tv Squawk on the Street CNBC April 6, 2016 9:00am-11:01am EDT
perseverance. revolutionalizing health or food are hard problems. they take out kind of a longer term mentality. it was sort of ten years in the making overnight success and partnerships and policy and perseverance were successful in the first wave. that's why i tell some of those stories. >> congratulations on the book. again, it's called "the third wave." we appreciate you being here. >> always fun. thank you. make sure you join us. "squawk on the street" is coming up next. good wednesday morning. welcome to "squawk on the street." carl quintanilla along with jim cramer and david faber.
oil is on its way in about 90 minutes. >> as carl just said this morning we got news from alergan and pfizer walking away from a deal signed last year. one of the largest deals we receive in that center actually overall, in fact, and part of it done in part not just to try to fuel a growth but also to allow it to access cash overseas and bring it back to the u.s. and become a foreign taxpayer but on monday u.s. issued regulations. this morning the u.s. treasury at least was successful in doing just that, pfizer and allergan going their separate ways, allergan paying pfizer a $150 million fee over time they've spent over the last few months in pursuing a deal together. now they're apart and going their separate ways.
we're joined on set by brent saunders, the ceo of allergan. thanks for being here. >> thank you for having me. >> it's been a tumultuous couple of days. >> it has, yes. >> there was a call back in february. you were talking about the spread. you said, man, it's baffling from my point of view. as far as pfizer is concerned, we think this deal will close. we're in a strong position. i don't see any obstacles. you guys were blind-sided. >> we were. look. we built this deal around the law. the regulations, all the notices that were put out by the treasury. and it was a highly legal contract. we follow it as they're looking to move to a foreign domicile. for rules to be changed is a bit un-americ
un-american, but that's the situation we're in. we're a great company and so it will work out well. >> do you believe the treasury specifically targeted your deal? >> it certainly appears that way. these rules, this three-year lookback was designed, i think, very specifically to target this deal. i don't believe based on an initial review it impacts any other deal and virtually any other circumstance. >> i'm sure you and your team of accountants and lawyers look at the fine print and try to figure out a way to get this done given the announcements this morning. i assume there was not. was there any hope after seeing the fine print after we got the release from the treasury? >> there really wasn't. it really looked like they did a very fine job at constructing a rule here, a temporary rule to stop this deal. obviously it was successful. >> yeah. i mean three years it will be in effect for. so the three-year lookback provision that was, of course, the key for killing the deal. what does it do, though, for allergan now because it wasn't just three-year lookbacks.
there's always an earning prescription. how does it affect your strategy in terms of acquisitions given your size is going to be calculated very differently if you use stock in those dealing? >> interestingly it has essentially no impact on allergan as a stand alone company and, in fact, arguably in a preverse way it strengths our stand alone company. so the three-year look back is onto if they were to acquire allergan. if they were to go out and buy something else, we can use stock. we can use a lot of stock after october of this year because that's the three-year anniversary of the deal. and as you know, we oar going to sell our generics business. we will have $40.5 billion of proceeds pretax. and so we have a lot of flexibility. with respect to our tax status
and income production, they have no material impact on us whatsoever. >> none at all. >> none. >> all right. brent. your stock average, 299 bucks before the story broke. now to me it says the whole merger was ill-advised. what steps can you take to bring your stock back to where it was before you ever got involved with pfizer? >> look. allergan, i think, has arguably one of the longest top profile growths in history. we have one of the strongest pipelines in our r & d industry and we are one o the strongest players in each one of those. we're set up for great success. i think as the market digests, the news of this deal starts to focus back on the fundamentals of the allergan business. the excitement will come back to allergan. >> you have to have a lot of
cash. your stock is going to be like $89 billion, $90 billion. who could you buy? would you buy valiant and become the ceo of valvaleant? >> take those one at a time. >> i can't rule on a -- >> can't you rule out valeant? >> i'll come close. this is how i'll do it. allergan has always been a growth pharma company. we've always bought growth assets, and so when you look at the profile, the companies you mention, some are growth oriented, others are not. anything that is a growth oriented business with strong fundamental businesses and a good pipeline to sustain that growth is of interest to us. >> okay. $299. now $225, $230. you say, i would not buy back stock. why not buy back the stock because it was much cheaper than when you started the nonsense. >> clearly a great opportunity
to buy back stock. unfortunately a decision of our board of directors. we'll look at it. we can't do anything until we close. which will happen the first of the year. once that happens, everything is on the table. >> you're talking about a company that's going to do $8 billion in ebitda, have no debt once you close the deal. clearly an unleveraged balance. to jim's question, i wonder, you ran bausch & lomb or even salix -- i don't think anybody's going buy valeant. >> i have the best job as ceo. >> potential sales, what kind of assets would you be looking for? would it include sales that might be from valeant? >> we look for assets in eye care, g.i. is another and growth
oriented and high quality. clearly bausch and loam & lomb >> the treasury has increased their appetite. why was there not more of a hedge in seeing treasury move like this? >> yeah. we were prepared for this, right? this was a continuous plan clearly. but we were prepared for the treasury to do something extraordinary and clearly they did. and so our pivot back to an independent company is straightforward. we're ready, we're excited. our people are energized. our business is performing. we have a great pipeline. allowing them to become
uncompetitive role boy. >> was it worth taking the risk of doing this deal? >> clearly this is the possibility. we were wrong. it was quite pivotal. . i wasn't day dreaming for a retirement or looking for a new job. i was going with the company as was most of my management team. we staid engaged the entire time and we're ready to go. >> let's look at the political landscape. she wishes that you made less money, but trump look at it. how do we know at 299 we can't do it anymore. we need pfizer more than pfizer needs us. >> yeah, i think the answer to that is when you look at ian
read's statement, we weren't accelerated to pfizer. we really liked their research capabilities, vaccine business and oncology business. we're going to have no issue pivoting forward here. we have no issue being a pharma strong company. >> you're a double digit grower. you're obviously your stock is depressed. when i look at the situation, i have to wonder. are you going to cut numbers when you report? >> we're not. we're going have our investor call and reiterate what we said earlier, i think february is the date, and we're going to continue to focus on executing or business. when we close the deal, talking about how to deploy that capital in the most decreed of way and
sustain the profile of our business. >> to those who would say, you know what? i kind of agree with treasury because allergan slash activist really was nothing more, trying to fatten itself up for an eventual sale. that's all the strategy has been about. gobble gobble abogobble it up a then get gobbled up. >> that's preposterous. i'm smart enough b. the blue chip names in our industry were built in part by m & a and in part by r & d investment. our strategy is very similar to that except we add a growth spectrum to it. >> right. also inned you have more tax breaks. and others are walled off. >> that's why allergan as a
stand alone company is part of it. but to think they're not the right company is preposterous as well. most of the big blue chip names were built that way. allergan stans for all those things as well but has a more efficient tax structure, a strong balance sheet and i think a really strong skill at buying a creed of growth assets. >> which sounds like what you plan on doing once you get the money in from teva. >> absolutely. >> do you have a list? >> yes. i've always maintained a list. and, yes, we do. >> i have to ask you something. valeant had this terrific, trivgs determine toe logic business. they laid off dermatologists. you've got botox over here. i mean have you destroy ed dest
portion of the business? >> we continue to be strong in the industry. >> have you destroyed their business? >> i think they have, right. >> once again, no interest whatsoever. say bill ackman called you right now, would you become ceo? >> i would not. i have the best ceo position in the industry. i love allergan, the industry, the future, i love our people. there's not one temptation for me to leave. and, in fact, with pfizer, i wasn't going to leave. >> is that a benefit? having bill ackman call you constantly, is that a good thing? >> i actually like him. he's a smart man. >> how many times day does he call? >> i have a lot of respect for him. >> have you spoken to lew since this news.
