tv Squawk on the Street CNBC April 26, 2016 9:00am-11:01am EDT
we leave you this, sarepta not a full decision but panel decision as a no. >> brian, thanks for being here the last couple days. >> sure, just flew by. >> see ya. >> make sure you join us tomorrow. right now time for "squawk on the street." good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber, jim cramer at the new york stock exchange. this morning's guest nike founder phil knight. meanwhi meanwhile, future steady 50 s&p earnings today with apple and twitter tonight. oil is up and k shiller up 5 and 3 in february. proctor, 3m and dupont. what you need to know from those reports. >> and on deck we've got apple
and twitter which report after the bell. we'll also get a preview of what you can kmpt. >> t-mobile shares on the rise this morning after strong earnings. john legere will join us onset fresh after his company analyst call. first up, beating the street with quarterly earnings on squawk. saying did help results. >> if you look at the margins, core gross margin up 270 basis points. core operating margin up 300 basis points. that's net of the fx headwind. so it's really giving us the ability to continue investing in markets to continue to serve consumers and hopefully to reaccelerate top line growth. >> that is key. organic sales up one, which is not as good as unilever or lo real. >> does more merging growth. they have these divisions that
have been bad for ages. grooming is bad again, decreased 1%, u.s. offset international. beauty plus one. i mean, baby sales decline. that's that kimberly-clark price war, but they take the gross margins up. the junk, the stuff you can cut, the stuff that costs you money is down. >> yeah. >> operating profit margins plus 320 basis points. this is the story of the earnings period. don't worry about the top line, as long as they keep firing we'll do it. >> that would be it. it would go to the moon all these stocks. >> yeah. these quarters are not the kinds of quarters that i want to see. but they're the kinds of kwarlters that the market's happy with. >> well, they're not growth quarters. >> exactly. >> they're cost saving quarters. >> right. >> but we always wonder when we have these kinds of quarters year over year and year after year whether the companies can keep doing it, and yet they are seemingly able to find costs
even though they've been zero basing things and, you know. >> dupont told me repeatedly she'd taken out big costs. ed breen comes there and corporate expense is down 44%. i mean, what did he do? did they have secretaries for secretaries who were being secretaries for -- national secretary day must have been biggest day at dupont. do they close the office for national secretary day? >> they may have just closed the offices period and not opened them again. >> by the way, both dupont and lilly today saying that the forex impact is declining. 20 cents at dupont versus a prior 30. >> ed breen finally said it. 10 cents positive this dollar. when you go over the quarter what he's basically saying is, listen, things are really going our way. look at these gross margins nutrition up gross 30 electric up 130, ag up 240.
this ag business, they're going to be the number one seed company when they finish merging with dow which they said would happen by the end of the second half. 10% workforce cut. two of the three headquarters will be in delaware, which i bet you the vice president likes. >> say that again. >> two of the three new headquarters when they split -- dow and dupont merge there's going to be three companies, two will be headquartered in delaware. >> are we sure about that? >> damn sure. >> you are? because i remember at the time of the deal i'd been hearing otherwise. and there were some real questions. a lot of things seemed to be moving to michigan. >> two out of three going -- two out of three ain't bad for joe biden. >> okay. >> oh, he's the vice president. >> yes. >> probably don't want to upset him, right? as opposed to ian reed. >> ian reed made himself an enemy in the treasury and/or the
white house. it didn't help him. >> he said, listen, i'm going to have my u.s. headquarters at 164th and flushing. >> queens boulevard. >> neighborhood right there. >> 164th right where my wife's from. right there. >> by the way, pfizer did start in brooklyn. >> it did? >> yes. >> i didn't know that. >> if what you're saying is absolutely true that the quality of these earnings remain weak, why is it the nasdaq then that's been punished more severely? >> well, because google added a lot of people. google had the biggest head count increase. people don't want that right now. i'm not being facetious, i looked at all the quarters reported so far the stock that's done the most poorly is the one that added the most people. so this market is upside down. it wants to see gross margins increase more than revenue increase. and it wants to see cost controls and commodities flowing through the decline in commodities going through. and look at union pacific and norfolk southern. how are they still able to fire people? >> it only wants to see those
things because it knows it can't see the other. i mean, if you're telling me investors would not be happy with growth, of course they would. >> i know it's going to rain. >> thai saying we're not going to get growth so we'll figure out another way and withhold judgment. >> if you fire many people and the revenues have any inflexion, second half's going to be huge. i got to tell you when yo go over some of these quarters like caterpill caterpillar, the much maligned caterpillar, europe was better, china was better, baltic freight up today. i know a lot of people think chinese are stockpiling. i know, chinese aside from the military article is a little -- >> i remember teper talking about this some time back on "squawk box" saying i don't see top line growth and i don't think the margins can expand that much anymore for a lot of corporations based on productivity increases or cost cutting. what you're saying is they are. >> i think dave's wrong. >> and that's where we're going to get a little alpha. >> this is this, you know,
billionaires are never wrong thing. i'm revising that. billionaires can be wrong. >> oh, they're wrong all the time. >> billionaires are wrong all the time? >> endlessly wrong. i know we refer to them as they know everything, but they don't. >> look at proctor's margins. they're awesome. >> i'm thinking back to the beginning of the year when goldman did that list of 50 companies set to expand margins in '16 is the story of the year. >> we got freeport 25% workforce is going away. pioneer, pxd, i mean, they're finding more oil with fewer people. they see okay equilibrium. they will rehire when things get better. people are ready for the inflexion. i think norfolk southern may have been the star of this whole earnings season because they had the expenses. revenues down six, expenses down
double digits. that's what you want. >> honeywell announced a big buyback yesterday after the show. didn't get reaction to the market because i gez it's sort of more the same. still, a lot of them. >> you know, i think dave cote -- the china story remains a very positive one. and i think that unless, you know, i don't know, i mean, unless this military story i thought was very threatening today about the chinese military. but they're obviously taking a lot of product in. look at annex p this is the first quarter where they merge with free scale and they are seeing very good demand at the end of the quarter. that's another theme that demand went up. nxpi can cut people because of the merger with free scale. and they're not just apple anymore. apple by the way taken numbers
down three times in my head since the show began. >> it's only been eight minutes. >> well, i got another five downgrades. i mean these are the softest bulls i've ever seen. they are i was describing earli earlier, i went to a bullfight in mexico and had to leave at the end because i had a bad feel. the matadors are out there with the red flags and then switch to the -- these bulls are just ready to jump ship so quickly it's like upton sinclaire, nasty slaughter house -- do you remember that book? >> i do. >> there you go. >> as jim alludes big earnings tonight, apple will be one of them. a lot of analysts expect the dow component to report its first year on year decline in iphone unit sales. at&t and twitter among companies due to report after the close of trading, but apple will be the one you're focused on. >> i was telling my trainer this morning at 4:30 a.m., i was able
to get the dupont number out -- this is the wrong day. companies reporting today you're going to get short tripped. move to other days. i know apple had to move because of the unfortunate death of mr. campbell, but inga, i can't look at your number. i'm too busy looking at proctor's number which then makes me look at whirlpool's number and then coach's number and then john legere coming over, what is the magenta thing. >> yeah. >> it's the wrong day. >> yeah, unless you want to have your earnings under the radar. my favorite is when we see a late friday announcement from a company on a long weekend. that's always a good time to get things. >> jim mentions t-mobile, it's up in the premarket 10.6% jump in revenue raising forecast for customer additions. we are going to talk to john legere later this hour. he's going to make his way directly from the earnings call to our set. >> he's going to hijack a subway
car with the magenta guys. it's going to be the taking of the six. >> the number two. i think he's on the west side. he's coming tr times square. >> stops there -- >> 42nd street. >> 72nd then 42nd. >> correct. >> and then 34th. >> then 14th, then chambers. >> and the f stop. >> there's a bunch of stops. the f also goes to my old neighborhood in queens. could go all the way. it's incredible. the new york city subway's an amazing thing. >> that's -- pfizer -- i keep going back. >> try keep it running if we can. okay. we were talking about t-mobile though. >> viewers are like what are they talking about. >> yeah, why are you discussing these things. >> t mlb is a great company. look at legere and think it has to run out. last time the stock was 28.38,
the stock didn't go up and talked about the idea how long can he stay independent if this stock doesn't go higher? >> well, there's nobody to buy him. he's too big now, right? dish is not going to do the deal. sprint's not going to do the deal, so who will? verizon and at&t you're never going to be able to buy them, so he's got to buy something if he wants to get larger. the question is what. doing a deal with charlie is very difficult. >> really? a cable company? >> there's our parent company that, you know, you never know might be enticed to do something, that's an interesting point you made. >> i didn't make it. you made it. >> you brought me there. i know exactly how you're thinking. >> brighthouse. >> brighthouse, part of charter which got all the approvals yesterday. although tough conditions. >> yeah. >> i mean you're not allowed to watch them, right?
