tv Squawk Box CNBC May 11, 2016 6:00am-9:01am EDT
way past carlos simms. it's may 11th, 2016 "squawk box" continues right now. ♪ >> announcer: live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" here on cnbc. i'm kelly evans along with joe kernin and scott wapner. becky and joe are off. we'll have richard fisher who joins us in just a moment. and david novak will be our guest host. we'll talk to target chairman and ceo brian cornell. home depot co-founder to talk politics and later, we'll talk to chairman and ceo jamie dimon. in the meantime, let's get a check of markets. overnight, it's taken a turn for the worse. the dow jones future is opening
lower by 51 points. s&p by 5, nasdaq giving up 14. weighing on the dow, of course, is disney. overnight in asia, the nikkei is managing to turn a little higher at the moment. the shanghai composite a little in the green. european equities, this one interesting to watch. a couple cross-currents to watch. german dax down 1%. france's cac, down almost 1%. and taking a look at crude, too. we got inventory numbers yesterday. after noon, we'll get more information this morning. wti, that looks down it's almost 1%. hovering a little bit over the $44 a barrel mark. brent for its part giving up about 0.5%. right around 45. a little higher as well, natural gas. clerks our top stories, shares of dow component disney
under pressure. earnings falling short among the espn subscriptions fell and ad revenue dropped. ceo bob iger discovering cord-cutting answer the future of viewership on the conference call. >> we're also in discussions with a number of entities, some current distributors that are coming forward with new packages. and some completely new distributors all have expressed an avid interest in having espn and our other channels included in our initial offerings. and we're very, very encouraged by the discussions/negotiations that we're having. >> theme park revenue rising about 5% but that was weaker than expected. the company also announcing its exiting the consol video game business less than three years after it launched its infinity title. the bright spot, the movie business. studio revenue rose to $2.1 billion. driven by "star wars: the force
awakens" and "zootopia." and the board of bob iger, iger's contract is up in 2017 but some have speculated he may stay longer. he addressed that issue on the call as well. >> i will say or remind people that i have just over two years left on my contract as ceo of the company. and the board is very actively engaged in a succession process it has has been actually for some time. and it believes that it has ample time to identify a successor, under timing circumstances, that will be just fine for the company. i have nothing really to add in terms of the extension of my contract except that i don't currently have any plans to extend beyond the june expiration date, that is june of 2018. >> we're going to talk to a disney analyst at 6:40 a.m. eastern time. >> and jenkins weighing in here
today, not all the time on the future of espn because she said box of something called -- a fork in the road called the ip multicast. live is biggest challenge for internet. yes, espn definitely has a future. anybody that doesn't see espn in the future -- >> well, it has a future for sports programming but what about the othersy. >> we know now when you look at ad rates final four, olympics, super bowl, espn has been the crown jewel of all cable. you can see a slight downward movement now and again. but what a great asset. i'm not worried about it. >> i'm not watching it any less. >> yeah, exactly. the whole family watches on game day on saturday. it's classic, right? they got a good franchise. you do have halftime reports. you are constantly talking about the effect of one dow stock on the average. you're a nerd.
i know you'll know. what's the divider? i mean, disney down five or six points that's 50 dow points? >> this is from robert -- >> so is it seven? >> seven dow points. >> 35 of the 50 is all disney. who knows what the rest of the market looks like. >> the stock in some ways was kind of ripe to come back. remember, back in august the stock was around 120. iger made the initial comments about espn. the space got obliterated. then it was back to 106. looked like it could have a little more momentum. but people can't get past the espn issue even as the studio from "star wars," to "zootopia" to "jungle book" it's been hit
after hit. >> comcast did a great day yesterday. i wonder a lot of times you see the other media stocks fall off. >> they did after hours. i know that time warner did to some extent. we should look and see to see if there's a cross-sector. >> helps to have -- nbc u and then comcast what disney doesn't have, and that's all of everything else that smooths it out. as you say, a superior business model, but that's just me. anyway, this morning's other corporate story, these two guys get together, huh-uh, no way, no way. office supplies -- it's frightening, you can't get this stuff on the internet, huh? >> can you imagine what you have to pay for that hole punch? >> you cannot the this happen. staples and office depot officially calling off their merger so they can sink in
separately inground instead of holding on to each other. it comes after a judge ordered a deal halted not since sirius xm which we know as a monopoly. there's pandora, and firefire, they got to figure out -- get howard stern, paying him $300 million a year just to -- it might be more -- what's he making now? >> what's the deal like $500 million over whatever? -- >> right. >> five years, ten years. >> anyway, a court -- and he signed a new one. he knows that 1930 formula that they use? do you remember that? >> i just find it interesting in '97. maybe in 1997, you could have a case for it, but today in the world of amazon -- >> but the formula they use purelily looks at what you're in. >> i made a list of the deals
that have been blocked in the last handful of years. pretty unbelievable. you look at this one, office depot and staples today. bakers hugues and halliburton. time warner, and honeywell slsh cisco foods. those are all in the last four years. >> and interestingly enough, despite all of this, there's a sense that industry has become overly concentrated with the big company. remember, there was obviously what happened in the wireless space. the t-mode. at&t that never happened. is four better than three? >> we have adopted a little bit more of a euro viewpoint. we're not worried about necessarily the end customer as much as you are, you know, you're protecting industries at times. you're protecting employees. i don't know. >> but that's what's so
interesting, right? saying, oh, we're doing this for the consumer. when you look around, is that who benefits the most? >> exactly. that's a deal. i guess people would say 20 years before that there was no antitrust. anyway, staples will pay a 25$2 million breakup fee to office depot. in political news, bernie sand issers claiming victory in west virginia. in an interesting twist, 39% said they would volt for trump over sanders in the fall. let's bring in john harwood. sanders voters said they'd vovol vote -- what was that again? >> people talked about a cross-over appeal all primary long both dealing with a people disaffected by the system. west virginia is a very conservative state.
it's just the kind of state that bernie sanders has done well in against hillary clinton because it's an almost all-white state. very rural state. he's done quite well with those in the past. this is a result that's not surprising because he led in the polls before the election but it was annoying to hillary clinton because it extends bernie sanders' campaign. and it extends the argument that he's the candidate's best position to beat donald trump. here's bernie sanders last night. >> our message to the democratic delegates who will be assembling in philadelphia, is while we may have many disagreements with secretary clivnnton, there is o area we agree, and that is we must defeat donald trump. >> now, of course, the donald trump campaign did very well last night, too. they won west virginia. and the erosion of the sanders supporters, that is to say, the
number who said they would vote for trump is a sign that would be a securely republican state in the general election. donald trump also won easily in nebraska which is not remarkable because he has no active opponents. remember, ted cruz yesterday was in a radio interview with glenn beck, and he was asked, you can get back in the campaign, he said maybe if i won nebraska even though i was not campaigning that did not happen last night. so ted cruz is not back in the campaign. everybody is going to watch the meeting between donald trump and the congressional leaders tomorrow to see whether trump can do better than he has before pulling the party together. >> with bernie sanders, he had no juice. and then governor ricketts, a chicago family, who spent millions of dollars -- >> he came around. >> yeah he did come around. all right. these two newspapers, these two dueling tabloids we have. we've got hillary, stop the
coronation on the post. and then the ever classy and relevant "daily news" 54% choose head lice over donald trump. you know, they try to sell this newspaper. not the paper for a dollar. the paper for a dollar. they're trying to sell the paper. not the paper -- >> why didn't you buy it, joe? >> the paper is 1.25. one copy is worth more than the actual entity itself. >> why didn't you buy it? think about the megaphone you have. >> with a vanity project and then i could -- i get to say -- >> i don't need that to publish anything, john. thank you. we got an esteemed -- you can just tell, a very esteemed guest host. look at this guy. i mean, if there was a -- richard, if there was a senior
"gq," you would be on every single time that they needed a cover, you would be on. >> i'd rather get her opinion than your opinion. >> mr. fisher is barclays senior adviser. also a cnbc contributor. and i miss you. we all miss you, i think, on the set. now that we have you, now you can be more outspoken. >> even more. >> yeah. we talked a lot. i guess the one thing i'd ask you now, we ask you a lot of times, at this point, where are we at, we have one rate increase. is it still helping, is it a net neutral what's happening? or are you convinced at this point that it might actually be holding us back? i mean, we did 0.5% in the last gdp number. all of this the best we can muster? is it just not helping anymore? >> i think the fed has the market on tender hooks. we talked about this earlier,
the justin moore market. justin moore is a country music singer who has a great number of hits -- >> not current? >> current. >> current. >> current? >> yes. >> the song he has is "you look like --" you look like you're going to try to love me down i think you know why you won't sit down you're dancing around, you can't sit down but you're scared to." that's the federal reserve. we've peaked on earnings. we have a bond market that's driven by monetary policy. we have a real estate market driven by monetary policy. i think is this a very precarious situation. unemployment has come down to 5%. inflation is running somewhere is in between, depending on what measure you use, 1 to 1.5.