>> i have not. >> when the company says they renounce their citizenship, what do you say? >> that's a missed approach. i know i've use thad word a lot when we've discussed the regulations but we're a job creator. we will continue to invest our r & ds. we'll look for curse and treatments and we understand our social contract with the u.s. this idea, it's not true. being inverted and having the tax structure allows it to be more easily in the u.s. than the u.s. company. it was built by being competitive, globally competitive, and i think this administration and these types of policies hurt america's
ability to compete on a global scale. we should talk about it. not build a wall to lock it in. >> do you think if pfizer had become a reality, they would have used some of it and brought it back to this country? >> up questionable. i think the -- if the deal had gone through, the investment in the united states would have been great er under a dublin-based pfizer around lack of come pessiveness. >> realize you're two completely different companies, but i'm curious. >> i think pfizer is in a strong position. i think -- i got to really know his management team as part of the preintegration. i have a tremendous respect and admiration for him and like us that is correct i had a contingency plan if this didn't go through and they're going to go forward and execute on it. so i'm sure they'll be in great
shape. >> okay. brent, when you were on "mad money" last, you said, i we believe this the america. for them to come in and try to change this in the ninth inning seems unfair. is this america? >> i think that's a great point, jim. when global companies like us look at the world and look for certainty and rule of law. when we think of places like india and operating in places like china, we worry about the rule of lauchl do we need to start worrying than in the a greatest countku country in the states? that just seems un-american to me. >> and if jack lew were sitting here, would you yell at him? >> no, look. we have to be constructive. we want to see this country be competitive. when you strip it all away, the most important thing that this country should focus on is reforming its tax code to make it more competitive globally and
make it easier for global companies to invest in the united states. >> you speak like you're an american company and you're not. everything you talk about is this part of it. you're based in new jersey. you can understand why some people certainly for political fodder might say what's going on here. >> well, first, i am a political american and a patriot and i do believe in this countkucountry. our company is a global company. it's the a greatest place to do business in. we hire in the united states, do manufacturing in the united states. so we're deeply committed to committing in the u.s. by the way, we pay our u.s. taxes in the united states. >> and, finally, jim mentioned the political campaign, but we're going end one a different president come january of next year. is it your expectation, given everything you're hearing, that
health care is going to continue to be under the microchip scope and suffer as we've already seen in terms of the multiple compression from whatever may come regardless of which party takes the white house? >> i don't think that's likely. i think it will be under pressure during the campaign season. we have to be sure and avoid controversies from some of the players in the industry today. that being said, health care reform was priority of the obama administration. i don't think it will be part of the priorities of whoever the next administration is. >> brent saunders, thank you for coming down today. >> thank you for having me. >> brent saunders, ceo of allergen. >> when we come back, big win for ted cruz and bernie sanders last night. what that means for the race ahead. also and they open a new arena. and take another look at the market. down day. three in a row.
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it's corona. they have tequila. ball last point. they've used all the cash flow. up to 362 last year. huge boost in the dividend. stz, move over bud, move over molson. it's all about corona and modell la. >> this mexican beer, that have the highest quality. they don't even have the capacity to make all that is business. they have to have more capacity because it is the beer they want. constellation can go higher. this is like the cash flow you used to see from the old anheuser-busch when it was starting to take over the world. these guys can take over the world if they want to.
>> doing in beverages what starbucks is doing in coffee. >> twhanlt to be the biggest wine and spirits company in the world. a lot of companies ahead of. but this company is based on fast growing mexican beer that's faster than any other drink, faster than water. people like water. >> i know, i know. people like beer more. >> yes, they do. they drink more beer in tough times. this corona and corona light, very strong, but what i really like about this company call is that they are able to buy pretty much anyone they want. craft beer is big. to me it tastes like cheerio. younger people like that craft beer. >> it's a little hoppy
sometimes. >> to me it's like cap'n crunch. >> yes. moves to something more vis k s viscuous. the other is that russia sees 45 to 50 as an acceptable ee quill libya brie yum. >> every time oil goes down. i don't care what anybody does. i care about the sallys. in the meantime obviously baker hur hughes, haul halliburton, i think oil, every time it goes higher, they're scrap producers sending it in. now we've got to the huge users like the airplane humvees. we're stuck. i've got to tell you.
i don't think there will be. sauddys don't like iran and they don't like us. they used to. they used to be our pals. >> you mentioned vhi. s&p says $414 billion in canceled global m & a this year. >> shooeesh. >> that's a lot. >> yeah. listen. who's buying these companies? $80 break even. remember, there's only a handful of counties that are profitable. pipeline companies are just a dime. >> we follow very closely with williams commencing litigation. it's to protect stock holders' rights. we're going to have more on this as this develops. i've got to make more calls.