>> you can watch them. >> do you see some of those things they put on you? i have to have netflix on there. >> tom had some tough things to say in interviews we did and then were used -- when he talked about hbo sowing the seeds of its own demise by going over the top. and they definitely did apply some significant conditions for seven years trying to help the growth of the online video marketplace. >> but don't you think that was highly unusual that that was just basically saying, listen, you going to do this deal we want -- no more buffering. it's an antibuffering clause. >> adding households, independent monitor, things that other large deals -- >> did not have. >> could it play in their favor versus fios? >> what? >> i was buffering this weekend. >> were you? on fios? by the way, with non-union guys, who's going to let any of those people in your home? until they figure out the strike, i mean really? i was trained two weeks ago.
>> i said what is that? it's got to be like the fbi or something, right? >> replacement workers. >> it was definitely -- bugged my house with the verizon truck. when we come back, a live and very rare interview with phil knight, the man who built nike 50 years ago into the world's largest sports footwear, apparel and equipment company. he's coming down to the exchange. one look at the premarket. and we will get to lockheed and 3m and coach and whirlpool, hershey and a lot more. more "squawk on the street" from post nine after a break. from virtually anywhere. it's been smashed and driven. it's perceptive enough to detect other vehicles on the road. it's been shaken and pummeled. it's innovative enough to brake by itself, park itself and help you steer. it's been in the rain... and dragged through the mud. the 2016 gle. it's where brains meet brawn.
lease the gle350 for $599 a month at your local mercedes-benz dealer. 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.
shares of sarepta plummeting in the premarket. the panel said the drug had not been proven effective. piper, jim, as you say goes hold to sell. >> yeah. suntrust talked about negative cut. this is a very, very hard disease. i know others have tried and it just seems like everything -- i know. look, everybody wants hope on this one. and i think sarepta did its
best. biomarin tried. >> yeah, it's a heartbreaking disease. you're a 12-year-old boy one day on your bicycle and next day you're suddenly realizing you're going to be in a wheelchair in a short time and life expectancy cut short. key here seems to be lack of substantial effectiveness. you're talking about a trial involving only 12 patients without placebo control, even though it does appear that there was help conferred to those who used the drug, and the muscular dystrophy communities you imagine is looking for anything that will help these boys and they are largely all boys. >> hoping for some compassionate but the fda they need more trials. for instance, when i had j.j. on from biomarin, they have a drug looks like it really does cure hemophilia, but they've had a small group of people cured by it. but he just said, look, i can't go to the fda with a small group
of people. i just can't. that's how you get a tarnished reputation go to the fda and try to jump it. but you're feeling the same thing which is, well, anything would be great, but you can't just give people anything. even these cancer trials where people are on the verge of dying. you know, the fda does not want -- look, i think our fda -- i'm defending our fda here. >> understood. >> i think they're trying -- they're much better than they used to be in terms of trying to get things to the public, but they do have a set of rules. and you can't beat that set of rules. a friend of mine has a company that does liquid biopsies and they have to do peer review and have fda to buy it and medicare to buy-in and just got picked up by savings and loan keterring because take a sample of your blood and they can find out whether you might be a candidate for stage 4 breast cancer. but you still got to go through this process. and the process is rigorous because people have been hurt.
>> sure. on the flip side a lot of that hard work has been done at lilly. as we talk about the lightning forex burden. >> yeah, people really want the alzheimer's drug. you're not going to get -- they had some change in the verbiage there, but lilly is good, the problem is jnj's better. in the end jnj's going to be valued at a premium. eli lilly is good though. we were hoping for this big alsz hi -- alzheimer's breakthrough and didn't get that. >> saying the use of cialis is actually being outweighed for other uses for arguably more medical reasons. volume up 30% in the quarter. >> what is that some sort of positive side effect? >> yeah. >> i did not know that. i'm not familiar with that.
what are the other uses? i'm serious. >> you're going to hide it like that? >> i wouldn't hide it. there's no hiding with me. >> that was a good -- >> i'm transparent. >> you hear music, isn't that a great time to go to commercial. >> it is a good time. i'm happy to continue this discussion if you'd like. there are some things i need to teach you? >> old dog new tricks. >> we'll get cramer's mad dash and count down to the opening bell in a moment. also ahead as we said a live interview with nike's founder and chairman phil knight. take another look at the premarket. more "squawk on the street" from the nyse straight ahead. sic pla♪ the first stock index was created 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. in that neighborhood, it wawhat we could afford.o get so i had set up alerts to say that if anything in this area ever comes below a certain price point. it just popped up one day and i was like, "oh my god, we have to go see it!" it's a really wonderful neighborhood, and then to add on to that how wonderful the house is, is so cool. whatever home means to you, we'll help you find it. zillow. you can fly across welcome town in minutes16,
or across the globe in under an hour. whole communities are living on mars and solar satellites provide earth with unlimited clean power. in less than a century, boeing took the world from seaplanes to space planes, across the universe and beyond. and if you thought that was amazing, you just wait. ♪
we're going to talk a little b.p. in the mad dash. >> a lot of companies thought it was better to split up, remember that kind of phase, conoco, marathon? well, bp is telling you that's not the thing to do because they were saved by refining and marketing. much better than expected quarter. kind of really a blowaway, though a lot of people worried about the dividend don't worry about the dividend anymore. the cfo saying a lot of good things. 2017 going to be a stronger year. that jives with what i'm seeing in supply and demand. >> they lost money though. a lot of this is because cost cutting was quite effective. >> right, but that combo of
having marketing and refining along with the upstream bringing out the oil turns out to be something you really gave you a buffer. that's why exxon and chevron people are very excited. >> they would have made money were it not for this little oil spill they had about six years ago. thaer still spending enormous amount of money on. >> they lost a lot of -- of lawsuits down there. >> about $58 billion paid so far. >> they had a deal with justice and epa turned around and slapped them -- >> but they're still paying out -- >> did you get any money? >> no, i didn't. >> there were a lot of companies that had like hotels 500 miles away. >> but this is not your father's bp anymore. >> no, it's a lean, mean -- >> different than it was in 2009. >> well, it had a lot of fat. what's incredible is they really didn't -- for all the trimming they did, they're oil still pretty good. so is pioneer, pxd, one of my favorites. good quarter, undeniable.
you're watching cnbc "squawk on the street" life from the financial capital of the world the opening bell in about a minute on a busy day where earnings are perking up. watch for political news for the so-called sell primary states, that will be big news tonight. the front-runners expected to do well. fed begins a two-day meeting and we have to work our way through all these earnings today and tonight, jim, chipotle's going to report. >> yeah. actually, chipotle is a company you shouldn't count this quarter because i think this is one where historically it takes a year. it takes a year. you're not a year along, but the company's been buying back stock. they had a great balance sheet. those who want to bet against have to cover quickly. i'm positive on chipotle. i think you can be down 40 points and then you buy it
because that's where they bought a lot of stock. they're a very smart company. just remember the history of these kinds of things positive not negative after one year. >> there's opening bell. at the big board autism speaks, recognition of national autism awareness month. over there a gene therapy company focused on central nervous system diseases, voyager. we didn't get to 3m yet although 2.05 beats by 13 cents. >> people instantly upset with 3m i say will you get a grip? i mean, this is an incredible quarter. top line. magnificent bottom line, top line $741 million, operating margins 6.2% growth there. consumer doing very, very well. safety doing well, raises forecast. geez, there's no real flies on 3m, but everyone wants to say
wait a second it can't continue. take a look where the stock's come from. and this company was just made too lean for this quarter. >> that is a good one. >> he's got a big buyback, the dividend, no flies on 3m. >> look at the consistency of that chart. right in the face of these or n organic sales. >> yeah. one of the things he's done is this remarkable international. he does very well. so if that dollar swings, that's one to be in. like jnj, you follow in some of these companies with the dollar swings, i mean, the numbers will be -- that's another point that we didn't mention. you can get a dollar swing that would make it like dupont talked about which is, listen, headwind goes to tailwind. look at dupont, you tell me that's going to be done here with ed breen doing that quarter. >> right. >> gross margins. >> and the deal moving ahead.
