tv Squawk Box CNBC April 11, 2016 6:00am-9:01am EDT
i've come to talk with you again ♪ >> announcer: live from new york where business never sleeps, this is "squawk box." ♪ good morning, welcome to "squawk box" right here. i'm andrew ross sorkin. becky's got indicate off. u.s. equity futures at this hour. dow jones looking like to open 52 points higher. s&p 500 looking to open 6.5% higher. nasdaq looking to open about 20 points higher. in asia, stocks rallied. the young yen on nikkei closed color. let's tell you what's going none europe. came up a little bit from what was going on there. the dax actually looking good. cac not bad either. let's take a quick look at the price of crude right now. wti trading at 39.55.
>> can't really break 40. >> a little tough. you know. elon musk is the reason. among the other top stories, president obama will meet with fed chair janet yellen on the state of america, on global economies and wall street reform and long-term economic outlook. vice president biden will also attend. the meeting is closed to the media. the earnings highlights, alcoa after the closing bell. unofficial start to the earnings season is always alcoa. jpmorgan reports on wednesday. on thursday, bank of america, blackrock, bank of america and citigroup. mike thompson will join us in this hour with a look at what to expect for this earnings season is and the equity markets from here. we'll also get several big data points on tuesday look for import prices which includes an
inflation gauge closely watched by the fed. on wednesday, retail sales, pricing index and the beige book report. and on thursday, march cpi. joe, hold on to your seat. >> yeah, the imf says it supports the move to negative rates. that report published ahead of this week's imf meetings in washington. it argues that the move to negative rates would lend to stimulus. we've seen the fruits of policies pouring out in japan. how well that stock market is doing. and you need to go a little more negative i think to bolster the yen. some would already say we already have de facto negative rates here. so, it's a global phenomenon that we'll talk to strasbourg is over there. waiting in the wings. waiting to talk about that. >> we can't hear you. we have to put a mike on you.
what's the atlanta fed now, 0.3, 0.1. did you see that did you see that on friday? >> a fraction -- >> yeah, 0.3. >> anyway, so it's kind of interesting we're going earnings season. we'll see how the country is doing but the overall economy barely above zero. who knows what that holds. blackrock's larry fink thinks it could hit consumer spending and undermine the economic growth that it's intended to encourage. in his annual letter to shareholders, fink says not enough attention has been given to the effective negative rates on savings habits. the head of the world's largest asset group said the in his words severely punishing the savers and incentives to reach for yield, pushing investors into liquid asset class and
increased levels of risk. these are things we've been talking about years. whether or not it comes home to roost at this point, but savings -- for years -- >> and he's in the savings business. that's his business. >> if he is, he's talking about we're not prepared for the climate in large part. >> right. >> i don't know, he's got some government ideas and some private sector ideas. but everybody talks the book a little bit. it will be good for him. people save for him and invest more. we've got yahoo! news. i don't know, you would think this is the hottest company in the world all of a sudden. >> today is the deadline for the bids. >> i appreciate that -- >> that's probably why we're seeing all this. >> yahoo! could have a new bidder that's what got people excited or maybe not so excited. the parent of the uk's daily mail is in talks for sale of private equity firms for a possible bid for the company. daily mail says the talks are in
early stage and there's no guarantee of a deal. the private equity firm could either acquire all of yahoo!'s operations with the daily mail taking over use in media properties. or private equity firm would merge into a new firm that could include the daily mail's media sites. that's controlled by the mail. yahoo! has set an april 18th deadline. the original deadline was the 12th and then it got extended so they could become the hottest thing in town. between all the stories that everybody is leaking about how they have patents worth billions of dollars. how time, inc. wants it. >> they're champing at the bit. >> there's something terribly amiss with this, i just want to say. >> 40 different entities? >> the whole thing is backwards. completely backwards. >> this is one of those things where i'm ready for this to get settled, you know what i mean? >> yeah. >> how much are we talking, the
maximum price? >> they claim, the number that's been floated is $10 billion. i would argue that's a terribly dangerous number to put out there because when it comes in at 5 or 6 it looks terrible. 5 or 6, 7 is more reasonable. $10 billion i don't think it's a win. i think it's a total failure. >> clearwater, i went two years back with my life people talking about clearwater. i don't even know who got clearwater. it went on and on and on. anyway -- >> this went on and on and on, sadly. it was one bad swing, really, followed by -- the heft to hit over that water, when you got behind you, you got a bunker you don't want to get in. it's all very difficult. defending champ jordan spieth closed out the front nine four straight birdies after he bogeyed number 5. and it looked like he was going to become the youngest player in
of the masters era to claim three majors after winning back-to-back. but it does start with the bogey on 10 blocked it into the bunker. and up and down. great and 11, he blocked it in on the right side. hit a great shot and missed the putt. that was the one that got him. it's not hard do on number 12. the wind was blowing and disaster did strike. he shot a quadruple bogey, 7 at the 12th hole. his first shot fell short. it trickles down into rae's creek and in the drop area. as you look in the post, it's a chicken wing. desailed on a wedge shot. it's tough. he birdied 13 and 15. it overshadows -- i don't think danny cares because he's got the
green jacket. it did give danny the lead. augusta, the first englishman to win since nick faldo won 20 years ago. as fate would have it. since jordan won last year. not only having a talk to the media afterwards. i know a lot of golfers would have just gone in the locker room. and then he had to show up in butler cabin -- >> he was upset. there was one point where he was knocking off the last tee, he asked the cameras not to shoot his face. >> they were right in his face. he was polite when he did it. i saw that, too, you don't want a youtube moment where you just snap obviously. i think he was classy. i talked about it with will smith earlier, he's benefited a lot earlier. you're all alone, it's not a
team. it's probably humiliating, look what he's gained. he'll be back. he's only 22. it's a character builder. >> it's safe to say he'll have another shot at the masters. he'll have many more shots. >> a lot of the great, arnie, the classic in what they call chokes. anyway, it was very difficult to watch. but we're going to do some other stuff. let's get a check on the markets this morning -- we just checked on the markets. we'll do it nonetheless. dow opening 46 points higher. s&p 6 points higher, and nasdaq opening about 16 points higher. the ten-year taking a look at larry fink just wrote that letter about, 7.31 is the number to beat. if you're looking at the dollar, boris, do you want to do the boards for us? >> sure. >> this is what you look at every morning, right? >> exactly.
>> what do you see that jumps out at you? >> not much. i see the yen too strong for anybody's liking. >> let's talk about the yen. roll up. the market is getting ready for another busy week. boris is here. managing director. and they went negative that should have helped alleviate a strong yen. but they didn't know we're no slackers in terms of racing to the bottom. when everyone races to the bottom and no one is in a position to raise rates, you can't go negative enough to -- >> that's exactly the story. >> it's pathetic. >> janet yellen completely scuttled any chances of a stimulus. they're in a difficult situation because they have no growth and their currency continues to appreciate. >> how much more negative can we go? you can go minus 10%, you can get 10% more money by borrowing?
>> i think japan is fascinating because it's a live experiment in extreme monetary policy. at this point, the only thing that you can begin to envision is ray dalio's idea of the bank. monetary policy masquerading as fiscal policy. >> isn't that what bernie sanders is running on? >> well, no, he's even on a fiscal basis. but here if the essential bank starts to essential money, what's fascinating about japan, they're hoarding cash there. there. the cash is better than anything else. the only way that helicopter money could begin to work is if they do it in a very small doses to the least -- to the most improverished part of the population. they're the ones that could spend the most and begin the
stimulus. other than that, even that policy could be a massive failure because people would horde the money instead of spending it. >> the dollar is weak not because the fed doesn't move but what's the number going to be? where's the atlanta fed now, back-to-back anemic numbers another terrible first quarter, right? >> right now the atlanta fed adown a tenth. >> you just said it did. >> it was quite fervent. everyone was -- yeah, excited to get over the weaker fourth quarter. and now it looks like we're set up for an even weaker first quarter. if you want to say, oh, that's been the pattern there might be a structurally adjusted reason for it, i think there's other measures of the economy that show that the weakness is ongoing. and not just an occasional bump. you know, one of yellen's favorite measures of the economy is the gross domestic income.
year-on-year basis, that's 2.5% as of the fourth quarter. this measures the gdp in just a different way, it gets to the same spot. but 2.5, just to show you what that is, in the last 50 years we've been there during the great recession and we were there during the three quarters following 9/11. so, the economy is not doing particularly well. and this, i think, with the concern over the global thing such as china growth or emerging markets. very important i think is brexit. eight days after the fed june meeting. fed i think is going to sit on hold for a while and watch these things play out. i don't think there's any rush to judgment. and i don't think yellen plans to make that rush. one thing i wanted to bounce off of boris about the yen is because of the policy, it has set the yen up for appreciation
because of the kerry trade. it was clearly stated that they wanted the yen. i think the kerry trade was a no-brainer for many people. once they went negative. there was the upset in the market earlier in the year, a lot of those traders, in order to liquidate the trade had to buy back the yen. i think that's one of the reasons we've fallen from 120 to 108. it's a perverse react to the rate in japan sfp. >> i think lou's right, it's all about china. i made a snarky comment. the reason why the fed has been so hesitant do anything to hike rate is precisely because we want to make sure that the yuan does not appreciate fast. they want to destabilize the yuan. more at this point the yuan is strong enough for china's economy remains to be seen.
i think i agree with lou, they probably want to stay on the sidelines until june which means dollar strength is not going to be there. and yen continues to be strong. >> we went from the dollar to, oh, yeah, now obviously it's going to go down. so .1% first quarter. i feel accelerates second quarter, third quarter even better. 5, 6% for november, for the election. don't you think that's when it will be peaking, about november? let's get this out of the way, don't you think -- >> "the new york times" -- there's -- >> back end low. >> china e >> janet yellen is meeting with the president today. i'm being sarcastic. >> the market is very much in a show-me state at this point.
until the fed is serious about tightening, it's hard to imagine the dollar getting any traction at this point. >> i don't know why this is kind of our fault, i think, in tellers of the race to the bottom. because we could have set an example for the western world. and maybe they would have -- >> yeah, but they were petrified about china. i think that's what's driving them. >> if they thought about a stronger dollar, the dollar probably would have been okay with a couple more -- >> yeah. >> they had covered a normalized fed funds and they didn't take advantage of it over the last couple of years. >> exactly. >> all right, boris, thank you. lou, i missed a couple of your appearances. >> yeah, yeah. does i didn't see you every single time. >> i don't beat jokes into the ground like a dead horse always. >> yes, do you. >> i know.
actually -- >> how many jokes have you made? >> boris -- remember that -- it was by accident. we had a boris. do you have any idea what we're talking about? >> i have no idea what we're talking about. i'm going to continue the humor during the commercial. not really. coming up, the battle for new york presidential candidate for both parties trying to win voters in the empire state. ben wright is going to be here with details. we're back with ben and pa politics. the first stock index ♪ (musiwas createdoughout) over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average.