>> let's get to the opening bell and get you a look at the s&p at the bottom of the screen. big optics, celebrating its name change to gig peak. over to vital therapies providing acute forms of treatment for liver failure. facebook making some changes to the live product which is clearly their big priority now. >> this is zuckerberg's biggest priority. from what i understand from my sources is he thinks this is going to be worldwide tv. i do a lot of facebooking, we all do it now. if they could somehow cure rate the questions so you could really do like the ultimate old "phil donahue show" that had 40 share. if they targetted with people that is off the cuff, i think zuckerberg thinks that's going
to be the future of tv. >> the question is what does that mean for periscope on a day that a lot of people are doubting the nfl deal, not that it's not a gutsy move but that it might be -- i think pat creche said it may be trading. >> i think he's more focused. i think it's programming when they want it. there's that limited window. you can save facebook. our network does fantastic facebook lierchlt i think it is the future. i'm shocked at how much he's personally in involved. he wants to make this so it's really lucrative for facebook, and if he wants to make it lucrative for facebook, it's really lucrative. meanwhile preannouncement season is essentially done.
>> you go over the conference call. he's saying, hey, some of it is oracle. i happen to think it's general electric. >> on lighting. >> yes. ooichls. and they were talking about street lamp and street lamp issues. it's in the stars. that's a little shakespearean thing. >> i hear you, i hear you. >> my daughter lives in a shakespearean area. it's got game. i tell you, it's still got game. cree is up again. ge is a big guy. size matters big, david, big. david doesn't think size matters, i think. >> no. i've heard that it does. i've heard that it does. it's even come up in the presidential campaign. >> yes, it has.
>> what's's up with it. asset growth unlikely to make -- >> this group is so hated. warren buffett, i think he's limited in how much. this group is shrinking and shrinking. the fed is not playing ball with what they need, which is multiple rate hikes. jamie dimon with a piece this morning in "the wall street journal" about, listen, you hurt the big banks, small banks. i don't know. when you finished the article, did you find yourself thinking more about the mets? ooh -- >> those guys have obviously read dimon's article.
>> there's some real activity. >> this political campaign is influencing a lot of stocks. he's not a friend. when he -- if he read jamie dimon's article, i don't know. i don't think he thinks jamie dimon is a friend other than their payroll. >> did you read sanders' interview with "the daily news" off fed board. >> leftist. >> a lot of people scratching their heads. not a lot of questions. >> johnny carson was in the 75% tax bracket. in the end, like 80%. i think we all should be. johnny was the highest paid in america. >> i think those are two separate things. he may have been miserable, but it had nothing to do with his market. allergen officials are not
miserable this morning. they may buy back. he wasn't buying back. he's talking about making acquisition rather easily. i think he should watch to see if gilead would want to buy his. >> do you think he's going to be able to do a $110 billion deal? >> he could buy, but he's got to wait until october. >> i don't want to go into the complexity of that. >> the average biotech stock i follow is down about 50% since it started. he can pick and choose and i think he can buy bausch & lomb. >> that may be the case.
>>. >> you asked if he would take the position for $100 billion. he said no. i think if they were for sale, they would be an interesting party. >> yes. that was a business that -- >> or even salix. there are any number of the parts of valeant. by the way, no word on who will replace mike pearson. one would think that will be difficult. >> i think what's interesting is gilead needs to do a dale. they have the firepower to buy valeant. >> yes. >> this guy's going to be loaded. is sal jean a threat?
>> don't think so. >> the deal called off this morning by both parties this after the treasury came out with regulations at 5:00 on monday that were stunning to put it mildly in terms of the three-year look back provision that baid basically to a size that was very little. when it merged, it would not count as an inversion. we asked brent saunders when he asked about the knew. >> we built this law around the regulations, all the notices put out by the u.s. treasury. it was a highly league contract. we set that. for the rules to be changed after the game has started to be
played is aed by american. >> he said to me in an interview -- >> he said, we may try to do more burke he was never specific. >> do you think president obama called jack lew and said will you cut this deal? >> i don't know. it's very hard to imagine that it wasn't aimed aet this deal and you wonder who at treasury has the financial acumen to figure this out. i could figure out a couple of guys. they've got a couple of good bankers there. they maybe figured this out. >> is there someone you're going
to mention? >> no, but i think he's interesting. >> it sounds like bill ackman gives him a jingle every now and then. i think they're two different companies. >> what about pfizer? >> jim, some people believe they will move more quickly to split off the slower growth business business. that's a key piece for being. you wonder if it's too much. they don't have a lot of growth in the pipeline. >> they sold a company which i
really, really like, animal health. pfizer has to do something. if they were willing to pay $160 billion, how much was tax oriented. how much was desperation by ian reid. they stepped slowly step by step, inch by inch. don't look at me like that. >> sorry. >> don't look at me like that. allergan is a fast moving drug. i put it out there. >> i know. you're not going to get a fee on that if it happens. >> i got a breakup fee -- no, i didn't get any breakup fee. i get absolutely nothing from anyone, no one, skmep my wife occasionally.
money. >> yes. >> dow is down, having its best day in three weeks. let's get to bob pisani. >> it's a mixed matter this morning. i want to show you interesting moves in europe. you guys were talking about allergan and the pfizer deal being terminated here. there seems to be some here. it seems like they may be merging with another company. they're not done here. this would be courting the same dealing that allergan has. also up are some of the italian banks, very interesting. there was a meet of the government with some of the italian bank executives to try and figure out what to do with italy's battered banking success tore. i guess you would call that. you can see some of the moving there. generali assicurazioni, that's a
big insurance company over there. you see this. the big telecom are going hugegy dents. they're big payers. they've got enormous dividend deals so they're going to go dividend. that's why these companies are owned by people for that dividend. these are huge payouts. at&t is going to pay out 2.9. i think at&t's revenues in support of $40 billion, something like that. $45 billion. huge payouts. the yields are really huge and kwlie popping. almost better than anyone you can get. @nt, 2.9, verizoy
at&t 4.96%, verizon, 4.22%. meantime, simply put, they're encouraging brokerage firms to move toward fee-based co competition rather than fee based. the changes in the rules were not quite as onerous as many had feared and some had been under pressure. they're all up today. you can have commission based but there's more disclosure. sharon epperson is going to be here to tell us all about what it means for you. very interesting story. meantime, you talk about constellation, one of my favorite companies out there. besides having one of the a greatest earnings, they bought a whine company, the prisoner. it's a famous company.
