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tv   Squawk Box  CNBC  April 19, 2012 6:00am-9:00am EDT

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including bank of america, dupont, morgan stanley, travelers and verizon. bank of america is expected to post earnings of 12 cents a share, revenue of $22.5 billion. we'll also pay attention to any information on bad loans. b of a has the biggest home equity portfolio in the nation. as for dupont, analysts looking for $1.55 earnings. revenue of $11.2 billion. consensus is calling for earnings of $1.52 a share for travelers. and verizon 58 cents a share. we'll be watching everything as it hits. and we will bring you those numbers as quickly as humanly possible. >> did you have to say that? >> yeah, as slowly as i can so we can look this up while it's hitting. we'll bring you the thunumbers as humanly possible. >> can i tell you what the
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estimate is. >> i can tell you earnings per share 1.61 x items which is a little better than had been anticipated. >> what is that number? >> earnings for the year, $4.1 billion. what's the estimate for the the year? dupont. >> looking 425. i'm still hooking for thelookin revenue number. breaking out all the individual -- >> and we have ellen colvin coming on at 8:00, talking about this and a whole lot more. >> and you will see input costs because of $102 -- i thought it was interesting yesterday when they made the point that with brent where it is, why is wt it i is like the cheapest thing.
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>> yeah. >> deal book being i assume. >> it was. >> let's talk about deal news this morning. apologies about the voice in advance. as you were saying -- >> what happened to your voice? >> when i say things off camera, if i already use them, i feel bad using them on air. >> i walked in this morning, he have a little bit of a frog in my throat. he says obama rally. you lost your voice at an obama rally. >> go hope and change! yes, we're ready, yes, we're ready! >> yes, we can. >> see, i haven't been to one. yes, we can! >> after those poll number which is obama got yesterday, we should talk about that, front page on the new york times -- >> your pollsters are very concerned. very concerned. >> i thought you were going to joke that they didn't ask the question the right way. >> that was your joke, yeah, they phrased it wrong. who would you rather have, romney or obama, and you wanted -- how would you have asked it, given the great come back and saving the world from the depression, are you still -- >> no, i thought the most important part of that article
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in that poll was that the economy is still the issue. that's where romney is coming from. >> and would he hae've been lul a -- 8.2 actually sounds good to us now, which it should not. but down there double digits, it is good. and it's heading in the right direction. but still it's not where we want to be obviously and i think there's people it that realize that. >> i would have thought more people given what felt like things were getting better, it's leak a see saw. felt like it was getting better, now people think it's not. >> there's a new poll, i don't know who had it, but they had said that americans feel better about the economy overall, but a little less strong about their own well. which is a shift from what we had seen before. >> this dog story is -- see, i don't think obama's people should have been ramming that's
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r irish setter story. it was a kid. and it was the custom p where he was. but then again with romney, they don't really clearly -- >> the dog on the roof story has gone into a whole new place. one of his relatives now says that it didn't happen the way he said it did. >> what did happen? >> so obama and ann -- no, romney and ann said the dog loved being up there. >> and they got the diarrhea from the turkey. >> one of his relatives has come out -- >> one of the dog's relatives? >> no, one of romney's relatives. the dog hated it, the dog was scarred by all of this. and that they ended up giving the dog away later. and that there's a whole long story to the dog. >> if you had to pick which dog -- >> the other part of the obama -- >> see, if you did have to pick one dog, who would you rather
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be? you'd still really be seamus. it was a long ride, it was windy and everything. but you didn't have like soy sauce on you. what do you do with -- >> it's like when you're in different cultures -- >> exactly. but when it's been mentioned 50 times by dnc enabling columnists in the "new york times," when gail collins has made her career writing about it 50 times -- >> we had a dog that we used to -- it was my dog, a stray dog we brought home and he had a bad habit of chasing cars and he chased a motorcycle, he got off the leash, chased a motor seek kell and bit the guy. we had to put the dog down. and i can see stories like that turning away and getting held up for something like that. at the time, i was furious. >> i have three dogs now. and they did love the window down. that's all i'm going to tell you. >> try too back and pig what happened when is a crazy sort of
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scenario. >> it's trivial and they're basing it -- gail collins is basing the entire choice of who you pick for president based on that one thing and she really kind of bet her career on it. >> except to say i'm sure she would -- she would say you get talking appointments from karl rove or something. >> when i grew up, i don't think she -- i'm not sure whether she had a dog because she was three doors up. >> you were her neighbor? >> i didn't know her because i'm quite a bit younger, but four houses up. and they definitely knew my dog. because pal was his name. came with that name, a black retriever. such a great lab. and he went to school and -- they lived up near the school. >> dog went to school? >> and when i was getting out, he would wait. >> that's a great story. >> yeah. but that was when dogs weren't on leashes. >> i don't even think this is a
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talking point situation. the same people saying president obama ate a dog, that's stupid, too. a different culture. >> live by the sword, die by the sword. your side has used this seamus story to the point where -- >> not my strategy. >> i've seen so many drawings of that dog on top of that car. >>ky also mention real quickly, dupont talked about the local prices. we were wondering about how much input prices would go up. local prices were 8% higher with increases in all regions. >> you admit you would rather be the irish setter than the one -- >> 100%. >> okay. >> i think we just lost the deal news. but we'll get it back. here it is. human genome scientists said it's received an unsolicited proposal from glaxosmithkline for $13 share in cash. argues the bird does not reflect value inherent in the company.
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the company is retaining goldman sachs and credit suisse to assist. and i imagine we'll be hearing a lot more about it this auction as it continues. >> human genome was -- when that initially was put is $13 fair? >> i don't know. i'll have to look at the ten year. this only goes back to 2002. prior to that, it might have been even higher. but all of the promise of sequencing the genome and we thought we could go from there to designing drugs immediately, and it's taken a while. and human genome, we can't go back further than -- >> remember when we first sequenced the genome and people thought it would change the world. >> some people today starting to see some of the promise. >> how far back did you want to
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go? >> that's where i'm talking about. '99, it was above 100. i remember a pretty well-known stock picker said will is going to be the stock that goes to $1,000 a share. and here we are at 13 bucks. anyway, another bit of earnings news just in, nokia reporting first quarter earnings ahead of expectations. revenue just slight of forecasts. shares at this point are, if you can believe it, down in -- >> on nokia, you have to pay attention. >> $4? >> that's the sad part to begin with, but -- >> at one point it looked like they had found their mojo again. >> it's an iphone world. >> we have talked about earnings and deals now to the economy on
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today'sed a jen today, weekly jobless claims due at 8:30 eastern which you heard referenced yesterday -- >> by jim o'neal. >> yeah, jim o'neill said he would be paying close attention to the release. said that definitely shown -- a lot of people have said if at the had one thing to look at on a desert islands, it would be jobless claims. >> today i would look at the spanish auction. >> it is interesting the journal's lead piece. and we mentioned that they had gotten a lot of money from the central bank and they used to buy the sovereign debt. and now they're all under water. leading economic indicators today at 10:00, as well. but sooner or later, that runs out and it's run out with some of the banks at this point. i don't know what's going to happen over there. >> totally gone off plan, can i ask the question, did you read this story about chesapeake? the most amazing story. ceo loaned to himself so that he
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could buy assets secured by chesapeake. i mean, does it get worse than this? >> you don't remember the -- remember he lost almost all of his -- >> he lost his shirt. >> and how did he get it back some he g? some you how he was recapitalized. >> doi do remember that. >> this company has a program where he can buy up to 2.5% stake in wells drilled by the company. so he can con will tribute up t million a year to do that. he's then getting these undisclosed loans so he can invest alongside the company. >> the company says that it's aligning his interests with those of share holders. >> would you have wanted to know that he's on the hook for a billion bucks? >> that wasn't disclosed? >> just yesterday. >> yeah, that's pretty
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interesting. i noticed something that i almost said yesterday but i didn't say it, vikram was in the front row signing a dodd frank. how does that feel, vik. you were the one guy that showed up. applauding ass's being signed and he gets it right up the nose right when it -- >> it was 2008. he sold about 90% of his stock at 33.4 million shares to meet a margin call after the drop in the u.s. stock market that week. >> and the heading in the journal is a shareholder years for the ceo who cheered dodd frank. similar one last week about any health care related people that got on board with the -- see, i call it the affordable care act now just to try to help your cause because i don't know what's going to happen in june. >> it's only fatheir.
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>> only fair that i do that. >> oh, fair enough. >> there you go. [ ding ] >> weiner or fair enough. >> how is your twitter account going? >> my twitter account, you know, i'm shy. >> did not know that about you. >> i did not tweet at all yesterday. i'm afraid if you really put something in, it lasts forever. did you tweet today? >> i didn't. but i just saw, did did you run into this story, weiner? >> weiner bare ee ee eed in boo. >> somebody else is writing it. >> did you tweet yesterday? >> i did not tweet yesterday. >> not a single tweet sha? >> i might tweet this picture. >> i retweeted something.
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>> everyone love loves is giraffe. >> it's like you have an assignment in school do something, so you'll tweet the claims number. >> i will tweet the claims number. >> you can't get wrong with that. >> i used to say a disappointing whatever or impressive whatever. and then i got so many people yelling at me about you're taking one side or the other. just put the straight number out at 8:30. >> yesterday i almost tweet that had i could still smell that cologne. it was somewhere on me. on my shoes or -- >> where? >> i don't know, but it was the day after. >> i was still smelling it. like you talk about phantom crying with children. >> you still think you have an itch on the end of your -- >> actually i retweeted blake last night, her post she put up up on the blog. and i tweeted something about you. what was it? >> she tweeted a little bit about buffett yesterday.
