Transcripts For CNBC Squawk Box 20170406

Looking overnight in asia. The nikkei droez edclosed down. The hang seng down. The shanghai was up 0. 3 . In early european trading, the dax is down. Down by 0. 4 . Ftse is off by a half percent. If you look at the tenyear yield, continuing to watch that yield below 2. 4 . Yesterday 2. 352 . This morning it looks like the tenyear is yielding 2. 357 . Crude oil prices, which have been above 50 over the last several sessions are up once fwan th again this morning by 3 cents. Some Market Movers yesterday. A lot going on. Really demonstrating how sensitive the market is shethes days. Paul ryan suggesting tax reform could take longer than expected. The possibility of tax reform did you forget your contact lenses . No, no the possibility of tax reform has been a big issue on the table. The house Tax Oversight Committee is planning thearings in connection with the tax reform. No sound bite . No sound bite. You went right through it. Was there a sound bite . There was. Lets get the sound bite up. I didnt know we had the sound bite. I think you left your we will need more time to do tax reform. The house has a plan. The senate does not quite have one yet. Theyre working on one. The white house has not nailed it down. Even the three entities dont are not on the same page yet on tax reform. Heres my question. Are we in newark yet . What . The train backing up . The train backing up. Yesterday you heard me talking to cramer. I thought that might be the beginning of another upleg. Thats disappointing to be up 200 and close down. In the morning, everybody was talking about pence. Everybody is getting along. Freedom caucus talking to moderates. By the end of the day, they got nowhere. And then what paul ryan was saying. The president was talking about multiple lines have been crossed. Talking about syria, north korea. And xi was coming up. Like i was saying earlier, you can imagine if they really didnt like each other. When you talk to china, an important trading partner, this is an important meeting. You have the Nuclear Option, not with north korea. The Nuclear Option and with north korea. But coming up today, in a matter of hours, there will be this vote in the senate. That will change the way things are seen. Were not back in newark. Were not even 2 off the highs yet. Were not even back to will mingson yet. Down near bwi. Which is a the airport which is north of baltimore, right . You think the train has gone further than i have. The minutes from the fed suggesting officials want to start unwinding the massive 4 45 trillion Balance Sheet later this year. Its very significant as janet yellen and others have said and one that would amount to a rate hike. The fed also noted theyre on pace for faster rate hikes. Some fomc members are concerned that the stock market is overvalued. All of that weighed on stocks yesterday. Thank you. When you have accuweather, you can put any city in. I was checking out augusta. Augusta, georgia, just to see. Yesterday the practice rounds got rained out. Today, sunny, but windy. Cooler. 64 degrees. Tomorrow, sunny, breezy. Awesome when theres wind. Awesome for us. Not them. Not for them. Then the way the trees are set up. You see these guys, especially around some of the on the back nine. Theyre looking around. You cant tell whats going on up there versus down here. And it affect par 3, jordan spieth. Remember 12 . Sunday, 78 degrees for the last round. Warmer. Should be great. Will we get when jack tees off with gary . Cant run that . We dont have that, but we have corporate stories. Several deals in the works. Unilever plans to exit its spreads unit, which includes brands like country crock and i cant believe not i cant believe it is. I cant believe its not butter. A double negative. Thats complicated. It worked. The Company Announcing the move as part of the Business Review which also includes increasing margins target and launching a 5 bill roion buyba this year. Programming note, unilever ceo paul polman will join us. Reuters reports that Cardinal Health is in talks to buy medtronics supply business. A deal worth about 6 billion could be announced sometime this month. And japans seven i holdings, the parent of 7eleven is buying more than 1,000 u. S. Gas stations and stores from sunoco. Seven i generates 80 of its profits from convenience stores. Mgm is buying epix in a 1 billion deal. Viacom owns half of epix, which is about 14 million subscribers, lions gate has a 31 stake. The lead story in the journal, ge still owns light bulbs . Yeah. They tried to get out before. They tried, then doubled down on light bulbs in terms of building out the next generation one. Thats when we got the fluorescent ones where the kind where if you drop one, it cracks in the hazmat suit. Just to clean it up . Brilliant. So theyve done a lot at ge, right . Still 29. I dont know what you need to do. Still 29. Tlaif do theyve done a lot. Better than 6, which is where it was. Still not 60, where it was 18 yea years ago or whatever. President trump and chinese president xi will be meeting later today at maralago , florida. Thats where we find Kayla Tausche this morning. Somewhat the winter white house is what people are talking about. That could set a different tone for the meetings today. Reporter yeah. Hopefully a place where the two leaders can break the ice. Maralago is fully cordoned off in advance of that visit that begins this afternoon. We are just down the road. White house officials have said that this meeting will be a test for u. S. china relations as these two leaders meet to tackle their most urgent agenda item. That is handling the what they say is a Mature Nuclear situation in north korea before they move on to issues like military and trade that have put the worlds two largest economic powers at odds. President trump is expected to ask president xi to have china weald more Financial Leverage over north korea to defuse the situation. China is almost the sole trading partner and source of kircurren for north korea. Chinas economy is about ten times the size of north korea. Its unclear how many tools china has in the toolkit. North korea has repeatedly violated u. N. Sanctions put in place, not once but twice last year. In midfebruary china said it would halt all coal imports in north korea, that was a move seen as a preemption of any u. S. Request for them to actually do that. So it will be interesting to see what deliverables and what discussions take place on that matter. For the administration, its as much a test for President Trump and his young and still incomplete administration as they face their first major diplomatic issue. Secretary of state Rex Tillerson visiting beijing last month to lay the groundwork for this discussion. He as well as a very large delegation of almost every relevant cabinet member will be here in florida assisting the president and meeting with their counterparts as this leaders meeting takes place. It will be a couple days of working meetings, no golf. There will be one absence that will be notably felt, thats the u. S. Ambassador to china that has been nominated but not confirmed. Its the longrunning Iowa Governor terry bran stead brans longtime friend of president xi. Not having him here is a loss for the administration. Is that because the senate has not moved to confirm . Thats the problem . Why the absence . Hes not been yet confirmed as ambassador to china, it is believed he will be because he is so well versed in china. Officials had hoped this meeting would take place in fall, but the north korea pushed up the need to do this perhaps before either side is ready to tackle the issues. Would be bad form if he were just down there, hanging out . You cant do that . You have to be confirmed to be around . To be in the state of florida . We know what happened with mike flynn having conversations i guess it would be bad form. To be there in an official capacity. Theres protocol on whether you can be advising the president on official matters, especially many matters which are classified before confirmations. Were you getting this New Washington gig before trumplect maralago would be the place to cover stuff . Are you saying this is all a ploy for me to spend more time in florida . 40 degrees and raining here. But its 70 degrees in washington and sunny. Thats not half bad either. All right. We know that d. C. Will have Florida Weather soon. Thank you, Kayla Tausche. Back to the broader markets. Joining us is david lebowicz from jpmorgan and rob martin, senior u. S. Economist at barclays. I think, guys, that on a daily basis, we get buffeted all over the place. Tax reform is important, you can call it noise but it moves things. We heard from the fed yesterday theyre trying to move forward the plan on reducing the Balance Sheet. A lot predicated on a huge surge in confidence. So, if we dont get tax refo reform later this year, it will be difficult to maintain those levels of positivity. The jobs market seems to have picked up. Maybe not gdp, another bad First Quarter, but some evidence that the consumer that the confidence is translating into more jobs. Jobs have been about 250,000, but theres been softness. We had the 238,000 last month. I followed that number. But a lot construction jobs. Construction jobs are good. Construction jobs are excellent, but thats a weather effect. February was warm, nice. Well see on friday. I think the broader question is do wages start to rise and does that make the cost of labor less cheap. Lane hear been very cheap, and businesses have been inclined to add more people rather than pay existing workers more. Not only is there a question around of what does it look like as expectations converge with confidence, but what do rising wages and Interest Rates mean for the equity market. That will put downward pressures on margins. To me, the question we ask virtually every morning is what premium do you believe is already in the market for these policy changes . If they dont happen, and that evaporates what are you talking about . We talk about the train, returning to the station. I think the deregulation weve gotten warrants being where we are here, and anything above that is icing and additional gains. I will speak to the Consumer Confidence aspect that Consumer Confidence keeps soaring and going upwards. A lot is predicated on expectations that something more will happen on fiscal policy. I dont think the Regulatory Environment is driving that. It could be the jobs picture driving that. Thats okay, but unchanged. Were expecting, weve been expecting a big increase in wages but stuck in the 2. 5 , 3 range. So its early for households to be happy about the raise they have not gotten yet. We averaged 200, but down 160. Even when sand zandy comes in, acknowledged it. I dont know. It may still be within standard deviati deviation. It may not be. While Consumer Confidence looks good, i think the bigger question in terms of how the rest of the Business Cycle plays out is what happens with Business Confidence. Do expectations around deregulation, tax reform, does that translate into more Capital Spending . Its great if you have a repatriation holiday, but if that cash comes back, they pay more dividends and buy back more shares, that doesnt create value in businesses. We need to see Business Confidence continue to strengthen. We need to see businesses feeling more comfortable with the outlook. That will require the administration putting stakes in the ground and letting us know what the timeline looks like around these changes in policy. All right. Thank you both. Rob, david. Well see. Coming up, blackrock chief larry fink will join us for an hour to talk about the portfolio strategy shift towards machines, well get his take on china the markets. First meg tirrell continues our modern medicine series from a location you might not expect. Iceland is known for its extreme environments, from pockets of geothermal activity to lava fields and volcanos to dramatic waterfalls what are less well known are its contributions to medical research. Well tell you how coming up. I love how usaa gives me the peace of mind and the security just like the marines did. At one point, i did change to a Different Company with car insurance, and i was not happy with the customer service. We have switched back over and we feel like were back home now. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children, and that they can be protected. Were the williams family, and were usaa members for life. Call usaa today to talk about your insurance needs. With e trades powerful trading tools, right at your fingertips, you have access to indepth analysis, level 2 data, and a team of experienced traders ready to help you if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade. Start trading today at etrade. Com iceland is known for scenic landscapes, volcanos and geysers. But now the island nation of 345,000 people has extensive n genetic operations and has some breakthroughs in the understanding of disease. Lots joining us from wrereykjavik heard iceland is green, and greenland is ice. Beautiful place. They say greenland is ice, and iceland is nice. Weve seen a lot of ice around here in iceland as well. Its having a moment now for tourism. The number of people coming to this country for tourism has doubled, just to see the northern lights. Its a hub of important genetics research, thats because it is a fatherly homogenous population, something known as the founder effect. Meaning a lot of the population here descended from common ancestors, and theyve remained relatively isolated for over 1,000 years. Another thing that makes it greet for Genetic Research is the records here are incredible. We visited the National Archives and got to see the worlds First Complete census taken in the 1700s. Records go back to the 800s. Beyond that, they have great medical records, those things combined make it a great place to do genetics research. Here is why kari sfefansson says iceland is so great for this. Icelanders, who once existed in iceland, its easier for us to make discoveries. Decode has made discoveries in things like alzheimers and cardiovascular disease, sometimes not even things that lead to disease but protect people from disease. They have a blood bank in their headquarters of 500,000 blood samples from half the population of iceland. This gold mine is being mined fby amgen now. Well have more on that work coming up on squawk alley later today. Joe, back to you. Meg tirrell, thank you. That was a cool looking whatever the hell that was, kind of scary. The chart . The thing with the gold all covered, moving. The automated its very tedious, a lot of that work. There it is. We should do a week from iceland. Those are two robots called david and goliath. They operate the blood bank. Theres not a guy there there . Minus 15 degrees. I did not get to try on the giant suit with arms. No. Its a robot. Remember, we started talking about iceland for a different reason a couple years ago. Remember, the currency . It was ground zero for a lot of what happened. The bankruptcy. Wasnt that in your book . Yeah. Yeah. Have you ever been . No, no. Have you . No. On my list of places to go. Talking about it last night. We should do squawk from there. Only a fourhour time difference, the right way for us. Yeah. I dont know. You dont know . No. The right way means youre working until 2 00 in the afternoon or 3 00 in the afternoon. When were in davos. That also means you can get guests to get up. The masters could be missing golfs top player. We dont know yet. Dustin johnson hurt his back after taking a serious fall down some stairs yesterday. Johnson won three straight tournaments heading into the masters. Hes scheduled to tee up at about 2 00 p. M. Eastern today. The weather forecast, as weve already discussed is better today than yesterday. Looks good for the rest of the tournament. Severe storms and tornado warnings sent spectators home early yesterday. The par 3 contest, the popular par 3 contest was canceled for the first time in more than 50 years. Thats a fun deal, but id trade that many for four good days from here on out. If you can have the bad weather, have it come yesterday. Get it out of the way. When we come back, blackrock is shifting away resources from Portfolio Managers towards machinedriven trading. We have the ceo, larry fink, joining us for the next hour to talk about this shift. All kinds of other things well get to. Markets, politics, china. Larry fink is here. Hell join us after the break. Right now a look at yesterdays s p 500 winners and losers. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Because when you really, really want to be there. But you cant. cheering at cognizant, were helping todays leading Media Companies create more immersive ways to experience entertainment with new Digital Systems and technologies. Get ready. Because were helping leading Companies Lead with digital. Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. Good morning. Welcome back to squawk box. Look at u. S. Equity futures at this hour. Show you whats going on after a remarkable ride yesterday. It looks like it will open marginally down, dow off about a point. Nasdaq off about a point and a half. Stocks to watch today. Bed bath beyond reporting better than expected earnings in comp sales. And yum china sales jumping. Sales topping forecasts. Ford plans to launch a plugin hybrid car in china by next year. They are looking to shift most of the lineup in china to electric cars and hope to do that by 2025. Blackrock making headlines. The Worlds Largest money manager announced a reorganization of active equity funds giving the edge to computers. Larry fink is the chairman of blackrock. Larry, thank you very much for being here today. Thank you. Good seeing you. This news that came out last were came out with massive amounts of attention from wall street. Even though this is talking about 36 employees leaving, this made massive headlines because its a new way of thinking about things. Youre bringing in computers to run some of these funds. People started thinking does this mean this is the end of humans making decisions on some of these equity funds . What do you think . I was very surprised at the coverage. We did not anticipate that coverage. As you said, it was only 36 individuals, more importantly it was a very small component of our overall assets. 30 billion in assets. But this is part of a twoyear plan. We reoriented our etf platform last year, ishares. We brought in Mark Weissman from the canadian pension plan, we wanted mark to put his imprint on this. That was a seven, eightmonth delay. What we did most importantly was in u. S. Equities, more the large cap area where i stated in the past that were seeing a democratization of information. At your fingertips we have so much information. You have to look for different sources of information. We have an incredibly great platform, and our model based equity team manages about 75 billion in equities. They had good performance over this period of time beating the benchmark after fees. Beating the computer programs . We are not substituting humans for machines. Were reorienting some of the jobs in terms of doing more data science and analysis. Youre not substituting machines for humans is what you meant. Thats what i meant. See, a machine would not have made that mistake. I wanted things that dont talk back. No. Annoying employees. More importantly, we have the same amount of employees in our Equity Division in a year from now than we have today. But its a reorientation of large cap in u. S. Equities. We did not change the behavior of some equity teams in the concentrated portfolios or high conviction. We did not change any of the portfolios related to country funds and sector products. Our European Team remains the same, our asian teams. But a lot of people say they look at this and say they think this is the camel with the nose, if the machines can do it better than humans, some sort of race has been set up. Is that the wrong way to think about it . No. In the last five years, very fast computers, as you can analyze blogs and all the feeds on the internet to come up with different nuances, different fields of information. So basically what it is is a recognition that there are more sources of information. It requires high computers, very fast computing. Requires model analysis, deep data analysis. So thats what probably the most important thing is. We do believe theres more to learn from the sensor technology, new information. Its kind of like what watson for ibm is doing for doctors. You wont get rid of doctors, but you can have a program look at all the research and funnel it. Its no different than over the last 20 years, some investors had better information faster. They were able to most of it was through computers. This is looking for new information to try to get different nuances. But theres twoways to think about this. When people think about renaissance technologies, they have computers trading, trying to pick up pennies here and there. Were not doing that. But i think thats twhat people are thinking is going on. Is this computer aided trading . I would say in many cases its computer aided trading. We are moving towards and doing big research now in ai on computer analysis, that a computer would buy and sell things. Thats not what were doing, but we have a whole team working on ai. How much would you like to invest on the technology side. Who are the people you would hire to do this . We have 3,000 people in blackrock. Much has to do with the aladdin platform, the Risk Management were doing, thats expanding at double digit pace, working with clients. Technology has always been a major component in who and what we are. We have always embraced technology. We have embraced technology in our modelbased teams and fix the income equities. This is another step forward towards thatted ed advancement. So maybe we ultimately have 4,000 employees that do analysis and are involved in technology. Eventually, to play chess, you need to be a grand master to beat a machine at this point. Eventually machines will be better than humans at money management. Its not that far into the future. Its not now, but its not that far. We hope to create some type of ai, watson that can aid us in investing and invest better than humans. Right now thats more of a myth than reality. Right. But things are talking about a lot of random inputs to get that done. Eventually we wont be able to compete. Isnt so much of the markets betting on the psychology of others . Thats different than betting on what and a computer has to understand that. It has to have that tich of ype intelligence. A lot you can analyze now through momentum. Thats a big factor. And sentiment. But sentiment is sentiment the robots are generating the sentiment. Yeah. Right. But then its hard to let the other the singularity. We dont know what theyll come up with when they do something. They do a lot of analysis in factors right now. One of the major factors of Investment Performance in equities is called momentum which is sentiment. So the computer will be able to track we have a lot of blackrock people on. Kate was on yesterday. When it does happen k we interview some of your computers . Yeah. I get bored with humans sometimes. Will you have more fun with rick, kate, other people like that. Hopefully the voice of hal will im sorry, dave. Im afraid i cant do that. You cant beat the s p . Im sorry, dave, im afraid i cant do that. One thing that has happened, as a result fees are coming down. Is that a related move . Indeed, we did lower fees on these products because the cost of the investment process is cheaper. So we did that. We have been very aggressive in lowering fees. As i said, a year ago we did that with the etf platform, fixed income platform and equity. So theres a Movement Towards lower fees. Much has to do with the persistence of low absolute returns. If you believe that absolute returns will be remaining low, our clients are in pain. The low absolute returns are harping them, harming parti participa participants. Halperins says they had to go to every participant and say pay more money. In a low absolute world, we need lower fees. If you need lower fees because returns are so bad, thats different than saying were lowering fees because were using machines. Its a combination. You give money to active managers . No, because its with all my restrictions, i just invest in index funds. But thats youre like us. Yeah. Thats more a function of the restrictions than of if you could give money to active managers, would you . I have money more illiquid managers, i could do that. Im a big believer if youre asking me if im a big believer in active management . Yes. Do i believe there are parts within the Investment Universe who could invest and have eks s is excess returns . Yes. Our teams have had Great Success in excess returns. Be careful. The i wonder if you saw lord martin reese, the british astronomer who thinks of this stuff, says aliens that do exist are likely electronic entities, which is which have overthrown and replaced the organic life forms which first designed them. This was an article two days ano. Hes talking about sky net. Sky net . Yeah. But the ones we finally come in contact with likely overthrew their antiquated organic life stor form . How old are you . You will probably be retired by your successor will be replaced by machine. Maybe. When we come back, former australian Prime Minister kevin rudd will join us, then well talk transportation and infrastructure in america. The creator of hyperloop run will join us. And unilever completing the review of its strategy a month after the takeover bid from kraftheinz, well have the l unilever ceo on with us. Back in a moment. Hey. Pass please. Im here to fix the elevator. Nothings wrong with the elevator. Right. But you want to fix it. Right. So who sent you . New guy. What new guy . Watson. My analysis of sensor and Maintenance Data indicates elevator 3 will malfunction in 2 days. There you go. You still need a pass. Welcome back to squawk box live from the Nasdaq Market site. Time now for the executive edge. Theranos founder Elizabeth Holmes reportedly owes the company about 25 million. Unbelievable story. Amazing. The wall street journal says the debt was disclosed in a document being circulated to a select group of investors. Theranos is reportedly seeking to exchange some of holmes personal holdings for a promise not to sue the company or its executives. You would hope some of ther 25 million would still be around. Is part of the 25 million her home . Holmes home . This document is circulating to investors asking them not to sue the company or her in exchange for some of her holdings. Heres my Holdings Worth zero percent, some of my shares, if you agree not to sue me. I would think you would know what she has. This is your kind of story. You have not gone through 25 million. Larry probably has. You havent gone through 25 million, have you . I blow through that you blow through that answer lotly. Absolutely. But were not worth 5 billion. Thats a lot of something. Think of anybody who signed a big contract in the sports world or something. You can pretty quickly run through that. When we come back, larry fink is here. Well talk china. President xi preparing to meet with President Trump in florida. Larry will weigh in on that and more. As we head to a break, a quick check of whats happening in european markets. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. The power of the Nasdaq Market. The power of 100 of the worlds top companies. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Any movement that interferes with that is not going to be helpful. Whatever money comes back under this policy is going to help support infrastructure, the middle class. They can all buy their stock back. Welcome back to squawk box. One of todays big stories, the first meeting between President Trump and chinese president xi is happening in florida today. Blackrock has a rare license to both trade and raise money in china. We have the chairman and c are eo here with us and we want to talk to him about what you think may or may not happen at this meeting. There are bigbyo political issues to confront. But then there is also trade issues and policy issues here in the United States. What do you think president xi is going to be pushing on trump first . I was in china two weeks ago. I saw many of the party leaders. I personally believe that the Chinese Government is going to be good listeners and see what our new administration is what their intentions are related to the relationship. I actually am optimistic about this is going on to be a good meeting. Both sides, actually, need some form of success. I think theyre going to find ways to improve the relationships. I think obviously north korea will be a major component of the conversations, but lets be clear, chinas relationship with north korea at this moment is probably the worst its ever been. Theyre postponing purchases of coal. Theyre slowly changes their relationships and behaviors with north korea. And china is, you know, in the midst of a mini growth spurt and that growth spurt, though, they are preparing for their party congress. Thats in october. I think both sides need to find way toes cooperate. In terms of president xi singling trade and the economy, you think hes going to say what, given some of the harsh language that President Trump used on the campaign trail. They are currently manipulators, but the opposite. They have spent almost 1 trillion keeping the currency where it is. And by all measures, when you loot a it relative to other currencies, china currency is actually pretty high. And theyve been keeping it high. If you look at exactly their behaviors, they are listening to President Trump, theyre trying to keep their currency strong. So im not i think this is going to probably be a big success for both sides. Thats kind of weird. And theyll find ways of cooperating. Thinking of it, because both sides need a win, both sides ive been trying to figure out how both sides can walk away and feel like they have a win when it comes to trade issues and trade issues, china is slowly opening up more and more opportunity for nonchinese institutions. So if donald trump could get some sort of agreement for a market or two, that would be a win for him. What is president xis win coming out of this . Just a stable relationship with the United States . A stable relationship, yeah. Their economy is growing north of 6. 7 right thou. Is that because they are trying to make sure the numbers are beefed up ahead of this meeting . I wouldnt say beefed up, but they are enjoying that growth spurt into the party congress. One thing is interesting. Both countries, we have our whole cabinet down in florida. The chinese leadership are all there together and theyre all going to have meetings together and try to come up with a game plan of trying to work together. Probably the most important thing is and i do believe its pretty distort, having the entire cabinet down and having these meetings for the chinese leadership, trying to find ways of building a connection and communicating, thats a good thing. So the office of the president y is a pretty phenomenal thing. You may not be there four years, i got it. But if he is there for years, the people that are meeting him now, you catch King Abdallah yesterday and his comments and el sisi, the egyptian president. These guys, they have a stake in whether they get a along with the United States, obviously. The aid to consent in most places, the stuff, they went over and above in terms of flattery about what they thought trump could do. Trump is seen as a strong leader in some parts of the world. Could be a very strong leader in the middle east, thats right. And they were so deferential and flowery and complimentary, thats the office of the thesy. And i think President Trump will increasingly be viewed like that. Hes going to have to be nice if hes going to be there for four years, which is questionable. When we come back, well have much more from our special guest, larry fink. Well get his take on politics and the markets, next. And later, the cofounder and ceo of Hyperloop One will join us regarding infrastructure spending. Got a lot of thoughts on this after my commute this morning. Squawk box will be right back. Tensions running high between the fed and investors. The head of the Worlds Largest Investment Firm is in the house. Blackrocks larry fink is here so talk about the markets, china and the president and the big meeting in maralago. President xi jinping will be talking trade, currently manipulation and much more. We have a preview and what it means for your money, straight ahead. And the future of transportation. The executives from hyperloop will highlight their plan to get underground and their vision of infrastructure. The second hour of squawk box begins right now. Live from the heart of business in new york city, this is squawk box. Good morning, welcome back to squawk box right here on cnbc. Were live at the Nasdaq Market site in times square. The future is up this hour after what was a roller koeflter of a day yesterday. Were now looking up. Dow looks like it would open up about 18 points higher, nasdaq up 3 points and the s p 500 well call it up marginal right now. In studio this morning, larry fink, chairman and ceo of blackrock. Well get his check on the market right thou. Are we close to 5 trillion at this point . 5. 1 trillion. 5. 1 trillion. Making headlines at this hour, President Trump and chinese president xi begin two days of meetings today. The president s marg laralago resort in florida. Well have much more on this story in just a few minutes, as well. And San Francisco fed president John Williams says we could have a total of four rate hikes this year if economic numbers are set to move. In a frankfurt appearance this morning, he also said the end of this year would be a good time to start normalizing your Balance Sheet, comments about the Balance Sheet. And a notable initial Public Offering this morning, u. S. Trucking Company Schneider National Pricing its ipo at 19 per share. Its the first public trucking to go public. Back to our special guest this morning, blackrock Ceo Larry Fink. Larry, weve got other than this you know, this summit that we have happening, weve got a jobs number from a um can of days ago that portends possibly good things for tomorrows number. Well see. And then weve got off the back drop of, you know, weve talked about some of the other stuff happening in washington, tax reform and obamacare, weve got gorsuch coming up. I dont necessarily think a Nuclear Reaction in the senate will affect the markets, but are we being to this cat fight that happens on a daily basis on capitol hill. . Does it matter . Of course it matters because if we dont have the tax reform that were expecting, if we dont see a true deregulation, i think the markets would have some setbacks there. And youre seeing that youre seeing a slowing down of on our economy the First Quarter. Were going to grow probably less than 1. 75 . And much of it is were waiting to see a little more certainty and whats going to happen with tax reform and deregulation and how were going to position ourselves. In fact, i think the First Quarter, the u. S. May be the slowest economy in the g7. When you say people are waiting to see, you mean ceos who are spending money i think actually individually, too. I think we have high confidence in america, but were not seeing that translate into sales. Were seeing car sales slow down b were not seeing that ramp up that everybody some have a prophesy to say you get founders and a lot of it is that uncertainty in washington. A lot of it is as to where are we going to be as an economy and, look, i think its probably prudent to wait and see. If these things happen, you can do it. So if you believe that it would be longer for these to transpire and we have a economy that is slower because of the uncertainty, then i would say the market is the u. S. Equity markets are probably higher than they should be. Is that easier or more tax than repeal and replace of obamacare, tax reform . I think everything is hard. I dont want to say one is easier than another. I think theres probably more unity around the need for tax reform. But then youve got deductibility, youve got all these sacred cows and you have the big component, are we going to accept tax reform with a with the backs drop of a growing deficit or are we going to be revenue neutral. . And if were going be revenue neutral, i still havent heard how we are going to find the revenues with a you know, it is my belief that the border adjustment tax is not going to happen. Now, obviously, many people will disagree with me. Its exactly like paul ryan, you remember how sure he was they were going to have the votes . They do that almost as posturing. Now we know that. But this is this is hard. This is really hard. So, you know, we originally heard 15 tax break for corporations and then 20, 25, could it be 27, 28 . Look, even at 27 and 28, thats okay. Well take that. As you said, joe, what we dont know is what are they going tie away . What type of deductions . Until we have better certainty, its hard for anyone to say, you know, im going to invest for that future growth spurt. The federal caucus isnt going away, either, neither are the moderates. And were only talking about republicans now. There are very, very hard things to do. I do believe europe is looking better every day. I actually believe as we enter brexit and try to go through with it, i would say the europeans are probably most surprised at the trump administration. And i think what youre seeing in europe and every country, youre seeing a movement away from populism back to centralism. So this is why i believe in the polls, you have macron, probably the leading candidate for france, theres less fear at the moment of a la pen win. So if you have money on the sidelines, would you invest in europe . I actually have probably incrementally more money in europe today than i would have normally had because you look at it as much better value . Much better value in the u. S. Today. And i also invested in mexico when the peso what the was at 21. I thought that was a great opportunity for a longterm investment in mexico. When we spoke earlier, you pointed out that we have seen below average concerns for a long time and massive Pension Funds are getting to the point where they have to realize this may be for the foreseeable future. Right. Is that your outlook on the markets for the foreseeable future . I hope. I hope that that future is not reality. I would like to see rising inflation, rising rates of return. I think that will solve so many of the issues. I do believe low rates harm savers worldwide and i do believe that low rates with low rates and poor returns on savings reduces consumption. I think thats some of the ills we have. But ive been saying that for a few years. And i do believe in retirement and the fear of retirement is the greatest problem we have in this country. And i believe thats being reflective in this populism, that as people near retirement, theyre getting more frightened. I dont have enough savings. And the compounding effect with this low return is really having a severe impact. And i dont think we can spend enough time focusing on these real big giant issues. We have to be aware, here we are talking about Financial Markets and the markets go up and down. People dont really like savings. They prefer to consume. We all like to consume more than the state. But you have to stay for these long outcomes, the outcomes of retirement. And its a process. Its a long 40year process. And so many people have been ill prepared for that long process. And this is this is one of the great problems that we have in this country, the fear of retirement. And we say in the job market, since the financial crisis, the component where most jobs have been credited for age group are men and women over 50 because they have to work longer because they dont have the nest egg that was that they needed to live retirement and dignity. And we dont spend enough time on that. And so, becky, if rates of returns are subdued because Global Economic activity is subdued, thats not a good outcome. This is why whatever we can do to find ways to celebrate global growth, through tax reform, through other through deregulation, if that works, and we ultimately then have higher inflation rates and that ultimately will move rates higher and then your total returns should be higher. What was your reaction to the fed minutes yesterday and just generally this idea of perhaps even more quickly than we thought . I think the i read that. I think youre hearing from three or four tightenings. Im probably in the camp that theyre going to go slower. And i read that and i still remain to be in that camp. I believe, you know but they all said theyre data dependent. They dont use those words any more. If we do have an economy your market return just on the idea that the tightening would be more aggressive than anticipated . So they said data depend theant. And so if you tell me what theyre going to do when the economy goes to 1. 