red wine. it was called the prisoner. it was famous because it was a blend of zinfandel and cabernet. it was a come bin neigh of zinfandel, very fruity, and cabernet, very dry. it was an enormous sus success. constellation is buying that wine. that's a huge, huge moneymaker fehr them. another huge, i think, acquisition for them. back to you. >> thank you very much. let's get to the bond decision in chicago. rick santelli. good morning, rick. >> good morning, carl. if you look, you key e see, we haven't moved that much. let's go to the realist, antagonist or protagonist. yesterday, of course, '08, eight
basis points was the low closing yield. if you go back in history to 2015, the low closing yield was '07. that's the all-time. we can kind of call this a double bottom in yields so to speak, at least recently. but i'm not sure it's over. we did get up to 13 basis points today. let's look at the year to date of boons. the reason i find this fascinating, looks at the pattern. they basically quantify. now let's look at tens. it's a little bit. it's a little bit different. the boons are going to continue to pull yields down in my opinion. one of the drives forces is to get in front of mario draghi. with regard to the upcoming ecb meeting a week from thursday. but maybe that's going to run out of gas to some extent. this may be a great thing. kwhie?
is he not listening to the economics in japan. of course, it's etf for high yield. the reason it's fascinating. let's look at year to date to go. they're very similar. risk on -- when risk's on, risk these. the final chart, this is a two-year. i'm going show this one a lot. this is definitely crowning. we need to watch this on a closing basis. not necessarily for a day or week. this is a long-term picture. i would say a monthly close would be rather significant due to technical damage it would do, but we're still not quite there yet. carl, back to you. >> all right. rick santelli, thank you very much. when we return, jeff bezos addressing criticism of amazon's culture in a letter to shareholders. we'll get you more on that. later the ceo and the gop primary and what it means to the
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. amazon founder jeff bezos defending the company. quote, the reason the cultures are so stable in time is because people self-select. someone enter jazzed by competitive zeal will be competitive while someone who loves to pioneer and invent may choose another. he neff said it his approach is the right one but it brings you back to the story of last year that they call cutthroat culture. >> there's such a job shortsage in the country. david did an amazing documentary. i remember watching it with my father. he said, that gets to be the worst place to work. i said, no, not versus not working. >> well said. they're bringing prime delivery to 11 new cities. >> so great. >> clearly their logistics moves
are starting to bear some fruit. >> every time i try to figure out what this company is valued at, i see an amazon truck in front of me. i'm shlepping it to the supermarket and they're getting it as quick. i need tide. i have to go get the tide myself. >> i think amazon web services. bob talk about how much it's worth but i do think amazon -- let's put it this way. you don't want to short it. >> they're roughly compare snoobl i'm going to get everything done. >> that deal's on track. that i may be suing each other. it zeinsed to actually make the deal happen. >> yeah. that's on the track.
getting word from the department of justice that they filed a civil anti-trust lawsuit seeming to block the acquisition of baker hughes. the complaint alleges it would eliminate head-to-head competition and markets for 23 products or services. loretta lynch saying it would harm american consumers that doj committed to vigorously enforcing. >> bingo. that deal is dead. you know what i'm going to do on stock trading? i'm going to do something i may regret. >> we mentioned williams and e.t. many know it's a deal we've been following for quite a long time. there was a battle as to whether this deal would get done. you may remember e.t. did this convertible off ring
only including the "insider"s even though they were taking a lower dividend, very complex. they sued the morning both in delaware to unwind that convertible and in texas for tortious interference. this includes, jim, by the way, kelsey warren being interviewed to protect stockholders' rights. in speaking with people familiar on the williams side, they say, listen, we want this deal to happen and we believe by asserting this w we make it more likely that it does happen. they don't believe it will affect the timing of it. i will won't to one interesting thing in the lawsuit itself that's kind of funny. there was back and forth behind kelsey warren where they said, come on, would you be open to considering ways for e.t. to address challenges more equitable to williams stockholders, williams responded in sum and substance that no one was going to tell him how to run his company. >> holy cow.
this is -- this is just bloody. and obviously e.t. is going to be very stretched. how do you like that for being diplomatic. very stretched. this is amazing. i don't think they realize when you sue the ceo, it's very personal. >> the company that you're getting together with. >> yeah. >> wow. >> don't want to touch e.t. or williams. it's too hot. just too hot. >> got it. >> what's on tonight? >> we've got conformists today. these are stocks that have been shredded. you want to watch that. i want to congratulate my partners. remember journalism? that's journalism. "mad money" at 6:00 p.m.