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because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back to "squawk box." presidential candidates are taking new york by storm. vying for voters ahead of next week's primary. former white house chief of staff earnston bowles gave answers about candidates. >> i was asked to define ted cruz, he's about as rich as a fire poker but without the warmth. >> i think what we need in
washington as president is someone who is smart, thoughtful, intellectually curious. and be willing to, as ronald reagan used to say take 80% of the loaf. but move the country forward. make the tough political decisions do the compromise. >> with trump, you could give him an enema and bury him in a shoe box. you just keep on watching but it isn't grufunny. it's going to be a very disrupting disemboweling thing. >> ben wright is here. those comments of course, the front page of "the new york times" says edges on gop race, ryan, as in paul, waging his own policy campaign. they say he's not running for president but embedded in the story is suggesting that effectively he is. >> sort of a shadow campaign.
everybody close to paul ryan says, no way, he won't take it, of course they're going to say that. he's putting the infrastructure, idea infrastructure in place should it come to convention and they go to him he could run. >> it's as what the speaker would do, too. >> it's also what the speaker would do. >> he was here, he didn't want to talk about any candidates. all he wanted to do is talk about what the republican -- the republican house can put who they want. >> there's two pieces of that. the fantasy is that paul ryan can be the nominee. that's a fantasy. and the other thing is he's trying try ing to inoculate the party. even if cruz is the nominee, he doesn't want house republicans on the senate to get wiped out. this is the alternative division of the republican party. >> talking about an inclusive
party this has been the headline all weekend on drudge. a big picture of ted cruz. furious, colorado has no primary or caucus. cruz celebrating voterless victory. >> it's true that colorado did not have a direct primary for president. they had delegate elections which ted cruz won completely. did a total sweep of donald trump. you could make the argument that maybe this isn't the fairest way to elect delegates. but if you're running for president. you have to be aware of it and get people on the ground to get your people elected. trump doesn't have that. that's the big achilles' heel. >> did they -- >> oh, man, i'm not go goiing t. >> it's a lot easier to show up and vote than just to caucus than this whole delegate suggestion. it may come down to multiple ballots in cleveland. if that happen, a lot of places
even where trump won, they're going to be cruz-friendly delegates. south carolina, massachusetts. >> yes. >> it's an incredible thing and cruz is doing it really well. >> well, we've had reince priebus out there saying don't worry, cruz will be transparent. how much is up to the rnc to lay out the rules very clearly, very transparently, all of us in the media who are covering this have to get refamiliarized with how the inside baseball works behind the scenes. the american people will be pretty angry if they feel like they're getting surprised by something that happens there. >> well, particularly people who are angry will be trump supporters and cruz supporters should neither of them get a nomination. but we won't have the rules in place until a couple weeks before cleveland. you have the rules meeting and you set the rules for how the votes are going to go. who needs how many states. >> that seems like the 11th hour, though. >> and it's not going to be
super -- >> so obama again says she didn't do anything wrong. is he allowed to do that when he doesn't know the whole case? >> well, he didn't say she didn't do anything wrong. >> he said there's classified and then there's classified. he has no way of knowing what's in the investigation. >> perhaps not. but he did say, you know, she wouldn't knowingly compromise national security. i think that's the thing he would naturally say. and then politico saying a lot of these other cases saying where there's classified information there are not indictments. >> and then the bar is higher because she's running for presidency. >> i will say this republicans who are hoping for and waiting for a hillary clinton indictment. it's not your ticket to the white house. it's not impossible but unlikely. >> bernie is waiting for that, bernie is waiting for something.
>> bernie keeps winning states. >> i know, but now he says some things that even -- >> even for him, that she's not qualified to be president. >> i'm not arguing with that but the other stuff. >> yeah, he's alienating a lot of her supporters. has he turned her supporters off her so much that they don't show up in november that's a possibility because he's said nasty things and bernie supporters have dug in not liking hillary. >> final question for the gop, which is trump, is he actually going to spend his own money? that's the big question, new yorkers need to do okay. >> california really where if he's going to spend a bunch of his own money, this is where it's going to happen. >> what's he going to spend? >> tens of millions. a bunch of anti-trump super pacs in california. that's going to be the final moment of the campaign. last day of the primaries. not going to be 1,237 at that
point. that mean spending a bunch of money there. that means he's got to pony up to write a check. >> what it "the boston globe" do? >> at the did a fake front page. >> devoted to trump bashing. >> saying deportations begin. market tanks on uncertainty. >> they're not inserting themselves in the race or anything. >> this is the opinion page. the opinion page. >> do they still -- >> he's up -- >> no, "the new york times" -- >> you don't right herd over that editorial? >> it's a different conspiracy. >> a different one. >> i don't know which one it is. >> massachusetts or new york. >> let's just -- look, the call came and it was taken care of. that's obviously how it's done. >> and couldn't you do a great page owen. >> of course, you could. bernie blows up national debt.
>> i bet you could do a great bill clinton -- >> i feel like donald trump is jordan spieth in the nomination process with the delegates. he's choking the delegate process. >> and taking a day off on friday. >> yeah, he does take more days off than other candidates. and it could come back to haunt him. look to california, that's where it's going to go down. it's go to be a bloodbath. >> ben white, good to see you. >> good seeing you. your favorite show is going to cost you more. but snail mail being cheaper for the first time in nearly a century because of that temporary increase. those stories on the executive edge next. first, as we head to break, here's a look at last week's s&p 500's winners and losers.
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welcome back to "squawk box." it's time for "executive edge." in london's sunday times, barclays wants its employees to be friends. surveys expected to be distributed in the next few weeks including the questions do you have any friends? reportedly asks staff members to name their best friends at the banks. managers hope it helps to improve the friendly culture.
>> what happens if a person who thinks you're their best friend doesn't put you down. hopefully, they don't share that information back. >> you need to buy a dog. >> but you can't bring it to the banks. >> i probably could bring it here, right? meanwhile, netflix is hiking its race of its streaming service by 25% starting may 1 fifty. an hd streaming subscription will cost $9.99. that's $2 more per month. new customers have already been page the higher rate since last october. shares netflix on this news rot heal moving up about half a percent in premarket trading up 61% in the last year. people have been wondering, though, how long, netflix could
get away with this standard plan. $9.99 raise to when you a $2 billion deficit. >> still watching it. 44 billion. will it be 200 billion now that's what i want to know? supposed to aggregate every other media company. >> i don't think it does. >> comcast, netflix, going to netflix. >> all going. >> 44 billion. >> it's the model. >> netflix can't afford to pay for all of that content. >> that's what i mean. >> they're spending $5 billion on the other stuff. >> i'll tell you what netflix doesn't better than anybody else, kids programming. it's the babysitter across america, i'm telling you.
>> eric jones raised in this activist letter. saying viacom is the new nickelodeon. >> for my kids, sits and watches "orange is the new black." is that kids programming? >> that's not kids programming. >> your netflix is going to get more expensive if you want that hd version. but it is going to be a little cheaper to send a letter this morning. the price of a first class postage stamp dropped by 2 cents. the postal service says the cut will cost it an estimated $2 billion per year. postmaster general megan brennan is seeking congressional action to bring back the surcharge. i wonder if there's going to be a black market for those forever stamps. what happens to the things you
paid 49 cents for? do you trash them? >> i used to do the first cutler stamps. >> when do they go back up? how long will it take to go back up? >> probably go to 52. >> they should be much higher. >> 70? >> i think people are conditioned to get it. >> they'll figure out a way to blow back. because it's the post office. you know that, right? >> i think it's fixable. >> no it's not. it's never been. and it won't be. >> just decide it's a utility we all need. >> it's what we do. >> it's basically the junk mail business. >> get a pile like that, can't find anything in there. >> not all your fan mail? >> a fan -- no, they don't need that address. i get plenty of fan mail, e-mail
address. in squawk sports and twitter. golden city warriors tying the chicago bulls for the best winning record by pulling off a gutsy win in san antonio. warriors beat the spurs 92-86. i actually watched the end of a game the other day. it was -- i can't believe they were that close. first time i watched the nba in i don't know how long. that ties them with the '95-96 bulls. 72 games won. that could stand alone at 73-9 if they beat the memphis grizzlies wednesday night. >> i knew golden state was good, but that comparison just tells you how good they are. >> you probably know the reds are 5-1, too, this year. they weren't expected to do
anything this year. >> i had not noticed. >> you didn't notice -- >> people can't stop talking about. >> i can't believe the jordan spieth stuff is coming to the sports page on the web. when we come back, season kicks off, wells fargo, citigroup on the calendar. we'll tell you what to expect -- up next. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.
the first stock index ♪ (musiwas createdoughout) over 100 years ago as a benchmark for average. yet many people still build portfolios 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.
ready for a barrage of bank earning this week. wilfred frost joins us now with a preview of the sector. wilfred that's down about 8% this year. >> absolutely right. banks performing sector year to date down 7.6%. q1, the focus for the banks. three main areas of focus, energy, capital markets and interest rates. the first is energy. given the start of the year that the energy sector had, investors more focused on the level of writedowns and nonperforming loans than they have been since the start of the financial crisis. second area to focus on is capital markets. and this is the biggest reason for downgrades so far. falls will be particularly severe because of tough comparisons but whilst the
absolute numbers will be down, 29% declines in the area expected. third is the retail bank business, the focus, of course is on interest rates. the december hike is a positive for this quarter's earnings, clearly analysts have reduced the expectations for further hike which is impacts their full year guidance for earnings. so, which names are we focusing on? nothing on monday and tuesday. jpmorgan will be the first of the banks to report kicking off on wednesday with bank of america and wells fargo picking up on thursday. citigroup closing out the week. lost to focus on, kayla. >> wilfred, such barometers for the world company. we'll be watching appreciate it. joining us on more what to expect from this earnings season, mike thompson. good morning, mike, it says in the prompter. we actually know that, right. good morning. >> good morning. >> this year more than ever,
this quarter more than ever, people are saying this could be forecasting, foreshadowing a really rocky year overall. why do we think that the first quarter will have a longer tail? >> i can't get into the banks. they have a lot of exposures everywhere. we'll probably learn a lot more and been smarter after they do the reporting for the quarter. but i think a lot of it has to do with energy, energy was a big -- you know, conversely when the consumer had to deal with all the higher energy prices u.s. corporate earnings were, you know, basically inflated to some degree by the sector. now, that's all gone. and that's had a really big deteriorating effect. as a matter of fact, i thought about the energy sector. since we've been tracking numbers, we actually have a first basically quarterly loss in the energy sector since we've been tracking numbers. the energy sector is down. earnings growthwise over 100%
over this time last year. >> we thought it was bad 90-plus percent. peel who are bullish on the stock market saying if you take out energy, then earnings look good but you can't do that because energy is a big part of the economy. >> i'm not sure they look good anymore. take out the energy, you're down just 6%. that's just ugly. here's the part. i've been kind of playing this earnings game for a while here i started to realize that valuations and earnings mean nothing right now. honestly, earnings are tactical. you're trading at 17.3% next year's earnings, all right? the historic average with much better earnings attributes with 7% growth, you're trading at 16 times earnings. how do you judge that? well, it just means that earnings just aren't what drives stocks. what drives stock is a really awful u.s. treasury ten-year yield which yields are you 1.8. and the rational investor says i
can buy the s&p 500 and good 1.. >> 90 sounds like a lot but it can go down more than that. they can lose money. you have to remember, a stock can only go down 100%. but a company can bgo from makig $10 a share to losing $10 a share. >> the average, one of the most stabling numbers we started tracking this a couple years ago as profit margins for the s&p, the average profit manager is 10%. that's stable. that doesn't budge. >> we're going to get that down, andrew, we're going to get that down in basis points. okay jus obviously, the customers aren't benefitting. the democrats are on the case. >> 2.5% growth, gdp, paltry earnings expectations for the s&p. where's it coming from?