4 gdp in the First Quarter. Theyre going to have to anticipate further and further growth. And were not seeing real inflation at all. So inflation stilt is muted in this country. So im under the view that they may have one or two more tightenings, but not three or four. But that also anticipates a weaker Economic Growth in the United States than, for example, than the white house would want or than some others are anticipating. That is my view. Thats not blackrocks view. Youre asking my personal opinion. I would say three or four tightens, same with gatemore. Our whole firm believes that the economy is going to accelerate growth in the second half of this year and the market anticipating it. And youre debating that with them. Im debating with them. I believe more and more leaders i talk to of companies, theyre stepping back and watching and theyre not willing to put a lot of money on the line right now until they start to see Economic Growth. When did that happen . Has that been a long return over health care . I think theres this greater worry that these proposed changes are going to be harder and harder to execute. And if we do see some change, real change in terms of tax policy, i think youll see those spirits continue. But lets be clear. I think much of the optimism has to do china is growing faster than we expected six months ago. Cab da is growing faster than six months ago. And europe is growing faster than we thought six months ago. The only time it is not growing faster than we wanted it to be is our country. We have seen this First Quarter gdp thats been for six, seven, eight years now. The First Quarter of gdp has been much lower. And its been questionable and we wonder if we even trust the numbers for the First Quarter at this point. Or people spend a lot of money during the Christmas Holidays and are finished. And the tax returns are coming in later this year, too. Much later. And thats a worry. I hear that everything where, how late the tax returns are and how thats impacting sales. The other thing, lets be clear, and i heard this again yesterday, we are seeing less tourists. Because of the stronger dollar . No. Because theres a fear in some ports of the world that were not as welcome. Because of the immigration policy. Immigration policy. Im aware in many of the universes, theres a drop of 20 to 40 of foreign applications for universities. So lets be clear. The components of the economy has weakened. Kids in the United States going to college maybe will have an easier time getting in . One of the reasons the universities bring in a lot of foreign students, obviously because they meet their requirements, but they pay the full load. Youre able to offer more scholarships to more americans through that policy. So there is a reason why they open up the global doors. But they compete with the u. S. Students, too. So if youre you need a much higher s. A. T. Score, a much higher a. C. T. Score to get into some of the colleges. As we all know, that is not a precursors of how they im being flip in saying these things, but yeah. There are weaknesses in this economy that are surprising people. And you talk to the people in the hotel industry, there is a weakness with less foreigners. Not for people . That has happened already. We havent spent enough time talking about it. Auto factories had as many as 5,000 to 10,000 depending on how large these factories are. Most auto factories have between 200 and 1200 people thou. We have robots and machines there. Lets be clear. You know, in every industry, we are seeing transformation by technologies, supplanting human input. But weve been talking about that for years. Thats not a surprise. Whos leading the way. Sthp. I wouldnt say we are leading the way. That was our initial conversation. By the way, you were talking about steve mnuchin, he was asked about ai and robotics. And i think about that every day. You think about it every day . Every day. Just as an aside, did you talk to the fed officials all the time as a big investors and they would tell you stuff they were going to do . How many conversations did you have per week with a fed official . Generally zero. Is that bad that youre out of the loop or good that youre not getting dragged down first of all, when they call, its a one directional conversation. They ask you a question, you answer the question, they say thank you. Thats the conversation. And theyre not giving you any hints on whats happening thats true. Sounds like such a strange story. The lack of obviously, i think it was more than a one directional conversation. I mean, thats what i read into it. Man, you spilled the beans during the commercial. The onedirectional conversation of squawk box. You spilled the beans. Yes. Im talking about it. No, but you know, i do believe that we have conversation with government leaders worldwide. Theyre asking our opinions and thats the end of the conversation. And you have to respect the youre trying to help these men and women trying to, you know, in their policy creations, whether its the Federal Reserve or a central bank or a finance minister. And you have to understand, you know, theyre trying to help their country and the future of their country. And theyre doing it through an interchange with many different people throughout the world. But it is you have to understand the province of what youre operating in. And it is one directional where theyre trying to be given information and thats the thats the sum and substance of what you do with these leaders. What do you think about the treasury bond, the tenure . How is how impossible spending above 2. 4 . Whats happening there . This is you know, im turned view and ive said this, i think, the last time i was here. Theres still more than i think theres a 51 chance the tenyear bond can be below 2 . Now, my team doesnt believe that, too, but i do. I actually believe the most crowded trade, talk about momentum ask sentiment. The most crowded trade with hedge funds and people that rates are going much higher. And so, to me, when you know trade is so crowded, and this is public information, i already talked about it. In the first three months of the year, 178 billion of etfs were purchased. A lot of money has been put to work. And were seeing a lot of money being put to work, even rates and credit and emerging credit. And so i think what people are forgetting, we always talk about that pool of cash. That pool of cash is enormous. And that the in some areas, that pool of cash is being put to work because they believe the you know, the opportunities are pretty good. Thank you for sticking around. Were going to continue this conversation. The trump xi meetings begin this afternoon. Two economic powers and the former Prime Minister of australia, kevin rudd, will join us a after the break. Stay tuned. Youre watching squawk box here on cnbc. For decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. So yourhow nice. A party . Ill be right there. And the butchery begins. What am i gonna wear . This party is super fancy. Lets go. Im ready. Are you my uber . [ horn honks ] [ tires screech ] hold on. [ upbeat music ] the biggest week in tv is back. [ doorbell rings ] whos that . Show me watchathon. Xfinity watchathon week now until april 9. Get unlimited access to all of netflix and more, free with xfinity on demand. President trump welcomes president xi to maralago today. Joining us now with more on what to expect from that meeting is kevin rudd. He is the former australian Prime Minister. Hes the president of the Asia Society Policy institute in new york. Sir, that you can so much for being with us today. Good to be back in the program. We have been trying to figure out what the room is going to feel like when these two president s join. You have a very interesting take on this. The president of china, you say, is going to be walking into this with a lot of respect for donald trump. Why is that . The chinese have a tradition of being respectful to foreign leaders, period, and its a big part of their cultural and political and frankly commercial tradition. Theres something else, as well. The chinese are pragmatists. And what they recognize is this guy, the president , the largest and most powerful country on the planet and secondly, he won against the odds. Theres something going for this guy, in their view. So the general assumption that foreign leaders somehow walk in and assume this president isnt legitimate doesnt hold in the minds of chinese leaders. Theyre much more pragmatic than that. And what does it mean in terms of the meetings . First meeting, first date, you know, these guys are, as someone wrote recently, two alpha political types. But establishing a little of Mutual Respect about this, which is a good way to start these meetings to talk about each others domestic politics. Everyone is constrained in international politics, whether you admit it or not, and therefore President Trump talking to president xi about the Upcoming Party congress this november, which is in their political system, communist party state, oneparty state, what are your constraints, mr. Xi . And i think mr. Xi would be interested in how on earth did you win and what forces actually brought you into the white house. Thats the way these conversations start is trying to understand each others perspectives. And the great strengths of president bush over the years. President bush would always begin by saying what are your politics, kevin . And frankly, all of us in democracy face this rolling question between good policy anding managing the political processes of our country. President xi is a different kettle of fish, but the bottom line is, the politics of an 8million member party is a big rubiks cube there. Getting to basics on that is a good way to unfreeze the room. There will be uncertainties in this meeting before you get on to the nuts and bolts. So when north korea comes up, do you think president xi says, you know, this is not great, whats happening here . Its unacceptable. Do you think president xi says, god, i know. This is i mean, were not sure what to do here. Or does he say is he truly a partner, an enables of i almost get the watching them condone launch missiles right before this visit is kind of in the face of his ally, china, as well,. Im wondering if he does enough to where china actually starts siding with us rather than siding with their neighbor. Is that policy . Well, you make a good point. Kim jong un has done Everything Possible to get that big pie and throw it into chinas face for a long period of time. And frankly, its really rubbed the chinese the wrong way. For example, this guy is now about four years into office, i think, kim jong un. Since that time, the chinese have not had him on a visit to china at all. President xi jinping has not rolled out the welcome mat like he did for his father and fwrand father. There is no positive view of kim jong un anywhere in beijing. But thats only half the story. The other more difficult half is what on earth do you do about it . And because the chinese say, hey, youve got problem with these guys. Theyre our neighbors. The country falls apart, we get 20 million refugees the next day. So what do you do given current failed diplomacy towards north korea to move to a new diplomacy which implies real leverage to pyongyang which includes the use of an Energy Supply leaver to bring about change. Well, im glad they have something because i was thinking that theyre out of leverage with north korea, as well. You think they still do in terms of they have one card left in the pack. All the political leverage theyve used, Foreign Policy leverage, they even cut back on coal exports. This is the one left, which is oil. China is reluctant to use it because they know if they turned it off, the regime politics of that would be disastrous in beijing. And being very pragmatic, what are the chinese saying . What do you think if kim jong un falls, do you get something worse . Do you get someone from the military . But i think the real game in town is lots not just bang our head against the wall, pretending that diplomacy is going to work. We now have four, five, six u. N. Sanctions, its not having any fraction. What is new and what cards should be on the table in terms of a grander bargain on the Korean Peninsula . But, kevin, dont you think a chinese south korean u. S. Cooperative can solve this problem . Chinese chinese south korea, u. S. Organized an effort to to facilitate a leadership change and have it organized, subsidized restructuring . I think the way what really worries everybody, whether youre in seoul, beijing, or washington, is what does this leadership in pyongyang do if it believes its internal trouble. Theres a problem in the transition. Look at the parallel between north and south. Look at the amount of north korean artillery all within about a 30 kilometer range of seoul, maybe 40 kilometers. So theres a tricky bit here, a very tricky bit. But youre right in a broader question, which are what are the elements of a grander bargain . I would roll in the North Koreans for that, as well. Can you get them to do the two core things you need, stop testing missiles, stop Testing Nuclear material, and secondly, get rid of your existing stockpiles of both. And what is in it, then, for the North Koreans . Well, a final peace treaty, diplomatic recognition from washington and maybe on top of that an external security guarantee by both beijing and washington so they get to keep their regime and they get to keep the territorial integrity of their country. Theres been a martial plan to rebuild the north, maybe a one country two Systems Approach to the north and south. Maybe even a longterm question of u. S. Troop. But lr the elements of a grand strategic battle, but the politics is real hard. That sounds like a great sort of blueprint for getting there, but its hard to imagine that with kim jong un in the picture. Yeah, i take that. But were down to a series of very bad options. Whats the least bad . So what i find interesting is that many places in china is the question surrounding a longer term strategic bargain on the peninsula and no longer an academic fantasy land. Theyre now being discussed more. But theres a big gap between