cti, to 3. every time i await the announcement from my fellow clearance i feel like justin moore. >> it's an analogy -- >> it's maintaining a mood in the market but you can keep someone on ritalin for a long time. >> but the same dose gets you less and less high. finally, you're just doing it so you're not sick basically. you need more and more. when you try and get rid of it, then you really feel sick so that analogy holds, too. >> yeah, i think we needed to do a little more to keep the patient alive after the crisis. i supported that. it's a question of sustaining something that is just differentiated between price and the underlying value. price is very high. and the commercial real estate market. at some point, joe, we're going to get a correction. and the question is how did the
monetary authorities react. we'll wait and see. also whac-a-mole. >> the dollar is at a point where they have a window now. it's not 111.07 on the euro anymore. >> i'll tell what you i worry about insurance. insurance companies are like oxen, they've pulled that cart forward steadily forever and ever. they're literally 1% in the world in this country but they're pulling a 6% liability cart. it doesn't square. banks, interest markets being hammered. to be honest, sitting at the table we did not perceive. in germany, you're at worst shape because 85% of germans save through life insurance and pension fund in a negative interest rate world, right? how do you provide for insurance
returns in that country? that's where i would be looking for real concerns. >> but can we lead the world higher with interest rates, or could we follow -- that's the argument. we're arguably govern with sovereign credit we have a higher rate than they have. >> i'm an american, i believe in leading not in following. i don't want to sound too trumpy in here. not america first. but the point is do what's right for the long-term health of our economy and for those institutions that underpin our economy. >> just quickly. likely that they go in june, zero? >> well, this is a guessing game. i have no idea. they've got the brexit and all of that stuff. i think there's buyers' remorse. they should have moved forward. it's easy to say that in hindsight. >> i'm not on the committee anymore, but i would like to see them move in july or june, and again in september.
just -- remember, she talked about -- janet yellen talked about the asymmetry of risk when she talked back in new york. there's very little slippage. the bank of israel did it three timings under sam fisher, what she gave back there's nothing to give back. the punch line of that speech was the paragraph which said the only thing we can do is go further up the o curve and investment of $1.1 trillion. flatten the curve even farther. that would be the only tool left in the fed's toolbox. that's worrisome. >> not yet, obviously, but when we saw that 0.5. everybody is writing off that 0.5. i couldn't help but think what if that became the real world, 0.5 became -- the new job number 150. or even worse.
or the stock market keeps going up when you see a need somewhere else. hasn't seemed to respond as well. and we're stuck at zero and things slow down. we've got nothing. >> we expect the consumer to kick in a little bit. when you think about the consumer, the consumer has to save more because they don't earn anything on their savings. bar and restaurant sales, which i love bar and restaurant, we're thought seeing it much elsewhere. a little better retail sales except for apparel. and in the cycle, joe, we're seven years in. and the business cycle is yet to be conquered. >> looking at the way you dress when you come in here, barney's and deneiman marcus, they must doing good. ♪ >> we have played it before for
andrew. we were kidding him taabout it. it's about a country boy and this is a city girl. >> you look like i need a drink. >> you look like i need a drink. all right. just a '90s girl in an '80s mercedes. he's going to be with us. >> i'm trying -- >> you're trying to co-exist. >> they're both believers. they're both believers. big time believers. coming up, how safe are your so-called safe haven investments. jpmorgan invest steven parker is raising a cautious flag. he joins us next. keep watching "squawk box." the ceos of target and jpmorgan and home depot co-found er ken
♪ no, you're not gonna watch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. their best day in two months. jumping more than 1% each. the next guest says there may be signs of froth in perceived safe
access. joining us is steven parker. guest host, of course, is richard fisher. he is with us as well. >> richard fisher raised his -- just so you know. >> what kind of a froth are we talking about? where are we looking? >> i think if you look broadly across all asset classes, where is the money going? it's going into gold. it's going into government bonds. it's going into the yen. specifically with equities which is where i'm focused while there are outflows broadly, the places inflows are places like consumer staples. and people are thinking because says that very uncertain world, they want some uncertainty. the problem is, safe assets are a function of not just the fundamentals, but also the price. if you look, staples trading at
22 times. utilities normally trading at 22% of the discount. today, they're trading at a premium. markets basically saying growth is never going to recover. interest rates goring to stay low forever. inflation is not coming back soon. if you see any of those things starting to reverse, i think the safe assets are potentially at risk. >> it's how to make a rotation out of those assets? or just take more money out of the stock market altogether? >> no, i think you have to be careful about trying to tie markets. all markets are broadly expensive right now. although there's certainly opportunities. we're seeing opportunities in certain parts of the value parts of the market. you have to have a long-term time horizon recognizing there's some volatility. a lot of the markets outside. u.s. have experienced these big corrections, japan, markets are better. >> we had a correction, did we
not? >> well, we did, back in february, down 10 or 15%. that was because of fears around recession which obviously didn't play out. if you didn't believe in a global recession now is the time to be buying some. other markets which have been beaten up where you're seeing more value and potentially more earnings growth relative to the u.s. >> since we have richard fisher here what role is the fed going to play? >> i don't know why you're asking me that question when you've got the expert here. >> he said it's going to play 100% of the role. if the fed does hike in the summer what role is it going to play in deflating costs? >> two things, one of the rally particularly driven by multiple expansion. and i think that has a lot to do with what the fed has done. i do think that the markets have gotten a little sanguine in terms of their view of a fed hike. the fact that the markets are pricing in zero% in june and
less than 50% of a hike this year. i think that that's a little too optimistic, depending on how you want to look at it. i think we're going to see one to two hikes this year. and that may cause volume difficult in the near term. people are going to get nervous about that. but i think longer term you need to see normalization and policy for markets to continue to move higher. >> steven, good to have you this morning. >> do you think the market is too complacent about the fed at this point? >> well, i think they're dependent on the fed and therefore complacent. i mean, it's nice -- >> those are two different things. >> no, it's not. they're very excepti iaccepting fact that rates are going to stay low. there is the goal i've seen that the cost is zilch. propels the markets in a different way. >> steve, again, thanks.
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. ♪ welcome back. our sanford neuroscientist has put up with jokes if you might live in texas or be a red neck
this morning. >> do you want to repeat a couple of those? >> new york-based ride sharing company raising $100 million. seeking to create the public transit system of the future. via does offer five bus rides across manhattan in peak riding hours. 500,000 in new york and chicago. ridership has grown four times over the past year. daniel ramot joins us. he's co-founder and ceo. welcome. >> thank you. >> how scalable is this model do you think? >> we believe it's very scalable. north america, there are 20 urban centers where there can be a very successful service and get to successful scale. we also believe in application gz outside of urban centers in suburban environments we operate actually in partnership with
mercedes-benz. mercedes-benz is using orange county of all places in a very different environment. >> that is interesting. is it $5 for everybody or is that just the manhattan price? how do you guys make money? this just the opening price to get the business going and it might go up some day? >> we believe at this price we build a terrific business. it's built on scale if we can get enough people to the vehicle at the same time, and we can get them to share, not only reducing congestion, helping the environment, we can also provide a great service. >> what's the difference with two people versus four? >> it's huge. it's double. >> let me try to do that math for a second -- times two. >> i learned that. that's why i have to go there. i think that's exactly the different if we can get four or five people in the vehicle, it would be a success. one or two, we have a hard time. >> do you search price, or not? >> we don't.