what are the profits coming from? well, you know, it's amazing, honestly, buybacks shrink the devisor. a lot what you see in terms of profit growth you do have now is engineering. i mean, it's global labor. and these are the numbers that the companies have to work with. they're taking advantage of the fact there's lots of opportunities to continue to engineer their earnings. >> but investors have been rewarding the companies for doing that. i'm curious when you think they will stop rewarding companies from cutting their purchase or great of growth? >> i'm not sure they're rewarding companies. they're spitting the bit at -- first of all, there's the demographic thing going on here. you have one of the largest and wealthiest, for sure, generations history of man kind being the boomer. all to the point where they have to be putting money into something. and in fact, it's very rational to be buying stocks. it sounds crazy. you say wow -- >> all the way down?
>> honestly, they're not going down. i would actually say, you know, there's just a good argument to be made it's gone up. here's an interesting stat, the consumer discretion sector is only one of three sectors that's actually going to post positive earnings growth. never bet against the u.s. consumer. that's all i've got to say because they've been carrying the whole economy. you know what's remarkable, we actually have the highest credit score for the united states ever. our credit rating so there's good news and bad news in that. the good news, basically, obviously people have the ability to do things. they've kind of strengthened up their -- >> and using their gas savings to pay down their credit cards. mike, you're going to have a busy two weeks. mike thompson, thank you very much. >> thank you very much. >> you have to be there listening -- you're not doing
them at all anymore? >> i'll be covering the credit card companies? >> since when? >> are you kidding me? i used to call jpmorgan as you did? won't you still be on the conference calls? >> i'll still be on the conference calls. >> for thomas? >> for you. >> for you. coming up, gender quality isn't just an ideal. fixing the economy could give gdp lenders a major boost. the founder of gen joining us next.
bridging the gender gap might give the u.s. economy a boost according to a new report by mckinsey global institute that says improving gender equality in the work place could add more than $2 trillion in u.s. gdp by 2025. a little less than ten years from now. joining us is katlyn grasso who is founder a media corporation that helps young women in media exploration. good morning. >> good morning. thank you for having me. >> starting with the numbers. i know they're not your numbers but the whole idea that getting more women into the workplace will fundamentally change the gdp number. how does it work? >> it's a critical issue. currently in today's market in
business and technology women currently only hold 4% of ceo positions at fortune 500 companies and 22.5% of senior leadership positions at tech companies. that's a huge problem because those are the businesses that are driving the economy. and if women are not at the top of the field leading them is becomes hard and discouraging for younger women to see themselves in positions of power. i tell the girls of genheration, if you can see it, you can be it. when the girls don't see women in power it becomes harder for them to envision themselves as successful leader. >> what does your company do? >> we are an interactive media company for high school and college women providing access to clear exploration. scholarships and female executives. we racked a campaign with adoebe where they challenge our members to utilize technology to raise awareness about issues. they work with the companies, submit ideas and get female
executives to mentor them and implement them. then we have a model which brings girls to leading companies in the world. >> to put a point on technology which you talked about earlier. when we talk about silicon valley it seems to be one of the places where the gender divide is real in a meaningful way. is that something you think actually does get fixed and how long does it take to get fixed? >> that is clearly an issue because there are so few women leading at the helm of technology companies. psychologists have found that it's critical for girls during the ages of 11 to 17 to develop projections about their futureselves. so that's when it's important to get girls interested in s.t.e.m. and engineering. >> do you have to tell people, you need -- in high school -- >> if someone told me that. you take s.t.e.m. courses. they're ridiculously hard. and it's a pain in the -- >> that's true. but what's key is the experiential learning bit.
if girls can practice them and get the support at a young age they might think, i am 14 years old. i was mentored and i can do it. now i'm interested in studying engineering. unfortunately it's too late once senior year of college runs around. if you don't know how to code, you won't get the engineering job. it could be deceptive that, if you want to work for the googles and facebooks of america you don't have to be an engineers. there are marketing and other roles. >> larry summers tried to broach that topic and i think he finally almost lost his job at harvard. it haven't been figured out how to get s.t.e.m. for accessible and predominant among -- i mean my daughter is taking like ap chemistry and she is worried and i'm worried. >> the conversation by summers, even though he lost his job, sort of started a lot of this conversation. >> exactly. >> appreciate it. earnings in focus this week. we'll ask jeff rosenberg and bob
dahl what to expect when the quarterly results start rolling in. yeah, val from voya. quick question, what are voya retirement squirrels doing in my house? we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? no, i'm more like a metaphor. okay, a spokes-metaphor. no, i'm... you're a spokes-metaphor. yeah. ok. see how voya can help you get organized at voya.com.
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let the earnings season begin. financials will be in focus this week along with key economic data on the consumer. bob dahl and black robbing's fixed income strategist jeff rosenberg are here to break down what you need to watch. the search for a buyer may be closer to an end for yahoo!. analyst on a possible deal is just minutes away. jordan spieth disaster at 12 cost him the green jacket. how he went from running away with a masters repeat to handing over the jacket to englishman danny willett as the second hour of "squawk box" begins right
now. live from the beating heart of business, new york city, this is "squawk box." welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and kayla tausche who is in for becky. futures have been positive for most of the morning session up somewhere around 50 points last time we looked. we'll take a quick look up. 62 now on the dow. up 8 on the s&p and up 19 on the nasdaq. oil was down just fractionally earlier today. but above 39. now down less than .25%. here are the other top stories we are watching this morning. britain's daily mail may become involved in a bid for yahoo!. in a statement a spokesperson says the company has been in discussions with a number of potential bidders but the discussions are at an early stage and there is no guarantee
any transaction will take place. we'll have more on yahoo! in a moment. but that news of a potential bid from "the daily mail" and partners sending yahoo! shares up 1.5% in the premarket. gasoline prices have jumped 8 cents a gallon over the last three weeks. the latest lundberg survey putting the average price at $2.10 per gallon. president obama meets with janet yellen at the white house to discuss the economy as well as wall street reform efforts and vice president joe biden will be in attendance. a masters meltdown for defending champ jordan spieth. he closed out the front nine with four straight birdies. and then things went downhill. he had a bogey on 10 and 11. then true disaster struck when spieth actually got a quadruple bogey 7 at the 12th after his tee shot went in the water. that's are right there.
then you've got to go to the drop area, and you can see the decel there. it goes in the water. over the back of the green in five. then a beautiful shot out of the bunker and got up and down for a seven. but it was too late at that point. he did birdie 13 and 15. if he had -- he had a putt on 16 where he -- >> have you played augusta? >> i have. >> personal triumph over hole 12? >> i've done -- i've had -- i've done both. i've done everything on every hole there. yeah, i have. i've done things much worse. see, i would have probably -- a couple of years ago there was a celebrity tournament, somebody hit 8 or 9 after hitting one in the water and kept doing it kind of like 8 or 9 like "tin cup." 7 is a horrific score, but believe me, you can score 20. it's in my pocket after 7
strokes. that's what amateurs are able to do if you're not in the tournament. you can go in the pocket and ease the pain. these guys, that's why they are a different breed to be able to get it in the hole every single time. but danny willett, this is one of the unfortunate -- he is not complaining, but this tournament will be remembered more for what happened to jordan than the incredible 67 that danny willett shot yesterday. his only second appearance at augusta. he was not going to play because his wife's due date for their baby was yesterday. the baby came early. he was able to play. and he ended up taking home the green jacket. first englishman to win the masters since nick faldo won 20 years ago. the first european to win it since josé maria. we have it awussies and south
african and r african. something about that venue that makes it -- >> don't they put like the heating pads on the azalea beds to thaw them and warm them up before the tournament? >> i don't think so, kayla. i think god knows what's happening. >> have you ever gone to watch in person? >> it's hard -- i like it on tv better. >> there was a great article in the "journal" over the weekend. that you're not allowed to run with the chairs. people get there at 5:00 in the morning, stand in the parking lot and take these chairs that they place down. once you place your chair apparently you can get up and leave for the whole day but you're not allowed to run. you have to walk. so it's like a speed-walking competition. >> i like it on tv. >> i should have brought some georgia home-made pimento cheese. >> the pga, the fourth major is in springfield, new jersey, this year, five minutes from my house. if you want tickets, i can help you with that. >> if you want to hang out with joe in your free time -- >> we do.
we do that sometimes. we do. moving on. black rock ceo warns negative interest rates could hit consumer spending and undermine economic growth that they're intended to envucourage. head of the world's largest asset management group says the central bank's actions are, quote, severely punishing the world's savers with potentially dangerous financial and economic consequences. not new consequences but always a closely watched all right from larry fink warning, again, of what negative interest rates could do to the global economy. meanwhile silicon valley has been abuzz with talk of a potential takeover of yahoo! with the latus suitor the u.k.'s daily mail. brian wesser joins us with his
thoughts. senior research analyst at pivotal research group. we have been debating this morning whether any of the companies actually come forward with a bid in the next week. wou would it ultimately value the core business? has your thesis changed? >> i think there was always the case that there could be dozens of companies who could plausibly claim to be able to run the core business better and either have the capital on hand or have access to raising the capital through other means. this is not surprising. there is no reason to react to this specifically. the primary reason is because it's not entirely clear that management will sell at whatever the highest bid is that's out there. it's possible that there will be a so-called dumb buyer who will overpay massively and cause the board to have to pay attention. but tmy thinking is that the board's expectations baked into it, they think the existing management team can do much put
such a high alternative on it in terms of the valuation of the company that there is no bidder who could pay that much so it might take a turnover of the existing board before that happens. >> twitter, facebook, google, even soft bank which of course is an investor that's familiar with yahoo!. those would seemingly be the types of bidders who could swallow the company. now we're talking about seemingly media players interested in the core media assets teaming up with private equity making this a large restructuring. >> take twitter, for example, there are lots of reasons why they wouldn't want to do it. i think a company like that knows exactly how challenged yahoo!'s core business is. or take any incumbent in the industry. i think that a disciplined buyer will know that this is hard and that the business is not worth
very much. frankly, the reason why i get to evaluation of only about $3 a share excluding cash. or $2.5 billion on the core business is because i am assuming they have to spend $800 million every year just to get to a teeny tiny little bit of growth. >> brian, if you are only at that price tag, what do you consider a win? if they sell this thing for $5 billion or $6 billion, they have floated this number $10 million. is bristol myers a genius? >> is cash included or not? >> let's take the cash out. >> take the cash out. if they can get to $10 billion they've done well. on the other hand, the main thing is that it might be the bankers who have done well in finding the so-called dumb buyer. you want someone to overpay if you are the existing management team or board, for that matter. that's a great thing for yahoo!'s shareholders. it might be a winner's curse for the acquirer.