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good wednesday morning. welcome back to "squawk on the street." i'm carl kin ta nia with quinta sa sara eisen. let's get to eamon. eamon? >> they a's right, carl. just moments ago we got the news that the u.s. department of justice is going to sue to block the deal. within minutes of that announcement we're getting a new press release from halliburton and baker hughes that the companies plan to vigorously contest the justice department's plan to block their impending merger. here's the reason. they believe the department of justice has reached the wrong conclusion in the assessment of the actionnd it's
counterproductive especially in the context of the challenges that the u.s. and global industries are clearly experiencing. clearly, guys, one of the arguments is going to be all the roller coaster ride we've seen in the rise in oil will have an impact on whether this is an appropriate merger. let me read what the department of justice says why this is a bad deal. it would combine two of the three largest oil companies in the united states eliminating important head-to-head competition in markets for 23 products or services used for on and offshore oil exploration and oil production in the u.s. so, guys, we're expecting a conference call at 10:40 so reporters can have a chance to ask more questions. for now we have a head-to-head showdown between the department of justice and these two companies, guys. >> it's not the first time we've seen it. office max and staples in court
in front of the judge. here the question had always been about the die vesty turs, were they enough to create another competitor in the eyes of the doj. i guess the answer in their opinion is no. >> and to put this in the broader context that you guys have been talking about, what a week for the government when you see what happened with pfizer. allergan just last night as you have been reporting, david, and now we even got this baker hughes announcement this morning. separate issue but overall the relationship between the u.s. government and the business community is really a tense one this week. >> perfect. and actually thank you for setting me up. that's what we're going to talk about right now. joining us from d.c. of course, he did mention a deal that is no longer going to happen. whether or not halliburton does may be up to the court. but in this case they abandon their deal to get together. it was a $160 billion acquisition of ailer began when it was announced last november and it would allow pfizer to
become a foreign taxpayer or a foreign-based company, dublin based company and therefore giving it access to $35 billion in roughly overseas cash. deal not going to happen. both sides reacting to a treasury move on monday that was, to say the least, unexpected when treasury introduced a three-year lookback position that does seem to have been designed specifically to target this deal and would have had the effect of making it a far smaller company and therefore not allowed pfizer to become a foreign company, hence eliminating the tax advantages of the deal and the deal itself is now gone. this morning we had an opportunity to sit down and talk to allergan's ceo brent saunders about life as an pendant company and i did ask him whether in fact the regulations included specific regulation on something called earnings stripping, whether either one of these would have an impact on allergan
strategy into the future. >> interestingly it has no impact on allergan as a stand alone company and, in fact, arguably it strengthens the stand alone company. it looks back if someone were to acquire allergan, if allergan were to go out and buy something else. we can use stock. we can use a lot of stock after october of this year because that's the three-year anniversary of it. >> he's referring to the three-year lookback deal. it gets somewhere complex where they don't want to do a deal. but they're going have an enormous amount of task. they're selling the business for $40 billion. that's expected to close in the first half of this year. they'll have an unleveraged balance sheet with that cash and ebitda. the expectation may bay b they may be on the lookout for doing
deals. no, they're not going to get bought by another company, but, yes, they're going to be active. would they, for example, consider buying some units that valeant might want to sell including bausch & lomb that mr. saunders once sfloon we look for growth and high quality assets. clearly bausch & lomb is one of those. >> he says he has no interest and will not entertain buying awe of valeant or becoming ceo of that company, something that's been speculated on. jim said even if they paid you 100 million bucks? and he said no. >> it was fascinating to watch him that he said it was un-american to actually change the rules in the middle of the game from the company that is absolutely dublin-balesed in the
first place. >> it is. it's that juxtaposition that's unfair that this company is really based in new jersey but for purposes of taxes is based in dublin that. said, they did change the rules in the middle of the road, they really did, out of nowhere. >> they say there are c contingencie contingencies. the breakup fee is only $150 million it's very different it. was $3.5 billion if, in fact, pfizer were to have walked away for some other reason other than what occurred, a change in the law. it was specifically carved out in their merger agreement. it was originally $450 million, down to $150 million. essentially for their time. >> they knew it could happen. yes, larry. >> just a point. >> welcome, by the way. >> thank you. >> enter, larry kudlow, stage right. >> it's such an interesting
point. i have written a column on this yesterday. i'm totally opposed to obama's aversions. that takes it away and companies will come to america instead of leaving. however, one area. i'd like to see limits gradually increasing limits on the deductibility of interest for debt. >> overall. >> overall. >> i think it's good tax policy. people have talked about this. why create more debt. >> larry. >> from the left. from the left. >> no. no, no, no. conservative tax reformists have argued the for a very long time. we have created with the interest deductions on the debt, a society, a business economy that's completely dependent on debt and credit instead of
fundamentals of earnings equity and everything david talks about. i'm just saying there's a tiny piece of this that's okay. the answer is horrible. it's a war on everything. i don't agree with any of it. >> we're happy here to get your comments on immersions but we want to turn to the 2016 elections. both front-runners hitting a block last night in wisconsin. bernie sanders topping hillary clinton and ted cruz beating donald trump. now we return to new york. larry is here as you can tell at post 9 and we've also got from washington cnbc contributor sara fagan. this is an important morning for trump. in his statement last night, ted cruz said he's worse than a
puppet. how does he respond to this loss to make it work for him? >> sometimes a little graciousness goes a long way, even in rough-and-tumble politics. so i don't think mr. trump played his cards right. look. on this race per se, i don't think congress changes anything fundamentally, at least on the republican side, but give cruz credit. it's not all about donald. give cruze credit. he ran a great organization, lots of money, and he was on message. he talked about jobs and wages and growth and being an outsider and obamacare. he really hit the menl. mr. trump, on the other hand, was always on the defense, way, way off message, didn't have good organization. and here's what i don't get, sara. how in the hell do you attack governor scott walker who is by
far the most popular republican in wisconsin. >> as you mentioned, better economics there as well. >> and the unemployment rate was a constant 4.6% which is not bad. he's going after him. eibel right with you. i'm just saying he's going after the popular governor. i just don't understand why trump went after the most popular governor. i don't get that. i'll never get that. >> sara fagan? >> he's a sore loser and he's proven it time and time again. now as the rubber hits the road in these delegate contests, he's pointing fingers and lashing out perhaps more so than he's done in the past.
oi disagree with larry. last night was a turning point. he can still win every delegate in new york and most of the delegates in -- all of the delegates in new jersey and pennsylvania and many of the delegates in these upcoming contests and still not have enough delegates on june 7th, the last day of voting, to wrap this up. and so i think it is now almost inevitable that this is going to be an open convention. >> that's not the mats, is it? if he wins new york and has a clear sweep of the 95 delegates, he only has to win 53% of the delegates moving forward. is he still in the game? >> he ooh is a front-runner. sara is a dear friend and i respect her judgment. >> here it comes. >> she knows a lot more about politic than i do. but i don't think it fundamentally changes the math to which you are referring.