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she makes the point that he will get the best care and that all americans can get great care. and she's 12. and that is -- it is true, there's a lot of nuances to health care in this country. but in terms of cancer survival and cancer outcome and drugs and things like that, there's no doubt we lead the world in all that. and the one thing that you point out that we're 38th or whatever it is, that's because of coverage. that 90% of being in that lower position is because of the number of people -- but nobody really does get turned down. we all have to pay for it and -- no one walks into a hospital or emergency room and they say no, you'll bleed to death. >> arguably the cost of them walking -- >> but there are other countries -- >> as a function of no prevent difference medicine and the fact that people aren't covered, some people could argue that brings its own problems. >> there are countries where they've covered every and didn't increase supply enough to where you do wait three, four, five
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months to see a specialist, you can die waiting to see a specialist. and in not third world countries, but in the developed world where they do have 100% coverage. but you can't get it. you're covered, but you can't get to see anyone. so that was the poenpoints she making. did you see the picture? that was the night of -- >> maybe -- was it andrew's? >> might have been too big to fail. one of those ground breaking movies. actually, i don't think i would put wall street 2 in ground breaking. i'll put yours. >> it may have been yours. with dough have news from ford coming out of china. phil lebeau joins us with the details. >> he tweets a lot. >> he does. >> i get your tweets, phil. i'm following you. all business with you. >> if you were up at 3:30 this morning, would you have heard the news coming from ford which is big news, the company announcing that it is going to be building a new auto plant, a
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final assembly plant in china. the significance she the significance here that ford is trying to catch up with competitors in china part of the company increasing its annual up with there by another 250,000 vehicles. they'll be up to 1.2 million when this plant opens and all part of the the company's very aggressive plan, which is global annual auto sales of 8 million by 2015. folks, this is the biggest expansion in 50 years by ford again adding another final assembly plant in china. an just one quick reminder. we will be live for "squawk box" from the beijing auto show coming up on monday and tuesday and guys, anytime that i can do a report for you is great, but when i can do a report for you live from beijing auto show, it's a great day. i'll even tweet about it for you, joe. >> plus the hours are good. evening hours instead of having on get up at the break of dawn.
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>> we have some fun live guests for you guys. a little tease. >> like who? >> i can't say yet. i cannot say yet. i will say that they are newsmakers. >> you behave yourself over will, lebeau. don't take any secret service guys with you. i know it's like 12,000 miles away. you'd think that no one-will-you can tweet over there, right? we'll hear about you. >> wheels up. rings off. that's the motto, right? >> i'll be tweeting for you, joe. >> thanks, buddy. you did something else on increased production or something? i see your stuff. you tweeted a couple times yesterday, right? >> well, you've got audi adding a plant in the western hemisphere in mexico. and significance there, that plant, it will ship to not only north america, but to it europe and to asia. smart place to put it if you are the germans. >> if anything happens with boeing, i'll see it first from you. >> anything with wings and
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wheels. >> got it. >> i remember when i tweeted about you yesterday. somebody said did joe really just say that on air. >> oh, mfw. >> no freaking way. sure did he. >> the markets are dealing with a tug of war, an drew, bringing you back in here, what are you looking at? >> e-mail. i think that picture was from the memo, it was not too big to fail, it was from wall street 2. >> drw trading group sfraenlgissfraenlgis strategist, i'm not going to do it, lou, just try toing more businesslike. are you keeping score, what is the score? keeping score or what? >> i'm not sure what i'm supposed to be keeping score of. >> that's jargon. but last week we really thought we were headed back into another slowdown. this week the markets acted pretty well. is it this typical of an uneven
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recovery and maybe we're looking at the trees too closely instead of the forest? i mean, this is all -- things are still moving forward, are they not? >> well, how quickly they're moving forward i guess is the the question, though. one of the things, the calendar is kind of playing against us. three of the last four years, only '09 being the exception, important high was made around this time of year. mid april to mid may. so there is some trepidation going into this. if you get one of the old adages to work and it's sell and may go away. but because of that, because of the calendar and the timing of the highs the last few year, i think the market is being a little cautious here. and there's good reason to be. europe is the perfect reason to be cautious at this time of year, especially with the situation in spain coming to a boil once again. but also the data, we don't really know if the last lee months or the winter period, the december, january and february was the real story or if that was just because of the unseasonably warm weather.
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we had the pay roles for instance were up 240,000 on average during those three months, and the six months before that, they were up half of that, 120,000. so now we get to march, which is not as affected by the weather as much and where are we, back at 120,000, the range that was prevailing before we had that good weather. some of the other data like the empire state fell 14 points in march or into april. and back to the level that we saw -- or the lowest it's been since november. once again before that seasonal boost that we got from the better weather. so i think that will is some trepidation going into it because we're not really sure if the better data that we had was just a matter of the better weather. >> when i read this in the journal, i read very first line, europe's bold program to diffuse its financial crisis. and we keep hearing it wasn't bold enough, don't we? it's weird that they wrote that. >> may 2010 was a bold program. and so was july of 2011 and
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october of 2011. they've had lots of bold programs. but they're really not getting to the heart of the matter. so you kind of have these red herrings like will this auction go well or not, and then when does because the banks still have ltro money, so about they don't buy, that would have been the story. do they go beyond this, will germany, will the the bundesbank allow germany to go beyond what they've already done. lots of schisms that could come to the foreov over the next several months. >> they need to turn the printing presses on full bore over there and it's hard to do when you've got weaker countries that can't deal value their own currency and stronger countries that are hesitant to throw their lot in with all the weaker countries to devalue their currency. but that's really what we're talking about. the ecb needs to open it up full bore, but germany won't let it
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happen because they don't want to undermine their own currency. they remember the-wi -- >> absolutely. and there's imbalance within that euro. like you say, if greece could have devalued the drachma, they would be in a lot better shape than they are right now. and the point is just the real economics of it, spain's unemployment rate for people under 25 is 50%. similar thing in greece. and so what are the prospects for those young people in those countries. and the imbalances, though, because they don't see, they don't see anything going on, you get people actually shifting money into germany creating more liabilities for germany. the hundreds of billions doubled since last year. it's something called the very arcane target two which is the central banks of the national
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countries payment system. away mr. spain, italy, greece, et cetera, doubled in the last year. so how far do they want to go. that's the question. and the election in france also might bring that to a boil a bit more. >> and we have to figure out how much it really affects us and then throw china in the mix. >> so with that in the calendar, kind of -- >> thank you, lou. see, i can bring this into your world. thanks, lou. the guy who played bernanke in your -- or that played buffett was blue grant lou grant on "mary tyler moore." and ted baxter would always say lou. so we're trying to get little -- >> a little culture lesson. >> we're trying to get young viewer, so -- >> somebody just ratted you out.
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you were in norfolk last night? >> no, during the day time. >> he wanted to know how you got back. that's how you lost your voice. >> i actually didn't talk at that. >> i thought obama was thin ohi yesterday? >> there was a rally last night downtown. >> and you were screaming at that? >> all evening. and then i went to the clubs. so it really -- david axelrod got everybody very excited. a pumped up situation. >> people believed me. and this might happen to you. >> i get the helicopters all the time. good just be careful. >> when we come back, we he have a live report from madrid. we'll find out if a solid spanish bond auction this morning could be just what the bulls need. we are looking at green arrows this morning. but first, fans around the world mourning television and music legend dick clark this morning.
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american bandstand for decades, we all knew this, he died yesterday at a los angeles area hospital after suffering a massive heart attack. many, many people mourning his loss. amongs celebrities reflecting, ryan seacrest. >> he taught me how to do television. i studied him as a kid and i had the fortunate opportunity to work with him for several years on new year's eve. so i'm sad and i'm grateful for what he's given all of us and certainly what he's given me. [ horn honks ]
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hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real ness.
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u.s. quit i futuress, green arrows across the board. dow would open about 53 points higher. we also have a flood of earnings reports that are already hitting the tape this morning that should be impacting some of these numbers before the market opens.
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dupont reporting earnings of $1.61 x items beating revenue misline, though. company ceo will be joining us live at 8:00 eastern. now time for the global markets report. focusing on the latest spanish debt auction. julia chatterly is standing by in madrid. >> we had these two year and ten year debt auctions. demand was higher than what we've seen in previous auctions. amount slightly above the top end of estimates. more costly in the ten year than what we'd seen in previous auctions, but below where the market was trading. overall a solid result and that has boosted the tone in the european equity markets take. traders were telling me that they expected the european central bank to be ringing around to make sure that there was demand there for these auctions today.
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so plenty of skepticism of who is buying the bonds. equity markets just after the result hit new three year lows, particular pressure on the banks, it raises the usual concerns about the sovereign debt spread widening and how much the banks hold this sovereign debt. so it's ongoing concerns, but ultimately a small amount, 2.5 billion euros and it is just one auction. there will be plenty who are data points from spain to come to just assess how the austerity is impacting the economy. back to you. >> coming up, squawk is the destination for current and former fed physicians. but today, we are going to expand our coverage. europe is dominating the global market conversation now and few understand it better than our next guest. lorenzo bini smaghi will be on and he's calling european
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politicians on the carpet. first as we head to break, a look at yesterday's winner and losers. my job is to find the next big sound. they sound awesome tonight. and when i do find it, i share it with the world. you landed the u.s. tour ? done. this is fantastic ! music is my life and i want to make the most of it without missing a beat. fly without putting your life on pause. be yourself nonstop.