>> does that assume you have to convince alibaba to buy back its stake? >> i think all flavors of possible outcomes are still possible. i think there will be some buyers who will think there is value in either buying yahoo! japan or alibaba stakes and doing something with it later. they might think it makes their bid more compelling or at least one that the board is less likely to be able to turn down. those are possibilities. they may not need alibaba's permission. on the other hand, there might be a buyer out there who thinks that because they can work well with alibaba, there is value there. there are so many possible outcomes. we're not sure, again, whether or not the board will sell at a certain price. >> you have a $40 price target on the stock. it's currently trading at about $37 a share. are you saying it's a buy on an option that a sale gets done? >> well, i have a hold rating on the stock.
but i think that it's possible that there is optionality to the upside. it's difficult to imagine less value than i am assuming, so it's possible that someone comes in with a really dumb bid, a really high one, that just ignores how broken the business is in terms of -- >> that's a strategic buyer, not the private equity guys, right? >> it depends. someone could be ignorant of the challenges the company is facing. your first sign that someone doesn't know what they're doing is that they start to value the business on a revenue per user or something like that. ignoring the secular challenges that are out there. from too often from industry players of all types who tend to look at the business in the wrong way and they will be burned. >> brian, we expect a note from you at the very least next week when we get more news of which offers come in, which are the dumb offers and which are the
smart offers. can you promise us that. >> i think he is suggesting all are dumb offers. >> the disciplined ones will not overpay. there is value in the business, it's just a question of what the value is. >> did you buy the patent things, the headlines that there are billions of dollars of patents that everybody wants? >> i think it's possible. the thing nobody considers is, if they end up selling patents, they'll have to pay higher licensing fees, it should come out in the wash. it's possible there is some value there, sure. >> we'll learn more about this business over the next week. brian, we appreciate your time this morning. >> he said patents. >> brian weiser. >> he said patent. everybody else can say it. >> patent. i can say it, if i choose to say it, the way you'd like me too. >> it's more like patent. >> sort of. right? >> like button. for me it's buddon.
great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. welcome back to "squawk box." futures right now are continuing to show upward momentum, up about 53 on the dow.
right now up 7 on the s&p. nasdaq indicated up about 17. no shortage of news making waves in the market so far this week, from fed-speak, retail sales, inflation data to earnings. bob doll, just the man. bob doll. you know it, i know it. the american people know it. that's bob dole, wasn't it? >> same dude. >> you're different. i thought we had bob dole. chief equity strategist at nuveen management. and jeff rosenberg at blackrock. we'll start with you because this is like déjà vu, day in and day out, whenever we have you on. we've gotten one rate increase under our belt. >> yep. >> unbelievable, wasn't it? how many more this year? >> well, the fed has brought it down a lot. remember when they gave us the raise in december. they promised four. what we got last month was cutting the promise into two and the bond markets have barely won. so a lot of it depends on what
we heard about last week and in the prior weeks, which is the global and international developments, what is the financial market conditions look like. so if you get some of this easing that we have seen and better stock markets and lower volatility they might be able to raise one probably in the june meeting. but raising rates when the rest of the world is cutting rates means a stronger dollar. if that results and we get a bigger move upward in the dollar you could be right back -- >> the dollar has been weak. this is a time when we could have been raising rates. we wouldn't have gone below 1.08. on the euro. yen is too strong for japan to recover. why can't we take one for the rest of the world, let them recover and then we'll recover as they recover? >> we might be able to. the risk is if you do one and the markets think now it's going to be one and more that you get a stronger dollar, and the very impact of a stronger dollar undermines the financial market conditions that allows us to think -- >> what's obama going to say to
yellen today? >> i have no idea. >> what do you mean you have no idea? you don't have to think about that? >> what do you think that conversation is like? >> i think it's a conversation where she talks a lot about the same things that she talks to us about, which is what are their concerns, what's driving their policy. but yellen, from that perspective is doing everything that you would want her to do. going very slow, not trying to focus on one side. >> if you were the president, worried about his legacy and electing hillary clinton, she is doing everything you would want her to do? is that what you meant? >> i meant you don't want an overly aggressive fed in an election year where there is a lot of concern -- >> so there is something to that? >> yes. >> huh! that's not right. they're supposed to not be political. >> they don't talk politics. they talk economics but the economics, of course, are of incredible concerns. >> a was larry wright -- he has wanted to raise rates for a while. >> we talked about going back to -- about the beginning of
2014, that the conditions were in place for the fed to raise rates. and that they had a window of opportunity. that window of opportunity, the global events that we went through in august, in january, they've really taken over the story. the window has been missed. now the fed is doing the right thing. they cannot raise rates into an environment of global economic conditions where they're tightening. the fed is reacting to that. all the things that have pulled back the fed and expectations is in reaction to the global situation that doesn't allow for higher interest rates at that pace. >> so, you -- are you guys talking -- weren't you at blackrock for a while? >> yes. >> is wasn't him. >> he is a good man. >> he's a good one! all right. why would anyone get optimistic here, bob? we're going to have a terrible first quarter in terms of gdp. the dollar as we talked about is no longer the headwind that it was. are you sort of -- there is no
alternative? is that where we are? >> at the end of the day i hope that's the case. it hangs on earnings. particularly in the second half. the culprit for earnings last year was falling oil, rising dollar. now we have falling dollar and rising oil and psi -- pmis and isms that are doing better, suggesting forward earnings could improve. that's the big question. i can't guarantee it, but all these things are lining up. i think we'll start to see some positive earnings revisions, whether it will be enough, joe, to get the market out of this funk, who knows. >> are you -- are you opt -- i don't know. you would probably prefer a republican. is there any chance for you now? >> for me? >> are you setting your alarm clock for 2020? to wake up in 2020 and start caring again? >> it's whoever to see whoever is the nominee on the republican side getting united enough to run out and defeat hillary.
>> what does that mean for -- i don't want to say the devil you know because then people say i'm calling hillary a devil. i'm not but wall street does know the clintons pretty well. bernie sanders keeps pointing that out. they don't seem to be too worried about a hillary clinton. >> rightfully so. i think we know where hillary will stand and what she'll do? >> so she'll move back? some type of reasonable rhetoric. >> we don't know what donald trump will do if he's elected president. we have no clue. >> you think that's worse than what hillary -- >> he says if he is not elected president we'll see a massive recession. >> well, of course. because he's going to make america great again. he's promised that. >> you don't know that there's some agita in the rest of the -- >> are you in the never trump camp? >> i would love to know what he's going to do if he is elected president. then i can give you a good
answer. >> normally he'd want to talk. but today -- >> i'm listening to the conversations. yes. you want to talk about bonds, the ten-year or something interesting? >> it's with earnings, joe. >> he is the compliance man in his head right now. >> i already brought up that bob used to work there and brought up larry fink. i tried to to do everything. anyway, thank you. >> thank you. >> nice to see you. be well. >> be well! if you can. coming up he formed his first band called the marksmen at the age of 12 and went on to sell more than 30 million records, talking about the one and only steve miller. this weekend he was honored by the rock & roll hall of fame. scathing words for record producers. the futures have been in positive territory this morning. losing a bit of steam. dow opened up 54 points. "squawk box" will be right back. it's more than a network and the cloud. it's reliable uptime. and multi-layered security.
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to go make a comeback after being convicted of insider trading. it's not a total knockout. batman versus superman took in $23.4 million slightly below mccarthy's flick. despite poor reviews and word of mouth the warner brothers film has made nearly $300 million in the u.s. and canada superman has, what, a 30% rotten rating on rotten tomatoes? >> what does it need to break even? needs a lot, right. >> it's going to break even. it will make money. >> it will? >> it's going to make a lot of money. >> a lot of money? >> i think it will. by the way, they're making more of these things. >> this was important to introduce all the other ones. when we come back, a busy week ahead on wall street. earnings season kicking off lots of fed-speak. we'll get you set up with the trading block. look at u.s. equity futures.
dow could open up 55 points higher. s&p 500 up 7.5 points. nasdaq up about 17 points. back in a moment. rk for average. yet many people still build portfolios 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.