but did these companies really get penalized by a strong dollar? do you feel that they did? >> i just think what happened is they ran in place because people just said, look, when is this going to end. the dollar's been flat year over year, but initially, yes, they were punished. now, some of these currencies are really good. like the rial. when you go to brazil, carl, you may have to bring some rials. >> along with bug spray. a hundred days away from opening ceremonies. >> deet. deet. >> i see and they fall like a beekeepers suit. >> yes. >> joining us from rio. >> don't overlook what deet can do if you're slatherred. >> these currencies are good. >> not to say some companies aren't going to continue to use
forex as an excuse for a few months to come? >> oh, yeah. 4% organic growth, 1.6 -- 1.6% margin improvement, raising numbers. and then when the dollar goes their way. >> i want to come back to yesterday's hostile bid, so to speak, unsolicited from gannett for tribune. some letters going back and forth worth releasing. late yesterday a letter from tribune saying gannett's behavior has been erratic and unreliable. despite that unreasonable time constraints, we responded quickly and meetings promptly followed meetings on march 4th. that wasn't sufficient says tribune, but no way changes our commitment to act in the best interest of our shareholders this after gannett made the $12.25 offer public.
they're now down three cents. gannett also up yesterday. they come back say it's not enough to address the inaccuracies in your letter with respect to the last few weeks, and we won't, although we do feel we have to spend a paragraph talking about one thing which is some social dinner at a convention. that's where they are. they're going back and forth about dinner plans. >> what about this timing? andrew mentioned it this morning in his piece about the board members and this is the time to act? seems like the board is going to be very much in the hands of the tribune -- new tribune management. >> new tribune management. the annual meeting is june 2nd. they have no ability to influence the direction of the directors. they missed that proxy window at gannett. but they knew that. they wanted to make this public. it's significant premium as everybody knows over the stock price as it was prior to this becoming public. and it's a decent multiple of 5.6 times. >> i thought so.
kind of perrigo like. >> it would create the largest publisher in the country of newspapers. >> i think this is a great deal for both sides. >> it's funny you mentioned perrigo. it's up today. >> is it? >> after that shellacking yesterday. it ended up being more of a story than valeant finding a new ceo. >> trying to figure out the impairment charge, what really went wrong, a board member leaves and everybody's happy except for the shareholders. >> everybody's happy. i did take a look at joe papa's compensation. he would have made a lot more money if they had actually sold the company to mylan. he had change and not that large an owner of stock. in fact, another gentleman whose nomination was rescinded is the largest single shareholder. >> oh, okay. so he just made a mistake. he wasn't trying to enrich himself. >> the only question i wonder about with papa is given the performance of the company, or lack of performance was the
board starting to say, you know what, joe, we don't know about you. >> they had to. >> joe hear that and say, okay, i'm going to valeant. >> still the numbers really kind of fell off a cliff. and i wonder -- i mean, how much did joe know? i think that's a legitimate question. i don't know. by the way, ibm hiked its dividend. >> i see that. >> 7%. >> ibm has great cash flow. remember, i got behind ibm at a little bit lower levels and i'm not backing away. i still think ibm is doing a lot right. but you can't be in a hurry. i think that warren buffett's kind of reached his limit how much he can buy. >> well, he hasn't sold any. and a lot of people thought he might. >> there's a turn coming at ibm. it's just taking a little while. taking a little while. you can't just earn ibm. it's a battleship. it's the uss missouri. >> they're shrinking it to grow it. >> no, google -- >> they're -- >> they're moving into data -- >> of course, moving into the
faster growing businesses and potentially the momentum of those have to overtake the slowing of all the other business. >> interesting google, ford and uber joining up to create a coalition to speed federal action on self-driving cars today. trying to get national standards set, get those things on the road. >> i think google has -- i think the board disappointed by the way in the other bets. they spent a lot of money on these other bets and it's kind of when you talk to people in the valley it's like the valley of the dolls out there for me, but you just get this sense, geez, when are some of those things going to come true, the other bets? >> well, they will. self-driving cars will come true. and it's interesting to the extent they can push the federal government because that will be the key establishing the standards needed to actually allow these things to actually hit the road. china is ahead of us in terms of encouraging self-driving and autonomous vehicles. it's going to change so many things. >> legere just tweeted, on my
way@jim cramer@carl@david faber, get your bleep ready. >> but that worries me you can't text on the subway unless you're going down -- >> you can at certain stops. before we get to bob i wanted to get comerica, it's a unique situation. a number of the company's large shareholders majority of the actively managed top ten shareholders are going down to the annual meeting to talk to the board of directors just in the public of the meeting and say, hey, we want you to do better on efficiency. we want you to do better on looking at cost cutting over a shorter amount of time than you've told us. and we want you to firmly at least consider strategic alternatives. their stock has been a strong performer recently, part on thoughts maybe there would be some consolidation and they would be consolidated. >> this government's going to
allow anyone to merge in that group? >> comerica is only an $8 million bank. you can have a foreign bank come in and buy it. >> okay. that's true. that's true. you could have a japanese bank to come in, or you could get further bvba. but i saw an upgrade -- >> that was up 33 points. let's get to bob pisani on the floor. good morning, bob. >> modestly positive start. all sectors of the s&p 500 in positive territory. i think the risk-on sectors all leading the market. positive comments on a number of big multinationals today. a few disappointments. i want to start with ingerso ingersoll-rand. make all the stuff behind the walls, heating, air-conditioning, ventilation, power tools all over the world, they gave guides and this is what passes for good guidance for a multinational these days. revenues flat to up 2%. you might think that's great,
but that's not bad for a lot of these multinationals. organic revenue growth will be 2% to 4%. again this is full year guidance which is what everybody's interested in. and earnings per share up 7%. that's pretty good overall. now, ingersoll-rand's up about 20% this year. you see that huge move off of the mid february bottoms, but the valuation for this one is not too bad. and valuations are a big problem with these multinationals, 17 times forward earnings is pretty good right now. let's move on talk about coach a little bit. they also beat on the top and bottom line. and, hey, they're actually starting to get some modest growth. north america was flat. their numbers i saw estimates down 1% to 2%, they were expecting so flat's pretty good. international up 5%. china down a little bit. japan up 8%. these are not adjusted for currency. if you adjust for currency the numbers actually look better, so they're getting some modest growth and they pointed that out they're pretty happy about it. here's the problem with coach it's had a big runup like this all these other names up about 20% this year and about 20 times forward earnings. this is a problem with these
companies a lot of the retailers are in that area right now. so valuation is an issue overall. then you have companies like whirlpool that missed, but underneath it was generally good news. so whirlpool missed the mark, the currency fluctuations were the big problem. look, north america up almost 3%. that's pretty good. latin america is a killer but it's because of the currency issues. if you exclude the currency sales were only down about 4%, 5%, 6% in latin america. so if that turns around things will get better. asia down a little bit. europe, middle east and africa were on the flat side. whirlpool by the way raised quarterly dividend and announced a billion dollar share buyback program. whirlpool you see here up 25% on the year. that's about 12 times forward earnings. that's a very reasonable valuation. so that might have a little bit more to go. but whirlpool highlights the big problem with these multinationals and that is they're not getting the revenue growth. so there's a bunch of misses. again, remember they reduced going into the quarter revenue expectations, and they still
missed, corning and hershey and whirlpool and wyndham all continued to miss. 3m, this is one of the great multinationals in the world, consistent earnings grower. earnings expected to be up 10.8%. these are year over year for 3m. sales down 2.2%. this is what a lot of these companies look like, modest growth on the earnings front and nothing at all on the revenue front. there you see 3m. and consistently reflected the fact it's a big, big earnings grower. that was historic high last week for 3m here and almost 21 times forward earnings, carl. so, again, the valuation issue coming up a lot this quarter with these big multinationals. back to you. >> bob pisani, thank you very much. ten-year at a one-month high. let's get to rick santelli in chicago. rick. >> yes, carl. you know, it is an aggressive
but it's a creep. it's a creep of higher rates, it's not only here, it's other sovereigns as well. that's very significant not only because of the level but because of the timing and because of the economic underpinnings or lack thereof. look at a one-week of tens. you can see the upward drift. open the chart up to the last fomc meeting, today is the first day of the two-day meeting this time around, let's go to march 15th, you can clearly see we moved down, we moved back up. we're not that far off from the same mark we were at the last meeting. now bunds, boy, that's changed a lot. look at a one-week of bunds. realize in two weeks and two trading days, so 12 trading days we've gone from settlement of 8 basis points to just about 30 basis points. it's all about foreign exchange today. let's look at those charts. how important it is first day of a two-day meeting the dollar is getting hit pretty hard against every major currency. look at a two-day of euro versus dollar. look at the pound, best levels of pound versus dollar going
back to first week of 2016. two-day dollar/yen, same issue. and finally the dollar index itself since the last meeting we are knocking at that door 94. we did have a couple of settlements below it, but we did avoid technical disaster. that's the level you want to watch especially on a closing basis. carl, back to you. >> rick santelli, thank you very much. when we come back, t-mobile's john legere doesn't pull punches when it comes to wireless wars. he tweeted he is on his way to post nine. get the bleep button ready. we look forward to talking to john. later on sandy weill on "closing bell" 3:00 p.m. ian. he and his wife aiming to advance brain research with a gift of $185 million. dow's up 26. don't go away.
mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of the at&t network, a network that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.
time for cramer and stop trading. >> lockheed martin you see this kind of company and say how can it keep doing it? it's got top and bottom line growth. they beat consensus 11.7, up 15.7 year over year, and it's the f-35 jet that brought back a lot of stock. they just keep buying back stock and keep buying back stock. and defense business is good. and i think it's gng to get stronger. again, i'm referencing that china article where if you're going to be a candidate for president, i think you're going to have to say, you know what, we're going to have to start spending more. maybe we're going to need more f-35s. this good quarter is moving boeing. i don't know that it's really right it's moving boeing. also durable goods number is good, but lockheed martin these defense contractors -- >> part of your ongoing thesis defense spending is benefitting from a proliferation of buyers. >> yes, look at the war in yemen the saudis have a lot of capital are starting to win that war in
yemen. i mean, someone finances these wars. patriot, missile for ratheon doing very well. it's not talked about enough. >> the president on cbs this morning talked about positioning missile systems to create a shield of sorts from north korea, which he called erratic. >> yes, i think it's an erratic world right now. and if china really does have ambitions where they're talking about, you're going to have to rearm. and it's not necessarily the united states that rearms them. >> right. who's going to rearm? we already spend over $600 billion a year. still more than eight countries below us combined. >> well, i mean, there's countries that have never been -- been relying on us that i think going to have to say, you know what, the chinese, we have to take note of the fact they're expanding their military rather rapidly. >> they are. >> what's on mad tonight? >> we have proofpoint and then tellurian, which is a private
company, but that charif souki, the man who built lng in a new guise -- remember, he and -- let's find out what's going on, liquid financial gas market the sending of liquid natural gas is now working. i think natural gas prices have tightened a little. propane prices are low. i am dying to hear what charif has to say. they built a great company and they said, hey, here's your hat, what's your hurry, don't let the door slam on the way out. >> there's been a few of those lately. >> happened fast. >> when we come back, john legere of t mobile don't go anywhere. wild-caught alaskan
we need to be ready for whatever weather may come our way. my name's scott strenfel and i'm a meteorologist at pg&e. we make sure that our crews as well as our customers are prepared to how weather may impact their energy. so every single day we're monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. during storm season we want our customers to be ready and stay safe.
learn how you can be prepared at pge.com/beprepared. together, we're building a better california. one of the busiest days of earnings season so far, and apple is going to take a lot of oxygen out of the room tonight, jim. >> yeah, i think people have to be prepped. i say own apple, don't trade it. people have to be prepped that both this quarter and next quarter are not going to be good.
i think a lot of analysts are anxious to jump ship thinking we have a soft buy on it. and i think it's a very hard quarter for them. you can't get too excited when -- here's the big problem with apple. they are -- they have a lot of buys on it. if they had holds on it i would feel much better, but they have all these buys but they're kind of ready for a bad quarter. when i say ready, downgrade it and then try to upgrade it ahead of the next cycle. are they going to be cute? just be aware i think they want to be cute, they want to take it off the last, they're set for disappointment. and there's two bars. there's the bar which says, well, listen, they're going to do june quarter estimates, weakest quarter, revenue's 48 and then the guys saying revenue's going to be 44. that'd be something. >> yeah. apple of course has managed to hit the bond market a couple of times at extraordinarily low numbers, but i took note of unilever's bond offering. john whether you saw where they're basically borrowing
money for free in euros because of the negative rates over there. unilever, when they got out to i think eight years they were paying something, but the shorter term paper almost paying virtually nothing, which is just fascinating. and you wonder how many u.s. companies with operations overseas that are generating euro ebitda are going to hit the bond market over there so they can get paid to issue debt. >> that's extraordinary. i mean, i don't think i've ever seen it. unilever's not a country. >> no, it's a company. >> it makes like dove. >> yes, it does. >> dove's going for a pretty good price. >> apparently making dove makes you not have to pay any interest on your bonds. >> i don't know who would possibly buy those, but there's all these outfits that need fixed income and pulling in everything. >> especially if it's sitting in a bank and you're actually getting penalized for having it there. >> that's what it is. unilever is considered to be a better credit than germany. that's wrong, but whatever. i do point out by the way as
negative as everybody is on apple, evgao which is broadcom streaming, those are part companies that do have a substantial apple exposure. so you've got this dichotomy people say, listen, the parts are doing well, but how can the whole be doing badly if the parts are doing well? >> yeah, it's going to be a big night. panera, twitter, chipotle, e-bay along with that. but we'll talk to john legere of t mobil after a break. don't go anywhere. here at td ameritrade, they work hard. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.
[bassist] two late nights in blew an amp.but good nights. sure,music's why we do this,but it's still our business. we spend days booking gigs, then we've gotta put in the miles to get there. but it's not without its perks. like seeing our album sales go through the roof enough to finally start paying meg's little brother- i mean,our new tour manager-with real,actual money. we run on quickbooks.that's how we own it.
good tuesday morning. welcome back to "squawk on the street." i'm carl quintanilla with david faber and jim cramer. market full of earnings today. oil interesting as we continue to get news from saudis on this vision 2030 plan. later this hour nike's founder phil knight and t mobile's john legere, a very big hour. knight you do not hear from often, jim, and he's got this new book in which he essentially
argues that the entrepreneurial spirit in this country is waning, for now. that there's a wave of pessimism among students and business owners. >> student debt is so high. people come out and unless they're computer science or computer engineering, it's really hard to find a job. computer science and computer engineering, you know, it's the ticket. and nothing else is the ticket. >> yeah. >> i mean, i remember my dad saying what are you being a history major for? there's no jobs. but there were jobs. now there really are no jobs. you look at "new york times" closing paris bureau. if you want to be a writer, where do you go? >> on that note let's get to rick santelli who has consumer confidence. >> yes, both april reads. april read on consumer confidence, the confidence board's version 94.2. definitely a business and follows a slightly revised 96.1 from last month. this is the second weakest year, the high water mark is january at 97.8.