>> would you? >> we don't. principally, we think it should be like public transit. i don't think you want to walk in the subway and find out that today is 3x the price. is it the case that during a peak hour we might charge another dollar, that might be part of the model down the road. i think for now, the right approach is saying this is like public transit. get in, it's very predictable. it's there for you every morning. it's not something for most days or today, i can't afford to use it anymore. i don't think that's a right way to build a system that's successful for everybody. >> are these electric cars or gasoline driven? >> i wish they were electric cars. when we first started, warren my co-founder and i were were dreaming about this all being david on electric cars. unfortunately, they don't exist. >> at the $5 price point, how good it on current gasoline prices? >> you can do the math. these cars don't travel --
>> it's challenging. >> i know. i know. i think that gas as a component, it's not a huge don't. when you work it out, these cars don't go very far in an hour. >> how about suburban? >> it could be a factor. that's where you want to use more efficient cars. >> in orange county, a lot of times you're standing still when you're driving. most. time in orange county you're standing still. >> the part that we are currently in southern orange county, what i've seen, traffic moves pretty quickly. >> there are ranches where the center is -- >> south of urbine. >> yeah. >> you remember the exact title of your dissertation? >> i don't. >> was it in neuroscience. >> it was in neuroscience. >> a ph.d. at stanford? >> right. >> what was it about?
what was the general thing were you working on? >> this was very relative to ride sharing i studied how single neurons store nerve information. >> i was going to ask you you, the elasticity of the nervous system. do we know how it works considering that the infrastructure is basically there. how does it change? what changes it neurotransmitters, receptors? what changes? >> the mind of the field, the connections, the strength of the connections between neuron, the synapses, that's what change. things inside the neurons change. new neurons are createsed. >> neurons can be created if you make stronger connections. >> that's one of the things we've been covering over the last 5, 10, 15 years there are parts of the brain. >> that's the frontier. looking more amazing that the g
nome set it all up. there are billions of neurons. and i'm innerconnections? >> about 10,000 more than those, right? >> we'll figure that out. >> are you guys profitable right now, by the way? >> in new york -- >> i'm thinking about, seriously, uber, one of the private guys just marked down their valuation, uber, there might have been other stuff go on there. there's a feeling that it's time to show me a business model. >> as you guys know this is a relatively tough climate for fund-raising. we discovered if you have good results, which in new york, we do, then it's still possible. >> a good result could be possible. >> i'd say this, invariably, some parts of the where we have scale, upper east side and midtown, we're seeing it serviceable. and downtown, it takes us a while to build the scale and expand. >> looking at what happened with
uber lyft, would it be something that-f they crack down on fingerprinting? >> we only use professional drivers. they're all licensed out there. and they all go for fingerprinting. for us, it has its advantage. >> a good time fob to be a driv. >> for the rest of the country, it's just an app? >> yes, you can use an app. you can use it here, new york, chicago, orange county. >> i've used it here in new york. >> really? >> yeah, it's five bucks. you turn on the meter -- >> literally, it goes straight down. if you're up here, you want to go all the way downtown. you go down, you go way to the corner of park avenue. it will take you straight down. it's not going to weave all over the city. >> it's like a mini bus. >> if you guys remember jetblue, and leather seats. this is what via is like. it's a premium service. it's better than anything else i've been in.
very large suburban. super comfortable and yet $5. give it a shot. >> you don't have a driver? >> what do you think i'm getting paid as much as you? >> what's with austin, man, maybe you ought to build a wall around austin. >> good luck. >> thanks. >> thank you. coming up, disney posting earnings miss for the first time in five years. that stock's trading sharply lower this morning. we'll dig through a report with an analyst next. as we head to break, a quick check of what's happening in european markets right now. ♪ & in a world held back by compromise, businesses need the agility to do one thing & another. only at&t has the network, people, and partners to help companies be...
local & global. open & secure. because no one knows & like at&t. trolling for a gig with can't blame you. it's a drone you control with your brain, which controls your thumbs, which control this joystick. no, i'm actually over at the ge booth. we're creating the operating system for industry. it's called predix. it's gonna change the way the world works. ok, i'm telling my brain to tell the drone to get you a copy of my resume. umm, maybe keep your hands on the controller. look out!! ohhhhhhhhhh... you know what, i'm just gonna email it to you. yeah that's probably safer. ok, cool.
♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song.
♪ disney stock not feeling the magic after posting a second quarter miss on both the top and bottom line. the media giant reported adjusted earnings at 1.36 a share. revenue was under $13 billion. the first time in five years that disney reported an earningses per share number that was short of analysts'
expectations. did they just not guide low enough, they didn't do a low enough massaging. breaking it down, tony wyble covering media. just in aesthetics without detail, overall philosophically, the demise of the stock, and i thought that demise was greatly dead. came all the way back. now, all of a sudden has it reared its ugly head. is there something to worry about? >> i think there's pressure among the ecosystem among the analysts. it wasn't a surprise that we had this weakness but at the end of the day, what disney is good at is finding new ways to distribute it. with disney, they're going to take the brand the nonsports aspect and put it into the consumer. and really how do they price this stuff.
today in cable, they get around $2 a sub. on the disney channel and all of that with hbo, they put together the mobile apps maybe parental control tools and sell it for 15 bucks. right now you do have headwinds in the tv system. >> everybody is looking at the political season and with the initial paw tix i guess is the trump factor. i guess disney's cable has been able to benefit from that. where will the outreach reach? >> so, broadcast is where you'd likely see a lot of that. abc actually is one of the shining points for disney. when you say look at the media landscape. if you do look at it, you want broadcast exposure, a large studio and frankly hbo. scatter is up more than any other network has talked about it. you have the production side of
abc that people forget about, put up an $800 million number last night. they're selling to netflix and others publisher series. and you take a look at the other side, the film studio, just this year alone with three films that are out they're the number one studio out there with 30% market share. and that's quite phenomenal. >> you wonder when you look at the work iger has done with marvel, pixar, "star wars," you wonder when that video gets the highest video. you can't really repeat -- it's so hard every year. you watch the lumpy results in the movie studio, one year they got "despicable me" and then the next year they don't. sooner or later, you think disney is able to repeat success with their franchise. >> it's interesting you look at how far out movie theaters are slating these things. "avatar" 4 and 5 just announced. and that content is hard to announce new brands to consumers. every single date seems like
it's taken up. you have transformers going head to head with wonder woman. marvel has that outreach. what they're doing is reaching it through that. >> they're opening up shanghai, no one is talking about that, it's actually happening as we speak. that's 33 million people a year and china's interesting. tell me about china. >> we did a real deep dive on shanghai. i think it's going to be one of the biggest resorts, if not the biggest park that we've seen in the world. we really don't think it's going to have any equity value to the earnings. part of the reason is that the chinese government ends up getting 50%. >> it's the sharing mechanism that will be part of it it. does this help it? >> it's the sharing mechanic amount. six out of ten years they don't generate a profit in the international parks. >> paris, paris, paris. >> i think what china's going to
represent is a doorway into a large market. it's going to be the largest film market out there. it's going to be a way to promote your brands. >> like a president trump with the 50%. for he builds a wall in shanghai. >> i thought they had a wall in china. >> yeah, they do. i haven't been there myself. >> thank you. >> all right. coming up, richard fisher at the top. hour we'll be joined by david novak, executive chairman of young brands. keep it right here on "squawk box."