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bonds today. very important day at the top end of the country's targeted amount, good news, but isn't enough to calm global fears about a global economic crisis or at least a european economic crisis that could turn into a domino effect. joining us now from washington, former member of the european central bank's executive board and now visiting scholar at the weather head center for international favors at harvard. let's talk about this bond auction and how important it is in terms of calming those fears. are they calming any of your fears? >> well, it will take more time i guess to calm the fears because the markets want to see action by government to improve the situation and reduce the budget and this will not be decided on one auction. >> how worried are you about spain relative to greece relative to italy? >> i think greece is really a different case. they delayed action for too
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long. took time before implementing the decisions. decisions always at the last minute. i think spain is a different situation. they're taking the right actions, it just takes time to adjust the budget. >> so pronfront page of the jou, europe's rescue plan falters. and the main premise is that ecb is about to run out of bullets and that the banks is been using up the money buying back their own dead. what will happen next? >> i think will headline has been run several times in the past and i think europeans have shown they can get their act together. unfortunately, they tend to do it when the markets worsen instead of ahead of time. so a bit of volatility. but i think experience has shown you cannot rule out the ecb and others from taking action when it's needed. >> if you're a member of the public or investor, looking for a trigger point, looking at
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different interest rate, what are the numbers trying to understand where the european markets are at any given point and when we should really get worried, what is it that you're looking at? >> you have to look he spreads. when they approach 7%, it's a scary point because that's not sustainab sustainable. so i think that's where we were in the past. we came back down close to 5 and then up again. so i think it's a significant mal for t signal to start being more convincing. >> let's talk about if you were whispering in the ear of mr. draghi, you would tell him what? >> i don't immediate need to wh. they know what to do about that but it's also in thehands of the government and the imf. we had discussions whether we can have additional money coming
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from the rest of the world to stabilize the situation p. >> and if you were going to handicap that you would say what? >> i think it's going to be interesting because several countries have committed to give money. the the u.s. is not, so they may need more time. >> do you think ultimately the u.s. will give money over? >> i think it will be interesting because money is power. so if they can raise money without the u.s., this may undermine the u.s. influence over the long term. so i think sooner or later, the u.s. will join. >> it's amazing that the one word that always comes to mind both in this country and in europe that would solve so many things is growth. and the kind of things that you're talking about if we could just figure out a bridge to where we were going, if we knew there was going to be growth, it would make it a lot easier. but a lot of parts of the bridge seem it to be austerity and i'm
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just wondering can we do it that way and are the efforts to reform a lot of the structural problems in europe, the labor laws and some of the other things, i know that they're continuing, but are you going to have time to do it? and is the resolve to do things like that? >> we are very short term. all looking at the short term. markets looking he short term. ic we and u.s. commentator, we have to try to look more about the medium term and we know that it takes time. when you have to adjust the economy and you have to go to austerity, you call it austerity, i would call it putting your house in order. you can't grow especially if you have a deficit which is so high if you spend more than you earn at the government level, you cannot grow and the markets have understood this. so you have to make these adjustments and it will take time. the problem is that markets are impatient, so you need to replace the markets with other means that create this bridge to the other side where growth will
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come back. and i think it will come back. reforms are that are being done will start to work. but we're going to go through one year which will be very difficult and maybe next year, too. >> we have a lot of commentators over here on the left that are point to go europe as an example that austerity didn't work. you're even hesitant to use the term austerity. getting the house in order is a much more positive term. i'm always astounded when they say look at the example of europe and i think they're talking about too much, but they're not talking about that they're talking about trying to use austerity to solve the problem. but it's necessary, yes? >> i don't think you can get out of an excessive debt by increasing the amount of debt. i think some countries are trying to do that. but sooner or later, you have to on come with reality. as long as the debt increases, at a certain point, you will have to address the issue.
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so the some places including this country the hope is that when the issue will come around the economy will be in a better shape, but it's not clear at all. sooner or later you have to address the issue of reducing the deficit. at that point the economy will start to shrink. >> the elections in france, will have any impact in the dialogue over there? >> if you've seen the last 20, 30 years elections in france, they start in one way and after the election, the world changes again because france has to come back to reality and address the issues with germany and the rest of europe. so many of the nationalistic will have to be reconsidered. >> sarkozy looks like he won't be in charge going forward. >> it's up to the the french to decide, i think. >> lorenzo, thanks for joining us this morning. >> thank you. about if you have any comments or questions about
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anything you see here on squawk, go ahead and e-mail us at when we come back, we'll find out if issues in europe will be hitting our markets today and then squawk is a must see television for everyone interested in earnings this morning. southwest airlines gary kelly will talk to us about how his company is fending off record oil prices. and speaking of energy costs, squeezing business operations, dupont eceo will be here to it talk about how they're handling higher prices. how her company managed to beat the street despite those higher input costs. [ mujahid ] there was a little bit of trepidation, not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids. it's my world. that's my world.
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welcome back.
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joining us from the cme, ira harris. the spanish bond auction went off. is that why we're seeing green arrows this morning? >> yes. everybody's anticipation yesterday was it will be a little tougher, but went off pretty well. so now we're out of that woods for about ten minutes anyway. >> okay. out for about ten minutes and what's the next number we're waiting for, the jobless claims or earnings? >> it will be the jobless claims, but andrew asked the right question and he dodged it. i thought he was a politician dodging the french issue because those elections are very important. i think in the market is really starting to pay attention to sunday's elections. >> what happens if sarkozy is no longer in charge of france? >> well, round one is this week. so the top two vote getters will make to round two unless
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somebody were to win an absolute majority. >> but ultimately if sarkozy doesn't win the election and the party who has said that they're not in favor of a lot of these austerity measures, how will the market here react to that? >> i think it would be a great negative. a lot of people in europe assuming that the french will automatically get back in line, that this is all campaign receipt or rec because that's what they've always done. this is a different time. the french are watching that austerity bite in spain. and paul krugman, who i don't agree with -- i agree with his work on japan on deflation, that was great work, but what he writes about recently, he's dead right on this austerity. you can't in-joke austerity with 24% unemployment. i don't care what the black markets are doing. and the french are watching this very closely. you saw sarkozy do a rad cical shift when he actually went after the local fiscal union concept that he had promised
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merkel that he would support and he said we need the ecb to get on a growth pattern rather than on an austerity driven path. so there are things of a foot here. if sarkozy were to lose, i think it would be an immediate impact especially on the euro currency. >> you heard the ecb guy we just had on, the ecb doesn't agree with you. >> well, he's no longer at the ecb. >> do you have kids? >> i have four kids. >> when your kid -- let's say he runs up a $30,000 credit bill on your credit card and then he goes, you know, if i have to stop this, it's going to be really a lot of austerity in my life and that's not good for me right now. can i run it up to $60,000, you would say yes to that? >> no, they don't even have credit cards. >> but you see my point. >> of course. >> how do you tell these people to keep spending when they're already never going to pay it back is this unless you just break up the union and devalue.
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we don't need austerity if we say, okay, the whole euro was a mistake. go back and devalue your -- take drachmas back. what did spain have? >> drachmas back. >> when we hear that word, internal devaluation, it means driving wage rates down so far. then people don't have enough money to spend and you go into a downward spiral. they are right in the middle of it and the bank does not have an answer to that. >> they should have thought of that about ten years ago. like where we are right now. i hate it when we use, you know, the analogy that look what's happening in europe with austerity, we can't do it here either and that enables us to
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end up where they are ten years from now instead of doing what they need to do right now. >> no question. the pain down the road is going to be far greater than you have to bear right now. there's no chance, it will be a matter of whether the spanish economies declines by 5, 8, 10% this year. >> they do have long lunches, siestas, tappas. >> devalue is a good thing when you get to travel over. >> you heard that yra thought i asked the right question. >> i did. and then he said they can't have austerity so he had a bunch of crazy ideas. >> if your dentist has ever told you told you tooth decay can lead to heart disease, stay with
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us, we'll debunk the myth. ♪ [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an engineer,
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welcome back, everybody. we're in the chairs talking about some of the things that have caught our attention. you've heard from your dentist, if you don't floss, take care of your teeth, you could die of a heart attack. >> i heard flossing extends your life. >> it goes into your arteries. >> the american heart association came out with huge unusual step of debunking that myth. for years it's been tied to the two. they said there's no causal --
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cause and effect between the two of them. >> do have i to floss anymore? >> yes, you do have to floss for your gum but it's not a heart issue. this is a strange instance where they're saying that's a myth, it's not for real. not that you don't have to floss anymore, it's not related to your heart. the reason there have been links is because if you don't take care of your heart, you probably don't floss. >> how often do you floss -- i remember on seinfeld they said how often do you cut your toe nails? every four to six weeks. >> that's how often you floss in. >> no, every morning. there are crowns there and spaces and times when you have to do it. you have a poppy seed in there. >> there's an air thing -- >> anyway.
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when we come back, quarterly results from bank of america. stick around. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us.
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it's an earnings extravaganza! bank of america, southwest airlines and morgan stanley all set to report this hour. >> we are breaking down all the hits and misses with the smartest minds in the business only here. >> and why this budding publicist web site could become the next biggest merger. the second hour of "squawk box" begins right here. ♪ good morning, everybody. welcome back to "squawk box." we have bank of america out with
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earnings right now. and all of the banks have some special circumstances. this is the time dva, fair value options charges are not going to be included in these analyst numbers. estimate for bank of america is 12 cents. now, they do give a number of 3 cents a share but that is not an apples to apples comparison you're looking at. >> revenue, 22.28 billion versus 22. 509. >> revenue net of interest expense as 22.5 billion. it sounds like it's right in line with expectations. the results compared to last year with this -- we know these are going to be more complicated. >> first quarter provision for credit losses, 2.42 billion. and also talking about net chargeoffs of $4 billion in the current period.
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>> we see anything on reserves here yet? do a little quick search. >> what did i say? i told you something on that. >> i was going to think legal reserves given with what you saw on jpmorgan just a week ago. that was a big number last time. >> 28 cents a share, negative value adjustments of $4.8 billion. >> if you added that back in, it would be 31 cents versus expectations of 12 cents. >> of 12 cents. >> let's see. strong performance in global markets. investment bank number two in global banking investment revenue. global wealth and investment management -- >> is that right, 31-12? is that the comparison? if you added it straight back in. >> the results compare to 17
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cents in the year ago or when there was 6 cents a share and excluding share adjustment revenue down 3%. the stock is indicated higher. at this point would you probably say -- >> they'd be pretty handily -- >> real quick on travelers also beating today. >> that's another one that's always got interesting -- >> well it, looks like they beat 2. 01. 1.52 was the estimate. looks like they're beating -- on the revenue side, they did not beat, 5.4 versus 5.7. >> we've had issues with reporting travelers. >> we have to look through this. >> travelers is also increasing its dividend by 12% to 46 cents.