now let's go to richmond fed 14, we were expecting 12. this follows an unrevised 22 obviously which is the comp, but how much credence do you put in this? last month's 92 is the best read since april of 2010. what's going on in that part of the country that's so hot? i'm not sure. also, we want to take one quick glance make sure you monitor the dollar index now. it's down over a half a cent. carl and the gang, back to you. >> thank you so much, rick. shares of t-mobile are off its highs this morning. mobile phone company reported very strong than expected revenues. we are joined fresh off the earnings call t-mobile president john legere. it was going up before you started talking. >> jim, i feel like i'm still on the earnings call. i sprinted down here to see you guys. our stock has been very strong. it's been moving up nicely. i can't tell you.
what i did say is the numbers are astonishing. and i'm so proud 2.2 million net additions. and that's 12 quarters in a row over a million. six of the last over 2 million. they're not attachments or connected car sims, we had over a million postpaid subscribers. 870,000 postpaid subscribers. >> where are they coming from? i saw your -- was down and i like that. are these people saying i like the customer service, i like the attitude. i mean, where are they switching from? >> first of all we have had three full years of positive postpaid against the whole industry. and nine quarters of positive reporting against everybody. so as i've said before, they're all donating. dumb and dumber are donating at record rates. >> why are they donating? because the knock against you
has been you guys discount so you're offering a better price. but that's not the case. you actually starting to turn for you and go the other way, average revenue per user. >> right. >> so how are you then con have i saiding people if it's not about price, which clearly doesn't seem to be the case sfwl well, let's take you guys because you're still on my hit list of people to go after. >> okay. >> the normal cycle you see happening each quarter, it's the same old promos, buy one, getd one, pricing, et cetera. but underneath that now we have done away with contracts, we've done away with overages, we've done away with international roaming fees, we've done with 200 million songs streamed free. with binge on now customers using two times as much video. so it's not one for one anymore. at&t and verizon stick to the old school stuff, contracts, bundling, and frankly verizon
wants to be in a different business. we do, you know, mobile phone business. that's the core of what we do. you saw verizon's earnings, top line revenue's down, we lost postpaid subscribers, walking back on 5 g and it's going to be there at the super bowl next year and we really want millennial and we want them to view our content. >> that's not a rap song. >> but i think that's the issue, david. you're right, david, strong. we are 11 quarters in a row the only group that has simultaneously grown postpaid and prepaid. nobody's done that for a year. do you know that it's been since q3 of '14 since at&t added a postpaid phone subscriber? remember, the arpu on a metro pcs customer is about $39. it's not a hum device.
>> but you're now $44.50. >> that's adjusted. i think i saw you highlight earlier because i was paying attention to my earnings call is the big partd is we had 13.6% service revenue growth. nobody else is growing service revenue. and just the ebitda grew 98% to 2.7 billion. we had positive net income 56 cents a share at eps. . so the big problem for dumb, dumber and yellow is this mechanism is working. we're growing. there's excitement about the cash generation at the company. 308 million pops -- >> 308 million -- >> similar to verizon. 193 million of low band 700 and right now i'm sitting in a low band auction. think about this 308 million, 194 million at the low band, coming about 258 and for the
future, you know, i'm investing in low band spectrum. this can go on for a while. >> i was going to say, aren't you -- don't you want to prep the street for some meaner version from them to where they actually get a win in a quarter? >> to who? >> against you? >> who gets a win? >> dumb, dumber and yellow? >> i can't help them. that's how they became dumb and dumber. again, they don't want to be in this business. the big trick is this, i said this before here, all content is going to the internet. all internet will be viewed locally, so there's a broad game going on over the next five years. we do one of those things really well, binge on is a migration. in five years the big question is what's that ajdjacent si goig to be? comcast is trying to figure out what to do in wi-fi, et cetera, so the trick is what happens to dish, what happens to sprint, what happens to comcast? and for us right now to be stand alone, strong, playing into that with a great brand and expanding
retail footprint -- >> well what happens -- you asked the question. so can you answer it for me? comcast not worried about, but dish and sprint. dish satellite subscribers going down. sprint struggling of course with a huge debt load. they offer a price competitiveness to your product, but it's unclear whether it's really taking hold. what happens to those? >> first of all sprint is kicking the can down the road, right? i compete against sprint with metro pcs. that's my -- >> you're taking share from yellow. >> we're taking share from everybody. and i think the issue for sprint in that asset is where does it go to. obviously that's something of interest to us over time. >> it's got to be, right? you once considered it of course the antitrust regimen was not allowing for it at the time, but that could change very soon with a new president. >> again, two things to think about. one is i still retain my belief that in five years we will think it's hilarious we thought there were four carriers. it's not a wireless industry, it's the core way you access
internet, entertainment, everything you do. there's going to be a lot of folks that sprint's got a lot of trouble. they know it. i can't answer that for them. charlie's fwot the mother load of spectrum. he's going to have to do something more that could attract verizon, could attract others and the cable players are going to come in. >> what does that mean? someone's going to buy you if your stock stays at 40? can you stay at 40 and stay independent? >> i don't think there is anybody who has our stock targeted at 40. there's an overhang because of the auction right now. we answered a lot of questions today like bad debt and what's happening. we've been moving very strongly, jim. >> but you do have a parent company that would some point want to monetize what is an investment for them. >> well, david, remember when i started this game like this company is going to survive and they're going to sell you. they've become big believers now, in fact we did a filing this morning that there was an
extension of debt that they've given to us for the auction. so, you know, i think there's multiple options. one is obviously they could monetize. two is they could double down. or three is they could participate with somebody else in a broad way become a shareholder but they're big fans of the company. i tell you what, getting dt to be a big fan of this company is one of my greater accomplishments. >> viewer calls you the donald trump of the mobile business. do you take that as a complement? >> who calls me that? >> one of the viewers. >> yeah, i have limited to no comments on -- listen, i think there are some trumpisms with me and the use of social media and, you know, the ability to speak your mind. >> you were pointing to your hair. i thought that was a hair thing. >> i don't have any comments about hair or donald trump today. it's too good of a day. >> but to jim's question about cable companies such as our own parent and their need in your opinion as you seem to express it to expand beyond what they're
currently offering as the offering becomes everything for the mobile device. you think you'll see consolidation amongst wireless players and those providing broadband? >> absolutely. do you really think your parent company's long-term view will be using wi-fi hot spots for cellular capability or mvo with competitor verizon. if you think about the scale economics that go with owning a wireless play, i'll take it all the way down to this point. i've got 7,500 dedicated metro pcs stores. i'm adding 1,000 this year. i have 3,500 corporate t mobile stores and i'm adding 400 expanding the footprint. i have a really cool brand that means wireless. the question starts to be even one-on-one with those other capabilities you walk down the street do you think somebody's more likely to buy wireless service from comcast or t mobile? is there a way to unlock that together in some way? sure there is. we'll see. >> in fairness your stock had
been up and your stock was down 36 when we talked last time at the quarter. so it did have a big move ahead. i understand the profit taking. john legere from t-mobile, thank you. i think yellow, dumb and dumber don't thank you. the donators. >> verizon's about to take over as dumber from at&t. i make that prediction in the next six months they're going to do some stupid acquisitions more, milleninial still will hae them. >> do you want them to buy yahoo? >> i think it's entertaining 5.5 billion so far on junk, another few billion and -- >> billion here, billion there. >> beautiful. >> absolutely right. >> well, john, what can i say? what can i say? >> that pretty much says it. john, thanks again. good to see you. let's get down to simon and sarah. busy day on a busy week of earnings, guys. >> indeed it is, carl. what an interview. let's send it to dom chu for reporting. >> such a business say day. let's recap earnings focusing on
the dow components here. start with consumer gianproduct giant proctor and gamble saw -- they said core operating profit margins were about 3% better compared to a year ago period. so there's the png story down by about a percent right now. 3m earning revenues beat forecast. the company saw increased profit margins during the quarter although it said it also saw negative impact from currency fluctuations. those shares down by a half percent. dupont meanwhile reporting better than expected quarterly results. this particular stock raising its full year guidance as it sees lower currency impacts than expected. you can see a theme developing here. the chemicals and seed producer plans to merge with dow chemical but remember last month said u.s. regulators need more time. share up 2.5%. all that leads us to what could
arguably be called the most important earnings of the season, apple itself is expected to account for nearly 5% of all operating profits per share in the entire s&p 500, on average analysts are looking for earnings per share of around $2, revenues of $51.97 billion. our data partners have also crowd source predictions for the results and the consensus is relatively in line, a tick higher $2.01 is what they're seeing. the revenue very in line with analyst expectations. as always the big data point will be the iphone sales which are expected to post their first ever year over year sales drop. options traders guys are already pricing what could be a swing of 4% up or down in the stock out on the heels, guys, of earnings. so, sarah, certainly an earnings report to watch this afternoon. back to you guys. >> we'll see what happens. dom, thank you for running
through some of the earnings movers. when we come back here on "squawk on the street," we'll talk about fed expectations. the federal reserve kicking off a two-day meeting. what janet yellin has in store for the statement and how to trade it ahead of tomorrow. and also still ahead on the show, phil knight live here at the new york stock exchange on a story business career, the company he founded and what is next for nike. we'll be right back.