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welcome back to "squawk box" on this monday morning. among the stories front and center today, the international monetary fund has expressed support for the move to negative interest rates. the bank of japan, the ecb and others, the imf says the moves will ease lending conditions and stimulate the economy. those comments ahead of the imf's spring meetings taking place in d.c. this week. overstock.com founder chief executive taking a medical leave of absence as he undergoes treatment for hepatitis c. burns says he doesn't know if he'll return to work. jpmorgan chase, bank of america and wells fargo set to report earnings this week. according to estimates by thomas reuters, the six biggest u.s. banks will likely report an average 20% decline in earnings compared to just one year ago.
joe. that's what interest rates this low will do. >> we alluded to this. musician steve miller joined the rock & roll hall of fame this weekend. ahead of the induction ceremony and the concert, the man behind -- i'm not going -- i don't like these songs. i don't like "jet airliner," "living in the usa," space cowboy. >> you don't like "the joker?" ? >> no. he's blasting the music industry saying nobody cares about artists, record companies are thieves and they should all be put in jail. he says it's depressing because studios are gone and in musicians will need rich people to sponsor them for their private concerts. i -- did deep purple make it? do you know? i don't know. they did make it. okay. who didn't make it? because i would have -- i don't
know. there are some people -- >> did yes make it? weren't they up for -- i missed it. okay. to the trading block for a roundup of what to expect from the markets this week. enjoying us scott nations on oil. mike rothman, corner stone analytics president and on currencies joe trevesani. >> the market at this point, looking at it, seems there is nothing to get excited about stocks, which makes me think it doesn't go down, maybe, and maybe it goes up. i see a lot of people saying it's tired, we've gotten as much out of it as we're going to get out of it. someone last week said it. i said "i'm writing this down." do you think we've made back of a lot of what we've lost at the beginning of the year and we turn back down or go to new highs now? >> i think we make new highs but really slowly. what happened at the first of the year i think about differently.
i think the problem was china and not the economic situation. but the stupid circuit breakers that they instituted on the first day of the year, that's what changed. we have worked that out of the system. china is having a great day today. kayla pointed out that we have a bunch of banks announcing earnings later this week and net interest margin will get crushed, but compare that to what we expect also this week in -- from inflation data. so those two will be in conflict. i think that we continue higher here in the s&p but it's not going to be a fantastic year and we're not going to run to new highs overnight. >> all right. we've got mike. used to be oil was going down, dollar was going up, so the market couldn't go up because of that. now oil is back -- well, 39. i can't believe what we're talking about. that's like a 40% move, isn't it, to 39. >> big move on a small base. >> it would be nice to know where oil will be trading a year from now, two years from now. what do you think?
>> a lot higher. >> really? like how much higher? >> figure by the end of the year about double from where we are. >> okay. did you -- anytime on the way down did you say that, like, did you say it was cheap at 80, 70, 60, 40, 30? >> no. i was at the opec meeting a near ago november when the saudis said they wouldn't try to put a floor. they thought it would stop at 60. i said next price down will be cash operating cost which we all estimate at somewhere between 30 and 40. they thought it was crazy. >> what's going to change? >> cure for a low price is always a low price. two things going on. demand growth and contraction and non-effect supply. first time in about eight years. >> all right. we have had chances to see low price cure low prices and low prices haven't cured low prices yet. i mean, if these -- some people
think that what has happened in this country, the revolution with horizontal drilling, has fundamentally changed the outlook and we can turn things back on, we're ready to turn the spigots back on. you think we go back to 70 and stay at 70 and 80? that's non -- the consensus is that we stay here for a while. >> no. the thing about shale that most people missed is that you're looking at a surge in production but it's not something that's prolonged. shale is a short-life resource. if you look at all of the countries outside of opec that produce oil, there are 81 of them. they have not grown at all over the last seven years. the u.s. has been the only story. the hope is that, if prices rebound, you'll get this somehow commensurate reaction in the u.s. which is not going to be the case. shale looked like it would make its peak in production in 2018 before the drop in oil prices. >> is it april? april 10th or 11th? >> 11th. >> it's the 11th?
you only got -- write that down too. 70 for 80 by the end of the year. >> our number is $85 by the end of the year. >> andrew, what do you think? i think he was in colorado with all the other guys -- like the dude. the dude would not go to vote after he smoked a big number. what do you think, andrew? is he out there not voting in colorado -- >> are you playing price is right rules? >> 85 by the end of the year? okay. so i can put all my money on crude futures. >> that's right. >> and i can make five times my money. i'll have five times my money. >> what did you say a year ago? >> i figured we'd start seeing signs of the balance tightening by the end of the year. we had a warm winter so it came in softer. >> andrew, do you have a video? remember this. 85. >> our producers have your phone number. he's going to come back. >> all right. >> that was brave.
>> why not take a shot, right? >> that's a price and a date. >> what do you think? the euro will go to 140 by the end of the year? >> the problem with the euro and the currency is the fed is the variable. we know what the ecb will do. they'll do what they're doing now or more of it. same with japan. the chinese have recently -- you know what they'll do because of the enormous loan bond in january. so the fed has been the variable. the fed was originally back in december and it's a little more than three months ago. they were going to do four rates. nobody believed it then, and now they're backing away from it. i think they're going to further back away. so the fed is the variable. so i think we could very well see that. then i have kind of changed my opinion on this because i thought the fed was actually more consistent with their own internal projections than they proved to be. so i think we could, actually, see that because the fed will continue to back off. they don't seem to have a lot of
choice. if they're looking at the u.s., then clearly they've met their standards. they can always change their standards, which they've done. as far as the rest of the world goes, there is a lot of pressure there. is the fed going to be the only central bank raising rates? it's possible. but then what does that entail for the rest of the world and the emerging markets, for china and japan? how much responsibility will they take for that? it seems like they're not willing to. >> by not raising they are not helping those other countries. >> that's true. but in the short term they are. if they raise rates they could potentially cause a great deal of trouble. at least by not raising rates they're not doing harm. they'll permit the japanese -- >> they're not doing any immediate harm. >> correct. that's what i think. it seems that the chinese are very sensitive about this. i mean, about a week and a half, maybe two weeks ago, they had this six-day period where they continually weakened the yuan.
they haven't done something for a while. does it mean something? i'm not sure. but their currency being tied effectively to the dollar means that if the dollar strengthens, so that is the yuan. the fed has become extremely wary about this, which is an unusual move for the fed. they haven't done this before. that's why i think maybe they're telling the truth and they're not going to raise rates. >> did you see "60 minutes" last night? >> i missed it. >> no, the masters ran into it. >> they played it after the masters. >> i had to get to bed early to wake up for this. >> where are you going with this? >> how many movie screens opened -- new movie screens open every day in china? 22. every dacy. the movie business in china will blow by the u.s. within a year or two. people want to go see -- it's no
longer mao and the revolution. it's just pure entertainment just like we have here. chinese producers coming over here and working in hollywood, collaborating. i mean, this is something. if you're thinking about billions a movie or something like that -- >> we should do it in chinese is what you're trying to say. >> that's why we don't want to be negative about chinese oil demand. >> 85. i look at you and i see 85. talking about china when we come back. building alibaba. new book hitting the shelves about jack ma and how he built the company. the house that jack ma built right after the break. that's right. i have read it is the hardest job in the world. that's why i'm here. can you... i can offer advice from the accumulated knowledge of other educators... that's wonderful but... i can tailor a curriculum for each student by cross-referencing aptitude, development, geography...
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trading. alibaba flexing muscles as the world's largest virtual shopping mall. has a bigger impact on retail in china than amazon does in the u.s. new book telling the story of the man behind alibaba. an inside look at jack ma's journey. joining us is duncan clark, founder and chairman of bda china and the author of this book, alibaba, the house that jack ma built. good morning to you. >> good morning, andrew. >> what's the most misunderstood thing about jack ma and alibaba. we talk about the company's size and scale but it's almost for us in the united states either too big to comprehend or i don't think we have a full appreciation of what's going on. >> to coin a phrase it's too big to nail because it is so huge in terms of everybody's daily life. chinese consumers have experienced consumption, many of them, through alibaba. off-line retail in china is
pretty bad. first it was state-run stores which were poor and then it was property developers were trying to put up louie viton's. now they can buy things from their home. it's the clean axe of commerce. >> he's compared in the book to steve jobs. is he a visionary genius or some would say he just copied a lot of things taking place in silicon valley. >> he clearly has the charisma. but perhaps without the authoritarian aspects that one aassociat associates with steve jobs. his first two companies failed. he did a stint in government. he had people follow him for years, a decade. he has a charisma that people stick with him. the company itself is very impactful because of his brand, personal brand as well. to some extent he is a vessel
that we pour our hopes into for how we'd like china to be. it's kind of the american dream. >> what do you think his ambition is. >> he has a double h strategy, health and happiness. the happiness stuff is he wants chinese movies to have hollywood endings. he says in chinese movies all the heroes die. >> do you think eventually he's here and everywhere? >> it's not the japanese kind of late '80s buying everything and losing their shirts. we just saw the enbang deal, crater. he has had missteps in china. they are a website that didn't work. so they're biding their time. they know entertainment wants to come to china. so they'll broker that. sports. they just signed rugby. they are a big sponsor of rugby. >> they've been able to grow within china at a breakneck pace. but i wonder, at what point does the u.s. or european consumer become more familiarized with them at a product level? >> as i have traveled the world
writing about the company, it's emerging markets where they're the most impactful. today alibaba runs the number one e-commerce site in russia. ukraine. they're big in brazil. i've been selling a lot of copies of the book in spain, russia, indonesia. it's not first the developed markets. he is going more because people trade, small and medium sized business. >> can you explain his relationship with the chinese government. and put it in this context which is he also just bought the newspapers, the south morning -- morning post. some think he is an arm of the government. >> he famously said, you know, fall in love with the government but don't marry them. i say in the book it would be polygamy if you do because the chinese government is a hydra head headed endity. he has to respect the government. hong kong is a very divided
place. there is an element that it's a trophy asset for a billionaire. i think it's an attempt to create head room for his visions. he is expanding domestically in finance and entertainment. those are pretty regulated sectors. he needs to make nice to the government but not be sort of part of the government. >> do you think he also ultimately becomes part of the government? i have read articles saying he'll eventually become a political leader. >> there really isn't a pathway for that. >> duncan, thank you. >> groicongratulations on the b. when we come back, a planet hunting spaceship in a state of emergency, 75 million miles from earth. details after the break. at the top of the hour, a focus on financials. a big week for bank earnings. plus, ceos fighting back against political rhetoric, one hot topic. former wells fargo ceo joins
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great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. . we do have a problem. the fate of the planet hunting spacecraft kepler might be on the line this week. nasa announcing tit entered emergency mode and is burning through a huge amount of fuel. last week it was in good health and acting as expected.
it completed its prime mission in 2012, detecting nearly 5,000 planets outside of our planetary system. >> where is it right now? how far -- do you know? >> i do not know the details of where it is. you should be happy that matt damon is not up there. >> 75 million miles. it's really not that far. 75 million light years is really not that far. it's a lot farther than 75 million miles. >> 75 million light years would be very far. >> that's what i said. that's far. 75 million miles is not far. 75 million light years -- oh, but on the big scale it's not that far. you can barely find another sign. nothing is close. there are some vast distances out there. let's look at the stocks to watch this morning. the old classic animal orchestra, with some steve miller.
i saw the bands that didn't get in. jethro tull, the cars. i am with steve miller. these guys are -- they have no idea what they're doing. i don't know who votes. mortgage week. hat ras financial bought by rival for $1.5 billion for cash and stock. emerson, lake and palmer didn't get in. deals worth 1585 a share. kansas. not in. bad company, no. restaurant brands international was upgraded to out perform from sector perform at rbc capital. restaurant brands is also the parent of tim hortons, if you didn't know that. seagate technology got a positive mention in barron's which shows the stock's 7.6% yield is enticing. it says the hard disc drive
maker will benefit as data centers buy disk drives to handle increasing cloud business. no iron maiden, no judas priest. no weird al, dire straits or def leppa leppard. when we return, ceos are fighting back against politicians and corporate rhetoric. >> no journey. we'll talk about the state of financials, politics and more, and maybe even a little bit of music. >> no moody blues. dow looks to open 65 points higher. back in a moment. >> no moody blues! ♪ we needed 30 new hires for our call center.