and you meet all those people who love investing. it's lions and foxes. we could be at a key moment of change. the question is, will they change their economy enough so it can grow. i'm not wearing this to fit in. it's the law here. welcome back. let's get back to our guest host this morning. richard fisher, barclay senior adviser, former dallas fed president. we were talking a little fed policy this hour. one interesting question, why is it -- we've talked about how may the fed if they had nothing left to do would move further out on the curve. but why is it when it seems that held stay supportive, yields it tend to rise. when it seems like they will pull back, everyone panics. does it seem like despite their actions, the impact of all this is actually constructive? >> well, the yield curve is
still very flat and long term yields are still very low by his historical standards, i would argue as low as they have ever been. this would just be a way, again what the chair referred to in her speech, you have $1.2 trillion in rollovers that are about to occur between now and 2019. the treasury has 20% of federal debt. that's a big arena to play in. and if you didn't have much room to cut it at the short end, you'd be extending the maturity of what is called the system of market account. and that is what they're really referring to. i'm not sure i agree with you completely. things will bop around, ten will bop around in 1.70 to 2% level. and compared to what? negative interest rates attract capital to the united states. >> soma is also the drug in a
brave new world. per perfect, a perfect name. >> this is the tool that i think is left. i wanted to have something in case we slipped backwards fp i wasn't afraid of ennation. i wanted to have some bullets to shoot in case we slipped backwards. i thought it was overshot. >> where would the economy be do you think if all of this monetary policy was joined by fiscal policy? >> we have no fiscal policy. and to be fair to high former colleagues and to be very fair to janet, we have no fiscal actor. >> regulatory overkill. >> so we have one actor the central bank of the united states. it's the same in europe.
19 screwed up governments. here we have one screwed up government. >> that's why i don't understand why there is so much criticism of the fed itself. >> it is the only game this town, but guess who is almost as unpopular as the congress of the united states. the federal reserve. only people less popular than the congress. >> there are ways that the congress can get out of the way instead of being activists in terms of fiscal policy. one side wants fiscal policy one way, tax reform, supply side, less regular lays, the other one wants infrastructure and still stimulus. i don't want congress to do everything proposed the last seven years, i'm saying -- >> you want to have certainty. and you had like to know who- >> who does a texas democrat as yourself, who is your candidate?
>> i'm a dino, democrat in name only. >> i know that. so who is your candidate this time around? >> do you want to go back to disney, hickey mouse, donald tuck? >> hillary clinton or donald trump. and then i'll give you bernie sanders or donald trump. >> oh, my gosh. i will opt out of the conversation. i'd like to know that donald trump actually stands for. i do know what hillary clinton stands for. whether i like it or for tnot, least you can plan for it. >> how do you know what she stands for? >> it's all relative. i have no idea what donald trump stands for. hopefully we'll get better clarity, i pray. >> the latest is she's moving left on health care. she wants public option and
people buy into head camedicare. >> nice thing about being at the fed, you opt out of politics. i opted out 12 years ago and i'm not going back. >> richard fisher, thanks so much for joining us. coming up, two big hours of "squawk box." our guest host is young blands executive chairman david novak. we'll talk to target ceo, home depot ken langone will be here to talk politics. and then later jamie dimon. "squawk box" will be right back.
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the force awake s a wace aw and the dark side is winning. disney stock shares up to shafrply pre-market. we'll take you inside the numbers straight ahead. no deal. regulators putting theky bokibo on the target deal and david novak says what it says for business. and the titanic of celine dion. ♪ we'll take you inside the $45 million florida mansion that sports a water park, lee pools and the most high tech shoe closet you've ever seen. the second hour of "squawk box" begins right now. ♪ i've got two tickets to paradise, won't you pack your bags, we'll leave tonight ♪ live from new york city, this is "squawk box."
>> welcome back. i'm scott walker along with kelly evans and joe kernen this morning. take a look at futures. dow would open lower by 50 points or so. s&p down by five. nasdaq down by 12 1/2. take a look at the energy complex. crude back below $45. it is a small gain this morning across the energy space. kelly, that's how we look at this hour. >> here are stories making headlines this morning. the strong yen taking its toll on toyota. that company saying its net profit will fall about 35% for the current fiscal year. mainly due to the yen rise. that will follow three straight years of record profits. in other news, takata is considering significant restructuring. it had its third annual loss in four years. more than 90 million vehicles have been recalled worldwide with the takata air bags. and owner of ultimate fighting
championship, ufc, are in advanced talks to sell the business, this according so pesn which says there are at least four bidders including the blackstone group. disney earning and rev new falling short. among the drags, prescriptions and ad rev new. theme park revenue weaker than expected. it is also exiting the console video business less than three years after it launched infinity title. schaffers rig s shares right now town down 5%. >> and sticking with video games, electronic arts leaning on star wars to help top estimates. adjusted revenue rose. wall street had expected revenue to slide a hair to $888 million.
shares are higher this morning in the pre-market, up almost 8%. >> chipotle holds its annual meeting today. shares down about 30%. the board expected to come under fire today. one proposal from the new york city pension funds would allow an investor group of investors opening 3% or more of outstanding shares continuously for three years to nominate directors to the board. the company wants that threshold at 5%. a sandisk will be bought. alaska air in the middle of the 52 week range. they're the ones who bought injury begin, right? a the will of questions about how the virgin aircraft will look.begin, right? a the will of questions about how the virgin aircraft will look. walmart suing visa for
allegedly forcing the customer to use signatures when paying with their chip based debit card. the retail giant says visa wouldn't allow walmart to just use the chip and pen protocol and that it was required have customers to sign. walmart is seeking a jury trial. and donald trump cruising to victory in nebraska and west have a vargs meanwhile bernie sanders keeping his campaign alive by beating hillary clinton in west virginia. but it's not expected to make a dent in hillary's lead. the candidates now shift their focus to kentucky and oregon. voters in those states will head to the polls on may 17. staples and office tebow firly calling off their merger. the decision after a federal judge ordered the deal temp requirely halted because of antitrust concerns. eamon javers joins us now with more. >> yeah, the decision from a federal judge for the district of columbia, that after the ftc
sued to block the deal back in can december. the government argued that this merger was severimply bad for business consumers. the companies said they were disappointed in the decision and they had argued that competition from giants online like amazon.com made their merger not necessarily have an impact in the competitive landscape. this is all part of an overall trend that we have been seeing on the u.s. government weighing in. take a look at this list that we put together of some blocked in recent years. you see a whole host of big brand names. comcast, the parent company of this network and time warner, cisco, bumblebee, all the mergers stopped in their tracks by the government. when you talk to government regulators about this as i have, they are very careful not to say that they are being more aggressive here in pursuing some
of these deals. in the halliburton/baker hughes, they said that deal soo never have been produce the them in the first place. so hard to decide whether the government is being aggressive or corporate board rooms are more aggressiaggressive bringin government for their review. >> thanks so much. just real quickly, it's referred to as the hh ichi. >> you have not gone into thi. p >> that's why i'm going into it. the only thing that i will say if you look at the problem with using that formula which is from 1945 in deciding whether someone has a plop on that pmonopoly is dependent another definition of the market in terms of success suitability.
and the internet disrupted everything. and what changed the market and for office supplies, think of the old world where you looked at what the market saz wsize wa and position of the mthink of te internet. so using it a probably not all that helpful. let's get to david novak. in-d under his leadership, the fast food giant doubled its size to 40,000 kfc, taco bell and pizza hut restaurants in 125 countries. i have trouble like picking a favorite out of those three. and basically the whole world is there. really if i had to do three meals a day at those three places, i would be fine. i don't even position i'd be fat, i'd be fine. from absolu >> absolutely. and now we have taco bell breakfast. >> i was thinking about a breakfast burrito.