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>> how's the yield on that stock now. >> 1.6%. >> what did you say operating share, andrew was $2. 1 for travellers? >> $2.01 is the number, an increase of about 5%. >> versus $1.52, right? >> that's the good news but a little bit light on revenue, if you look through this. >> you want to read some headlines? >> let's get you some of the other morning headlines. this is a huge day for earnings. we have a handful of economic reports that could move the marks today. weekly initial jobless claims, that number comes out at 8:30 eastern time and weep get existing home sales at 10:00 and the philly fed index economic indicators as well. we'll have a busy after-the-bell session as well.
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microsoft, sandisc and etrade among others to report after the bell. and a takeover bid for human genome. they say it underoffers. s&p futures are higher by just over 5 points. >> our guest host has successfully invested in industries ranging from sports to real estate to lodging and now he's launching rlj entertainment. do we even mention media at the top there? bob johnson joining us now. >> media? >> you know a little bit about media. >> i'm back. >> you said you made some new ventures in media? >> i acquired two countries.
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$144 million spac, we acquired two content companies that will distribute across the entire platform everything from blu-ray, dvds, netflix, to hulu. >> nothing through straight broadcast? >> you go to broadcast as well. i'm look technical explosion of technology creates a constant demand for content. this is the best time to be a content curator and distribute it across a multiplicity of platforms. that's why i'm excited about these two companies. within company dominate in british drom as and kmed eats, called acorn tv. another is image that's has over 5,000 titles in its library, that has always of these content -- distribution platforms are going to be looking for. google is talksing about
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creating a hundred channels. you've got netflix and hulu and i pad downloads. you have all of this technology explosion creating a demand for content. that's what happened with bet. they would not have existed had there not been this marger of satellite and cable technology to create niche channels. you guys wouldn't exist. news shows were far and few between on network television back? the 70s, 80s. now you guys are 24 hours a day globl, because of a change that allowed cable operators to dlif 24 hours news, 24 hours news and sport. i'm catching this right ne right point in time with two well-managed companies. we're bying them as a a great discount to market value.
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combine the two companies, you're looking at companies with about a 37 million ebb dain 2012 going up to approximately 44. we're buying at a discount comparable at about a 40% to 50% comparable. stocks trading today, it's a spac so it public. so under rlg acquisition or rlj-a, the tock is probably trading and 9.88 about there's implied value at 9.95. >> that's another one of my companies. not that one. that's a great company, too. but the point here is that this company you're buying at 40% to 50% discount to media companies. >> why didn't anyone else -- acorn. tell me, would i know -- some british shows i heard of, some
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not. >> acorn just bought 67% of the company for the agatha kristy library. all of that content will become available. they distribute in the u.s. the company is already moving into new technology. acorn tv is already streaming this content on a prescription basis. >> why were you able to get such a big discount? >> one because i'm real good at buying companies. the second is the owners saw a value in combining with me because of my connections and relationships and they see an opportunity to grow as far as
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distribution began and they see this company growing dramatically. >> do they have a stake, though? >> oh, yeah. the guys in image kept a big stake. the found are at acorn, he ran the company for 27 years. so i had to put a big chunk, close to 10 million, into the company. >> this is all about disintermediatating for the current technology. would you guy a cable tv in this environment? >> no, i would not. with a cable channel you still have to go market by market to convince the cable operators to carry you. you got time, you got time warner -- >> when you look five years out,
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do you see cable chopped up allah cart? how does it look to you? >> i think it will be an explosion of individual channels, thousands of shows of content you can down load. it going to continue for the cable to sell projects bundled if people aren't watching these small niche channels. 50% of their revenue approximately comes from cable operators, which basically comes from subscribers. so that's going to be tough. >> i would argue maybe you want on the pipe ultimately. >> con ten is king in a where information is accessible to everybody at the push at the
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internet. if you're a content you're kateor like we are and know how to monetize it, you have a business. >> what's the name of the company. >> image entertainment. >> what horror movies do you have? >> they had a whole general dra of horror movies. >> it's like the old labor brays -- >> content get more valuable everybody time a new distribution injury. once the technology allowed me to ag gate millions of home for bet, it was sold to viacom in 2001 for $20 million. bet added $150 million of value
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every year on the basis of this technological shift that allowed cable homes to grow every year. >> bob, i'll flip it around on content. music. if you believe that content broadly, whether it's newspapers or tv is ultimately going the way of music, meaning the margin compression becomes a hit driven business on almost like singles, you could argue it's a tough business now. >> music business -- >> no, no, the question is has that become the model. is that where this all goes? >> the motdel goes like this -- instead of having music companies or record companies, you have individual artists who become their own companies. teak a guy like justin bieber. there were 400 million tickets sold for "titanic" sold world wide. justin viewer downloaded his
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baby pictures. total viewers, $7717 million. >> how do you monetize that? >> jay-z could become his own record company. >> could he make as much money or more money today given all the different distribution channels as he could have 20 years ago when arguably the music companies had more monopoly over the system? >> i think over time individual artists have fewer people to come in. when you eliminate the gatekeepers -- >> i'm only paying 99 krnts for each song as opposed to being able to willing to -- >> you're paying for a song.
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think of what that does for his touring. so he wants to go to the u p so the global nature of the internet changes dramatically. >> you down loaded justin bieber songs? >> i do not. >> you just said -- i did watch the documentary with b him, though. >> you did? >> on an airplane, though. so i saw it for free. >> so you actually haven't bought any justin bieber? >> no. have you bought justin bieber? >> no, i don't buy any -- >> he probably doesn't have to pay for mousse ping. >> are you on spotify or anything like that? i'm not a technical guy. >> do you ever see a day when
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content is not what you're paying for -- >> can i tell you morgue and stanley quickly? when you stip out excluding dva it was 71 cents a share. the street was looking for 444 cents a share. when you include all of these things, there was a loss of 5 cents a share. so you can call this one a beat, too. same with bank of america. when you looked at the excluding dva number, it was 31 cents versus the 12 cents that the street had been looking for. so, again, you're talking about big beats with both of these. net revenue was $6.9 billion but that included the negative impact of the 2 billion. let me look real lickly to what the estimates was. >> up about 50% from where we
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were in europe, remember the controversy, what do they hedge, what do they not edge. it was still scary. >> there's still rumors moody's may down grade them. >> revenue was well above 2. the street was looking for 3. >> we have greg fleming coming on next week. investment revenue, which has been a tough number for everybody, $851 million. the firm they say ranking impos number one and now mr. bieber is playing us out. >> this is from i don't pipod. soap did you pay for the -- >> we're going to take a check on bank of america quickly.
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you can see a bid and the ask looking a bill lit better. the took are is -- now the company has signed a pact to let him by the company for $30 a share. it schaffer holders approve it. coming up, a document sharing web site. we'll talk to the ceo of scribnered in just a bit. up next, can you feel the love? ceo of southwest tellings us if there are good days ahead. that powers sound decisions. duff & phelps financial advisory and investment banking services.
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jet fuel prices hitting southwest airlines. the chairman and ceo gary kelly noting outstanding revenue production and costs, except for jet fuel.
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gary, how are you? >> terrific. >> it was better than expected but jel fuel was a huge issue. >> that's pretty much the story. we continue to have very strong revenue production weeks have momentum built up over a number of years. we had another record revenue performance in the first quarter. southwest did well, air tran, a separate ounit did very well. very pleased with that. our fuel costs were up over $200 million in the first quarter. so that was a struggle and we're able to boost revenues about that same amount. at least we eked out a little operating income but a small net loss. the outlook for the rest of the year is much better, but it in large part will depend on what fuel price does from here. >> you guys have always gone back and forth with this hedging issues. does a quarter like this make
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you think that maybe hedging is a good idea? >> well, hedging is a program. by that i mean it has a long-term life to it. our program to date, our hedging program has saved us well over $3 billion. so the hedging portfolio that we have for the rest of this year and '13, '14 and 2015 has what small profit in it. it's there for protection. it's not there to manage earnings. a long answer to a short question. but absolutely, it's critical to have that kind of insurance protection in place against a catastrophe. >> so the long answer or short answer for that is you have to look past the quarter to quarter on this, this is better serving the airline over the long term? >> very well said. >> gary, it's bob johnson. i want to ask you a question. i had the fortune -- i think it was fortune to serve for 12 years on the board of u.s. air
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ways and saw it go through two or three bankruptcies. is it the fate of the airline industry to go in and out of bankruptcy? is there anything that the government can do to sort of bring stability to the airline industry so you're not faced with union fights that lead to bankruptcy and then you go back again and bring the pilots back, the flight attendants and then do you it again about three, four years later? >> well, bob, great to be with you. and of course i know that you know all too well what a tough business it is. but, no, i don't think it is the fate of the industry to go through bankruptcy. as you well know, every legacy airline has gone through bankruptcy now with american airlines now going through that process. so that says something. but you have this disruptive force that's taken place over
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the last four decades, which is the low cost/low-fare carriers and it resets the bar and that's what competition does. we've never been bankrupt. we're the strongest to this day in the industry and we're the low cost producer, certainly among the legacy carriers in this industry. and by far. so, you know, the government is absolutely a challenge. we're overtaxed, we're overregulated. i would say that the single biggest thing that the government can do is to modernize the air traffic control system, which will reduce fuel burn by 15% and is also climate friendly. >> what's the holdup with that? we've been hearing about that for quite some time with congress. it's billions that have to be spent now but you're still
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operating with an air traffic control system that's been around sin the 50s. >> that's absolutely right. its origins date back before the 50s. you ask a very fundamental and good question. i think it is complicated but there need toobs focus and we need to follow through. we've made all the investments that we need as an industry and as a government to make this a reality. now we need to follow through with the procedures and modernize the air traffic control system. >> it would help if truckers would run on natural gas. it would help you guys, too. we need to save some of the other stuff for jet fuel you would think. >> absolutely. >> you can't run -- for globalization, you need jet fuel, right? you can never use natural gas or anything, wind, solar? >> we need jet fuel but you can derive jel fuel from a number of sources, including natural gas. they are not economic compared
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to crude oil derived jet fuel and they're not in commercially viable quantities. there as a lot of complication to making and distributing those other forms of jet fuel. >> thank you for joining us. >> coming up, the success of skribd. coming up. huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at plegh! [ male announcer ] aggressive styling.