now, does it make it a little harder because he got what, five delegates? >> it does. it does it's gone to california. however, however, i do not believe new yorkers are following the wisconsin primary closely. and i think you still have to give advantages. the northeast primaries after new york, pennsylvania, connecticut, rhode island, maryland, all that stuff, those are trump states. wisconsin was not really a trump state. so i don't want to take anything away from ted cruz. he had a great night and a great strategy. >> you guys, i love you, larry. i love you, you're awesome, and i agree with you. you're wrong on this. >> thank you. in new york it's statewide. delegates are divided proport n proportionately and in the congressional districts, you have to reach a threshold, 20%
of delegates and if you're under 50%, they're proportional. donald trump isn't going to win all the delegates in new york. these are congressional district plays at this point. he would have to virtually win 65% of all the unbound delegates to get there by convention. i just don't see it happening. i don't think it's happening. >> i don't disagree with you. i understand it's proportional and cd by cd. i'm not disagreeing with you. i think the thrust of this thing has not really changed. it gives cruz a leg up, i grant you that. and it gives the next round of polls to see how much of a leg up. but, sara, you know, you're p against donald trump. >> yes, i am. i have been for a long time. >> this is not breaking news. the people fighting trump,
they're basically using ted cruz as a battering ram to hurt trump, but i'll come down to this, okay? i don't endorse anybody and i don't intend to. there's two people and only two people that can get the gop nomination. one of them is ted cruz and the other one is donald trump and if the republican party establishment wants to change the rules at the last minute to keep those guys out, you know what? all hell's going to break loose in cleveland. all hell -- you cannot disenfranchise 20 million, 30 million people. >> last word, sara. >> larry, there's no doubt there will be enormous frustration by some voters, but the reality is -- no one is talking about changing the rules. the rules have long been established. if neither can walk in without their requisite bat lots,
they'll go. it's been how this party has been run since its inception and that's the way the rules work. ice not that the rules are being changed. >> yeah, the rules are going to be changed. if they change the rules, all hell breaket out. all i'm saying is, yes, you're going have ballot after ballot, sara, you're absolutely right. but you can't parachute a noncandidate into this thing and say that person is going to win. paul ripe, i love him, he's a future president. i've known him for 350 years. all that's great. he cannot do that this year. and if they try to run that, you're going have a revolt and it will split the republican party. >> you'll need someone like paul ryan. >> we've got to leave it there. good discussion. guess what? it's not over. >> you're kidding. >> larry kudlow, thank you. >> my pleasure. thank you, sara. >> thank you. okay. ahead on the show, pfizer and allergan scrapping their $150 million inversion deal after the
treasury announcement was announced. coming up a testify break, the ceo of the u.s. chamber of commerce, thomas donahue, and a look at the scenes. we'll be right back. with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks.
on that note we turn iter of the john harwood. >> we vice president tom donahue from the u.s. chamber of kmoms commerce. welcome. >> good to be here. >> what's your reaction? >> well, i think it's a tremendous problem for american companies. many of these mergers are motivated by the investors who not only press to do it because of returns, but occasionally help finance it, and you'll find if we basically shut them all off -- now, pfizer was so big. but if you shut them all off, you're going to find the people on the other side of the pond, they'll be making the buy. and when that happens and we'll see how they try and infect that. but when that happens, far more of the jobs are going to be lost in the united states than would be when they simply locate it
overseas. we need to fix the tax problem for those trying to keep jobs and create jobs. >> i talked to the chairman of the ways & means committee. he did not, however, talk about action by congress to stop treasury from doing what it's doing. do you want congress to stop trashry in these regulations? >> well, it's very interesting. i asked some questions this morning, what kind of regulation is it, what is the scope of their authority. and with it -- is it something you'd sue about. but even if you did, it will take a long time. so we're going to be for a while dealing with these regulations, and i'm very concerned about one regulation on top of another on top of another which is basically taking the vitality out of the american system.
>> do you think that companies in this circumstance have any obligation to consider any sort of duty to country in a circumstance like this, or is it pure return to shareholders and dollars and cents and that's the wait ought to be? >> most of the share holders are people in the country, so there's a duty to them. and i think there's also a reality that it is not as bad as the option asia menti i mention. there's going to be many more jobs lost than if we did it in way we've seen most of the them work. and the secondary issue is we should fix this. but do you fix it all by itself or do you fix it in the context of general reform of the corporate tax system. >> let me ask you about the 2016 presidential race, which is very unusual. you've got anti-rhetoric on the
one side but the republican side. maybe ted cruz would say you're t it. there was a talk of blood suckers. tell me about that. >> no. i think it's a very unique time. >> is donald trump a corporate blood sucker in. >> no. i think he should know something about it because he deals with all the people in the finance and real estate and the circumstances. we've had 11 million people. what we've ended up with is four major candidates, two on each side, who are different than we've had many times before because of the frustration, the anger, and the we're not going
to take it anymore attitude of young people, older people, middle-class folks and i think it ee something we all have to pay attention to. but in the meantime we have to get leadership in the white house that's going to help make things better and we for sure have to keep the senate and the house where they are as we look at the questions of the supreme court seats and we look at what would happen when any number of these people -- you make the combination, end up persevering in these elections. >> a lot of people, conservatives, people with similar views similar to yours worry that if donald trump is the republican nominee, control of the senate and perhaps teen house is in jeopardy. do you see that? >> some people have told me that. >> do you believe them? >> no. because the american people with all of their anger are pretty salve yrk and if we get down eight, ten weeks before the election and whoever is running and if they're running in the
same way, both sides, they can become encouraged and reasonable and make sure there's a protection for them and things that are important for us and that's the house and the senate. >> last question. when you have two leading republican candidates who are not in favor of the tr trans-pacific partnership who build a reform which you are for, what are the implications of that kind of republican party for the business agenda? >> well, it's interesting. we've -- i would look at it two ways. what would be the implications of that kind of presidency. we would be dealing with them. and we're going to be able to deal with that no matter who's there because we have a system
that operates all over the country and our deal will be to work with and find ways that can help and encourage whoever takes those jobs. if you look at the two sets of bills that were passed by both parties in a bipartisan way, signed by the president where you've gotten a dozen things done that nobody thought you got done it tells you you can do it. >> would you do business with hillary clinton? >> of course. >> tom donahue, thanks so much for being with us. >> thank you. >> back to you. >> john harwood with tom donahue in washington. when we come back, retirement and its requirements. more on that after the break.