having a discussion and producing a real political outcome. We havent talked much about trade. Is there a way that both president s can walk out of this meeting and feel like they have won on the trade front . I think what well see loud and clear in beijing is that business as usual on u. S. China trade aint gonna fly politically in this country. Going back to our first point about how did President Trump get elected . The chinese will absorb deeply the forces in terms of a heartland of america which brought the president to office, about the economy, defining industrys cities in the rift. So they have got that and theyre part of that picture. Where does the action lie . I was in beijing about a week ago. Does it lie in tariffs . Does it lie in purchasing agreements with cities and sectors . Because the gap, which the president focuses on, is something in the order of 350 billion a year between american exports to china and chinas exports to this country. So how is that to be closed . But theres practical stuff on the table. It will be hard. How is President Trump viewed in australia, would you say . I havent been back to australia for quite a while is the honest answer. I live here in a small village somewhere between china and western europe . I think the fair thing to say is that certainly in western europe and in large parts of australia, the president is viewed negatively. I think thats fair to say. Like the democrats in this country . Not quite that bad. Well, i labor party. But im not going to domestic policies, either. Those are all yours. Im sticking to the Foreign Policy. Its safer terrain. Mr. Prime minister, thank you very much for your time today. Good to have you. And larry fink, thank you for being here. We can talk about chuck you just hired chuck robins this morning. We didnt get to it because we dont have enough time. We ran out of time. Not because of we, but because you have places you have to be. I do. Coming up, breaking news from challenger ray and christmas on jobs and job cuts. Find out which industries are hiring and which ones are firing. And later, a trump economic adviser gary cohen touting elon musk and infrastructure. One of those ideas is the based hyperloop, well hear from the ceo and cofounder about their business for america and the future of transportation. Squawk box will be back back. Welcome back to squawk box. Challenger christmas just out with his monthly report on jobs in hurricane. Number of layoffs jumping 17 in march. But hiring are at a record. Good morning to you. Walk us through the headline numbers, sir. Well, with we saw 43,310 job cuts and that was up 17 from last month. But weve now seen three consecutive months, first three months of the year where the job cuts are down from what they were in the same month last year. So First Quarter, down 30 . Job cuts. The job market is hot with 4. 7 . Were looking at a list of the breakdown of those industries. Youre looking at telecommunications as the leader. Is that a particular company . No, but we saw some general move in telecom. Cuts still very light for the quarter fof telecongenerally, even though they were up this month at just under 10,000. The its a shifting product mix, automation, the same sorts of things were seeing in most high tech industries. I dont think thats something rashble, then. How did it look regionally . Well, heaviest cuts were in texas and ohio in the month. 17,000 each in those two places. And the other thing you just referred to, which is robots and machines in terms of cost cutting, we were just talking to larry fink about robots as you would imagine given the headlines about whats going on at blackrock and then we talked about the comments Steven Mnuchin said around ai and whether they were going to take over jobs. He said its not an issue he thinks about. Is it an issue think about . It is an issue. We you sa what happened to the Manufacturing Industry back in the 80s and 90s. We may now be moving into the era just the start of that where its the same sort of effect from robots and technology, automation, ai may affect retail, may affect transportation, jobs. No question in my mind, just like offshore and technology is changing the face of the jobs market today. Final question, retail always, you know, always at least for the past year, it has been one of the toughest place toes be, including the numbers demonstrate that. Is there a bottom . Well, whats interesting about retail, this quarter particularly, is we saw 38,000 job cuts there and, you know, a bunch of cuts, cut stores and they seem to always do that, you know, after the holiday season, the ones that just barely held on. And we saw more of that this time. But we also just saw a big Job Announcement by home depot this month at 80,000 jobs that people Like Customer Service and salespeople and freight and receiving types of workers. So there is growth there. Most of the growth seems to be more in the ecommerce area longterm. But were seeing in this hot job market continued kind of flux in that retail sector. Where is that dynamic young go gutter that we had on last time that gave us so much useful information and just sooeg seemed to really have a grasp of everything . Your son, what happened you saw how well he did. You said i have to get back on there. Is that the last time were going to see him . He did too well . Where is he . Im not kicking the bucket quite yet, but hes coming on soon. In fact, you know, we know when that recession hits, these layoffs are going to start to explode. I hate to have him be the bearer of bad news, but certainly, you know, you guys were so good to him last month. We like to cut his jiff. He just really, run, the whole segment came alive, john. Well, all right. Im telling him that youre asking for him. Lets alternate. No, we love you, john. Im just kidding. I forget his name. What was his first name again . Andy. Tell andy we send our best, but we like you both. Maybe we can do both of you guys. Not appeared rue . Its andy. Back and forth, back and forth we could go. Okay. John challenger, thank you. Great to see you. All right. Check out the futures at this hour. They you know, who knows after yesterday. We were up sharply and closed lower. We are down earlier today. Now were up. Serving green across the board. Who knows, you know, its a small move, but it is interesting to watch. Squawk box returns after the break with Hyperloop One. And the future of infrastructure. Making every do. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Im val. The orange money retirement squirrel from voya. I represent the money you save for the future. Whos he . Hes the green money you can spend now. Whats up . Gonna pay some bills, maybe buy a new tennis racket. Hes got a killer backhand. When its time to get organized for retirement, its time to get voya. Welcome back to squawk box. Policymakers in washington this morning, details for 11 routes in the United States, cover 40 to 100 miles. Jerry cohen will talk about elon musk and tunnelling a white house town hall meeting with ceos earlier this week. We cant really build high speed rail in the east coast order because its too curvy. Elon musk says, okay, i can solve the problem. I can tunnel the whole way. Hes been tunnelling out in the desert, hes been tunnelling this california to prove it can be done. And not only can he tunnel, he can beat high speed rail. Joining us now to talk about their vision, the Hyperloop One founder and ceo and robert lloyd, Hyperloop Ones ceo. Good morning to both of you gentlemen. Talk to us about your vision and how it relates to what gary cohn just talked about. Well, today in washington, rob and i and many of the team, Hyperloop One is now 250 employees strong. We just came from vegas 24r hours ago and saw the last tube of the first full scale hyperloop in the world being built and were going to move towards our moment and show the world that hyperloop works. Were the only company in the world thats actually building it and the vision for america is announcing a number of initiatives, rob, lloyd, our ceo, is going to speak to that were very excited that comes out of our global competition. Routes all over america that can solve all of the traffic and logistics problems that are causing so much friction and pain in peoples lives in america. And were showing an image right now of what the hyperloop likes like. This is a proof of concept here no, thats real. Thats not a proof of concept. That is not computer graphics. That is real on the screen right now. I appreciate that that no, i appreciate that that is absolutely real. The question i was going to ask is in terms of rolling this out in a meaningful way, what kind of timeline could we be talking about and what are the true costs . Because when you the technology itself, but then when you Start Talking about digging tunnels, if, in fact, that is the approach to take, it becomes very expensive very quickly. Yeah, i think the most exciting part about hyperloop is were at least twothirds the cost of high speed rail. City centers, many of the projects that were highlighting today that weve been reviewing as well with transportation ex experts over the last couple of days cover all of those news cases. We can go in a dance urban corridor like the northeast, we can use big, open spaces like in colorado or nevada or texas. And the idea of going from denver to vale in under ten minutes for you ski enthusiasts is something that would really, really change our experiences. So think of twothirds of the cost of high speed railing, technology thats all been developed in america, built in america, and instead of relying on foreign technology, as is the case today with high speed rail, you would be looking at Technology Made right here, a company thats gone from a founding josh giegel, our cofounder, to over 500 employees this year and is building jobs across nevada, california, its a very appealing concept. And yesterday on the hill, as we spoke with policymakers about what it would take to bring those routes to reality, we had a very positive response. It was very encouraging. If you were doing that, rob, from and you just peaked my interest, from denver to va will he, would you be accelerating for five minutes and decelerating for five minutes . How would dow that . You would have to, right . Yeah. So thats a great question. The exciting part, the part that gets us so kind of invigorated about hyperloop is the high speed. But, really, if the first groups that have developed are a hundred miles or 200 miles as part of a larger network, we would have very gradual acceleration. The feeling i would have would be no less than the feeling of accelerating on an aircraft,. 2 gs. That takes a couple of miles to get to a very high speed. And then were not going to be pushing people forward in any uncomfortable way. It would be like riding in a commercial aircraft up to aircraft speeds and faster. But if the route is only 150, 200 miles, you really probably never hit 700 miles per hour. But you would still be able to go there so much more quickly than the alternatives we have today, which is really a Transportation System thats fallen behind and, obviously, the excitement that everyone feels behind hyperloop is something new, a new mode, and something that really will change our lives. It would be like what is that, i70 or i80, it would be part through the mountain and part adjacent to mountains . Im thinking denver to vale, would that be problematic . Anything that goes through a mountain would require a tunnel because it needs to remain relatively flat. So with 11 great ideas that were prengt today here in d. C. , from all across the country, 35 states, 4,000 over 4,000 miles of proposed hyperloop, theres a lot of great ideas the. And this was a bottoms up initiative that surfaced state departments of transportation, world class engineering firms that rparticipated. So were pretty excited. If we wanted to replace from the northeast, how do you do it . How much does it find . Forget about that. Instru instructly, how would you do it on the east coast . Is it possible . Like gary cohen was just talking about, is it possible to do that on the eastern border . Absolutely. The next decades, its just something that is possible, but america is a huge country and all of the all of the presentations were going to make and the proposals of different routes from florida to the rest of the country show that theres huge slots of the nation that could be interconnected in a much better way and the vision, really, is to turn these city curves into essentially super regions and have the Economic Impact that weve seen of connected regions like the northeast corridor, via the rest of the country. And the final point is, only in america was this really possible to invent, create and build and as you saw in the video in the deserts of nevada, rise up an actual example of hyperloop and were about to do the kitty hawk moment. And that was impossible anywhere else. That spirit of going after the moon shot and in 2 1 2 years going from idea to execution is impossible anywhere else in the world. And real quickly sense you you tried to disrupt other transportation before as an early investor in uber, and i just wanted to get your latest thoughts on whats happened and some of the troubles at that company and, really, even, the economics of that Company Given that the company is continuing to lose money. Yeah, my our thesis as always been as an early investor in the transportation space, as an early investor in uber, is that the size of the in transportation in this decade and the decades ahead are so massive, youre talking about trillions and trillions of dollars of Economic Activity being structured by Companies Like uber, by kwps like Hyperloop One. The scale of the business here already is massive, as you know. Sure. Give it time to continue to scale. We wish you lots of luck. It is a great project. Talk to you guys soon. Thank you, rob and shervin. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Itthat can make a worldces,. Readof difference. Expedia, everything in one place, so you can travel the world better. Im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. Coming up, investors keeping a close eye on the talks between President Trump and president xi of china. Max baucus will be joining us next when squawk returns. Snow instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential. Tights time for the your business entrepreneur of the week. Danielle will never sell online. The owner of the fibre store wants to connect with customers at her story. She entices people to come in and buy using social media. Will your business be ready when growth presents itself . American express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. Blackrock Ceo Larry Fink on the record, the markets, the economy and the Worlds Largest asset manager shift towards machine. Technology has always been a major component of who and what we are. Highlights from that exclusive conversation, straight ahead. A high stakes summit at maralago. President trump will be facetoface with chinese president xi today. Well tell what you to expect from the meeting. Plus, jeff basos doubles down on his mission to send people to space. The final hour of squawk box begins now. Live from the most powerful city in the world, new york. This is squawk box. Morning. Welcome back to squawk box here on cnbc live from the Nasdaq Market site. Im joe kernen along with becky quick and andrew ross sorkin. Futures now are mixed. Down half a point on the s p, up about 8 on the dow jones, up less than 2 in the nasdaq and we started lower. Then we turned all the indices are implying a positive open and now were kind of mixed. Treasury yields today, moderating. Again theyve been between 230 and 240 for about the last week or so. Okay. Lets get you to some of the top stories today. Unileaver plans to launch a buyback for some of its spreads unit. It will be laurping ads 5 billion buyback. Unilever rejekded a buyback from kraft. Its a first on cnbc interview youre not going to want to miss. Fortune magazine calling the battle between kraft heinz and unilever. Weekly jobless claims at 8 30 a. M. Eastern time. Blackrocks ceo, larry fink, speaking out about the impact potential delays of tax reform could have on the markets. He joined us in the last hour. If you believe that it will be longer for these to transpire and we have a economy that is lower because of the uncertainty, then i would say the market is the u. S. Equity markets are probably higher than they should be. Actually, larry talked about a lot of different views he has on the markets. And sometimes his own personal views die verge from those on the blackrock firms views. He talked about how he talks about those things with the other analysts and advisers who are kind of digging through things. But he did say if we can get some tax reforms and some of the issues that are there, that it could spur some of this growth. President trump and chinese president xi will meet later today at maralago. Kayla tousche keeps tweeting out pictures of the sunrise over the ocean, down in palm beach. I was going the take a picture of outside of our studio just to send it to you. There you go, kayla. You see the umbrellas and its about 39 degrees and balmy with a steadiy rain. And its dark. Its 8 00 and its dark. So keep tweeting out those you know, i know youre just trying to brighten our day. We just want to draw a stark contrast, joe, to the thunderstorm, the torrential rains that are expected to hit here in a couple of hours. So you might end up getting the last laugh from where you sit in new york. Unclear if thats an omen for todays meetings or not. But it is clear, guys, that the administration faces its highest Foreign Policy stakes yet today when the trump administration, the President Trump, president xi and their delegations will hold a series of meetings for the next day or so to discuss the urgent matter of north korea and how to diffuse the north Korean Nuclear situation. President trump is expected to ask china to tighten the screws economically to get north korea to back down from the program that they have been building. North koreas Gross National income from the best we could tell from the data thats available is just 1200 per capita. Thats a tenth of chinas and chinas is its sole trading partner, its sole source of the currency for the entire region. To that sense, china already said it would halt all coal imports from north korea. That was expected to be in advance of a potential u. S. Request to do that. So its unclear at this point what tools the administration has to actually ask china to use because u. N. Sanctions have already been put in place and china has already seemingly preempted a u. S. Request to do this. There, of course, are other issues that have put these two countries at odds, notably, the occupation of the South China Sea and then the trade issues that have come up on the campaign trail and even since the president has been elected over the the deficit, over the trade imbalance and currency issues. But were told that those issues will be discussed, the relevant military and financial delegations and cabinet members will be here to discuss those issues. But that the purpose is to establish a framework for figuring those out Going Forward and that they will take a back seat to north korea. Specifically, yesterday in a briefing a Top State Department official was asked about currency and whether anything would be announced about the administrations position on currency, the renminbi or the yuan. This is what a top official said. I think i would be not only remiss, but in big trouble if i tried to remand it to anybody other than the state department. So it does feel like the Administration Still incomplete, doesnt have a trade representative orren an am was door to china still confirmed. But farther down the line here, theyre going to be discussing the most urgent matter to try and get a resolution on north korea. All right. Kayla, thank you very much. Well check in with you just a little bit later this morning, as well. In the meantime, max baucus who is the former u. S. Ambassador to china is here. Hes a former senator from the state of montana. And ambassador baucus, thank you for joining us today. Youre very welcome. Good to be back. We earlier today spoke with the former Prime Minister of australia, kevin rudd, and asked him about where he thinks things are going to be shaping up. And he had some very interesting insights, just about how the two leaders are likely to sit down and talk about their own politics first, to find a way that they can each walk out of this with a win. Is that how you expect things might actually go down today . I believe this is the most important summit President Trump will be in his presidency. Because the u. S. China relationship is critical and its getting more and more important each day. It really, in many ways, determines policy worldwide about how the United States and china get together. So the challenges are great. Regrettably, ive attended a lot of these summits, so president obama and president xi. I can tell you theyre very formal, theyre very scripted. Each gives a statement. Neither asks a question of the other. And to make it more difficult its through an interpreter which stands to make the reality a little less real. So its very difficult, very transcripted. Now, each will state its policy positions, the United States clearly will try to encourage china to do more in north korea. But weve been trying for a long time without a lot of success, frankly. On the other hand, were getting closer to a moment of truth in north korea. The problems getting more dire each day. And i know, because ive heard president xi say a couple three times how much he very much disrespects kim jong un. So there might be an opportunity for President Trump to say to president xi, hey, weve got a problem here. And its not getting any better. Its getling a lot worse. So lets Start Talking about how we figure out a way to handle this fella in a way that makes the world safe. That, i think, is an attempt we have the to make. Unfortunately, weve already seen so many of these efforts fail and so many of the pressures from the u. N. Sanctions that have been levied against them from what china has already done to this point. They have oil left as the last thing that they can really yank. But if they pull that and there is no success, what then . Well, i dont think kim jong un will do anything to keep power. Hell do anything to keep his nukes and his missiles. Unless some deal is worked out some way where he can save face with north korea. Its very difficult. But china has to be part of the solution. The United States cannot do this alone, even preemptly or militarywise, it wont work. China is the big partner here. We have to just try and up the ante with china, too, in a very solid way, a very respectful way. The because china wants a solution, too. But china does not want the peninsula to be chaotic. It does not want this peninsula to be unstable. China loves this ability in the peninsula and thats the main reason they have not done more. Arguably, though, the stability is not really there any more. Well, it is for the shortterm. And china is willing to maintain the status quo, current stability, as far as they can until they china get to the point where they see, wait a minute, they better do something. And were going to get close to that point and that might be the opportunity that we americans have in talking to china. What about on the trade picture, where do you think things can be where do you see motion when it comes to the trade picture . Both at the summit, both sides are basically going to state their positions. Frankly, we americans feel were being taken advantage of and we really are. The trade with china is very protectionist. Policy is very difficult for American Companies to do business there. And president xi will Say Something that will be somewhat helpful. I suspect hes going to come bearing gifts, for example, investment and some very specific project or two in the United States that President Trump can then tweet about and claim credit for. But thats not really going to solve the trade problem. Basically, the United States has to trump should just say to president xi, hey, youve got to stop doing x, y and z which hurts our companies. And if you dont stop doing x, y and z, were going to have to take some actions. You may not like what were going to do, but its going to happen. And we may have to expect china to maybe retaliate. China is not going to like that. But we have to still gain this through in a respectful way, make it clear to china we cant stand the protective actions theyve taken any more. We cant bully china, but we have to stand up and make sure china doesnt bully us. That comes down to the respect that President Trump and xi can have for each other and theyre going to have to start doing this. Because theres going to be a crisis in the world. It might be north korea. And the more xi and trump have a bit of an understanding with each other and their people do, their teams do, then when the crisis occurs, the two countries can better solve it and better deal with it. Obviously, some very High Expectations riding on all of this. Senator bachus, we want to thank you very much for your time today. You bet. You bet. You bet. Okay. When we return to infinity and beyond. Amazons Ceo Jeff Bezos is on a mission to space colonization. He spoke out about his super skeet venture. Plus, paul polman, the ceo of unilever, will join us at 8 30 europe time. And then later, a high stakes meeting at maralago today and well talk about what President Trumps summit with president xi jinping means for the global economy. Stay tuned for more squawk box here on cnbc. Lysis, lysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade welcome back to squawk box, everybody. It is thursday and we are excited about that because that means tomorrow is friday. Lets check out the futures right now. This morning, so far, things have been relatively flat, kind of waiting for guidance and its not a surprise after the wild ride we saw yesterday where the dow was up about 195 points before coming back and closing down about 40. Big swing. Big turns on confidence. Adp is what send that number a stronger than expected adp report sent that number up. Some concerns about the fed later on in the afternoon with the fomc minutes bringing it down. So were waiting to see what happens next. Jeff bezos speaking out about his super secretive blue origin venture. And its almost ready for launch rocket and kals capsule. Morgan brennan joins us now with a look inside. Morgan. Hey, theateats right. I want you to come on in and take a look inside this space. It has room for six. Its fully autonomous, meaning its just customers that will go up. Its an 11minute ride that will pull up to five times the force of gravity. Thats the reason these seats are reclining and its going to include a few minutes of weightlessness. Also noteworthy, this is reusable. Which founs founder and eco jeff bezos says is key, this concept of reusability to getting millions of People Living and working in space. If we can make access to space low cost, then entrepreneurs will be unleashed, you will see creativity, you will see dynamism, you will see the same thing in space that i have witnessed on the internet over the last 20 years. Hes emphasizing that that will take time and hes hopeful the shuttle will Start Service later next year, the Company Still hasnt started taking reservations and hasnt actually disclosed a price for the trip yet. So you might be wondering, how is blue origin being funded . My