it is day one of a two-day fed meeting. our senior economics report eer steve liesman is back at hq with what investors are expecting. >> interesting results from our survey. 48 people responded. economists, strategists, fund managers. look at their outlook for stocks, there's two big stories in this chart. the first is as you can see here the january swoon, that violent selloff thought we'd have a recession and what you see in the last two surveys we very much recovered the outlook from december from the january downturn right there. so back where we thought we were from the december survey. the other thing is the sense right now that we're fairly fully priced on the s&p at least for this year for 2016. just looking for like another 1% for the rest of the year. and all the hopes and dreams of the market are now in 2017 where they're looking for a 7% return from the current level.
here's what scott wren from wells fargo investment institute wrote about, in our opinion the market is already look at 2017. and that is why the s&p 500 is near the all-time record high. but he says the cyclical bull market has more room to run in our opinion. now, remember the rebound in stocks. take a look at the treasury market. nothing of the kind has happened. both for 2016 and 2017 the outlook for the ten-year yield has come down. we're now at 1.90 looking for just 2.11 for the rest of the year and 2.58 for 2017. so you don't have that v action, the outlook for yields came down and stayed down. and one of those reasons you can see in the next chart here is the outlook for inflation. i guess i got to come over here to get that. had a dip down to 1.50, but still relatively low outlook for inflation 1.66 for 2016. and one more thing we want to show you is the outlook for the fed funds rate which is linked
to all this outlook for the ten-year yield stocks and inflation. the gap narrowed with the fed. and their median outlook for 2016. but it widens in 2017 just a half a point there, but bigger in 2018. so there's some discussion to be ahead between the fed and market for two years out. right now allen from decision economics says the fed should be cautious until the 2% price stability target clearly is in. neil from renaissance macro says the fed's willingness to ignore the recrept inflation pickup suggests an increased willingness to overshoot its inflation target. but others write in and say the fed should be hiking now the because the economy is near full. this is all online cnbc.com full results of the cnbc fed survey. back to you. >> and the question of whether you hike before an election. >> good point. and before brexit, all of that stuff. a lot of people saying june is the time for the next hike,
sim simon. but there are those issues small matter of presidential election and small matter of britain perhaps leaving the european union. >> steve, thank you very much for that. let's bring in ubs director of floor operations, art cashin. >> good morning. >> having rebounded as strongly as the market had, yesterday we held support really quite confidently. and now we're able to build on it during earnings. what does that say to you? >> a couple of things. first of all, the 30 hours before a fed decision has 75% or better upward bias, so we're benefitting from that even though we're off the highs here. secondarily, if you look at what the dollar is doing today, demonstrating some real weakness going into a fed decision. that tells you they don't believe the fed's going to be very hawkish at all. particularly with the bank of japan and the ecb leaning toward easing. >> yeah. >> so the market's pretty much got its mind made up that not only will there be no action, but they won't even speak very
hawkish. >> which means they may be horribly surprised if they put the next rate rise on the table. would that do that if they don't have a news conference tabled for tomorrow? they're not going to do anything that would upset the market if there's a news conference, would they? >> well, what they might try to do particularly because fisher is determined to keep the options open is they might want to say that we're data dependent. and some of the recent data has shown some improvement and see where they go from there. >> and yet we cannot escape the correlation with oil. i mean, crude oil's up 2%, energy's the best performing sector right now. this is still pulling this market. >> yeah. the tether gets somewhat elastic at times, but it still is going to be a key factor here. >> i wonder how much you got your eye on treasury yields now that we've passed 1.9%. this idea that yields are rising into the fed meeting even though the dollar's weaker. what does that tell you? >> well, it tells me that there is enough concern that some of
the early signs of inflationary pressure are beginning to show. but i don't think enough that it will cause the fed to move or even be hawkish. >> typically with the disappointment we had last week that didn't dent the market, people always say earnings are very important for the market, but i wonder if actually the release of earnings rather than earnings expectations whether they do tend to move the market these days or not. are we connected to earnings? or are we not connected to earnings? >> well, you are. in the meantime the bulls have seen the visibility of new record highs. and they refuse to step back from that. so they're going to try and hold the market together here. it would take some rather i think large negative surprise to disrupt that. they will either wear them down or surprise them down, but for now the bulls have the whole that one piece of good news.
>> i guess the other thing is you have this swelling of people that are neutral in the market overall, so it's not so much bull/bear, nice to see you, art. enjoy the afternoon. art cashin there from ubs. the other big story we're following today, primaries in five states moving the nominating process to the final stages. our chief washington correspondent john harwood is in silver springs, maryland today where voting is underway. good morning, john. >> reporter: good morning, sarah. it is a big primary day. pennsylvania, delaware, connecticut, rhode island and here in maryland and silver spring outside east silver spring elementary school which is a place one of my daughters went to school a few years ago. we've had voters trickling in across montgomery county today. you can see a lot of support for bernie sanders, a significant amount for hillary clinton. and even though this is a democratic county, for donald trump. take a listen to some of these voters. >> a lot of domestic issues hillary hasn't really addressed so that's what attracts me more to bernie sanders. >> i was very anti-hillary when
i was younger, but i've warmed to her over the years. i mean, i'm not -- i don't feel passionately about her unfortunately. i mean, i have kind of mixed feelings. but in the long run i just think she would do a better job. >> vote for trump. i mean, ain't no secret. i think he's about the best so far i've seen the rest of them blowing off steam. they don't know what they're talking about. >> reporter: now, of course donald trump that gentleman couldn't vote for him because he's a registered democrat, but it's expected donald trump both here in maryland and across these states voting today is going to have plenty of support. he's been leading most of the polls. hillary clinton on the democratic side has been leading in most of the polls. so we expect tonight, guys, to be a very good night for the two front-runners moving them closer to the democratic and republican nominations. >> look forward to seeing the returns tonight, john, thanks so much. meanwhile let's get to the cme in chicago check in with rick and get the exchange. >> thanks, carl. i like to welcome my guest josh
rosner, josh, thanks for taking the time. >> thanks for having me. >> listen, a lot's going on. quickly, maybe you can summaryize, conservativeship for the gops in 2012 they did a sweep, maybe changed the rules, took all of the profits, court cases and then something happened on april 11th and something happened on april 15th in a d.c. court case. all right, take it over, josh. >> yeah. so in essence the government passed new legislation in 2008 to fix what went wrong with the gse shortly there afterthey were put in conserve tership. the government said hold on let's call it a time out. but in 2012 the government changed the rules and said the gses may end up in a death spiral and we need to therefore make sure that doesn't happen in return for our commitment to providing them credit lines, we will sweep any future profits
into the treasury conference. now, they claimed that they didn't know there would be profits. in court documents that were finally released a couple of weeks ago, we find out that the government was well aware the gses were about to become wildly profitable and that they had a $50 billion plus deferred tax asset and the government decided to sweep them. so they've been denying, denying, denying that they had any awareness of that. it came out in court documents that they did. the government tried to squelch those from coming out, but the judge said we're not going to avoid the release of documents that only serve to protect the certain government officials or agencies from embarrassment. there's still 1,100 other documents the government refuses to turn over or disclose. and obviously those are going to be subject to more court battles. and unfortunately i think there's a lot of embarrassment here for the government because it looks like -- >> well, i'll tell you, there is a lot of embarrassment. let me stop you quickly.