it's a very big announcement. it's the few dushry standard. it sounds pretty funny but it's important for families that have accounts. simply put people are getting investment advice and they're being given investment advises to clients that have money and they must now, professionals, put the clients' best interest before their own profits. right now only investment advise erps who are registered with the securities exchange commission have to follow this rule. they currently follow the suitability rekwierm. they get some wiggle room to recommend commission-based products that have higher fees even if there are similar products that will make them less money. how do you know if this new fiduciary rule applies to you. if you have a rocket or 401(k)
that you plan on rolling over and you use a financial professional, the advice you receive, they must follow the fiduciary standard. it will be faphased in by next april. you can ask them. also ask them how they get paid. you may be surprised by what their answers are. sara? >> good tips. thank you very much. oil inventories are out. let's get to jackie deangelis. hi. >> good morning to you, sara. we did get a drawdown from the department of energy in crude oil inventories of 4.9 million barrels. that was higher than the apis last night which surprised many analysts and investors. that's why we saw strength to the close yesterday that continued overnight. it's continuing now. this number pushing crude prices back over $37.
gas was a build of 1.4 billion barrels. we're going to see the refiners make more product, take it, turn it into gas lien as summer driving season is getting under kwa. what's interesting here in the report, we have to look at that u.s. production number. is it continuing flat line or are we going to see a drop. and also i receive seen this. we've not seen these volatile swings. we're about $37 plus or my fuss five either way and traders are telling us to expect that. the session high was $37.15. we've increased that to $37.18. back to you. >> when we come back, a rough week for stocks so far. all three indices losing 1%. we'll get look at what the rest of the week may bring in a moment.
good morning, everyone. i'm sue herera with your cnbc news. the satellite was launched on the back of a rocket in the chi sneeze desert. the turkish coast guard says dozens of refugees were apprehended. the group of some 60 people was brought back to a coast guardization in western turkey. there were some syrians among
those returned as well. pope francis blessing an american girl who is losing her sight and hearing. the 5-year-old is suffering from a genetic disease. the pope approached her at the end of his weekly audience in st. peter's square. and connecticut women's basketball team winning an unprecedented championship. they beat syracuse, 86-51. the team has won 75 straight games. and that is the news hour. news hour. that is the news at this hour. simon, down to you. i think you're going to go to art cashin soon. give him a hug for me. >> okay, yeah, thanks. meantime -- you're changing the show here. what do you think we're doing here. okay, let's get back to the markets. 28 points on the dow. hovering around the flat line as we await the fed minute this afternoon. you'll remember, of course, we fell significantly yesterday, down to about 1%.
art cashin. forgive me if i don't hug you. >> i'll do it, don't worry. >> maybe on break, not on camera. some are arguing that the markets may be coming to an end with the move we had yesterday. with the negative buyers today, what do you think? are the ujds lying dynamics changing here? >> i think right now we're stuck in a rather narrow range. we held. 2040, 2045. that goes back to april fools' day. i think we've hit it about six times or so, and it has protected us. on the other hand, there is resistance at 2075 to 2080. so until we begin to move out of that band, it's touf say the volatility will build. >> i wonder if there's more risks. they've stumped on everybody becoming super dovish but when they find out about super
inflation, maybe they realize the hawks are still quite powerful. give them what they said before, she spoke. >> no. i agree. i think there is some slight danger in this. if i had to make a wild guess, i think the markets may be firm or steady going into the minutes and find some disappointment. we'll find ourselves doing this silly game of reading specific words. a few, the many. several, and try -- >> that's how they set the ru rules. that's how they do it. >> we're going have to add them up and see if yellen is, in fact, a lone roof or if the committee itself is concerned. it's interesting to me that yellen seems to me to be on the same level as lagarde from the imf who is still very concerned. >> at least yellen is an economist though. >> right. >> regarding the earning season, ar
they kick things off. how much is priced in? >> i think a decent amount. i think people have been lowering expectations. the bar is so low you've got to think it would be very hard to get a negative surprise in here. they have talked the thing down, talked down the profit margins and several other things. i would think it would be hard to find a negative shock in the earnings picture. >> then you've got what they're saying, what they're calling fading dollar head winds, right? does that set up new high this summer the way some have argued? >> i think it is continuing to be a again official aspect, but on the other side of the coin, while that's of great help to us here, look at kwh's going on japan. they can't get out of their own way. they have tried everything including negative interest rates. so if the dollar continues to weaken. that's going to present a real problem for tokyo than mr. abe
and he may do something more desperate. >> and europe equally as well, no? >> yes, absolutely. draghi will be in portugal tomorrow making a presentation. we'll be interestied to see wha he says in that manner. it's about the whole health in europe. >> it's about four weeks. art, thank you. >> my pleasure. >> enjoy the rest of the season. >> art cashin, cnbc. when we come back, opening up the team global arena in the multi-million-dollar development on the veglas vegas strip. hee going to join us on "squawk alley" in just a few moments. to spot trends and predict demand. sounds like you spend a lot of time online? i constantly absorb online content
tradingnation dayto tradingnation.cnbc.com. [vet] two yearly physicals down. martha and mildred are good to go. here's your invoice, ladies. a few stops later, and it looks like big ollie is on the mend. it might not seem that glamorous having an old pickup truck for an office... or filling your days looking down the south end of a heifer, but...i wouldn't have it any other way. look at that, i had my best month ever. and earned a shiny new office upgrade. i run on quickbooks. that's how i own it.