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. welcome back. a flood of corporate earnings this morning. human genome sciences is the subject of a takeover bid. they say the offer still undervalues the company. cvr energy removing an obstacle to carl icahn's bid to the company. also, this morning solid demand. this is good news at spain's auction of $3.3 billion in two and ten-year bonds. yields did move slightly higher.
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comments, questions, shoot us an e-mail. before we go, we've got some earnings. >> 59 cents versus expectation of 58 cents for verizon. this is a yielder, that's for sure. you got a revenue number? >> the yield is 2%. on verizon. >> has it gone up to that point? >> that's the difficult depend is 2%. the yield is 5.3%. >> i'm sorry. right, right, right. >> revenue 29.24 versus 28.17. >> i guess it's the wire line. 4.7% year over year quarterly revenue growth in wireless. >> 734 net retail customer additions in the first quarter. you have fios still, right?
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>> yes. >> 180,000 net new fios video connections in the first quarter of 2012. >> right. 8.1% year-over-year increase -- 63% of the consumer revenue generated by fios. >> can't tell where it's going to open at this point. still a big spread between the bid and ask. looks pretty solid. don't see any outlook for it. the san lists that follow it know exactly what kind of net adds they want in video and they break it all wait down and hath have all of those numbers. >> they will continue to deliver, the internet quality distribution for home. but they also, i guarantee, are looking to get into content. because they've got to drive a reason to get it into the home
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against other parties who are bringing a bundled service. it goes back to -- >> you mean like a comcast? >> yeah, like a comcast. and even netflix is getting into original product. >> you're just a utility, you're just the pipes -- >> yeah. >> there was a picture of the cast of a new sitcom for hulu. >> i saw that. >> did you? >> yeah. >> i was scratching my head about that. >> google has signed deals with the creators of "marvel", the guys who did "csi," with shaquille o'neal on a comedy channel. you see all this explosion in distribution and it has to be fed by something. we said, hey, let's put ourselves right at the center point of having content that we can distribute agnostically
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across all these brands. who know, we can create a version of targeted verse of hulo to the hispanic marketplace, to the urban marketplace with the talent we have and the management because we know how to take this content and monetize it because we know we can distribute -- even red box. you go to a red box and want to buy a title? >> whenever you hear late night tv nobody watches anymore because all the young people are doing something else. they're doing something else but they're looking at content. >> it mobile, it's ipad -- >> but it's still content. they're not sitting their twiddling their son. >> content is king.
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>> up next, we'll break down earnings from bank of america. and then they call themselves the largest book club on the planet. find out why some say skribd may be facebook's next acquisition or at least a targ oat out there in silicon valley. we'll be back right after the break. >> time for our aflac trivia question? [ mujahid ] there was a little bit of trepidation, not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be,
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and i get the chance to spend more time with my wife and my kids. it's my world. that's my world. ♪ [ crunches ] mmm. ♪ [ male announcer ] pringles... bursting with more flavor. [ crunch! ] sadly, no. oh. but i did pick up your dry cleaning and had your shoes shined. well, i made you a reservation at the sushi place around the corner. well, in that case, i better get back to these invoices... which i'll do right after making your favorite pancakes. you know what? i'm going to tidy up your side of the office. i can't hear you because i'm also making you a smoothie. [ male announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business.
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what song by michael jackson reached number one on the billboard hot 100 list? the answer: "rock with you." >> aflac! >> bank of america earlier this morning reporting first quarter results. kate kelly joins us now the other day i asked you for the lead and had you it right away. what's our lead here with bank of america? >> the first thing to note is it looked like a huge earnings miss
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because of the accounting issues, dva and the structured note problem that gave them a $4 billion hit. they made 3 cents after that, relative to 22 cents people were expecting. there are some signs of strn. they had a really good quarter in sales and trading. their fixed income was $4.1 million and that's right in line with goldman. so let's keep in mind the first quarter is seasonally good but b of a has made a comeback, this is an area they really struggled. so that's a highlight. they have an all-time high of cash on their balance sheet, $406 billion. that's an all-time high. and i'm told actually that loan demand slackened a little bit, that's one reason they have so much cash, but they're trying to stay liquid because of the
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regulatory environment. credit card issuance up 19% year over year. i wondered what's that's about. are there loosening credit standards or people are looking for more cards? i'm told no, standards were stiffened in '09. and we've been talking about project new bac, the effort to sell assets, reduce head count. head count was down about 3%. i actually think they deserve some credit for a fairly strong quarter. >> $5 to $9 since the beginning of the year. >> that's just perception but here they're delivering. >> did you say 31 is the number we're using? >> yeah. i think 22 was the expectation. 3 is the reality. i'm not sure where 21 comes from. >> are we backing out the this
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evening -- things -- >> yeah, i'm sure that's right. >> i think trump bought some of that, too, right? >> trump bought some b of a. >> they're continuing to throw things overboard. bids are due over the weekend, they may have a deal pretty soon. that's going to raise $1.5 to $2 billion. they're still reducing head count except in the mortgage servicing area. it's an ongoing process. >> the credit card part is interesting. i think it's an indication, maybe stretching, the housing market is getting better, people are getting more confidence, get more leverage. >> knock wood. >> thanks for coming in. >> my pleasure. >> coming up, we have from kevlar to teflon, dupont is
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coming up. we'll talk to dupont's ceo coming up. >> still to come, the ceo of the largest book club on the planet joins us to talk social media and his startup success. choose control.
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weep -- we are back and we have a company here that i'm going to put in the category these days, i don't know about $1 billion but it is a hot silicon company. we have the ceo and co-founder of skribd. when you came out what did you say, how old are you? >> early 20s? >> 27. >> you obviously don't drink or smoke. >> and you said don't ask me that on air. >> trip is in that category. some of your friends are the guys from instagram and drop box. all these companies with crazy valuations. describe what skribd does. a lot of people may not know
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they use it. >> you're a great user. we love having you as a user. we're a social publishing and reading site. we let anyone, whether you're an individual or big company take any kind of written content and publish that on the web. and we turn it into a nice web page for you, help you distribute that through google, through facebook and we help you monetize it. >> i tell people it's like the youtube of documents. any time you see a pdf or document on the web, it usually coming through skribd. and i'm curious just as we watched what happened to instagram, these guys are your friends or drop box guys, it's not worth like $4 million. a, does it make sense to you and, b, how does it affect your own business and how you manage it? >> there's so much change happening, it creates so much opportunity.
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people are switching their web usage to mobile and new targets. that's why you're getting these breakout companies. whether those valuations are fair or a little too high, that's another topic of discussion. but there's definitely a lot of interesting activity. >> but does that make you feel like, okay, this is the moment in time when you have to strike and you get a big deal like this and if i don't do it now, it will pass or do you think this is great but if i hold on to everything i've created and keep going, this is going to be worth a lot more down the road? what's your viewpoint? >> i think it's really important in times like this for entrepreneurs to stay focused. i've been hearing things like this is the time to have your moment. i don't think that's the right advice. i think it's better to stay long term focused and build long-term value. >> how does skribd deal with the change to mobile? are you doing anything
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different? >> yeah. we're building a great mobile experience and building apps, that you can take any kind of content. it's a difficult content to make any content readable. >> it is. as somebody who tries to down load stuff to my blackberry. >> it is. we have a lot of cool technology coming out that will allow you to read any technology. >> as an entrepreneur to an entrepreneur, when did you have that eureka moment that i've got this thing called skribd and this is something? >> well, the story is when i was in college at harvard, my senior year i was talking to my dad, who is a doctor. and he had a medical paper that he wanted to publish. and in medical publishing, it takes about 18 months to great paper just published. he just wand to share this paper with his colleagues. that inspired the idea of making a web site to share this paper. we broadened that to all kinds
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of content to things like books, papers, creative writing, any kind of written content. we started working on it. as an entrepreneur, there are days you think you have the next big thing and there are days you think have something that's not going to work. but then we launched it one day and it took off, and it's growing quickly, doubling in size every month we shall have about 90,000 subscribers every month. >> what about revenues? >> we have three-part model, we have ads on the web site, premium accounts and ability for users to buy and sell content. we want to help publishers make as much money as possible. >> what do you think in the way of this -- you're in this justice department suit with apple. >> well, i mean, i don't really know exactly what those guys discuss but knowing these publishers, my feeling is there probably wasn't a lot of
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colluding which went on. in our case we just let the publishers set the price and we just stay out it have and let the community deep side what the price should be. >> real quick, we're going to have to go, how do you look at a google? are they a competitor to you or a potential buyer for you? >> i think in our case google complements us very well, they help search the content on our site and one we integrate with the whole fabric with the web. we integration closely with google and facebook. we use their log-in system. so we are nicely integrated with google, facebook and all these other companies. >> would you sell to either of them? >> right now we're just focused on building the best long-term independent business we can beep have a lot of great revenue streams ahead of us and we have a lot of work to do. >> if you do become an instagram, you have to come back and announce it here. >> does your web site still have
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to be cool? >> i don't want to answer that question. >> do you have any of these other guys that we would know sort of mentoring you? have you been to a club with sean parker and his victoria super model or anything like that happening? >> you should have seen this guy the davos. >> that's where we met. i've only seen you in davos. >> what is it, a mocker? like someone who mocks people? that's a mocker? >> the digital moguls. do girls know who you are yet? >> what do you think? >> i think the smart ones do. >> is that one of the things you told me not to ask? >> you ask all the fun questions. >> far be it for me for trying
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to make the show fun. >> when we come back, earnings, earnings, earnings. plus in the next hour, we have senator mark warner of virginia. he'll join our guest host, bob johnson, to talk politics, the economy and winning the white house. "squawk box" will be right back. , you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz.