so on april 15th there was a d.c. case to see if this should be revisited. my guess is in 30, 60, 90 days we'll learn more. but quickly, josh, when you recant this story it sounds like some third world country or government basically seized an entity, changed the rules, throws the money in a general fund and your final comment, how do you think this will turn out on that d.c. court hearing that we did have two weeks ago? >> so it was an appeal. there were three judges. it seems to me that two of the judges are going to agree with the plaintiffs that the government's actions were wrong. probably remand it to the lower courts. the lower court. and the lower court i suspect will get direction into what to look at this time. and there's a lot of documentary evidence that wasn't presented before that since come out. and i suspect that that will play into it. so i think the government's in an embarrassing situation here. and the gses by the way as opposed to being allowed to build capital continue to have little to no capital. >> all right. josh, thank you very much.
and when we hear more from that d.c. appellate hearing, hopefully we'll bring you back to explain what the final conclusions are. sarah, back to you. and thanks, josh. >> thank you, rick. thank you, rick. coming up, he founded the company back in 1964, took it public in 1980. take a look at the stock since then now a $100 billion global juggernaut. phil knight on his nike career and what's next coming up in just a few minutes here on "squawk on the street."
good morning everyone. i'm sue herera. here is your cnbc news update at this hour. thousands of doctors have walked picket lines outside hospitals across england. it is the first all-out strike in the history of the national health service. the strike is taking place over two days. at issue, the government's pledge to bolster weekend
services. a massive fire engulfed india's national museum of natural history gutting that building. firefighters worked throughout the night to put out the flames. according to a fire official the museum's fire safety mechanism was debunked, but the cause of the fire not yet known. mitsubishi motors says an internal investigation found it had intentionally lied about its models mileage dating back to 1981. its president telling reporters the probe was ongoing and more irregularities might be found. he said it was unknown what action the company will take. and a wreath laying ceremony was held in kiev to honor those that died in the chernobyl nuclear disaster 30 years ago. ukrainian president and other political leaders attended that event. hard to believe it was 30 years ago. that is the cnbc news update this hour. sarah, back to you. thank you very much, sue herera. well, 50 years ago phil knight was a struggling shoe sales man begging bankers for cash,
selling japanese sneakers out of the trunk of his car. today, his company nike has grown into a sportswear giant surpassing $30 billion in sales last year. and for the first time ever phil knight is telling his story. his memoir "shoe dog" is out today. and mr. knight joins us for a very rare and special interview. >> great to be here. i haven't been on the floor of the new york stock exchange for almost 20 years. >> here we are at post five where nike trades. you took it public in december 1980. >> that's right. >> what i learned in the book is you actually did not want to take this company public. >> we were concerned about losing control. so that was always -- so, yes, we did debate for two or three years before we finally decided to go public. and it was obviously one of the best things we ever did. >> you also went public on the same week as apple. >> right. >> a little company known as apple. that is why you insisted on $22 a share. it seems like there's a kinship between apple and nike. tim cook is on nike's board.
what is that relationship? >> well, i think it's more kind of a cultural sameness than there is anything else. yeah, obviously tim cook is a very valuable board member, but sort of the cultures the two companies are similar that's why we get compared in the media. >> let's go back to the 1960s where the book begins. you're a runner with a track coach you're very fond of, an accountant and stanford business school grad. >> all those things. >> that produced a crazy idea. >> it was a combination of two things, came up with the running track in a classroom at stanford business school. and bioman was always tinkering with shoes and began to have some of his good runners, not just hacks like me wear the shoes. and they were wearing them quite successfully. and he was very sincere in believing the weight of the shoe was very important to a runner. and so that registered. then all the best shoes were being made in germany.
and it made no sense, adidas and puma, made no sense. so i wrote a paper they should make them in japan and the idea built and built and built and became a crazy idea to everybody but me and my college professor and my old track coach. >> what about the swoosh? i love how this idea was generated. >> when we broke off we had to have an identifying logo on the side. and we so we paid a graphic art student $35 to come up with the swoosh. >> and the name. >> and the name was -- mentioned six was -- >> dimension six. just think where we'd be if i picked that name. >> you got mocked. >> i did. i got laughed at. we had 45 employees at the time we made a change and each one put a name in the hat we didn't have time or money to do research. so we put in a name. my name was dimension six, got mocked. but the other names weren't very good either and jeff johnson came up with nike and said i
don't know if i like it too much, but it's better than the other names. turned out to be pretty good. >> along the way you did face a number of hurdles, japanese businessmen, bankers who wouldn't loan you money. >> right. >> yen fluctuations, which i enjoyed reading about. what was the biggest challenge in those early years? >> yeah, probably the biggest -- well, two huge ones. one getting kicked out of the second bank and not being able to pay -- we were supposed to pay $1 million and i walked in that friday afternoon and says i can't pay you anything and i need to borrow another billion. and they said yes and kept us alive. and that's really kind of one of the dramatic stories of the early years. then the other thing was fighting with our own government about what the duties would be applied on a retro active basis. >> that's where i wanted to go because the red tape in some ways has only gotten worse. >> yes, i think it's true. >> is america still the best place to launch a business? >> well, i don't know, i think it should be. and it can be. and i think it will be again. i don't know it's having a little bit of a down period
right now for entrepreneurs shown by polls. but i think it's a cycle, i don't think it's a trend. >> you mentioned the competition with adidas which we learned you are fiercely competitive, have been from the beginning cht i want to read this excerpt from the book. i was developing an unhealthy contempt for adidas, as you say, or maybe it was healthy. i despised them. >> yeah. >> adidas is coming back from a soft patch and there are others like understood armour making headway on sales. >> everybody is a concern, but i'm still the same as i was before. i know they asked me in one of the rare tv interviews from 25 years ago if i wanted to meet the president of reebok and i said no. i said i don't know him, i don't like him and i don't want to like him. and i still feel that way about the competition. >> what about underarmour in the u.s. market? >> they're one of them. they're one of them. there are lots of them we compete with. but believe me, we will compete.