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♪ changes you'll notice. wherever you are in the world. ceos speak out. new this morning, a warning from blackrock ceo larry fink, why he fears negative rates will hurt saving and spending. decision 2016. the race getting tighter. the issues more contentious. our special guest this hour, former senate majority leader tom dashal. take the money and run. why rock & roll hall of famer steve miller is sounding off at
the music business. final hour of "squawk box" begins right now ♪ jungle love is driving me mad, making me crazy ♪ you can play every song off of "the joker." can i request "space cowboy" or "living in the usa?" welcome back. it was rock & roll hall of fame selection process. steve miller made it but a lot of bands didn't. the cars. i'm joe kernen along with andrew ross sorkin and kayla tausche. becky is off today. she might be boycotting because of kansas. >> less than 90 minutes away from the opening bell. futures continue to be about where they were, up 54 points on the dow. 7 on the s&p. up 17.5 on the nasdaq. checking out the markets in europe. all green except for just a fractional loss on the ftse 100.
everything else is moving higher. >> is that the danny willett selloff? >> um, yeah. oh, i don't know why that would be -- why that -- first englishman in 20 years. euro hasn't won in a long time either. we questioned whether -- if there is a brexit, is it still a win for europe. >> you asked that question earlier. didn't get an answer. >> i didn't. today president obama meets with fed chair janet yellen at the white house to discuss the economy as well as wall street reform efforts. earning season unofficially opens this afternoon when alcoa reports results. forecasting a 9% decline. gasoline prices jumped 8 cents a gallon in the last three weeks. the latest lundberg survey putting the average price at $2.10 per gallon which in the grand scheme of things is not crazy. but given how low they were,
just coming into spring break and the summer driving season, prices are climbing. >> i am not a driver. stocks to watch. canadian pacific ending its effort to merge with norfolk southern saying it sees no clear path to a deal do to norfolk's resistance. for notebook's shares falling in premarket trading. there had been anti-trust issues from day one. he had all sorts of ideas about how to get around them. thought they were going to put this thing in trust for a period. but here we are. britain's daily mail might become involved in a bid for i don't yahoo!. a spokesperson saying the discussions are at an early stage and there is no guarantee any transaction will take place. of course, they would have to do it with private equity. private equity is running around
to try to find anybody to help them. hatteras financial will be bought by rival capital management for $1.5 billion in cash and stock. or $15.85 per share. >> i want an ekg. when your heart actually sees a word like that. i want to see what goes on in your actual body chemistry. >> for hatteras? >> yeah. >> i'm familiar with hatteras? >> i saw. >> i said it earlier, which if you had been listening -- >> i feel lucky to have witnessed one of the first times andrew saw adrianna in the proper. >> you have to dial it down. >> we've never lost anybody. >> not here. >> no one has ever died that we know of. >> blackrock ceo larry fink out with his annual letter to shareholders warning that negative interest rates could hit consumer spending and undermine the economic growth that they are intended to
encourage. could -- this could be what you say about zerp for the past ten years. it's like, we know this. the head of the world's largest asset management group also writing in part, in the u.s., the quality of corporate earnings is deteriorating, with record share purchases in 2015 driving valuations. that's from zerp. an indication of companies succumbing to the pressures of short-termism in place of constructive long-term strategies. i don't know whether anything ever happens from any of this, though, do you, sorkin or kayla? he has a lot of advice but it just never -- >> you have to get congress -- you have to do a lot of things. >> i don't know whether you need necessarily to get congress. the fed certainly hasn't listened. >> no. but for all of his other -- he has all sorts of short term, long term, and those are the things you'd need, to make serious changes, treasury would have to be involved. >> some people think those remedies -- >> yes.
there are two sides to this. >> you have goldman's annual shareholder letter. jamie diamond's annual shareholder letter. where there is a lot of criticism about negative rates and what it's doing to the economy. i think the chorus is probably more important than one particular letter, wouldn't you say? >> i would. and all negative rates are really a reflection of is just really we're so suddenly dependent on central banks for everything. and i am not sure how we got there. i guess it's partly the problems with gridlock and slow growth and structural problems in europe and everything else. it is a problem. these guys probably don't like it much either. to the intersection of wall street and washington. pretty good segue. corporate greed rhetoric has been intensifying in the presidential race as candidates take an anti-business stance. >> my view, the business model of wall street is fraud. it's fraud. >> we're going to get apple to start building their damn computers and things in this country instead of in other
countries. >> i don't think what i am arguing is bad for business at all. it's certainly -- it certainly is focused on bad behavior of some businesses. >> some of america's best-known corporate leaders are firing back. you saw jeff immelt's thought -- you liked it, andrew. >> thought it was spectacular. >> letter to bernie sanders about the general electorate. >> absolutely. >> joining us with more on the corporate push-back is dick kovacevich, former chairman and ceo of wells fargo, and john alison, former chairman and ceo of bb&t and former cato president and former professor of finance and leadership at wake forest. gentlemen, it's a populist environment i think on both sides of the aisle. there are some good reasons for it in terms of, you know, people not getting ahead like they think they should and a pretty anemic recovery, right, dick, over the past seven years?
it's been the worst one in post world war history. >> absolutely right. >> yep. >> john alison, you're not surprised, but is there a way you could try to explain to people who are rightly angry that it's not just corporate america's fault? >> it's a difficult challenge. it's one of the things i was trying to do when i was at cato. it's actually government policy that's created this slow growth rate. as you mentioned, the federal reserve's action, i think, have really deterred investment. the arb traery nature of regulations. they change every day. how can you make long-term investments when you don't know what the rule of law is. that's a huge issue for the economy. it leads to stock buy-backs. >> either one of you can weigh in on this. for seven years we have been highlighting increased
regulation and obamacare and executive actions and the -- really, not a very positive environment in terms of washington and the private sector. but dick, people look at the rest of the world and say, look, we've recovered faster than anyone else. with the fed we have recovered faster than anyone else even though we supposedly have all these headwinds. obviously if the entire planet was facing something bigger than any one country and we haven't done this to ourselves. that's the narrative now, dick kovacevich. >> i think that's right. but we always are the leader of the world's economy, and it is because we basically have a domestic economy. and our consumers are earning money. they're spending it. and as -- as was already discussed, what's happened, there is no business confidence. it's the business side of our
economy that is very, very weak. the consumer side is strong. and the reason -- i agree completely that it's so weak is they don't trust the government. i have never seen so much government intervention and regulation in my entire career. it's unnecessary, it's excessive and it's for political rhetoric. they think they're gaining political points. but eventually it will be about the economy and the election, i think, will be who can get the economy growing faster and we'll -- you know, we'll see what happens. but we have to do something about this regulation. when you talk about income inequality, the reason why there is such a low wage rate is because productivity, which has been growing at 2.2% for the past 50 years, is at .6% in the last seven years. and the reason is, if you have
30,000 people like jpmorgan that are in compliance, compliance only, you're going to have low productivity. if you don't get the productivity you are not going to get the wage growth. it's a huge, huge issue. >> john, larry kudlow actually said we're looking at it backwards, that if the united states had not been sort of held back over the past seven years that not only would we be better but the rest of the world would actually be showing better growth too since we're the engine of the entire -- and when you look at it that way, you can't just write it off to why the whole world is slower. maybe they'd be growing faster and we would be at 3%, 3.5%. >> i totally agree with that. in fact, coming off the kind of recession we had, we should have had several years of 4% or 5% growth. you think about the amazing advances in technology and the advantages of international trade. we should be doing very well, and it's absolutely government policy that's kept us from doing
well. the combination of what i think is bad federal reserve policy and the regulatory environment that dick described. when i talk to business people, they can't figure out what the rules are and are very afraid of arguing with their regulators because this is new. the regulatory environment is very much, if you argue with me, i'm coming to get you. i think business has gotten that message. >> well, dick, the current conversation on the campaign trail at least is this demonization of big national companies which was highlighted in the letter that jeff immelt wrote to the "washington post." and as you have run a company that is pretty much 100% in the united states, do you get the sense that these candidates really just want to recreate wells fargo, they want to recreate these companies that have no global presence truly?
>> no. again, i think it's political rhetoric. they are saying that the reason why our growth isn't as good as it is is not our fault, it's not the government's fault, it's because these multi-nationals are doing business overseas. it's great that our companies are doing overseas. we are the leaders overseas, and that's how -- that's why our people are employed. that's why our unemployment is very low is because we have a combination of companies who are mainly domestic companies and we have companies who are world-class, and that allows us to have better employment than if we did not have that. it's political rhetoric. it is not fact-based. >> dick, bottom line it for us. you have historically supported republicans. if donald trump is the candidate, would you vote for him given the rhetoric that you just condemned? >> absolutely not. i think -- i think he is
obnoxious, he is a bully, he is a narcissist, he debates on the basis of personal insults and trivial sound bites, and i do not think -- i don't even know what his policies are, and the times that he does come out with policies, i don't think they make any sense. so i would not vote for donald trump. >> ted cruz, hillary clinton? who would be your candidate? >> well, there aren't a lot of good choices. the negative ratings on both hillary and ted cruz are high. even amongst the -- the democrats don't trust hillary. the republicans don't trust ted cruz. i don't even know how you vote for a president that you don't trust. however, my guess is that it will be a contested convention for the republicans, and after the first vote ted cruz is likely to be the candidate, and i think most republicans, even
though they may not prefer ted cruz, if there were other better choices in the republican party, will vote for a ted cruz, but they won't vote for donald trump. and they'll vote for ted cruz because they think that's a better alternative. >> so john -- >> not because they think he's the best candidate. >> john alison, looking at things through your cato lens. two terms of president obama and now potentially an extension, maybe a third term. are you optimistic that the u.s. can come back into its old role as, you know, maybe the -- there are some that think the exceptionalism is slowly being drained out and we're going to end up as sort of a pseudo-entitlement state, like europe. are we past the point of no return, or will we get there? are you optimistic? >> i battle with being very
concerned and trying to be optimi optimistic. we just put out a paper looking at the fiscal mess that the united states has. and it's pretty stunning, the deficits we have, mostly coming out of medicare, medicaid and the new obamacare. the numbers are very, very scary. can they be fixed? yes, in theory. but they can't be fixed easy. it's not about just having faster growth. it's not about just raising taxes. those won't fix it. we've got to deal with these entitlement programs and that takes political will. and if we wait much longer it becomes almost unfixable without something pretty dramatic happening that could really be detrimental to the united states and to our children and grandchildren. it's kind of scary. in this campaign nobody is really talking about entitlements. that is absolutely the elephant in the room. we're talking about all the wrong stuff, in addition to attacking wall street, nobody is talking about what matters.
the entitlement programs consume the united states in a relatively short period of time in 20, 25 years. so i am discouraged that we're not willing to deal with the real issues. >> gentlemen, dick kovacevich and john alison, thank you. appreciate it. good to see you today. coming up when we return, mortgage rates are falling, but a new survey showing both buyers and sellers are in the worst moods in almost two years. what's going on? raising the roof on the full story when "squawk box" comes right back. thank you for calling. we'll be with you shortly. yeah right... xerox predictive analytics help companies provide a better and faster customer experience. hello mr. kent. can i rebook your flight? i'm here! customer care can work better. with xerox. wait i'm here! mr. kent? (gasp) shark diving! xerox personalized employee portals help companies make benefits simple and accessible... from anywhere.