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today's guest host, bob johnson, joins us now. we have others who insist on
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being legendary. you don't insist on it. talk on a quick political discussion here to pull out in the -- we talk a lot off camera. >> we do. let's keep it that way. >> we go back and forth a lot. nothing going to happen to the election right now, which is frustrating to a lot of people. you, too? >> it's frozen. every political decision, every economic decision is all frozen until after november. and so, you know, the whole process is now how mean spirited this campaign could get. my hope is that it won't get that way but when you're already seeing people getting to the point where they're throwing up on twitter pictures of dogs, you see where it's going. there's no real dialogue about the real serious issues, debt, you know, rising costs of medicare, medicaid, social security deficit, international problem of war.
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none of this is being discussed. it's all about how can i win about seven or eight swing states. >> and i ask you as an entrepreneur and a private equity guy, do you admire romney's career? do you think he was really good at what he did? >> as a business person i admire every business person in this country who is taking a risk and becoming creative and innovative and trying to create jobs, build wealth and obviously help this country become competitive. >> you're not sure that translates to being a great president. >> a president is not like a ceo. a ceo you got a lot of control over what you do and how do you it. a president has to share the decision making authority with the congress. >> but based on policy, you're not exactly jumping up and down about being opposed to a lot of romney policy either. >> i'm not opposed to anything that's going to move jobs, economic growth and reduce the
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deficit and the debt so we don't spiral into spain or greece. >> very good. >> that's all right. >> we got a few things out of there. >> coming up, dupont up 8% in its first quarter. the ceo is coming up next when "squawk" returns. a route map shows you where we go. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see... it's the world.
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dow component dupont out with its latest items. >> chairman and ceo ellen kullman will break down the report and give us her outlook for the rest of the year. >> and the race for the white house is on. >> he has failed. it is very clear that his agenda has not accomplished what he said it would. >> the last thing we can afford to do is to go back to the very same policies that got us into this mess in the first place. >> we're going to break down the presidential campaigns and talk election year politics with virginia senator mark warner. >> and breaking economic numbers. it's data that is closely watched by market power players. >> it's really useful data. >> initial jobless claims do out at 8:30 a.m. eastern.
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the third hour of "squawk box" begins right now. ♪ ♪ welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our guest host -- how many companies do you have? >> about 15. >> how many public ones? >> one is a spac we were talking about and the other is roj trust. >> checking u.s. equity future. >> they've come back. earlier we were up at 75 points
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at one moment because what we saw with the spanish bond, auction actually going off. it was well subscribed. yields were higher but it was well subscribed. there have been some other thoughts going around. art cashin just sent out a note saying a part of this may be because of rumors of a french downgrade or a friction between the bundes bank ecb. >> let's do a quick recap. it has been a busy morning for earnings. bank of america reporting better than expected results. ceo brian moynihan said he saw improved businesses in q 1. and verizon beating streets bay opiniony. and travelers, the company
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falling short, raising its dividend, living its dividend yield to 13.9%. and morgan stanley, with estimates better than expected. for more on morgan stanley's report, our good friend mary thompson is here. what's going on? >> big quarter for morgan stanley. let's run through the numbers. the company had a hit from their dva, which is basically a narrowing of their credit spreads during the quarterback. for morgan stanley, the $2 billion. the company's earnings were actually 71 cents from a continuing operations based. if you look at that, well above analyst estimates of 44 cents a share and revenue was higher at 8.1 billion, once you take out dva. a couple of things to note here. if you have looked at their fixed income currencies and commodities trading, the revenue
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there was up 36% -- 34%, i should say, year over year. a very strong quarter. what's interesting, the quarter-to-quarter -- year over year numbers are very difficult for the first quarter but morgan stanley showing a significant injury in revenue. goldman sachs had a year over year decline there. the company had very strong equity revenue. it was up 6%. this has been an area of difficulty for the big banks. the volume haven't been as strong but morgan stanley mosting a strong quarter. morgan stanley has been very much tied to how europe is acting, in large part because of their exposure to the gips in france. its exposure to the begin country, meaning greece, italy,
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ireland, portugal and spain, it decreased to $8.48 billion. france at 1.7 billion. some compensation numbers and ratios were high. >> is it possible it changes the dynamic for them around a moody's downgrade? >> one might think. the banks are really trying to down play what one credit rating might say about them and they point to their higher capital ratios, the cash on hand, et cetera. morgan stanley isn't the only one who faces a down grade. the concern for morgan stanley, there's a potential down grade of about three notches. >> would could chang their costs. >> exactly. could change all of their costs.
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. and yesterday there was this article with fink with blackwell company saying maybe we don't want to trade with some of these companies. >> the four giips countries -- >> have you heard giip is. >> i heard gimp. >> they because they don't want to call them pigs? >> yeah. they just flip it. >> if myorka was there, it would be gimps. >> let's stick with giips. it's not the way you want to start the morning, is it? i didn't bring up the gimps.
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you brought up the gimps. >> why don't you tweet that. >> mary johnson, thank you for joining us. what's going on? you guys, unbelievable. >> futures are falling off a bit this morning in spite of what seemed like positive earnings reports. larry kantor tracking that activity for bark clclays. i apologize, larry, craziness is going on on the set. if you could square the circle, joe will give me a hard time for using that phrase, on why the markets look like they're down this morning. >> he's out on his skis. >> i can't give you an answer as to why they're down this morning. i think it's too early to draw conclusions on earnings. they're coming in not only better than expected but so far over 80% of companies have beat their estimates and that's better than -- it was about
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two-thirds first quarter of last year and the average since the recovery is about 75%. they're beating it by a little more than what we've seen. but it's way too early. we've only got less than 15% of companies roarieporting and abo 20% are market cap. i think it's the global environment driving this evenings. probably overnight the news was that the span, bond auctions went better than expected and that's good news. >> then you would think the markets would be up. the question is about europe and you are talking about macro trends. in this environment we seem to always go back to europe. we forget about europe and then we decide we want to worry about europe. right now buying opportunity? not? what are you suggesting? >> after the big rally we had, we actually at the end of march -- so early in december we said ahead of the ltros, we thought it was going to be a bigger deal than the market did.
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we advised investors to tip their toes in the euro area in the equity and debt side. by late march we thought enough is enough. things still looked cheap on an historical basis but given the risks around growths and deficits, we thought the rally had gone enough. >> does that mean if you bought you got to get out? >> i'd say out. and the reason is especially with regard to spain, they have a very wide budget deficit. the economy is in a pretty severe recession and we don't think they get out of it this year. and the market seems to be crying for more fiscal austerity, which is going to make growth worse. italy looks in a little better shape because they run actually a primary budget surfaplus. their big cost is rolling off the debt. the fact that banks are flush with cash makes that easier. but spain is still in a really bad situation. we'd rather see growth positive reform, like labor market
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reform. we think concerns about the fiscal sustainability in spain are going to be with us. it's going to be up and down. we're know where near the kind of dire situation we were at the end of last year before the ecb flushed the banking system with a trillion euro. it made things a lot better. we're not on a precipice here but it's going to be dicey. >> do you like the big caps, though, that have exposure to europe? >> well, exposure to europe is one element. you're looking at different sectors and the growth in various sectors. that's certainly a negative. so companies that do have bigger exposure to europe, on that basis alone -- >> what would you touch and wouldn't you touch given what you said. >> i wouldn't get into individual companies. as a rule, we're staying away from that area for now because we think markets got a little ahead of themselves.
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>> would you go into bonds right now? i read an article in fortune magazine by robert sloan who said if you're near a bond you should run. >> valuations seem okay, maybe a little cheap but on a relative basis they look super attractive. the question is where else are you going to go? if you look at so-called safe assets, there's a hell of a lot than there used to be, bundes, treasuries, not many places to go. and investment grade corporate credit in the u.s. is now at historically low yield. wek it's look quite attractive on that basis. so on a tell tiff basis, it's hard to stay with equities -- i'd say away with equities. we think the u.s. economy will keep growing somewhere around
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2%. looks like jobless claims this morning that maybe the market is slowing down a bill bit but we think it's enough to keep growth at about 2%. we'll get fourth quarter gdp. right now it's adding up to something a little higher than that. the u.s. economy should hold up okay. >> larry kantor, thanks for joining us this morning. >> coming up, dupont outlook better than expected this morning. next half hour, politics and economy with mark warner. coming right back. you from wheu are... to where you need to be. and we're not just talking about points on a map. with a more intuitive delta website and mobile app... and the most wifi equipped planes. we let you be everywhere at once. innovations like these are extending our reach so you can extend yours. and now, even at 30,000 feet you can still touch the ground.