we have talked about that in the past that you enjoy a taco bell meal every once -- maybe not every day, but i mean, you can feed a family of four for like $11 there. >> and i think one of the great things about our business, we have affordable food, we have convenient food. and like you say, all three brands taste great. you have that combination, you can be successful all away the world. and we have transformed our company into a global powerhouse. in '97, we had 20% of our profit this is the u.s. now it's 80% of our profits are outside. >> amazing. so when did you step down as ceo, then executive chairman and eventually going to step down as executive chairman? >> yeah, i'll be stepping down as executive chairman may 21 which is my last board meeting. and i'll be moving on to -- i'm not really retiring. i like to say i'm refiring. starting a new company called o
ogo. >> and you wrote o great one, a story about the power of recognition with employees. and i guess for people in your life, as well. >> absolutely. obviously with employees it makes a lot of accepof sense, b everyone. one thing i learned running young brandyum brands, there is a global recognition deficit. we just fielded national research and we found that 82% of people believe that their supervisor does not recognize them for what they comdo. 60% of people say i value recognition as much as hone. recognition happens very rarely. . most employees say it happens about once every two months. and 40% of people say it if they had recognition in their company, they would put more energy into their work. so to me recognition is the secret weapon that every leader really needs to use. and what i did with this book o
great one, i wrote a fictitious story, it's a parable, based on my experience this business, but it's about this guy named jeff johnson who becomes ceo of this new company called happy face toy company and he realizes nobody is happy. and he turns around the business be, you have it read the boog, but he turns away the business by really valuing people and listening to people, listening to people, getting them involved and energized. and i've learned this myself. i've seen all our great leaders around the world run their businesses when they do it well. you have to create a work environment where people feel valued. and our new ceo believes in recognition. the job requirement for both mickey and greg is they had to really cascade recognition and keep it alive. >> positive recognition. in absolu >> absolutely. >> you don't need someone calling you a screw up every other day. >> i think there are two kinds.
one is earned recognition. if it's fluff, it doesn't matter. the other thing you have to do is recognize bad behavior. if you have bad behave in yoiorr company, you can't roll it. you have to have high standards. >> i think managers need to manage down. so many managers just manage up. they look up and trying to think of how to make themselves look good. and if you can manage down, the whole organization will be better. >> i've always said don't look up, don't look down, always look straight ahead when dealing with people. nobody better than you, you're not better than anybody else. deal with people eyeball to eyeball face-to-face, level to level. and it's a level playing field and you value people, i think you can't help but do well. but i'm really excited about this ogo because there is a huge need out there. it's amazing to me how many companies don't realize how important it is to recognize people. >> why do you think there is such a deficiency? >> one thing i think leaders feel like if you give somebody
some recognition, they height not work as hard. the other thing they say, if i recognize this person, what will the other person think.work as . the other thing they say, if i recognize this person, what will the other person think. so make recognition on high value in your entire company. i can't be the only american recognizing people. i have to have everybody in our ogs recognizing people.american recognizing people. i have to have everybody in our ogs recognizing people. so all of our leaders have their own individual recognition awards and we have fun celebrating the achievements of others. and we're a high performance organization. we have our people planning reviews and manage out the people that need to go, but if you're doing great work, we want people to deal appreciated for doing it. the other thing that is really interesting, there are two reasons why people leave their jobs all around the world. number one, they don't feel appreciated for what they do. that's why recognition is so important if you want to build a sustainable great high performing company, and the other thing is they don't get along with their moss. so we try to create coach, not
bosses. we think boss is an archaic phrase. you want to have people being coaches and developing people and valuing people. and i talk about these principles in the book and i personally really believe this is a book that should be casc e cascaded in every company and around the world because if it does, the world would be a better place. >> i don't know what the statistics are or if you know them right here either, but the longevity of the typical young employee versus another company because of the ideals that you preach and the way you run your businesses but the things you say in the book? >> i think one of the things -- we studied great companies. when we were split off in 97 today, we looked at teams and said what are they doing. continuity and key process.'97 today, we looked at teams and said what are they doing. continuity and key process. if you can keep them in place and they keep getting better and
better, you will win. the companies that have constant turnover at the top and management changes, those are the companies that continually struggle. so this is why recognition is important. >> your turnover rates go down? >> at the team member level, we had like 150% team member turnover. we dropped it below 100. so we really improved our turnover rates and performance. and i think the thing i'm most proud of is that we do have continuity, we have great general managers all over the world. we're keeping these people because recognition is universal value. >> we've known each other a long time. this is really nice what you put here. i love this recognition. did i earn this? look at this note he wrote me. you've always -- why haven't you ever told me this before? >> well, i think you're really good at this jobs but i've seen you on the golf course, you're not the so good on the course. >> and now that you are retired,
you don't have to hide that single digit -- what are you, like a four? >> i'm a five. >> you never admitted that when you were on here. i saw you like holding the driver and -- >> i didn't play any golf. >> and now you admit you're a five. >> a recent five. >> we never actually played and we should sometime. i remember we were on the tenth at one of those courses, i hit a good drive. >> i think you hit a spectator. >> all right. when you walked in, i immediately asked you how are you doing. i didn't know that you had any issues going on. but i think we should talk about that. you hd a hell of a head of hair. >> no longer. it will be back. i came down with a rare form of male breast cancer. i've an excellent prognosis, but
i'm in tthin the middle of chemotherapy, radiation. but one of the things that i really have learned and it comes back to this rec nirks one great thing about having cancer is that you're not hit by a bus. you have time. and so what has really been interesting for me, i've been able to tell people i love them and appreciate them and it's come back from my friend, my family. it's come the other way. and in a strange kind of way, it's been a blessing in some regards. i actually expect to live a long life and come out of this, but it did strike me -- i met with an oncologist here in new york. in people missed it, right? >> yeah, two people did. but i met with an oncologist here in new york. she's famous. she's been doing oncology for 40 years. absolutely famous, best in the world. blessed to have her.
and i said what happened? she got up and she had this plastic key chain that they gave her at her 40 year anniversary. this is a person who has been saving lives for years. and renowned in the industry. p so if you can debt hcan get h you with your oncology, you will be the luckiest guy in the world. and i got her. but here is this person and i think about the organization she was working with. what a wasted opportunity. and obviously she needs to be recognized for what she does and she does it with her team. but i thought that this was just a classic example of what happens in every industry. medical industry, food service industry, technology. you pick it, people are not recognized. and that's why for me this is my vocation. is this why i
this is why i'm saying i'm refiring. starting ogo enterprises, all focused on recognizing the amazing people in your life. but it's going to be a powerful company and it will be a lot of fun. and i don't know if i'll make a lot of money. that's not the point. it's my vocation. but i'm on a mission to make the world a per place by getting people to recognize other people. >> great. david, stick around. we have some great guests that we've booked. >> looking forward to it. >> as we are. coming up, a rough ride for disney after the company's results missed the mark. we'll talk more about that company and the results after the break. and then target's plan to take on e-commerce, we hear there ceo brian cornell about the company's business strategy and get his outlook for the retail sector. actions speak louder.
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it is disappointing quarterly results. julia boorstin on bring down the numbers. take your pick. trouble in the house of mouse becoming a smaller world for disney. have you got any you want to throw in will? more than you can do with apple even. >> you've clearly been busy this morning. but here is the thing. disney's revenue growth up 4% and its earnings growth of 11%. those two areas did show growth. top and bottom line growth. but it was short of what wall street analysts projected. and that growth that you saw was driven by a massive quarter at the studio where operating income grew 27% on star wars the force awakens as well as utopia. but they took a charge to cancel its infinity console game business and many of the questions on the earnings call focused on how disney is managing the digital transition. iger saying that the inclusion of his net worth including espn
and sling and playstation view tv packages is a good thing saying disney will benefit and that the company's exploring ways to expand its disney life subscription app and more. >> we're blessed with brands and products that give us the opportunity to take them direct to consumer. it's not always that simple in that we have agreements with distributors that have to be considered, although they don't go forever. and obviously we have to get it right from a technology perspective. >> iger saying that there are no updates on the search for a successor, but he and the board are confident that there is plenty of time to find someone. for now he has no plans to extend his contract. weighing in on the stock declines, iger said he thinks disney should not be evaluated quarter to quarter because they're building brands that will pay off for many of their divisions over the long term.