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welcome back to "squawk box." dubai developer mr properties is building a new world's tallest tower in dubai. the company announcing plans for this $1 billion building over the weekend. it will be just a notch taller than the current record holder in dubai. speaking of real estate. most thought mortgage rates would have had nowhere to go but up this year. the opposite is happening. >> when the fed raised rates
late last year it looked like the confirmation to all those predictions of rising mortgage rates, the 30-year fixed would head toward 5% or higher. not so much. take a look. the average contract interest rate on the 30-year below 4%, headed lower last week to 3.64%. that according to mortgage news daily. that's down from close to 4.25% last summer. why? a combination of janet yellen spooking the market, the fed minutes confirming it, the ecb concern over the european economy, ongoing low oil prices. take your pick and add them up. the drop in rates is boosting refinances. but last week it really did nothing for mortgage applications to buy a home. both home buyers and sellers think now is a bad time to make a deal. that according to a monthly survey from fannie mae. sellers feel it's a bad time to sell rather than a good time to sell. that's the first time we've seen that in over a year. the interesting part is the
mortgage gurus i talk to who continually tell me there is a floor on rates are changing their tune now and making noises that we could actually break through a new low on the 30-year fixed. guys? >> thank you for that. coming up, watch out michael jordan. the golden state warriors could be about to topple one of your records. one of michael jordan's records. that's the story in today's squawk sports news straight ahead. ♪ keep on rocking me baby
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welcome back. it is time for squawk sports news. we have been talking about englishman danny willett winning the green jacket yesterday. you probably have seen this. first there were two hole-in-ones already when south african louie -- andrew? >> oosthuizen on the par 3 16th finds a way to get to the bottom by bouncing off another ball. for the third hole-in-one. a very unconventional hole in one. it was really cool to see that. and davis love got a hole-in-one. who else? >> it's not just unfair to me. it would be unfair to him. >> to say oosthuizen. that's impossible. no one would get that right.
that was cool, isn't it? look at that. you would think with regular billiards the first one would have but it doesn't. that's when you scratch. >> you have elevation of play that you don't have on the pool table. in other news, the golden state warriors tied the chicago bulls for the best winning record in nba history by pulling off a gutsy win in san antonio. behind steph curry's 37 points, the warriors beat the spurs 92-86. so that ties them with the 1995-1996 chicago bulls for the best record in history. 72 games won. of course, with one game left, the warriors could stand alone at 73-9 if they beat the memphis grizzlies on wednesday night. but i love all the interviews that folks have done with the '95-96 bulls. they unequivocally agree for the most part that they would sweep the warriors, if they played today. >> the bulls would kill them. they would. >> i would love to see that. >> come on! >> for a fund-raiser it would be
an amazing matchup. >> michael pippin. horace grant. >> is rodman on that team? >> he was maybe the first or second year they won the championship. >> if you're going to be a codger and be like, the teams back then! you go back to the big "o," wilt chamberla chamberlain. you can't just be an old geezer always saying the old teams are always better, right? >> yeah, but i think that bulls team was special in a different way. i think that team could have beaten any team. i could be wrong. >> steph curry -- no one has ever shot three-pointers like him, though. >> i know. music this morning. musician steve miller joined the rock & roll hall of fame this weekend, ahead of the introduction ceremony and concert -- these are songs joe doesn't like. he doesn't like "the joker." >> the whole album. >> he spoke to the "wall street
journal." he is blasting the music business saying record companies are thieves and should all be put in jail, that nobody cares about the artists. he says studios are gone and it's become like a video game and in 20 years musicians will need rich people to sponsor them for their private concerts. police say an unlikely character was taken into custody after wandering into a california starbucks. a wayward goat. the hairy guy -- an actual goat, not a hairy guy -- was spotted possibly trying to get a caffeine fix early sunday morning. officers were quickly able to take the coffee-craving goat into custody. in a dog's crate. police still trying to figure out who owns the goat and what he was doing in a starbucks. a new record for -- happened in sochi. check this out.
i don't know if this is being done for ratings or what. more than 1,000 participants simultaneously went down the slopes. the glamorous parade was part of the first mountain carnival. i don't know how to pronounce that one. previous record -- >> admiralable job. >> i am glad the olympic slopes are being put to good use. >> someone has to use them. who knew. >> next year. on site. >> we'll be on site doing the show live. joe will be there. >> like boogie woogie. the only reason to give it to you is to mess with you, for the producer. >> it wraps. >> that's the only reason to do the story. >> are you going to wear board shorts when we do this next time? i thought you were going to do the show in sochi. >> nobody needs to see me in --
i haven't shaved my legs. >> a speedo? >> no. faber is a speedo guy. he really is. the turtle sound. did you know the turtle sound? coming up! this morning's top stories. steve leishman joins us with a look at why you should be concerned about gdp. tomorrow, dallas president rob kaplan. first interview since joining the central bank. you're watching cnbc, first in business worldwide. before earning 1% cash back everywhere, every time and 2% back at the grocery store. even before he got 3% back on gas. kenny used his bankamericard cash rewards credit card to join the wednesday night league. because he loves to play hoops. not jump through them. that's the excitement of rewarding connections. apply online or at a bank of america near you.
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. ♪ in the wintertime, when all the leaves are brown, and the wind blows ♪ ♪ and the birds have all gone welcome back to "squawk box." stocks to watch in the news. hertz warned the results will be weaker than expected. it says industry capacity are among the factors pressuring pricing and earnings. the concerns expressed are also pressuring the shares of rival avis and budget. they've lost a third of their
value this year. that's prior to today's news. home builder toll brothers rising in premarket trading. toll the subject of a positive barron's article noting toll's successful entry into new york, into the city's luxury condominium market. a statement out today from the board of valeant. the statement says the senate committee on aging wants to depose pears depose pearson and they're currently in discussions. first quarter gdp plunging. steve leishman joins us with details from the cnbc's rapid update. >> a critical week for economic data. reports on retails sales, inflation and manufacturing. investors will look for whether the march data will offer hope for what is shaping to be another weak first quarter. the question is whether this is a case of the recurring weak first quarter growth that we have been talking about.
it's been chalked up to problems with the seasonality and data or is this a softening of the economy. it's the average of gdp tracking estimates on the street here, and it lets us see what the sources of weakness are. it shows it's coming from all parts of the economy. rapid update has fallen from a high of 2.3% in mid february to 0.6% now. it's come from retail, it's come from inventories, durables. income and spending. then trade you can see has brought it down. the yellow bars are the decline and the blue bar is what's happened to gdp. historic fall here, at least in the estimates. here is where people are on the street and how much they brought it down. the atlanta fed brought it down by 2.5%. mark zandy 1.1. down to 0.1% for the first quarter as is the atlanta fed. hes are very low numbers.
this has happened the past two years raising questions for investors of whether they should be playing the second quarter rebound. q 1, q 2. look along the bottom. you can see weak first quarter was negative in '14. came back strong, up 4%. barely positive in 2015. came back near 4%. some of the business surveys have shown better data for march. jpmorgan over the weekend was among those economists puzzling over the weak q 1 and saying a second-quarter rebound is likely though just over 2%. tomorrow dallas fed president robert kaplan. i thought we weren't going to talk about gdp anymore because it's usually wrong. >> you still have to watch it. look, if it was one thing, like inventories, which is -- can be a good thing when inventories reduce growth, it means you have less inventory to work off the next quarter, that would be one thing, but we're seeing it from all these different sources and
that's a reason for worry. you want to stick around and be part of the next conversation? you'll care about this. >> sure. a new report raising red flags on pension. local governments estimate a shortage of $1 trillion. our next guess says it's much worse. bringing in the professor of finance at stanford graduate school of business and a hoover institution senior fellow. how much worse is it? >> it's three or four times worse. to make sure everybody is aware of what's going on. if you have a job in the private economy you have a 401(k) or ira but your city, state government is still promising people traditional pensions. they're saying don't worry. we budget for these things, we're preparing for them. the amounts of money they're setting aside are far short of adequate. the budget and accounting measures and standards they're using are flawed. the problem is three to four times worse. $3.5 trillion. >> what's the tipping point and what happens once we get there. >> right now the budgeting is
allowing state and local governments -- your governments, big cities, big counties. we studied 560 of them in this report. states to essentially run unbalanced budgets. they say they're running a balanced budget but they're not because they're promising public employees pensions that they won't be able to meet with current resources. >> when does it happen. >> more money will have to go into these funds and you'll see more bankruptcies along the likes of detroit, san bernardino, stockton, california. i would expect there to be a number -- many more cities going bankrupt and many states that are insolvent in the next ten years. it has to do with what it will depend on -- why can't i give you an exact year? it depends on the stock market because that's what your local governments are banki on and investing in to try to solve the problem. they're assuming we'll earn 7% or 8% a year on the returns.
they might but they might not. it's a matter of time. if they do well maybe it will be ten years before things hit the fan. if not, maybe more like five years. >> let's talk about those investments. you were to advise one of these pension funds about where to put their money in terms of allocating the capital, there was a report out last week saying private equity has been a remarkable winner over the past 25 years. other people will say venture capital. there is also all these fees built in. you see so much of the money moving away frankly from hedge funds and some of these alternatives right now. >> the reality is that a lot of the asset classes that you could have had access to over the last 30 years have been pretty well maybe excepting the last two in public equity markets. a lot of asset classes have done well. public stocks, bonds have done well. the alternative classes have done well net of fees. they've just beaten public investments or just fallen short.
