're going to address in the 2022 elections, for example and that is we just heard senator toomey say once again that if the republicans can get empowered, they want to raise taxes on all of america, on working families in america, on half of people they want to raise taxes on people living on social security, people who are making minimum wage, people who are in the working class. what democrats are saying is that we've got a plan to try and

raise taxes on millionaires and billionaires, the people at the top who are not even paying taxes at the same rate as everyone else. our tax system is badly broken, and it's broken because it makes an underlying assumption everyone makes money in the same way, and if you tax all that matters is what's the marginal rate the highest income earners? but now when we've got so many billionaires who have all of this huge unrealized gain in stock and they manage to live massively lavish lifestyles without ever paying anything or pay only a small amount in federal income taxes, we can't keep that up we can't keep it up in the government we can't keep it up in the economy, and we can't keep it up in a functioning democracy so biden white house has stepped up and said we have a plan to change that. >> senator, but do you think there's different ways to do it besides the idea of taxing

unrealized gains there's constitutional questions about whether you can even do that, and i want to play if you a clip from an interview we did this morning this was billionaire mike novogratz, and this is what he had to say about the idea and by the way a democrat, his thoughts on taxing unrealized gains this way. >> it's just a crazy idea practically. i think of, you know, stocks i've owned from fortress to galaxy who have had wild volatility there are times you declared my income at the end of the year and i had to pay 20% on that i'd be bankrupt because the stock fell so much the difference between liquidity and paper wealth is at times gigantic, and so i think it's just practically, you know, an impossible idea. >> what do you think of that

>> first of all, i want to say try explaining to a public schoolteacher who's just trying to pay for child care or make it to the end of the month or someone working on minimum wage the difference between liquidity and paper wealth is enormous the provisions the white house have put forward have a long period for smoothing this out. they don't just say you have to pay every penny right at the end of the year. they've actually worked out an account for volatility what this is really about is whether or not people who are making their income by the appreciation of stocks or other investments should have to pay something to make this country run and should have to pay it on annual basis the white house has figured out a way to do that, and i think it's a step in the right direction. me, i still support a wealth tax across the board that is a different thing. i think we should have a small amount that we pay every year on total wealth

the white house is focused on income, on the appreciation that people are making year by year i support them for that. it's a way to say those at the top have to pay a fair share, too. >> senator, i think of a lot of people we just look at the current view of billionaires or really successful people on the progressive left and i think shared by you yand i wonder if you think it's shared by americans specifically thinking of elon musk and what he's created, tens of thousands of jobs, billions of dollars of share in shareholder wealth and changed the world in our country, recently said he'd pay $11 pillion in taxes last year and yet you said he needs to stop free loading off the rest of us. does that really ring true to you, senator shouldn't he be celebrated and

not disparaged as some sort of modern day robber baron? >> i'm happy to celebrate success but let's remember lon musk didn't make it on his own he got huge investments from government, from taxpayers, from those public schoolteachers and min pm wage workers who vin paying their taxes all along to get that business up and running and help see it through rough times. and the thing is as americans we're glad to help make those investments. we're glad to all have a hand in helping create all of those jobs all we're saying is when you make it to the top, to the very tippy, tippy top, then pay something in so everybody else gets a share elon musk paying this year, that's great because he chose to sell some stock. 2018, also one of the richest people in the world, how much did elon musk pay that year? we actually saw his taxes that year, and the answer is he paid

zero the public schoolteacher did not have the option to pay zero in 2018 or in 2020. >> i understand. if he'd never been born do you think that the $11 billion is like a zero-sum game, someone else would -- the bottom line is because he created that company here and it's this successful, why not celebrate the $11 billion he's paying? that's more than every senator and everyone for their entire career -- >> do you want to give me a chance to answer ini celebrate success. how many times do i have to say that can i finish my sentence >> okay. >> i celebrate success but i think when people make it big you've got to make an investment back in this country so we have a chance to help the next company, the next person who's got a great idea we have a chance to invest in their education. we have a chance to invest in

the infrastructure and yes, we even have a chance to invest directly in these businesses that's what we have done nobody got rich on their own they got rich because of the investments -- at least in part because of the investments all of us made and what we're asking for is to say when you make it big, yes, let's have a big party, let's throw the confetti but let's also ask that you pay a fair share in taxes the 99% pay about 7.2% of their total wealth in taxes every year that top 0.1% pays less than half as much that's not right make an investment so the next elon musk gets a chance to make it big as well >> sen one of the other parts of the proposal that the biden administration has put forward is about effectively trying to discourage to some degree buybacks, something i know

you've been quite critical about. and one of the measures in place beyond a 1% tax is this idea of changing the dynamic or creating a blackout window so that senior executives at companies behind the decisions to pursue buybacks cannot not only sell into them but probably can't sell into them on the order of probably thirty-two years the question three years is the right number, whether it can be two years or one year or less? >> or five years which i think is what i proposed initially but the point is to try to align the incentives better. we've seen from the research that what happens since these big corporations do buy backs and the executives are the ones who profit they cash out quickly. the idea is to align the incentives so the executives are in for a decision that has to have an effect over a longer ark of time.