>> that is the hope. thank you. coming up, amazon is ready to take on youtube. we'll get you details after the break. and then the ceo of target joins david novak to discuss the retail sector and business conditions. you both have a perfect driving record. >>perfect. no tickets. no accidents... >>that is until one of you clips a food truck, ruining your perfect record. >>yup... now, you would think your insurance company
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among the stories front and center this morning, mortgage applications are up 0.4% last week. according to mortgage bankers association, both new purchases and refinancings increased. the average 30 year mortgage rate dropped to 3.82%. watch manger fossil group is one of this morning's big stock losers. earnings and revenue fell short of street free throws. they also slashed full year
guidance. but shares at last check down 25%. hayes ci macy's is expected to report profit of 36 cents per share on revenue of a little over $5.9 billion. but obviously a lot of focus on how the retailers will be doing as we move into this part of earnings season. >> amazon is taking on youtube now. the company debuting its video direct service allowing video creators to post on amazon's streaming platform. amazon is giving the creator the option to sell, represent or make videos available to prime members or make them free with advertising p. >> amazon stock closing at a record high of $703 on tuesday. bernstein raised its price tar get to 1,000 saying it believes its margins will expand faster than expected. the rally helping make bezos $2 billion richer. who is counting.
making his net worth almost novak-like. it vaults him past carlos slim. who needs money when you have a name like carlos slim. >> serously. >> almost as cool as carlos danger. in fourth place on the forbes list-yeah, he herd heard that. he is happy. since it came out in march, bezos' net worth has grown by more than $15 billion. it's not funny, it's great. >> do you know why jeff has done so women -- >> recognition. >> he was a spokesperson for taco bell to one commercial.wom >> recognition. >> he was a spokesperson for taco bell to one commercial. he helped us launch the quesadilla. he's sit beiting around a table talking to a bunch of techies talking about the new handheld. >> when can i order one of those
with a corona? >> we're working on all kinds of things. >> good. hello. hate to disturb you. what there's going on? >> i was reading. >> i thought you were on netflix. >> i was doing more interview prep. you know what that is. i was reading. >> well, then read away. read away. >> thank you. you know what they haven't played yet this morning which is very unsettling? >> theme song for me or you? >> mine so that we could discuss a possible one for you because people have been tweeting ideas. >> i saw some. i saw actually a good one that was kind of -- >> there was a peter gun oig gl o gunn one. >> some people sent in knight rider. >> i'll take that.
i love the hofmeister. he's back totally buffed on bay watch still and he's in his 60s. never lost anything. all right. the wall of worry building for traditional retailers, but amazon is riding high. target recently tightened its grip on delivery to better compete with the e-commerce giant cracking town down on suppliers. shares of the sixth largest u.s. retailer are down about 1% over the past year. while amazon is up more than 60%. let's bring in now brian cornell, ceo of target and our guest host this morning is david novak of course. he is the executive chairman and former ceo of yum brands. brian, welcome to the program. nice to see you on squawk this morning. >> good morning. >> going into will week with the flood of retail earnings coming down the pike, we're under the narrative of amazon is crushing
everybody. eating everybody's lunch. nobody can keep up. is take what keeps you up at night, that singular company and how you can compete with it? >> well, the things that i think about every day really start with the guests we serve. and in the fourth quarter, you saw us report very strong digital performance. we actually led the industry with 31% increases online. but it really starts with us understanding our guests. apma make an and making sure th provide them with a great experience whether they're shopping in our store, vehicling and coming by to collect their order, or having us deliver it directly to them. so we think we're well positioned in an environment where when you look at the naums, stores still count. apdespite the rapid growth online, if you look at overall retail sales in 2015, over 90% of the business was still done in a physical store. so we're really focused on making sure that we make it very easy for our guests to shop anyway they want.
and we know some days they will be in our store, some days they will be shopping online. but we know we have to make sure we make it really easy and convenient for them. >> frankly some question whether you can keep up. i know one firm a couple of months ago and it was controversial at the time downgraded your stock and cited weak digital sales growth. they said frankly, and i'm quoting, they don't believe that you can reach your longer term same store sales growth of comps of 3%. in this environment of an amazon world. so guess spite everything that you just said, how do you convince investors and wall streetspite everything that you just said, how do you convince investors and wall street that you can reach your goals when everybody seems to be ko consumed with the amazon effect? >> we have to demonstrate consistent performance each and he ha every quarter. we had a very solid 2015.
we've now had six consecutive store increases. we led the industry will digital growth. so we're putting points on the board, but not resting on our laurls. we wake up every day really thinking about how we compete in the new environment, making sure we have the right content, maeg sure we're localizing our assortment to meet the needs of consumers, making sure we provide great customer service. but we have to make sure we're playing our game. an leveraging the great assets we have. but most importantly, recognizing and leveraging our team. as i've talked to consumers across the country, talking about the way they shop, they clearly told me that human interaction is still really important. they value our team members when they're in our stores. and we have to make sure we continue to leverage that personal touch that we can provide and the power of our target brand every time they
interact with our company. >> one of the things that i know you have going for you which any retailer would love to have is the power of the target brand. but i know when you came in a couple years ago, you had a lot of challenges. how did you balance the need to really change for the changing environment and at the same time provide the right kind of recognition that will mote vaet your front line? you have 300,000 team members as i understand. >> about 340,000, david. >> sorry about that. >> first of all, thanks for inviting me to join you today. and before i answer that question, as a director for yum, albeit a new one, i want to make sure we recognize you for the leadership you provided to the company for so many years. you've built incredible brands. but most importantly, you built an organization filled with exceptional talent and on behalf
of the board and all of the team members at yum, i think we need to appreciate and thank you for everything you've done. so david thanks for having me today. and to your question about coming to target when i joined in the summer of 2014, a lot has been written about the challenging times. but the approach i took and many of the approaches i took really come out of the book you've just written, i thought it was really important to me, particularly as an outsider, to come in, spend time and listen to the team. make sure they knew i valued their point of view, their experience. they had built this iconic brand. they built the $70 billion company that has 30 million guests shopping our stores every week and over 20 million shopsishop shopsishops solean. so it was important to spend time listening to them, recognize grat work that theyed that done. and really making sure i built
positive energy back inside of the organization. make sure they knew i believed in them. i was looking for them to provide the answers as we moved forward. and focus on recognition and appreciation has been critically important as we've regained momentum. >> speaking of challenges, businesses have wound up really in the middle of dealing with this north care carry bathroom law. you guys are no exception to that. i think tar get's policy was to allow people to use the bathroom of their choice. i see here theget's policy was allow people to use the bathroom of their choice. i see here the american family association has a boycott going of your stores now. how will you continue to navigate this one? >> we've had a long history embracing diversity and inclusion. a couple weeks ago, one of our team members sent me a note remining me that if we went back to the mid-60s, our company was one of the very first to use african-american models in their advertising. and back then, it wasn't well
received. we had a lot of tough feedback. but sitting here today, we know we made the right decision. and i certainly recognize that the staps nce we took, which wa similar to our retail peers, has received quite a bit of feedback and as a company we're constantly listening to our guests and team mecmbers. but what we also talked about is that the vast majority of our stores actually over 1400 of our stores already have a family restroom. and we're committed over the next few months to make sure every one of our stores has that option. because we want our guests to be welcomed in our stores. be b but if there is a question of safety, i can tell you and others our focus on safety is unwavered. and we want to make sure we provide a welcoming environment for all of our guests, one that
is safe, one that is comfortable, and that is our commitment over time. so we took a stance. and we will continue to embrace our belief of diversity, inclusion, just how important that is to our company. but we're also going to make sure our focus on safety is unwavering. and we will provide a great environment for our guests to shop every time they're in our stores. >> when you think about your 340,000 team members and your huge number of stores, how do you pay attention or how do you measure what is happening at the store level with your culture and with the environment that you're creating? >> it's one of my favorite things to do. one of the great parts of this job and you would know this this from your time at yum is to be able to go out and interface with the front line organization. i travel just about every week. i'm in stores every week. i get a chance to measure the
pulse of our team members on the front line. and most of high store visits are unannounced. people don't know when i'm coming in. so i get to see our stores the same way our guests do. and i get a sense for how our team members are feeling about our programs, our plans, the presentation we have for their guests. and i get a chance to listen to them every single week. and that is the way i stay close to the business. through the eyes of our front lean line team members who are out there every day talking to our guests, seeing how they shop. and i get a chance toean line t out there every day talking to our guests, seeing how they shop. and i get a chance toline team there every day talking to our guests, seeing how they shop. and i get a chance to quach watch them and learn from them. so bying for out there, working in the stores with them, understanding their challenges, help them work on solutions. but it's one of the great parts of my job and i know it was the same way for you when you traveled the world with yum. there is nothing quite like being out there with your team.