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welcome back to "squawk box," everyone. the futures this morning are still indicated higher but off their highs of the session. there was a big jump for human genome sciences. it's received an unsolicited takeover offer worth $13 a share or $2.6 billion from its former partner, an 82% premium from where it had been earlier. we've been watching what's been happening with earnings this morning and watching very closely on earnings, you can see through the morning we have had stronger earnings from bank of
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america, morgan stanley, verizon, traveler. we're also watching dupont, came in with earnings better than the street had been anticipating and a lot of moving pieces. joining us, ellen kullman, dupont ceo. you did come in with earnings better than expected. congratulations on that. >> thank you. >> one of the key things we watch dupont for is to get a gauge of what's happening around the globe with the economy. agriculture is a huge point for you. sales up 16%. can you tell us what's happening? is this around the globe? >> yes. agriculture is strong. farmer incomes are at higher levels, technology really coming in and helping farmers create higher yields and dupont, we have a great product lineup in both seed and crop protection
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chemicals. our seed volume was up 20% in the first quarter. there was an early start to the season with the mild winter but it's really novel in innovative products, it's our direct-to-farmer -- you know, the way we call on our customers that are really giving us a great opportunity to excel in that marketplace. we'll see a very strong ag season. >> you mention it's an early start in north america because of the warm weather we've been seeing. and that's something that throws off numbers all the time, jobless claims to getting a feel for retail sales. how much of this do you think is pulling forward from sales that you think would be coming a little later if it wasn't so warm? >> as we estimate our volumes in this area, we see it's about 3 cents a share has been pulled forward from the first quarter to the second quarter. >> so that's not a huge amount.
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you do say it's still product innovation still? >> it is. it's our novel insecticide, they're making headway in the marketplace and gaining ground. >> we have seen inflation around the globe and it's been something a lot of people have been worried about. overall was it an increase of 8% for input costs? >> materials were up 7% for the quarter, for the year we're pegging it at about 3%. that's below about what we had said? january, about 1 percent and point below. certainly natural gas and that's a benefit. oil is up so that's a negative. all in all we're going to see about 3% inflation on our raw materials this year. >> are you worried about inflati inflation? sounds like you're less worried than in january. what else is happening besides natural gas? >> at the end of the day, our
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company has changed a lot over the last decade. we are much less impacted by runups in major commodity price, except in the agg area. and we're focused on science that helps us engage with customers and focus on their needs. and also the global nature of our business and variety of the sectors that we participate in, agriculture, automotive, industrial, food ingredients, things like that help us balance the equation -- >> but with what's happening with inflation, there's been so much worry about every central bank printing money. is this an issue or less of a threat at this point? >> i think you have to watch it. i think it's appropriate to are concerned about it. that's why we continue as a company to drive productivity. we saw great productivity not only in our fixed cost but our
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working capital in the first quarter. we have to focus on what we can control and take those erk ternl factors in consideration and deliver against our plan. >> it's bob johnson. we always talk about the imt pact of regulations on the business environment today and whether or not it's something what we should be concerned about in terms of our ability to continue to grow and compete effectively. i would assume the e pa-type regulations are something that you guys watch carefully. how do you feel about the regulatory climate as it impacts your business. >> certainly the regulatory climate has been, you know, strengthening i guess could i say in the last few years, not on in the united states but in many countries around the world. the reach legislation in europe. and i think that's something we have to watch very closely. at the end of the day it's about
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having a level playing field, about making sure that here in the united states we're not regulate together point that our industries here can't compete globally. we're a big exporter out of the united states so it's very important for us to keep the u.s. in the right place from a regulatory standpoint compared to the globe in order for to us be able to compete effectively. >> you mentioned innovation. the last five years we talk about all the time the world has really changed in terms of our viewpoint on our own domestic reserves because of i guess natural gas or this bountiful supply that we have here. has your -- you have actually told your researchers or your scientists to make look at ways of capitalizing on our being eventually than where dupont would have been five years ago.
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it would have been totally different i think. >> energy is one of the things we take into consideration, but the majority of our innovation is further down the chain as it were. it's really in the advanced materials area where we're making very differentiated products in high-strength materials like kevlar, water and moisture resistant materials like tyvek and the acquisition of dennisco which brought healthy food and ingredient. a good part of our company is moving away from the energy intensive areas that maybe it was decades ago and moving into advanced science and materials, augustier, biotechnology. it has less of an impact on us today. there's a huge team -- to help
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protect people in the environment and help create alternatives in the energy area. . or very focused on the basics of science to help bridge those gaps. >> what do you have in the pipeline that might help the auto producers? apparently there's a shortage of nylon 12 or something, a rezin that they use in fuel lines and other areas that they're facing a real shortage on. do you have anything that you can substitute? >> we don't make the nylon 12. our application developers and salespeople are out working with oems today. it is an issue for the automotive industry. >> thank you very much for joining us today. 8:30 eastern time seven minutes away. we'll get the closely watched jobless claims number to you as
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soon as it hits. homosexual still ahead this morning, former virginia governor mark warner will join us to break down the numbers. we'll be right back. when's the show? well, if we don't find an audience, all we'll ever do is rehearse. maybe you should try every door direct mail. just select the zip codes where you want your message to be seen, print it yourself, or we'll help you find a local partner and you find the customers that matter most. brilliant. clifton, show us overjoyed. no, too much. jennessa. ah! a round of applause. [ applause ] [ male announcer ] go online to reach every home, every address, every time with every door direct mail.
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welcome back to "squawk box," everyone. we are just a few seconds away from the weekly jobless claims number. remember last week that number
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jumped. this week we are expecting it to drop back down to 357,000. and that number jumped unexpectedly that week to 380,000. we'll see what happens this time around. kevin, why don't you give us the numbers. >> 386 and last week revised to 388. bond prices up a little bit on the move, yes. >> we've been watching all morning long the weekly jobless claims we thought would give us a little insight. does this get us back to where we start worrying about what's happening with the weather and whether any of these things are sustainable, kevin? >> you're going to have one more
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week where you have seasonal adjustment. you want to give it one more week. the markets are taking any data point, where you're trading spanish debt or anything else, becky. they're trying to oscillate quickly around that print. overall the market's still at a very good level equity-wise. these numbers are not heading in the right direction. we're getting a cluster of weaker data. i think that's what people are focusing. >> kevin stay there. i want to bring brian into, too. what gives, brian? >> i think it has to be viewed as a modest disappointment. i remember sit hearing three, four years ago digesting 600,000 people joining the ranks of the unemployed in a given week. it is a marked improvement. it's still consistent with historically a lower unemployment rate than we've seen but it's a move in the wrong direction. >> and the key here is that we had seen a lot of better than expected numbers, not only in weekly jobless claims but in the
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monthly jobs numbers, too. and we wondered whether we were getting traction back. does that make you think we are getting that traction or that we're giving back and this is some sort of a swoon again? >> you wand t to look at leadin indicators for job creation and whether it's the average work week in the manufacturing sector or temporary employment, they're all pointing to future job growth. what a lot of companies or ceos are dealing with is the uncertainty, whether it's in europe or the political situation. we're facing a fiscal drag at the end of the year. as our politicians have come together to extend and kick the can a little bit further down the road, it's hard for ceos to act with strong conviction given the uncertainty that exists. >> are you going to focus more today on this number or on the earnings? >> i'll focus on both.
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earnings continue to be strong. it continues to be a good picture for corporate america, we see equities trading at reasonable valuations. >> still reasonable with this pressure. >> reasonable compared to treasuries, closer to fair value against themselves historically. it is a slower environment. the markets wille focusing on is this a repeat of 2011, 2010. there are some things that are different, emerging markets are trying to foster improved growth, gasoline prices seem to be moderating. i don't think this is an economy that's coming to a halt. it's going to be a soft patch of data and the markets are going to have to deal with it. >> go ahead, becky. >> there a lot of things happening today, not just this jobless numbers. you've got earnings that all looked pretty strong, you had the spanish debt auction that
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came back well subscribed. and the earnings numbers are better. what's happening? >> what i was going to add to what your guest is pointing out is we're supposed to be the leadership here. that's what the market is going to have to focus on going forward. the globe has lost its growth leadership. it used to be china, then india. but it's got to come from us. when you're starting to see the claims figures get sticky up here and the faith in that leadership starts to wane. >> do you think we're seeing a tale of two economies, bank of america saying credit card applications are up, american express saying credit card debt is up, housing beginning to come back a little bit yet at the same time the unemployment numbers still seem kind of stale. is there sort of two economies
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at work here? >> we have to remember the back drop. we're still in the after math of a very deep financial crisis. we've said this before, even the bible talks of seven years of plenty followed by seven years of famine. perhaps we're moving along in the seven years of famine but it's going to come with fits and starts. this market has shown remarkable resillians. 2% gdp growth is positive but not good enough for anyone. when you grow at these rates, you're susceptible to shocks and there's no shortage of them out there. but consumers are hanging in, dipping in their savings a little bit, perhaps not what you want to see at this point. you'd rather see personal income remain somewhat modest. it's going to be a generally weak economic environment. but the u.s. is still among the only economies in the world that will have better growth than it did last year.
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>> what's the weather situation? is next week the last week that it's supposed to impact? >> you pull some forward on better weather. i don't want to overstate it. the leading indicators are pointing to better growth in the united states. some of that is demand that's pulled forward but i would suggest that more of what we've seen is meaningful activity. you're seeing perhaps a little bit of a pullback here. i think that the economy continues to run along and the data continues to reflect it. >> i'm in the automobile business, durable goods, automobiles, things still seeming to -- in the auto sector, we're selling cars at a clip that's very attractive if you're a dealer and i assume other durable goods are seeing that same lift. >> it's pent up demand in the economy. you were not selling enough cars a couple years ago to cover the replacement rate. consumers, even though sentiment
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remains low are starting to feel the pent-up demand. look at 15 million annualized car sales. the big question is when it comes to purchases, what are businesses doing with the cash on the balance sheets? is this capital investment or are we going to see -- leading indicators point to job creation but ceos will remain skeptical as long as these drags exist for the global economy. >> kevin, thank you for covering and getting those number to us right away. >> crude oil, flat. the dollar dropped against the yen on the news, treasury bonds increased and we'll watch the futures in the morning. >> we should be watching in trade. i'm -- i imagine this will help romney's case. >> i went on twitter. are you going to buy a car?