and i think it's a sensible approach that the white house is advancing here i support them on this >> here's, though, one of the questions which is you do want capital to go where it's going to be best used. and one of the things unique about this moment and one of the reasons i imagine there are so many buybacks of companies rather than investments in rnd or frankly acquisitions, very hard for a big fortune 500 company or big tech companies right now to make acquisitions because of the anti-trust laws in this country. oftentimes they're look at themselves saying maybe this is the best deal. how should an executive team or a board square that idea with what may turn out to be a disincentive for them along the way? and i don't disagree -- i don't believe anyone should be able to sell into a buyback that i absolutely think you want to discourage, but i think at some level a year or two out you'd like people to actually be able to benefit the same way that

shareholders might >> well, we have to remember that the executives are the ones who have much more control over this so putting somewhat more restrictions on when they can sell makes sense under those circumstances. also, we'd like to see these companies put more money into rnd, and if the companies really say they don't have use for the money, then fine you don't have to do it in buybacks this is just another distortion because of a tax system that doesn't work pay dividends. >> part of the problem is we've setup the incentives so that executives are paid in stock we wanted them to be aligned with the shareholders to begin with what if this has unintended consequences we'll just pay them in cash again which puts us back at the point we were trying to prevent which is we wanted them aligned

with shareholders and have more stock compensation by the way, they wait a lot of times already three or four years for those shares to do it and you're talking about seven years after the work they've done for the year they get paid for. >> actually, i think the histor of this is a little different. i think we saw the moves to executives being paid in stock when there was an effort to put a cap on what executives get paid because there was a sense at the time that executive pay was just out of control and had gone so far beyond what ordinary workers were making they were trying to find policy makers to bring those into aliepment, but moving over getting paid in stock has already blown entirely through that rationalization and i think what the biden administration is looking for here is exactly the right thing. they're trying to get incentives

better aligned again and saying sailing into a buyback is not an alignment of incentives. it does not have the executives making the right decisions on investment in rnd or on taking care of the shareholders overall. so they're trying to put some restriction on that. if you're going to ask me am i really worried that the heads of these major corp ragdss are not getting paid enough, my answer is going to be no. >> would you take it a step further and say you want to cap salaries >> no, it didn't work and it's not going to work. the real point is let's try to get some better alignment because what the data are showing us is that the executives apparently are putting their own interests ahead of the interests of the shareholder because of these buybacks, and that we ought to

put a stop to. >> are we discouraging companies to be public to begin with if you look at private equity companies owned by them, the amount of money some of those business leaders are making on a relative basis frankly to those in the public market that don't even compare, meaning they're making more and yet that's being done effectively in the shadows and whether policies like this discourage access to them? >> look, the responsibility of the sec, the responsibility of the government is to make sure incentives as best we can with policy, incentives are appropriately aligned between the management and shareholders. and that's what the biden administration is trying to do here with public companies obviously private companies have different ownership structures and different ways either of

reassuring their investors or not, but that's up to the investors that go to those companies. >> and then finally, senator, and you and i have talked about this for a long time, carried interest >> yes >> in this case it's fascinating. why do you think the democrats which ostensibly could have taken this on in a real way ultimately vaenlt? they've talked about it, you've talked about it. everybody's talked about it, and here we are, never happened. >> okay, so, look, we don't have quite enough votes to get it done, but i'm going to put it this way here's the big difference between democrats and republicans. we keep talking about it and keep trying and we keep trying to straighten out this part of the tax code >> even senator manchin said that he doesn't like carried interest >> not one single republican will join us on this the republicans say no we have the skinniest possible

margin right now in the united states senate. we get 50 votes on this issue then we will get it done democrats are trying to do it, the republicans are opposed to it across the board. twitter is wonderful, isn't oh,. >> one of your colleagues tweeted when senator warren watches @squawkcnbc, she should watch it maybe with the volume on if she did, she would know i never said we should raise taxes on anyone, unlike her who never tires of proposing new taxes -- new tax increases. senator toomey was on earlier. that's twitter >> i think i corrected myself, i hope i corrected myself in that very sentence to say raise taxes, what is it, on only 50% of america that they say are not paying taxes right now i believe that this is now the republican senate committee's actual position where they said

they want to raise taxes on people who are living on social security they want to raise taxes on people who are making minimum wage, they want to raise taxes on working families, and that's what i thought i heard senator toomey say at the conclusionis that the republicans want everybody -- i believe his words were -- to have skin in the game by having to pay federal income taxes. every single -- >> i think those were my words, actually. >> was that your language? >> i think that was my language saying the skin in the game. >> it was a conversation we were having back and forth, but i think i was the one who used skin in the game. >> if the republicans want to stand up and back off from what they've actually put in writing about raising taxes on working families while democrats are trying to raise taxes on billionaires, let's do that. i mean, we can both get in front of the same screen shot and do it if the republicans want to say they want to back off from what they've been saying for weeks now about raising taxes across