and i like to appear unannounced and i love catching people doing all the right things. there is nothing better than walking into a great store where looks like it's grand opening ready and they didn't know i was coming, but they're rujust doin the right things for the guests. >> i position abothink about ou relationship with china especially in the current political virn henvironment and think about the price of goods that you can offer or a walmart. people say maybe three quarters of a percent of inflation has been kept off the books -- not off the books, but we've held it down that low because the very low priced goods that we could get. it's a great relationship in that sense. but is to some extent -- do we look the other way for intellectual property and it's the current political
environment that china bashing has become very popular because people think we're getting the short he saend of the stick. does what you get from china make up for what we give away in other areas? >> well, one of the real keys to our company are both our design team and our sourcing team. and our sourcing teams are on the ground in china and in many countries around the world making sure we have products being produced with the highest quality. but also with the right ethical standards. so we try to make sure that we're delivering goods that are right for our guests and that we're getting the value we deserve. but we're certainly huge advocates for ttp and the expansion ever trade agreements to make sure that we have the balance to deliver the great value we need for our guests.ev to make sure that we have the balance to deliver the great value we need for our guests. so we recognize trade is a
critical part of what we do and very have great relationships in china, but also expanding our relationships around the world. >> if i said to you in a half a one percent economy the stay of the consumer is blank, how would you fill in the blank today? >> i think the state of the consumer hasn't changed dramatically over the last year p. and i think it's still very unpredictable. i think we've seen some stability. but i think this is a consumer that is still trying to read the tea leaves. and we need to make sure we understand what they're looking for, value is still very important, but we also recognize they're looking for great experience and newness. but i think this is a consumer that is incredibly cautious today. >> do you think the feds should raise rates this summer and what impact do you think that could have on retail in general just the way that up canner econsum about purchasing? >> there has been so much discussion around interest rate increases.
ic it's n i think the core consumer it's not something that they are thinking about. consumers are very focused on paying down debt. they're hanging their credit card balances very carefully despite the interest rate environment. so i think a rate hike will have very little influence on how consumers behave in the retail environment. >> will it influence how you run your own business so? >> certainly we look at rates very carefully. we have a fabulous balance sheet. we're a company that has had a terrific balance sheet for years. so we've had that leverage that we can work with. so we'll look at interest rate increases very carefully, but we're well positioned to perform despite any changes that might take place over the next year. >> what would be the single biggest change initiative you're working on today and how do you plan on using recognition to
drive that? >> i think one of the things that you and i have talked about over the years is at the end of the day, we can talk about strategies and initiatives. i've spent a lot of time talking about that with our team. but ultimately it always comes go down to people. and we've really been focused over the last year on what i'll call core behaviors. how do we make sure we have an organization that is bold, is accountable, is curious. curiosity is really important to us. how do we make sure they're looking externally, they understand consumers, they're studying their competition. they're really focused on one team. so we're really trying to make sure that as we put our strategies together and we put our initiatives together, from a team standpoint, we're focused on the right behaviors that will drive that execution. and i think it starts with our team holding themselves accountable. they have to be bold and be willing to take some risks. they have to make sure that they're looking at the consumer
and being curious. and they have to operate as one team. and i think that's critically important for us to succeed. >> brian, appreciate your time this morning. >> you bet. great to be here. david, thank you. >> thank you, brian. and coming up, secret lives of the super rich. celine dion's paradise is up for grabs. details after the break.
♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song.
there are mansions and then there aare celine dion's $45 million paradise. robert frank was given unprecedented access and he joins us with more. what part of florida? >> jupiter island. she lives in vegas now, so she's selling -- spending less time in jupiter islands, so now it's on the market for 45.5. we got a look inside the five building compound and inside a dean reon's bedroom. inside the many house, the living room has walls that disappear to create the ultimate indo indoor/outdoor entertainment area. also on the first floor, a guest suite for him in the thorn wing and another for her in the south. plus a mega family room with
plenty of space for he wielegan dining. but upstairs is where her mansion hits the high notes. we're in her bedroom. the platinum artist's giant custom has stress makes a california king seem tiny. the walls aren't painted, they're up holstered. an even the fireplace which is loo lined with fireproof mirrors has great ocean views. there is also a private water park and i couldn't leave without taking a ride on the water vid. it was so hot, i just jumped on in my suit. the thing about water slides in a suit, it kind of absorbs water, so it takes a while to get down. but it's a half million gallons of water in the private water park. just amazing. >> if you took off your suit, everyone would have seen the super thman of -- >> couldn't do that. another big hour coming your
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shares of disney plunging and putting equity futures under pressure. donald trump looks to consolidate support among republicans in his bid for the white house. but can he be the grand ol unifier. we'll ask ken langone. and the economy, political uncertainty and geopolitical forces, no topic off the tail with chairman and ceo jamie dimon joining us as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." welcome back to "squawk box" on cnbc first in business
worldwide. 90 minutes now from the opening bell. futures continue lower. disney is part of that. their numbers lower than expected.he top story? >> let's do a quick check of macy's. we've been waiting for their earnings to hit. trying to tdig through and brinu the results. the question is whether it would follow the likes of the negative news of gap. . and here on the scene some of the numbers. 40 centsed a justed, that would be a beat on the bottom the line anyway. but shares already down 47% on the year are lagging as revenues messed, about $5.771 billion,
$5.93 billion was the estimate there. macy's shares down a little bit more than 5%. >> at this point that is a four cent beat except for the revenue which is below expectation a as. we will get xguidance. >> rough bunch of quarters.as. we will get guidance. >> rough bunch of quarters.s. we will get guidance. >> rough bunch of quarters. >> but look at the last deck sa decade. inside that company, they know there needs to be change.deck decade. inside that company, they know there needs to be change. and nobody working harder than that management team. >> here it is, guidance was lowered. p. >> jcpenney was interesting because in noting some of the softness, appliances had been a strong suit and macy's has also tried to figure out is it best buy, what do they need to bring into the stores. >> i think when you have a company, biggest thing you have
to worry about is you're so internally focused, you're not the focused on the customer. you don't be a macy's or target without a keen sense of the customer. so i think it's a huge opportunity. >> even adjusted, we're talking 40 cents this year. terry lundgren says expectations meaningfully slowed beginning in mid large. and first quarterly results are actually below our original outlook. and then i still haven't seen -- >> do they say what comps are? street was looking for a fifth consecutive same store sales drop and seventh straight drop in operating income. >> noting the uncertain direction of consumer spending makes predictions of future
performance difficult, macy's now expects full year 2016 comp sales in the range of 3% to 4%. and then on a known bhafs, 50 bhafs points lower than that p. previous guidance was i guess better than that. >> shares down more than 8% thousand. s so a lot has railroaded been priced in. >> and that is a new low. and maybe more than a yearly low. we'll get the chart and figure it out. but at least -- high is above 70. >> they have their challenges, but never underestimate the power of the big brands. >> among today's top stories, disneys falling short of earnings estimates for the first time in five years. theme park revenue was weaker than expected.
shares down about 5.5%. staples and office depot calling off their merger after a federal judge ordered the deal temporarily halted because of antitrust concerns. the automaker posting -- toyota posting its third straight year of record profit on a week yen and demand pickup in the u.s. toyota warning as the yen rises, its exports will be less profitable weighing on earnings for the year. >> ignore me. in economic news -- >> are you watching videos? >> there are multiple things happening this morning. >> was that like a millennial chat or something? what the hell was that? >> no, katie cho, good morning. that is my cousin. in economic news, mortgage applications ending higher despite the lowest interest rates in nearly three years. refinancing applications are now 23% higher than a year ago.