welcome back to "squawk on the street." the sector is getting some attention saz it sits just fractionally high oren a year to date-basis thanks to just fractional gains today. the fourth biggest sector is being weighed down by harley-davidson, lowered by commentary and lower after announcing prefinancial results. they round out the first five consumer discretionary performers. back over to you guys. >> thank you very much. we've been talking pfizer/allergan all morning long. hillary clinton weighing in on twitter saying, quote, glad to hear pfizer is called off the merger. we need to close the loopholes that let corporations escape paying their taxes. signing with an "h," assuming she tweet thad herself, which is
what politicians do. we get to rick. >> thank you very much. i'd like to welcome my guest today, peter schiff. nobody gets the blood pressure going better than peter schiff. thanks for taking the time, peter. my pleasure, rick. >> listen. my best way to get into this is on april 1st, you wrote a letter, you know, you normally write lots of pieces called april fools in march. there's a quote. it may be impossible to underestimate the gultabililibif federal fed watchers. what did you mean? >> everybody was talking about whether or not the fed was going to raise rates. all of this is part after a bluff. it's a charade. they can't raise rates because they don't want to put too many
holes in this recovery. it's a bubble. this one is even bigger and i think what we really should be talking about is not when the fed's going to hike rates but when they're going admit that the economy is much weaker, when are they going to cut rates and when are they going to launch qe4. >> you know, peter, you bring up a great point. i can't disagree with what you said so far. i don't think it's gullibility. i think it's going along to get a check and there is a serious difference. i think many out there understand. if the economy was good, we would have normalized rates. so the obvious conclusion is it isn't that good. it's mediocre, and we need to grade on a curve. but in the end, aren't many investors and big institutional hedge fund managers going along with it because they're really gaining it, aren't they? >> sure. they're going along with it like they went along with it last time. either they don't understand it or that do and they don't want
to as mitt. this economy would have to improve dramatically to get to mediocre. it's lousy. why do you think donald trump and bernie sanders have gotten so much support. behind the phony jobs numbers are angry americans who have lost their jobs, their standard of living has gone down, cost of living has gone up and everyone wants to pretend it's a language mat recovery and just an illusion. >> so basically you're looking at what's going on in the presidential election through the prism of nationalism and it seems to make sense. would you agree with that? >> not nationalism. it's much higher than that. they're counting people with part-time jobs as if they're fully employed. they're not. all these numbers are phony because they don't reflect what's actually happening. meanwhile there are a lot of economic numbers that you report
every day that are lousy, so bad, we never see them unless we near a recession. >> they don't count. they're way out of the norm with regard to how they get revised. it seems as though it's shoot the merge. listen. we're out of time, peter. how about we take this to dot-com. let's do a santelli exchange, extra innings. >> all right. i'm ready. >> i'll kick it back to sara. back to you. >> coming up, the chairman of the ur ray shah group and his take on the election. we'll be right back.
the fall out continues from the huge leak of documents known as the panama papers that show how the rich and powerful use tax havens to hide their wealth. iceland's prime minister re-signing and other world leaders and celebrities are still denying any wrong doing. what are the longer material implications here? could this have for government and business as we go forward? joining us to discuss it is the chairman of the eurasisa group.
>> do you think it will help feed the anger that's already so apparent on the campaign trail? >> what we see is leaks around the world. and you see anger and this is just going to stop that. >> where is america in this? we haven't seen any high profile american figures though we have seen american states mentioned as tax havens. >> america's not in it yet but there's only a small fraction of the treasure trove of information. in the u.k. already on the hot seat and now he's even on a higher promise to clean up the act and he hasn't done that so we don't have direct interest but we have close secondary interest already and it's already done. >> where do you expect the next
domino to fall? david cameron has already said this is not about him. maybe his father had ties to his corporation but he's stood pretty firm on this. >> it's not about him. let's see what the u.k. voters think about that. we don't know where the next domino is going to fall. there's a lot to name names that haven't been named. the politicians that have been named i think china is fine but what i really worry about is a major leader in a western country. the united states and france and germany getting in this. nobody is strong right now. we have a competition among very weak leaders. if we get a competition among weaker leaders we can have a real problem of leadership. that's a big macro problem, crisis prevention and a lot of things. >> are you really surprised? do you really think that anybody is surprised that tax havens hide secrets like this? i don't understand why there's a
phony out rage. we know where the tax havens are. it could do that. it chooses not to. it doesn't want to stir up the nest of bees. so we leave it and we leave panama to do what panama is doing today and panama will do tomorrow. this is phony out rage isn't it? >> this is about as surprising as the sun coming up. the problem here though is that it shows the power of what i call super technologists. it shows that we're going to be entering an age of forced transparency. nothing is private anymore. we're going to get snoeden 2.0. another data dump of very embarrassing political leaks. institutions and central banks they run in confidentiality. that matters. >> with respect i'm not sure that that's most people's take away. most people's take away is why you are so impotent as
organizations to do something about it? why do the tax havens exist in the first place rather than maybe technology will help us out here? why don't western governments move on these tax havens and stop them? >> well, first of all, most people's take away is the miss the big picture which is nothing is secret anymore. we have global political gridlock but there has been some movement. they have moved toward shutting down the tax havens. there hasn't been enough. now the silver lining here may be to push this forward and boost the efforts. we may see more cracking down on these banks that are still doing these things. that may be legal but are detrimental to policy. >> it comes at a time when the treasury is cracking down on taxes. clearly this is a win for the administration. is it a win for america? or is this a stance where the u. s. administration is becoming
increasingly antibusiness. >> beauty is in the eye of the be holder. with panama cracking down there's no choice. we have to move forward on what happened on monday. i think panama will create more problems for tax inversions though. we still have gridlock in washington. how far this can move, i'm dubious that it will move very far. >> thank you for joining us. >> see ya. >> let's send it over to john for squawk alley. >> we're going to dig into facebook's live video footage. they're excited about it and it generates a lot of traffic. could it be a problem for twitter? also jeff besos talking about amazon's culture all the months over the flap over whether the culture is too much and we'll have mg m&a pg.
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♪ welcome to squawk alley for a wednesday. myself at post 9 on a day when market is hanging in there. one of the best days in about a month but allergan and pfizer are are walking away from the merger after new rules on corporate tax inversions. david faber has been covering the story since the beginning and back at post 9. >> the largest deal ever torn asunder or terminated is perhaps the better term to use there.