the board on people across this country, some people who do not make enough income to pay federal income taxes right now, that's their push. our push is to raise taxes on billionaires i'm ready for that fight >> senator warren, we want to thank you for the conversation this morning it's always good to see you. look forward to talking to you again soon. >> good to see you >> do people not have the volume on that's just -- you know, i guess that's possible. >> depends on who's talking. >> just watching the ticker, let's get down to the new york stock exchange jim cramer, i've heard that, jim. if you have the closed captioning on, they do get subtitles, subtitles so where you want to start, jim? russia maybe, is it possible you does the market move on things like that when they're the master of disinformation, what we used to call lies >> well, the market can move on

it, and obviously the russians can have talks, and maybe decide, listen, kharkiv, we're going to take that from you, and we're going to have a state where you can keep certain places this is a war, and for russia to put out a statement saying we're not going to take certain areas is not unlike their war with putin and chechnya where they say we're not going to go against grozny and the next day they level grozny. everybody got killed putin is not going to give you his game plan. he never has, and he never will. we can all buy into this, but until we hear that he's pulling back his people, until we hear that he's giving up kharkiv trusting him is pretty stupid. >> jim, we've had lots of discussions about how to get out some of the unrealized gains that so many really wealthy americans have, are we getting

anywhere, do you think we look at every new plan and we analyze it and we try and figure it out, and it usually doesn't go anywhere. how do we finally end up getting somewhere on that? what's the end game, do you think? >> i mean, the country has always stated that you have to have a transaction i think the country's history of doing that has been right. i do think that as andrew said, the way that private equity is accounted, it's kind of a faux transaction, but it should be counted as a transaction because it is just -- you are journaling money from one group of people to another, and that's a transaction as far as i'm concerned, so i'm hoping that they address that, but i also know executive comp got out of control, and senator warren should have talked about, she had a great wrap about where executive comp was under president reagan versus where it is now, and a lot of it just got out of hand -- well, one guy made this buopoint. it's kind of like the nfl, deshaun watson is making it so

that every single quarterback gets more. that's what happened in america, every single ceo started getting more, and the next thing you know we had this great disparity that i think nobody is really happy about except for a handful of ceos who are beyond rich. we should be dealing with how we got to the point where investment comp -- where ceo comp got where it is >> right all right, jim, thank you. we will -- >> i got the volume up i love the show. talk to you guys. >> nice. >> they use closed captions there. >> closed captions that's okay. >> it is >> see you, jim. don't miss a ceo doubleheader on jim's show the heads of fedex and -- >> that's going to be something to see. >> and mccormick, "squawk box" will be right back so you partner with ibm to build a security architecture to keep your data, network, and applications protected.

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take a look at the futures this morning, we have seen the futures power up we've been in positive territory all morning long, but there have been some positive headlines coming out of those russia/ukraine peace talks that make it sound promising. of course we've heard things from the russians before the market at this point dow up by about 280 points. s&p futures up by 38 this morning, and then you've got the nasdaq up by about 173

these are significant gains that add to the gains we've seen in the last couple of weeks for the market oil prices down by 7.5% yesterday, oil prices have been down this morning. the ten-year note, that yield is below 2.5% for the ten-year note those lower yields started out yesterday, fell below 2.5%, but we have seen that yield pick up incredibly rapidly over the last several weeks, maybe three weeks at this point, and then oil prices sitting right at $100 a barrel that's a decline of another 5.5% today, again on the potential probably from these good headlines that are coming out from the ukraine and russia peace talks. yesterday it was the lockdown in shanghai, so that was on the demand side of the picture the headlines today on the supply side of the picture, and again, that's putting wti right at about $100 a barrel take a look at crypto as well. yesterday bitcoin moved above $48,000 for the first time this year right now it's a little bit below that, but not by much. 47,852, so basically in positive territory for the year for most

of the people who have bought in on this this year. that does it for us today. gentlemen, i'll be out tomorrow, but i'll see you guys back here the day after. >> okay. >> you promise >> good show. >> i promise as always. miss you guys. anyway, that does it for us today. make sure you join us tomorrow right now it's time for "squawk on the street. good otuesday morning, welcome to "squawk on the str street". i'm carl quintanilla with jim cramer, david faber. the cease fire talks in istanbul are called the most constructive so far russia says it will cut military activity near kyiv vix below 19, oil dips below 99. our road map begins with that optimism signs of constructive talks and renewed cease fire hopes buoying investors hopes. >> fred smith is set to step aside as the ceo of a company that he founded more tha