Business Model right now for blue origin is i sell about 1 billion a year of amazon stock and i use it to invest in blue origin. So the Business Model for blue origin is very robust. And i do want, you know i do want i think its very important that blue origin stand on its own feet and be a profitable, sustainable enterprise. Now, bezos also saying that as hes learned from amazon, disruption really lies with the customer. And specifically the customer adopting a new technology. To that extent, he said the, quote, super optimistic about demand for new shepherd, but, guys, while weve been talking about this capsule, i also want to point out the rocket behind me, this booster has been launched and landed vertically five times. So really get to go that concept of reusability and what that will mean to driving down the costs of space travel. Back over to you. How many people in that little area, morgan . Six . Six. Whew. And its up like where you cant leave because theres no air and youre right. Did he commit to do it . Did bezos personally say he would fly on this thing as one of the first ones up . You know, thats a good question. I dont know the answer to that. I know he has expressed interest and said hes looking to do this. Ill have to get back to you with that. But i would i cant see why not. Would you . Overall in all, this is going to be me . Totally i would do this. In all, this is going to be about a 40minute trip. All right. Richard branson said he would do it, but he doesnt want to do it first. Im curious if mr. Bezos wants to do it first. I think its worth noting that while there is this timeline to hopefully Start Service next year, bezos did stress the fact that youre going to seek their time and this is all about safety and doing as much testing as they feel is necessary. Theyre not racing against the clock or looking to put deadlines in place. Its really about getting this as safe as possible. That looks cool, but there are rides of great adventure i wont do. If that was going 100 or 200 feet into the ocean, i dont know if i would even you know, its little small spaces like that where you definitely a viewer wants to know, i just got a text, is there a bathroom on that thing . No. No, you have to go to the bathroom and actually, this came up yesterday. Youre going to have to go to the bathroom before you get in here and take the ride. But like i said, its going to be about 40 minutes in all, so yeah, well, thats not going to work for some of us. Well, it wouldnt matter. You would need to be wearing your im kid background the 40 minutes. 40 minutes is type. Im surprised we havent gotten to the topic of throwing up. I just told you this is going to go up to 5 gs. I throw up on planes. And theres not gravity. So floating around and landing in space. Dont ride with me, but dont worry, i wont be on it. Rink bezos is start to go look like the expectation is that the expectation is that youre actually probably not going to be throwing up on this, either. As i mentioned before, the reclining seats actually help with the impact of all that force in terms of the launch ask coming back. Thanks for that. When we come back, blackrocks larry fink and then later, paul polman speaking about that take your bid from kraft heinz. Well be back in just a moment. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back to squawk box. Larry fink joined us this morning and said the Worlds Largest manufacturer is not substituting machines for humans. I would say in many cases its computeraided trading. We are moving towards and doing some big research now at ai on computer natural on a computer would buy and sell things. Thats a thats not what we are doing here. But we have a whole team working on ai. You know, there have been so many questions about this since it was announced last week that they would be moving about 30 was it 30 billion of assets under management into out of 5 trillion. Out of 5. 1 trillion on this on things where theyre using algorithms, not to trade, but to deep mine the data. Theres 26 employees or 36 employees that are leaving as a result. But he was pretty forceful on the idea that they are still going to have even more employees that theyre keeping around and hiring. Why invest trillions when you can invest billions. Elizabeth holmes reportedly owes theranos about 25 million. Theranos seeking to exchange some of holmes personal holdings for a promise not to sue the company or its executives, including her. Holmes stake was once worth 5 billion. Of course, this is amid several legal and regulatory challenges. Whether its worth anything. Thats the scary thing. There might be some assetes and some ip. But even with Public Companies sometimes where you do the market cap based on where the latest shares traded. So someones seed money went into theranos, and it was probably how much . Hundreds of millions or something. So you do the math and the percentages and it comes to 5 billion. That was never worth 5 billion. Valuations of above 60 billion. But that money never existed. Unless the bank wants to give you a loan against your stake, which does exist. Right. But thats personal bankruptcy. How much was the company what was the maximum valuation of that company, do you think . Oh, how much she owns. I do not know. I dont know the answer to that. I will get an answer during the commercial break. Something becomes reality, it has no bearing on reality, really, a lot of times. Dream becomes reality. When we come back, weve got weekly jobless claims about to hit the tape. We will bring you those numbers. Also, unilever rejected a takeover bid from kraft heinz. Predictable. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. The markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. Welcome back to squawk box. Breaking news, the latest read on jobless claims and its a bit of a stunner once again. Last week, 258 upgraded to 259. Subtract. Subtract 25,000. Yes, 234,000. Thats a big drop. And it puts us right back into that level we havent seen since the early 70s. You can take it for what you want in terms of viewers and strategists, exactly what it means may. But one thing it doesnt mean, it doesnt offer us any anxiety. Its not popping up. How much more good will we can get out of these low riding numbers is maybe the question. Tomorrow will be the big report, the march report from the bureau of labor statistics. Continuing claims, you know, they ramped down a bit, too, from slightly over 2. 05 million, slightly under 2. 03 million. That tenyear note, pretty stubborn here as it sits in the mid 230s and all eyes will be focused on the aftermath of what many are saying we should have all expected. But Balance Sheet runoff and what that means in the form of less accommodation is something the market may have to grapple with sooner rather than later. That is going to be an issue with the markets. Becky, back to you. Rick, thank you very much. The release of the fed minutes sparking a market selloff yesterday. Lets bring in Steve Liesman who has been watching this, too. That was quite a day to be watching. We did come on monday and say the Balance Sheet is the biggest story out there. Theyve begun to talk about it. I must say i was surprised at how far the Balance Sheet went as far as what they talked about, as well as how quick they seem to be going, what kind of schedule they seemed to be on here. Let me go through the two main points that show you what really was first, you can see that stock reaction yesterday. We had a type rally going and it seems to clearly be a the selloff clearly attached to the fed Balance Sheet minutes released. First of all, the fed rocking stocks by saying theyre likely to reduce the Balance Sheet this year, not in 2018. It looks like a majority of the camp is there right thou. The second thing, its critical to understand, its possible that they will do an immediate evend to their reinvestment strategy, not a gradual one. Everybody thought it would be a gradual end to reinvestment. Every month, every year, a sep certain number of treasuries roll off. Mortgages roll off. The idea was they were going to reduce that reinvestment. It looks like they may considering a its a 50 50 chance now all at once. Lets take a look at whats on the feds Balance Sheet rye noup. 4. 4 trillion of which 2 1 2 are treasuries. They said theyre going to sell them both kind of together. The other is 200. Lets take a look at maturities. The one to five year is 1. 2 trillion. Five years are plus around 1 trillion, a little bit more. And the idea is the maturity is around 60 years. Thats the part of the curb that would be affected the most when it fed starts to roll this off. Its very hard to understand this, but one way to think about this is when the fed bought treasuries in the financial crisis, it was because they couldnt lower Interest Rates any more. Selling treasuries is the equivalent of triegs to raise Interest Rates and they want to get that whole point out. Fed chair ben bernanke has written, why bother at all . The fed is clearly worried about this. One other point worth pointing out here, this is a regime thats probably coming to an end. Sometime around early next year, but they clearly what to do is leave a blueprint for the successors on how to unwind this balance. We are going to talk about one of the big headlines of the morning. Review after it rejected that 143 takeover bid from kraft heinz back this february. Joining us right now is the ceo of unilever, paul coleman. We appreciate him joining us this morning. You are doing a lot this morning. You are announcing the plan to sell your margin business. Youre buying back roughly 5 million in shares. Youre increasing your dividend, increasing cost cutting. You want higher margins. Tell us how you got to this point. Yep. Well, listen, it has been a busy morning. As they say the prices, we have looked over the last eight weeks at our continuous strategy issue and what we are announcing now is really the result of that. This is a refuel that obviously is going on continuously over the last few years with our border, as well. What we have announced this morning, first and foremost, is that our sustainable model is not changing for unilever. It has given us 190 share return over the last eight years and has made us grow about twice the level of the industry. 5 compounded every year. So were very happy about that. But weve also realized that with the changes out there, the changing environment, the competitive environment, the consumer, the geopolitical environment, with we need to accelerate our value delivery. What we have announced this morning is basically three things in essence. The first thing is a Cost Savings Program that we have started last year called connected for growth. And we invest about twothirds of that in our business to ensure longterm growth. We also accelerate the transformation of our portfolio. Youve seen that we will divest a low growth spreads businesses and create a food and refreshment business so that we can focus on the higher growing segments. Last but not least with the cash generation that we do, our First Priority is m a activity for further growth, but we will generate more cash in a lech raejed Balance Sheet, results in a 5 billion share back bye weve announced for 2017 and a 12 increase in dividend. Given the confidence that we have in the future generation of this company. Paul, Fortune Magazine called in this morning the battle for the soul of capitalism. And one of the reasons we mentioned that is that you have talked about probably shareholder perhaps the rationale for why they may suffer in the first place. What do i make of that . Well, i havent seen the article, but what we have to find is in society in general the right shawl for shareholder valuation for the shortterm and the longterm. We have clearly decided to have a model that serves the consumers out there. As we do that very well, trying to improve their lives, doing it in a more sustainable and a more equitable way, we are able to unlock our shareholder value return. Youve seen the 190 i mentioned over the last eight years. Theres nothing really to be ashamed of. Certainly ahead of most of our competitors the the. Unfortunately what you see is there is uncertainty out there in the global world. Future cash flow is discounted a little bit more. And there is a certain big group of investors that seems to prefer the immediate cost cutting and margin creation at this level. And what we have to do in our model that is very much longterm focused is to be sure that we find that right balance. The measures that we have announced today, i think, get exactly there and we think there will be enough shareholders that well buy into our longterm compounding story. Paul, can you tell us a little bit about the decision to reject the takeover offer and perhaps more importantly how you persuaded the other side to stand down. We asked Warren Buffett a bit about this, but i would love to hear it from your side. Well one got Warren Buffetts story. And i tend to believe that this warrants a reflection of what happened here. But when kraft heinz came, it was very clear to my board, at least, that we could unlock that value ourselves and we were well on the way to do it. We just hadnt communicated it to the market because i firmly, rightfully or wrongliful believe that its better to deliver than to promise and that ultimately the numbers will reflect the share price will reflect what you do. Unfortunately the way the Financial Market is going, we clearly know that we need to do more and hence this communication now. But the board was firmly convinced that this offer was first of all certainly not sufficient, but more importantly, it did not fit with the unilever Value Creation model and certainly our opinion of how to create shareholder value for the longterm. Were dealing here with fundamentally different Business