>> but kevin plank has a similar story to you. started as an athlete telling t-shirts in his grandmother's basement in georgetown. >> yep. >> does he remind you of yourself? >> well, i've met him a couple times. we're different personalities. so not really. >> and you despise your enemies still or the competition. >> always. >> i just wanted to ask you about the u.s. market and what you see and how it's changed, the market for sportswear. the fact people now wear it to school, they wear it in the streets. i mean, you really changed the way we all dress. >> it absolutely blew me away. i was in new york this weekend and walking around the streets of new york to see the muscle tights, which started out as long underwear, you know, 40, 50 years ago. we wore long underwear to run in races because we didn't want to wear sweats and didn't want shorts because it was too cold. then we dyed it and made it of different material and now the
uniform of the woman walking around new york city which blows me away. >> what's going to be the next trend? >> we're always working on things but our thing is always to have something as a functional base. that's what the muscle tights do. so we're working on things to first and foremost make the athlete run better, jump higher, throw farther. >> what about china? this was a market that you were the first to enter as a sportswear company back in 1980. >> uh-huh. >> 1 billion people. 2 billion feet. >> that's right. >> you say in the book. so many other american companies that struggle in china, what would you say to them? or those that want to enter that market? >> well, it's a complicated market, but it's a big market. so you have to pair those two things together. i think if you're a real small company, you don't have the resources to get going so you have to be a certain size before you can really go through all the things necessary to compete there. >> what about the factory scandal? what about the sweat shops? a line you read in 1998 the height of it to the washington
press club said the nike product has become synonymous with slave wages, forced overtime and arbitrary abuses. >> yeah. >> what was that like going through that? >> it was not fun. >> i would imagine. >> but i think we made a lot of mistakes early on. most of them do to the chief executive officer. >> which was you. >> that was me. but we made a lot of progress since. and i think within the industry we recognize as the gold standard of foreign factories. i don't think there's anymore evidence of that than the president of the united states coming out to visit nike when he wants to promote his foreign trade initiative. >> i was there for that when he came to talk to about tpp. >> uh-huh. >> except for now on the campaign trail everybody is bashing that and all the other trade agreements that were signed. >> yes, they are. the flavor of the month. i think that's very regrettable. >> you did mention your role as ceo, mark parker of course current ceo who transitioned ten years ago and now you are preparing for another transition to step down as chairman in
june. >> uh-huh. >> how do you manage that succession plan for a company that you founded? >> well, you think about it a lot. so basically the decision on the current plan for me to step down as chairman in june basically thought about for two or three years. and i just have a philosophy that it's a lot better to step down two years early than two years late. and so i'm in good health and i feel good. but i think -- >> is it hard to let go? >> well, it may be. come ask me in june. but right now i'm at peace with it. >> i was sort of -- i read the book. book about the history of nike. i was a little surprised that there wasn't even a chapter or really much of a mention of michael jordan. which to me seemed so critical in nike's history. why is that? >> well, i decided that basically if i told the whole history of nike it was too much story for a book, so i want eedo
concentrate on the early years. when we went public sky is the limit. but obviously signing jordan i allude to it in the epilogue a meaningful moment and took us to a new level. >> how important is he to the future of nike? >> huge. basically his sales volume is hugely significant, much more than when he was a player and has a great growth trajectory. >> you talk a little bit about some of the relationships with other athletes pre tiger, lebron, how did olympic define this athlete/sponsor relationship? >> it wasn't a conscious effort to redefine it, we said from the beginning we want to win the athlete's heart as well as his or her feet. and we worked at that ever since. so they become part of the company, almost part family. >> are there any athletes you regret letting go? >> not really. i think there's probably a couple -- there's several that you could say i wish we'd gotten to them in the first place, but i don't really regret letting go. >> which was the most meaningful
relationship of all the athletes for you? >> well, i think obviously jordan is the most meaningful financially. but to say on a personal basis i wouldn't want to say. they're like children. which is your favorite child? >> according to forbes you are now the 24th richest person in the world and have made a $25 billion fortune. what d you plan to do with it? >> basically i'll see that my children are fixed and their children. and the rest of it will be given over, you know, a period of more than a decade to charity. >> do you support any of the presidential candidates? >> i'm supporting anybody right now. >> we sort of eluded to the trade, but i think someone who has built a business and a presence in nearly every part of the world and now depends on foreign markets for majority of sales and production for nike you must be worried at what you are hearing from donald trump when it comes to protectionist rhetoric? >> well, all four of the leading candidates are basically
antitrade right now. trump may be the most versatile, but it's funny. i'll give you a funny answer, i doe don't worry about it for nike. our average selling price is $88, for low end maybe $60, if our price goes up to $125, they have to go up to $100, we'll probably gain market share. i don't worry about it from a personal standpoint, but i worry about benefits of international trade and i think it will hurt the country and the world if we start closing markets. >> what about the business bashing we're hearing on the campaign trail? >> there's a lot of that too which i think is unfortunate which contributes to i think there's sort of a down trend in entrepreneurship. goes to business in general, but i do believe it's going to be short lived. >> do you believe that one of the candidates would be worse for business than the rest? >> i wouldn't make that statement right now. >> also wanted to talk to you about some of the companies you admire. because you say in the book you admired sony, at the time that was its hayday, what about now?
>> sony is at the time what apple is now. we respect apple almost more than any other company, for what they do in innovation and the great consumer products they bring to market. they're very worthy of respect. >> i know you don't like to choose between children, but favorite nike sneaker of all time? >> the shoe i still run in is 43 years old, it's the peg sus. it's held up better than i have. >> what about the future? what do you see for nike in ten years? >> well, i think, you know, nike's really great growth period lies ahead of it. mark parker announced in i think a couple months ago that he has a projection of $50 billion in sales in about five years. and we do believe that's achievable. so i'm excited about the future for nike. >> what about innovations? nike has in large part become a technology company as well as sneaker company. >> innovation is key to us. and i like the group we have working on innovative new products and systems.
and that excites me about the future as well. >> is there an innovation you're most excited about right now? >> well, if there was, but i wouldn't fell you about it. the ones we have in shoes, the fly net system just beginning to register with the consumer. and it's a really innovative breakthrough on how to get lightweight uppers, comfortable uppers that are really better than what is existed before. >> and what about your competition? is there anything out there that you see that you say we should be doing? >> i don't see anything right now. i don't doubt they have capacity to do some things. we need to win the innovation war. >> how many pairs of sneakers do you have? >> i have about 50 in my closet. >> 50? that's it? >> that's all. i don't have of them for sure. only have two feet. >> phil, thank you so much for joining us. the founder of nike and he is, guys, one of america's greatest
we and the rest of the world are watching apple set to report earnings after the bell today. analysts predict it will report its first year on year sales decline in iphones since it introduced the smartphone nine years ago. joining us now for analysis analyst with rbc capital markets. welcome to the program. >> thanks. >> i see you're predicting $48 million iphone sales for the first quarter.
that would be down 20% on last year. i guess for most people watching at home the question is do i look through that and believe that the launch of the iphone 7 will put it on the upswing? is >> well, absolutely. that is our belief that you look past the trough as you get into the iphone 7 to get past it. think of this on the two-year cadence because that is when the refreshers happen. and so last year, a little too slow, and this years too good, so there is an average between the highs and the lows. >> and apple does not innovate as it does, and what can we assume is in the iphone 7 that is going to propel it forward and do we believe that each it ration is going to be more clever to to a substantial degree? >> well, to some degree, you are right, the iphone 6 success was
more revolution, and the 6 was pretty good with the revolutionary new screen, and with the 7.0, it is a little bit more of the evolutionary and not revolutionary, and the big is the screen coming out and not only better screen, but better battery life that should happen with the iphone 7s down the road, but it is also going to be another evolutionary cycle. >> and so for the stock, we are $11 off of the low in february and $38 off of the high in last year, and what do you think it is lightly going to trade over, and what sort of price targets are you willing to put in there? >> well, again, assuminging that they can run out of the cadence as we call it, and our take is that the 12 to 15 bandwidth, and
three to five times cash flow, and so when the stock was cheap, and it was stable, it needses to get back to them. >> but it is big enough to attract some of the big investors with whatever else they are doing in the market, and what happens if they come through to return more cash to the shareholders? is it super sensitive to that? it is a far better inves tment even if you are there for the technology and the innovation? >> well, the expectation announcement today is a 10% uptick of the capital al e location as you go into the call. if it is better, it is going to be more of the offshore, and in the u.s. returning back to the shareholders could drive the stock higher. i point to cisco in the last call, and they raised the stock and it reacted favorably, and apple with the same setup, but the holdback on them is that most of the cash is trapped overseas. >> and so good luck, amit.
washingt washington. and the products and pipeline driving apple. tomorrow on "squawk box." and what is happening with the stock, losing some steam with the dow down 25 point, and the s&p 500 hugging the flatline, but we have lost an early modest rebound, and the nasdaq is going for if we stay negative four straight sessions of the negative action, and a lot could be determine oefrd the next 48 hours. we have apple earnings after the bell, and then the fed statement is out tomorrow at 2:00 p.m. eastern. >> and the highlight of the course of the hour is sarah's interview with the founder of nike, and how much is he worth? >> $25 billion and he gives most of it away. >> and he is a cool guy. appeared to be a cool guy. what is your takeaway. >> yes, and he was sure to check the stock price of nike and saw it was up, and so, good. if you put a dollar in the ipo in 1985, it would be wor$1985, 5
and not a bad return. >> i wish my father had put in $1,000. thank you, sarah. and it is 11:00 a.m. on wall street and 8:00 a.m. in san francisco, and we are live on "squawk street." ♪ welcome the "squawk alley" this tuesday morning. and jon fortt is live at the collision conference in new orleans and he is going to be speak to the ceo of roku, and also, terry is joining us from