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we're talking about pent-up demand. >> one of these days. i don't have a car. i have jeeves but i don't have a car. >> coming up, a senator who has plenty of private sector experience, the former governor of virginia and co-founder of telecom company nexttel after the break.
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welcome back to "squawk box." right now you can see the futures are indicated lower, this is after they've been as high as 75 points higher this morning. this is after we see the jobless claims come out higher than expected. it is the second week in a row we've seen a surprisingly high number of claims coming in. everything else we've been hearing today from the spanish bond auctions, we've had a lot of good news but we're still looking at red arrows now. >> our guest host this morning is bob johnson. i've talked to ellen kullman of ceo of deponupont, i can only imagine how much paperwork gets done every year satisfying regulation. you mentioned being on the business council.
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it sounded to me like you were trying to get her to say regulations were a problem. is that your view and the view of the business council at this point? >> the business countcil sends out a questionnaire before each board meeting. one of the key questions is what impact does regulations have on your companies, your company's commitment to hire, your company's bottom line. and to a person everybody ranks that as a very important issue. >> too much? i mean, we know regulation is important but are you saying there is too much regulation? >> without question there's too much regulation. >> and it's holding back the economy? >> it's holding back business certainty, confidence more than anything else. because regulations -- people write regulations like generals fight last year's wars. people will regulate something based on a problem that happened five years ago but they never change the regulation. the technical can change, the market can change but the
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regulation sort of stay there is. it seems to me that you can have a policy where every regulation sunsets every two years and they can be reviewed to see if they're relative to the markets and to conditions. >> let me be more specific. has the obama administration gone too far -- congress can only help so much. once congress won't do anything, then up know about executive powers and these agencies. you've seen the action of the nlrb. inio view, too far on regulation? >> i think it's a natural reaction for -- >> that explains but has it gone too far. regulations become the bureaucrats raised on debt. >> in a simplistic view, though, bob, you know the party that is
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associated with a lot of regulation, right? i mean, you know in a simplistic world which it is. >> you would argue that under a democratic administration you probably would see more public-interest-type regulation. i'm not saying that's bad. >> you kind of said that. what about the epa? is that bad? >> regulation if it just exists without a review process, without a vetting process as to whether or not it's continually relevant to the needs of the consumer, the public interest or the business community needs to be examined and eliminated or at least altered to reflect the anatomy. >> every regulation that you're equation into what it does as to whether there's jobs or not. who did we have on the epa. i asked that question, you have
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thought about this? it's one of the things they were proposing. i think they backed up finally. i asked had you thousand about this? she called thoo a cynical question for me to even ask. some regulators, the fur gets up on their back if you ask about this in reference to jobs. they kind of do it in a vacuum. >> i think you're right. any kind of action or any kind of regulation? and what is the basis of this, to support something? it should be does this create jobs? if the answer is yes, do you it. if the answer is it hinders jobs -- >> kills jobs -- >> the answer should be we should look at it with the idea of changing it. >> so when you think of the jobs bill, there's two sides to it. it may create jobs because it may allow crowd funding. the flip side is some will say
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it will again. but as jou pointed out. there has to be key kiefers and in this key driver, if it is a job creator, you have to have a reason not to go forward with the keystone pipeline. >> if you don't -- >> off camera i asked you whether you have a psychiatrist to help you rectify all these conflicting views because you -- i couldn't say things better than you say them half the time. >> that's because you're not as smart as i am. >> you got me there. >> the point is that -- >> but you balance a lot of different things. >> this country needs a strong dose of reality in the conditions we're in and move the politics off and say we got
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serious problems. we've got debt problems, we've got deficit problems, we've got global competitive problems and everything else. >> do you tell the president that was a mistake with keystone then? would you actually say that? >> i said you should always err on creating economic growth and stunt, ps unless there's overwhelming evidence that the impact will be so overwhelming on society that you hedge. i don't think the keystone pipeline should have been a hedge. >> how about the boeing decision? >> the boeing decision was clearly anti-business. i talked to -- >> mcnerney. >> jim mcnerney. clearly there was no reason for that whatsoever. >> keystone may get done, by the
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way. >> i saw that. >> it may be too late. they're already going west, young man. >> bob is going to be with us. he's a very smart man. we love having him. let's get down to the new york stock exchange. jim cramer joins us. we've been watching the news from the spanish debt auction, to the earnings. they've all come in better than expected. jim johnson said the floor wants to take anything and look at the negatives in it. do you think that's why why we're looking at the futures looking lower? >> i think there could be a disconnect between the futures, maybe there's a rumor in france. when we come down to ellen kullman talking about how good deponte is, when we're talking about how good we are seeing so many different earnings away from that, this ebay is a breakout.
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it's incredibly important. a vm, the big data stories, verizinon widely over. i come back to the futures are all about hedge funds trading hedge funds to hedge funts. it's about morgan stanley and verizon doing better than expected. . eye find it fireson frankly. >> and ellen kullman, she thinks this is not just the warmer weather that's helping with agriculturier. this is real change and you're talking about new products and significant gains there. five years ago we didn't think of this when it was coleman. no different from intel, no different from what we'll see from microsoft. bank of america, that had been the achilles heel of the group. is that trading off of
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portuguese and italy? no. if he had 10,000 more jobs created, this markets would be flying i think we should be we'll see you in just a few minutes at the top of the hour. coming up, the race for the white house is on. we're going to talk to virginia senator mark warner coming up next when "squawk" returns. [ female announcer ] everything that goes into a lennox system is engineered for comfort. like parts that create your perfect temperature
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welcome back to "squawk box." our next guest organized the senate infamous gang of six which spent more than a year tackling ways to cut the national debt and now includes 45 senators and 100 members of the house. joining us is senator mark warner from virginia. great to see you, senator warner. >> nice to be here. >> what's going on with senator conrad? are you with him, against him? where are we with that because i guess that's as good as we're going to do in terms of a budget from your side right now, right? >> remember, we do have the budget control act which puts the topline numbers for both fiscal year and next, it's in law. it should be the guidepost. but admittedly we need a longer-term plan.
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what senator conrad did was pretty brave. rather than putting out a democratic budget that would have gotten through barely on votes, you had the ryan budget, the democratic budget, neither one would be agreed. the senate would never agree to ryan. house would never agree to the democratic plan. he said, let's go ahead and start now using the bowles/simpson plan, the best broad bipartisan plan that was out there. let's put that out there as the starting point and let us start those discussions now. we all know we're going to have a train wreck at the end of the year. does anybody want us to repeat the kind of crazy embarrassing way we went about this in the end of june of 2011 where we ended up with this so-called budget control act which was frankly an embarrassment to the country and to the markets. ended up creating a downgrade in our debt. let's go ahead and take this frame, update it and fight, argue, but make sure there's a
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working document by the time -- >> are you helping senator con add? we talked to him yesterday. he talked like he was all alone. he came up with one guy from the omb. he said no one was urging him on. as you know, he's not seeking reelection which is why he's able to do it, i think. >> no, listen, i'm with him. we worked on it together with the gang of six. there needs to be improoumts. this is a 2010 document. needs to be brought up to 2013. there needs to be anapproa approachment and need a regressive imposition of some sort of the bush tax cuts. so we don't have 47% of americans paying federal income tax.
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we need more -- >> senator, the buffett tax, we haven't heard the end of it. we've heard an awful lot of it so far. stump speeches, swing states. $47 billion over ten years and we know it's not going anywhere. nine votes short. and then eric cantor on the other side, going to put a jobs bill through the house. going to get it through the house. no way it goes through the senate. so one side says, with e pae pa and you don't. and the other side says the same thing. do you support the president with the buffett rule going state to state and talking about this nonstop? >> do you think that there is a reason why 90% of americans think we're dysfunctional up here? i agree with the 90% of americans. this is crazy. i didn't get the memo when i got
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this job that we're supposed to take presidential election years off. the people in brazil, india and china are not taking 2012 off just because we have a presidential election year going. i think the single best thing we could do for job creation, better than any of the proposals the president's laid out, better than any of the proposals that romney's laid out is pass a realistic long-term deficit reduction plan that knocks at least $5 trillion off of our debt number. that's going to require increased revenues, major entitlement reform and it's going to require everyone -- >> both sides wanted that, senator. we're not going to relitigate who walked out on who back during the -- we haven't seen any leadership since then. >> again, i fundamentally disagree with you. this gang of six plan, it ain't perfect. we got 45 senators, we got 100 house members. clearly the leaderships of both parties don't want that going forward. it needs to be continued to be worked on.
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that is still the most viable option out there. take bowles/simpson and ratchet it up. it ain't perfect but that ought to be the starting point. i think that's what conrad has said. let's go back to the core document and at least start from there. that was where most of the press and pundits said was a rational good start. >> hey, mark, bob johnson. >> hey, bob. >> here's a question i have to ask you. i'm continually investing in businesses, trying to create businesses and start up jobs particularly in the minority community. every business will tell you that lack of certainty is jobs killer for business in terms of investment and growth. we've got this question of the bush tax cuts expiring at the end of the year. along with what you and kent conrad are doing, why wouldn't
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the congress indicate that you're going to extend the bush tax cuts for a period of time, maybe six months, to go seriously at coming up with real tax reform that will bring about a level of progressiveness, increase the revenue but at the same time stimulate and spur economic growth? >> because, bob, i don't think one more short-term extension at three or six months buys you any kind of certainty. we have to recognize the fact we've got to have more revenues. republicans got to acknowledge that. democrats got to acknowledge our current entitlement programs the way they're structured. they just don't work. it's nobody's fault other than the doctors because we're all living longer. we have to recognize those facts. i think that the only thing coming about by these


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