Models, fundamentally different cultures and i think we have shown with the announcement today that we are well capable of creating this shareholder value ourselves, i believe to the benefit of longterm society, as well. Paul, war b buffett was never behind the idea of a hostile offer, he was under the impression that these had been friendly talks and that you were open and receptive to some deal being passed on. He said it became clear to him later on that that was mott the case. Is that your understanding, too . Yeah. I heard him say this and its too bad that he came to that conclusion a little bit later than could have. But at the same time, weve used this opportunity to really look at our own model and were grateful for that to see what we could accelerate and actually strengthen our longterm Value Creation. And this has given a great impetus to a company of our size and skill to move some of the programs that we have faster forward than we perhaps would have been able to do. Just to clarify, as far as youre concerned, these were always hostile talks, there was never any sort of friendly cooperation along the lines . That is correct. Nor do i understand the joke of the diplomate and other things. Weve always been very clear. And there is no doubt about it on our side, at least. And, paul, wuvent o things that you are doing is reviewing right now what is a dual headed structure in terms of being based both in rotterdam and london. How are you thinking about that . And in particular, if you were to unravel that or change it, it could make you more susceptible to a hostile bid, right . Well, the question is the right one and weve actually Just Announced a study, not a conclusion of a study, and that will take us to the end of 2017. But what we have looked at is when we came to the conclusion of divesting our spreads business, the lower growing spreads business to focus on the higher growing businesses, we discovered that actually one of the options that we have is to do a spin off and to have this as a stand alone unit. And actually being a unified company, something that weve studied about every ten years, by the way, having a unified company would make this simpler to do. It also would allow us, with one Share Capital versus two Share Capitals and instead of having one company to participate in future major m a activity whether to come along and whether of interest to unilever. So we want to just prepare that optionality to position us better for the future. The reason we havent really tackled this until now is that it hasnt given us the complexities. Were lunching this company internally with one ceo, which is myself, with one strategy that is getting clearer by the day. So we havent seen the need. But i think were ready for it now to take our time for 2017 and see if theres a better solution that gives us more optionality moving forward. Paul, can you conceive of a scenario in which you would sell the company or merge with another company of the size and scale of unilever . Well, it is not for me to predict all the options in the future, but we think that we have a very responsible longterm Business Model to the benefit of all of our stakeholders. And weve always had a very active m a policy. The last few years, weve bought, acquired about 10 billion worth of businesses in what we think are the faster, more strategic roles area, if you look 10 years out, 15 years out, wonderful acquisition of the shave club in the United States, wonderful acquisition of generation, a brand made for the future, really for millennials. Weve bought living proof and in china we bought a brand called blue air which is an air purification business. As we grow our businesses, we continue to look at what it takes to get this Company Competitive and future fit, if you want to, by involving our portfolio. If the right opportunities come along, we certainly look at that. That was a detailed interview, andrew. Just one thing, paul, are you absolutely sure its not butter . I mean, you have proof that because i cant believe that its its not butter. I think youre maybe youre sitting there selling that, andrew . Yes, they are selling i think you found out it is butter and now youre selling it to get out from a legal liability of having something that was, in fact, butter all along because i cant believe its not butter. Do you know for a fact its not butter . We know for a fact its not butter, but it tastes darn good, that is for sure, and im glad that so Many Americans love it. And thats probably one of the reasons i think well find a good buyer. The businesses that weve built here in europe, as well, and in the u. S. , brands like country crock are enormous businesses that have potential under different owners and obviously we want to prepare very well for when that moment comes. Okay. Paul, we appreciate your time. Come on in studio. We have food, by the way, here. We do have margin and real butter. We might even get some half butter, as well. But we really appreciate your candor this morning and coming on with us first to break it all down. No, thank you. Look forward to seeing you next time. Thank you. Thank you. You dont ask the really tough questions a lot of times. Were you ready to grill him on the on the veracity of the butter . Well be right back to talk about this. What we do every night is like something out of a strange dream. Except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive, farreaching and, yes. A little magical. Fedex. Com slash dream you never got the brakes looked at . E girl. Oh yeah. No. At cognizant, were helping todays leading manufacturers make things that think and do automatically. Imagine that, a world of new Digital Products and services all working together for you. Can i borrow the car when its back . Get ready, because were helping leading Companies Lead with digital. President trump and chinese president xi will sit down later today. Its the first meeting between the two. Lets bring in doug paul, Vice President for studies at the carnegie endowlity. Doug, you pointed out both of these leaders have a lot at stake, i think, to some extent. When its all said and done, do you think that the headline is, wow, these guys really got along and it was as planned or do you think theres the potential for something to you know, that people will write about that does not go well for either side. I think the tension was built into the four story, getting ready for this, trump talking about its put up or shut up on north korea, trump talking about trade. But i think behind the scenes, theyve done a lot of work to make this come out fairley smoothly. The chinese are coming with some modest assistance on north korea. So you cant say that it didnt do anything. And theyre going to provide some economic incentives, as well, so that trump can show the American People that hes out there to get jobs and open markets. So the chinese will play along with that narrative, then, you think . Theyll come bearing gifts . Theyre coming bearing modest gifts. Theyre big numbers, but modest in the grand scheme of things. But they want to have a smooth meeting. This is part of the rollout of xi jinpings end of this year party congress. So he went to davos, meeting with trump to show hes an international statesman, host a big summit in a couple of weeks, a big military parade. Its all part of a yearlong rollout for xi jinping. And hes getting in early, president xi. Hes not the first, the but a pretty major deal for him, you would think. You point out that the kushner effect is evident here, as well. Behind the scenes, that was the one china, whether it was a misstep or whether it was deliberate, that was smoothed over by the president s soninlaw. Yeah. Who would have thought, you know, in middecember that we would be where you are today . A lot of incredible personal diplomacy. Chinas ambassador in washington, Henry Kissinger got into washington with a little bit of help. Jared kushner is carrying water for his fatherinlaw. Oil and water, though, between these two leaders. Im plaqueble as you called president xi and the somewhat unpredictable President Trump might be good tv or it might be good for journalists to write about, i think. I dont know how much well get to write youll get to write about it, but the id love to will have in the room. There has to be some eye rolling moments when they guys get together. But they have a common interest in showing results. The story is going to be essentially one of a positive outcome based on what im shor. Appreciate your time today. Thank you. Thank you. When we return, jim cramer will join us live from the new york stock exchange. Squawk on the stree squawk box will be back. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Time for the stat of the day. The aprils top sector is energy returning an average of more than 3 . Followed by the utilities and lets get down to the new york stock exchange. Jim cramer joins us now. What was worldwide what was that the agony what happened yesterday, jim . The thrill of victory the thrill of victory. Agony of defeat. We were it was going to be the next step higher. What was it the fomc you think . Not as much, but i think it was einstein ryan. I think what happened he came hes a genius. Selfdescribed genius. Take a long time. I mean, the guy im not saying he shorted the market because that would be facetious. But hes a one man wrecking crew. Hes as uninterested in the market and business as the president is interested so when he said something that totally derails whatever could be out there to save us from so to speak from what i regard to be the deceleration in the month of march he kills it. Hes not sensitive. Hes like a hillary clinton. Theyre not sensitive to the stock market. Some fed governor said that the stock market is too high, thanks for nothing. If they want to sell some bonds, fine. Well take them. Im not saying that matters. But what matters is ryan saying look, trump has no game. Like bridge. There have been days in the past where were like, well, we come up with the headline. Think of today. Youve got the summit with xi. Youve got the Nuclear Option. Youve got on gorsuch. On gorsuch. You should worry about that. Im longing for obama here. Im longing for boeobama . Like clear sailing, the market went up a lot. Maybe theres some stuff, domestic stuff. You dont ilike this . Paul ryan is on a different agenda from us. Why not say that tax reform is not going to happen. If theres a border tax, you cant send mexican beer to michigan. He might be gun shy. He loves the ink. And the six pack. The six pack that he cares about like hes kind of like a male model. He has everything going except for the stock market. Right. He doesnt like the market. Thats okay, its not for everybody. Thats right. See you at the top of the hour. Tomorrow on squawk box, dont miss three times masters champ gary player. Seriously . Well i think he does a thousand situps or something. Hes going to join us at 7 50 a. M. I dont know if hes never not shot his age. Various shouting heigh ho its off to work we go woman on the gulf coast, new exxonmobil projects are expected to create over 45,000 jobs. And each job created by the Energy Industry supports two others in the community. Altogether, the industry supports over 9 million jobs nationwide. These are jobs that natural gas is helping make happen, all while reducing americas emissions. Energy lives here. Kevin, meet yourkeviner. Americas emissions. Kevin Kevin Kevin Kevin Kevin Kevin Kevin kevin kevin trusted advice for life. Kevin, hows your mom . Life well planned. See what a Raymond James Financial Advisor can do for you. To growing businesses cdw broacross the city,tration increasing productivity like never before, which is amazing, unless youre a barista. Cdw implemented Dell Poweredge servers with intel xeon processors to allow people to work from anywhere, so lucky me. So nobody wants coffee . hey, can i get a couple copies . Enhanced mobility by dell. I. T. Orchestration by cdw. Is the economy keeping face with the fed . First word on jobs and wages. Team analysis on squawk box. Tomorrow at 8 30 eastern on cnbc. Some stocks to watch this morning. Auto retailer carmax reported Quarterly Earnings of 81 cents a share, that Beat Estimates by two cents. And Comparable Store sales were up 8. 7 . The stocks up by 2. 8 . Beating estimates is spirits maker constellation brands. It earned 1. 48 a share for the latest quarter. That was 12 cents better than expected. Revenue also better than expected. And so was the full year forecast. The company was helped by Strong Demand for ka rocorona and ball point. And the labor party is delaying its decision on a Britney Spears concert. It will use the bulk of security guards using the labor party with slim pickings. The decision to postpone the election by 24 hours would make it easier for people to reach the polling stations. All right. That may be the strangest story i have heard today. Right. Britney spears in israel. Well, lets get a quick check on the markets. As we showed you things had been right and the flat line through most of the morning today. If youre looking right now, you can see the futures picked up a bit of ground with the dow futures up by 2. The ten year is continuing to yield below 2. 4 . This morning, sticking at 2. 23 . So well see. I think its exciting. The summit. The summit, yeah. Absolutely. I thought you were talking about the masters. Oh, and that too. That too. Gary player tomorrow. Yeah. Tomorrow. Make sure you join us tomorrow to see that. Squawk on the street is next. Good morning. Im david faber along with jim cramer. Carl quintanilla is on assi assignment this morning. Lets look at the futures. You saw them at the end of osquawk box we have a slightly higher open. Lets give you a look at europe. Where do we stand right now when it comes to the german, french and the market in the uk