we've lived through an amazing bull market in all of these asset classes. what state and local governments are doing is assuming it's going to continue indefinitely. if you think about it the way a financial analyst thinks about it, it's unlikely. you look at the way the yields on stuff today. it's a lot lower than it ever was. secondly it violates the fundamental principle of finance which is you can't assume because you did well taking risky investments in the past that you're going to get the same returns taking risky investments in the future. that's what they're doing. with bond yields as low as they are they have ramped up risks and allocations to the investment strategies. a lot of pension funds out there, the vast majority, are going way long in the risky strategies to try to target the 7% or 8% return and it's unlikely they'll get there. for taxpayers, it means they'll get soaked by this. if you don't want your taxes to go up, if you rely on public
services, you'll get squeezed. a lot of cities and counties may be setting aside -- they set aside around 7.5% of the budget to pension contributions. people say that's no small change but it's not a major crisis. to stop the debt from growing, to actually claim in an economic sense that they're running a balanced budget they should be setting aside 17.5% of the budget. it's short by 10% of revenues right there. >> josh, tell us what the numbers are at various rates of return. are you assuming a 5% -- at a 5% rate of return for those pensions, is it still a $3.4 trillion problem? are you a i sumissuming a 3%? >> this is government debt and we're assuming a bond-like structure. if you promise somebody, a creditor in municipal bond markets you're going to pay him back and you promise a pensioner you're going to pay him back, they should be treated the same
way. both treated like government set. what's used to fund a $3 trillion unfunded liability are around 3%. that's what you should use. look, you know, you could lend me a hundred thousand dollars due in ten years. i could spend half on vacation and invest the other half in the stock market and say the $50,000 will double in ten years. we don't have any debts. there is no problem. that's what the state and local governments are doing, which is totally flawed and unreasonable. >> they don't typically earn 3%, right? i get the logic behind that. but they have a long-term horizon here. maybe that's the right number. but it's not been the historical return. >> i mean, come on. one of the first things you know about finance is that past returns are no guarantee of future returns but these pensions are guaranteed. they have to be paid. >> you want to call out one for
two municipalities or states or cities that you think will go down first? >> chicago is a disaster. it's a disaster in many ways. the school district and public safety also. "chicago sun-times" said there are 950 fewer police on the streets because of budgetary problems. a lot of the money has to go into pensions. the chicago school district, they contribute 20% of revenues to pensions. if they were going to be running a balanced budget and claim the debt were increasing they should be contributing 60%. the big cities in california, you know, l.a., san francisco, san jose, are all hugely problematic. the state of california, the state of illinois, the state of new jersey. counties across the u.s. allegheny county, pennsylvania, fairfax county, virginia. it's a pervasive problem. some politicians have been a little more responsible than others but it's a pervasive problem based on very flawed assumptions in government budgeting. >> josh, ringing the bell on this one. thank you.
appreciate it. >> thanks for having me on the show. >> you're welcome. coming up, tackling the rising cost of health care. former senate majority leader tom daschle joins us. we'll ask him about the race for the white house and health care next. t the td ameritrade trader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. td ameritrade. this just got interesting. why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions
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to replace the ceo. in a new letter by the board, william pulte says hiring duga in 2003 was a big mistake. he accuses the ceo of overly aggressive land purchases that led to write-downs and losses and calls his tenure uniquely disastrous. that fight will not end anytime soon. >> that's the quickest way to hurt a housing company. land. land is so economically sensitive, you know. that's what all of the -- that's how all these guys have gotten in trouble in the passion. but they have to buy land to put up houses. land can go from, i don't know how much an acre to -- it can go down 50%, 70%. >> the ceo also did the centex merger in 2009 at the bottom of the market. they were supposed to be able to weather the market together. >> wasn't it good at the bottom of the market? >> you would think.
>> you're doubling down in a tough time. i don't know. 13th annual world health care congress today in washington, meeting to discuss the challenges of health care costs and the impact of affordable care act. joining us now former senate majority leader tom daschle. senator -- or leader. if i would have ever been a willeder leader, i would like to be called a leader. we'll call you leader daschle. >> works for me! ? >> terms of the meeting, is it mostly u.s. centric and domestic centric? i would imagine -- i mean, we have our problems. if i were going to talk about globally health care it would be a totally different conversation. >> well, i think it's both. it's -- we have enormous problems in this country. quality is actually going down in many respects. and performance terms we don't rank in the top 20 any longer in
industrialized countries in quality. 34 in life expectancy and infant mortality. we have a long way to go. there are global aspects of this. you just have to say ebola or zika to fully appreciate the magnitude of global health today. >> we have heard the figures before. i know you know that there are life-style issues, obesity, there are drugs, there are things that factor into those awful numbers. the quality of health care at the preeminent institutions is still the world's finest, obviously, the mayo clinic, m.d. anderson. >> we have the finest technology in the world and islands of excellence in a sea of mediocri mediocrity. we have a lot to do to address the challenges in cost access and quality in our country. >> you hear the republicans -- you know, ted cruz, who knows what finally happens with all this. he said he would repeal every single world of -- i mean, even the commas he is going to
repeal, and the quotation marks and glossary of terms. he'll repeal everything about obamacare. on the other hand you have even had hillary clinton's daughter saying obamacare is a mess and needs to be fixed. is there a lot that needs to be fixed around the edges? >> well, there's a lot. i think mr. cruz is going to have to explain to those 20 million people who have insurance who didn't have it before what they're going to do, or those of us who benefit from the fact that we no longer have lifetime limits or any kind of annual limits on care. we're no longer having to worry about preexisting conditions as we try to get insurance. all of those things are repealed if mr. cruz has his way. i think that would be a tragedy in this country. but to your point, there are a lot of things we still have to do, even though overall cost growth in health is the lowest it's been in history. we know costs are going to continue to rise. we know we have huge challenges in terms of finding ways to improve our system of payment. today we're rewarding volume,
not value. today we have no transparency. at the time of purchase in health we don't know what it's going to cost or who is going to pay. so we have a lot of sectors that simply are siloed today in health and cannot collaborate like they need to. in chronic illness management and in all of the challenges we face in long-term care, diabetes is on the rise. all of those things have to be addressed successfully. >> we have to walk a fine line between expecting that, you know, to curtail costs in drug development. yet, if you were able to find a way to help people with alzheimer's or chronic diseases, you know, you spend some money up front, you could save a lot of money if it's all about cost containment and profit margins. >> absolutely. >> you have to walk a very fine line. i hope politicians understand that. >> that's a very good point. >> so how do we help -- no one likes to help insurance companies, but some of them are
at this point the way that the plans are set up makes it so that a lot are going to exit. that could actually be a problem for the overall system. how -- what do we need to jigger around the edges there? >> well, i have been a big believer in the risk corridor program. it said we don't know how the actuarial tables will play out. we had a lot of people who couldn't get insurance before, they had preexisting conditions. they'll obviously put pressure on the business models we've developed over the years. finding risk corridors that work are critical. they have worked. we haven't funded them to the degree we need to. i think that's important. we have to look at something called the special enrollment periods where people can enroll at the last minute for certain circumstances. i think all of those things can make a difference. by and large i think this has been a partnership that's worked. as i said, the insurance companies today have 20 million more customers than they had
before. we have more opportunities, provide more services than ever before. by and large i think the system is working. we just can do a lot more to build on what we have already done. >> we'll let you off the hook, senator, because we're out of time. if time. if i let andrew ask a question, he'll ask you about how donald trump could get in this position. if i ask you a question, i ask you how can sanders represent the center of the democratic party. and what happened to the washington that you were part of. but we don't have time for that. so you get to dodge that. >> next time. >> yeah, next time. i hear there will be a next time, which is good. thank you. thank you, leader. leader daschle. >> thanks for having me. >> joe, i met a college student this weekend who called obama a conservative. so you have to think about how the world's changed. jim cramer joins us from the new york stock exchange when we return. look at futures right now. looks like the dow jones opening up at 64 points higher.
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it going up dramatically. i don't think that's the case, even though i think the united states is coming down. iran is adding capacity. i think there's an undercurrent of worldwide commodity growth. and i think that is very important for people to focus on. if that's the case and we're in earnings season and we have alcoa tonight, maybe there can be a positive spin on something that's been terrible for years. >> canadian pacific, the deal is done. you expected it to be done? >> they spike it to 97 and take it to 80. thanks for nothing. csx reports this week. will canadian pacific wreck that stock? i think norfolk southern is deeply related to coal, which is not just in a downturn but ending. coal is ending. it represents about 32% of our base load when it comes to utilities, but that will be down to 25, even though the epa wanted it down to 30. norfolk southern, i can't get excited about it. >> another day, another headline
on yahoo!. you saw that the daily mail might be one of the potential bidders. i don't know if everyone is just throwing their name in the ring. >> i know the daily mail has a website. that's good. look, if they're going to combine with anybody, anybody can bid. right now it's worth about minus 5 when you back out the different pieces. you and i could take it on. we buy it, we close it. >> what's the price have to be for marissa mayer so work away -- for everybody to applaud what took place? for her to walk away? 480? 740? >> that's a test? >> she's not walking away. the company walks away before she walks away. that's the point. >> right. >> jim, it's a dull market. you know what they say about dull markets, i don't know. >> amen corner. >> yeah. they go up usually. >> exactly right.
>> 785, she might leave. 948 she's out. she is the company. that's the point. >> that one. she is the company. >> all right. >> we don't want to confuse things. >> hey -- >> thank you, jim. >> we'll see you shortly. >> coming up, twitter headed to tinseltown to replace two outgoing board members, we'll tell you which heavyweights the social media giant tried to convince. ♪
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twitter loves tinseltown. reports say twitter's board was in talks with shonda rimes who is working with "scandal" and "how to get away with murder" but the board struck out. they're trying to put her on the board. the social media site also vetted peter guber, but those talks stopped. hugh johnson and martha lane fox were named to the board last week. >> there were some criticisms to johnston, because his first tweet ever was announcing he joined the board. >> you can never be too late.
>> couple of stocks to watch, shares of hertz falling in the premarket. the company warning first quarter results will be weaker than expected. that's dragging shares of avis and budget lower. avis bought budget? >> that's true. >> see? >> a while back. >> "squawk on the street" is coming up next. good monday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber. we have the unofficial start of earnings season with alcoa tonight. the opec meeting on sunday. china's cpi was in line, ten-year around 1.73. oil steady. we begin with larry fink and a warning for central banks as the president and fed chairle