>> i would just check to see -- it's not a dow component, ma macy's, but that was like more arrivi more arriving. i wouldn't be surprised if the futures said that's crappy. it's an important retailer and a gauge of the health of the consumer right now. and it said mid march, too, which the market instability with january and february -- >> this is a somewhat controversial thing to bring up, but if it wasn't terry lund gasoline running this business, would people be saying it's time to start thinking about new management? >> he does have a lot of good will.about new management? >> he does have a lot of good will. sometimes you defer to cramer on these things. people still think terry is a great ceo. probably tough for anyone to manage much better.
>> you were speaking generically, but i'm sure were speaking of terry. >> you have to bet on the people. there is not a better retailer than i know of than terry lund gasoline. i guarantee you he knows what the problems are. and i wouldn't bet xwrens him. against him. his experience is his best asset. if you're not in tune with the game, it's time to go on. but this guy is in the game. >> i think maybe it's execution specific, but maybe this is just a tough moment to be in this type of business. >> people figure these moments out. the best thing about business is defining the unfinished business that has to be done. i guarantee you the companies that are the big brands, smart leaders, they're uncovering every stone and they will get after it. >> and wire also watching oil prices. at 10:30, we'll get weekly oil and gas inventorienventories.
price complex up, natural gas down. staying on the cakcamommodity t goldman sax cautions there is not much room for further increases. the firm points to weaker u.s. dollar. gold man's three month price target for gold is now $1200 per ounce. so not that bullish considering it's at 1280. i want to know everything. your friends are messaging you. who are you -- what was that? >> concentrate. >> i am. is this not halftime report. this is serious. >> you need to get more into positive recognition. >> he has been doing a good job, but i just want to make sure he continues to. >> read o great one. >> okay, you're great, you're
great. >> read the boog. you need help. >> stocks to watch this morning, wendy's posting better than expected quarterly results raising its full year forecast, as well. same restaurant sales rising 3.6%. fossil results following short. the watch maker now slashing its guidance blaming currency headwinds. and electronic arts beating the street. the company star wars battle front game helped drive results. nuance communications missing the mark as the firm saw revenues slip in its medical transcriptions and mobile units. alaska air will replace sandisk in the s&p 500 after the close of trading tomorrow as is sandi will be bought. and expectations for seaworld are ahead of themselves and that the company will suffer from a lag of pricing power. the challenges continue for china's economy. moody's raising a red flag over
the country's debt. exports are stalling and either are the to the receipt tore rec is trading hostile environment. joining us steven roach from yale university. david novak of course with us, as well. thanks for being here. and you guys are perfect to have this conversation about what is happening in china today because frankly, the news flow seems to keep getting worse. i'm wondering if it will be worth it for companies to take the risk they're given some of the political crackdowns going on. >> i think china is unlike most economies can operate both this dealing with its short term problems as well as staying focused on its long term strategic issues. it's definitely addressing the short term slowdown with monetary and fiscal policy i think overnight there was a
story on another big infrastructure initiative by the chine chinese government to address the short term issues. you about i think the big story is the extra strategic push and given the weakness the american consumer, which i've talked about for years, it will be great to have a new consumer driving the global economy in the years ahead. >> we take your point obviously a huge population and a developing one. but isn't the really big story xi jinping? the stifling of dissent that we're seeing and kicking out of nonprofits. i mean, it feels like every day you wake p apread the paper and it seems like there more power consolidation, more moves that are sort of inflaming tensions in the south china sea. sort of a -- was this the way you exhibpected it to go a coup years ago? >> first of all, my advice is when you wake up in the morning,
don't read the newspapers. if you continue to do that, you may just want to stay this bed on lots of topics. but xi jinping clearly has a firm hand on dealing with a lot of issues that make us uncomfortable in the west. and despite our understandable discomfort, i think we have to be objective in looking lieu that to assess the fundamentals that are driving the chinese economy. >> the chinese people themselves, if you're trying to foster successful transition to empower your middle class, how can you both empower the himidd class while stifling their excess ability? >> three things and they're doing it. one, job kregs in tcreation in services economy. generates about 20% more jobs per unit of output than does manufacturing and construction.
that's where the impetus is. secondly, urbanization. there are 15 million more of them each year earn three times their counterparts. and thirdly the social safety net. if they continue to push in areas of dealing with social security and health care, this will give the middle class the confidence to spend. the issues of dissent that you rightfully point out do not affect the macro fundamentals. and we have to make a distinction between what is abhorrent to us from our western point of view and the macro fundamentals of the new chinese middle class summer. >> i think one of the things that people don't understand a lot of times is just how much china really is changing. i think you're absolutely right. the big story is the growing consumer class. people don't realize that there
are twice as many cell tone uph users in china than will is the united states population. this economy and this consumer class is continuing to glow aro the reason why yum has been such a great stock. as we go forward, the reason why we think yum will be an even better investment the next ten years. >> it's a fair point. and the connectivity, especially the smartphone paced connectivity, is what sk and he will rataccelerates the pace. china's e-commerce share of total retail sales is more than double that of the united states and rapidly expanding that gap. they don't need to do bricks and mortar, they do bytes and bits. >> the whole world use use quite a bit more growth. >> would you take the position of donald trump's china envoy?
if offered, do you think that would be a good job for you? >> joe, i haven't had a long conference with the donald in a couple of decades. and anything he offers pea i would really prefer to have it vetted by you as a much closer relationship to donald trump. >> good answer. >> yeah, it was. it is kind of a frenemy sim by on the tick rens ship we have. we get a lot of benefits from those cheap imports. but then again, sometimes it seems like we do look the other way just because we have to. and say they got a lot of our at the time debt, they steal stuff. they got the us right where me want us.atthe time debt, they s stuff. they got the us right where me want us. >> what i've stressed is that there is a co-dependent relationship. and when one partner changes the
rules of engagement, it has implications for the other. trump by focusing on this big trade deficit which he continually distorts and misses the number on, which is another issue, misses the fact that america ran trade deficits last year with 101 countries. we have a multilat tral trade problem because we don't save. >> and they move the goal posts from time to time during the game. >> and most co-depends inside cities, you're in therapy for years. >> therapy will help you, i know that. >> than, stephen. macy's shares slammed but futures are holding up. we'll bring you the charts. plus ken langone, going to try to get preliminary him to say w. we'll hear what he had to say about donald trump and the attempts to unify the party. and whether trump wants the
check out shares of macy's. they have recovered a little bit. revenue fell short. retailers slashing its full year profit view and we are seeing some cloollateral damage. check that out. that's something there. >> that's ugly. >> almost 3% across the board. and yet there is the dow futures, you can see them on the right, dow futures only down about 38. >> why do you think that is? >> i don't know why. >> you know why. >> tell me why. because the fed is still around, aren't they? right? retail gets worse, futures get better. why is that? coming up, marco rubio weighing in on the presidential race this morning. we'll show you what he said about donald trump. plus special guest ken langone is here with his take on trump as a presumed republican nominee. looking for balance in your digestive system?
former presidential candidate marco rubio on the "today" show this morning weighing in on the race. and whether he is eventually going to pack trump. >> all of the policy differences i have with him remain. all of the reservations that i have about his campaign remain. i clearly didn't want us to be in the position we are in today. i was a candidate for president who tried to be the nominee myself. it didn't work out. i don't want hillary clinton to win. donald trump is the only other choice on the ballot. i recognize that. i have a pledge to support the nominee on top of it and i intend to keep it. what i don't intend to do is spend the next six months by the way taking shots at donald. whether we like it or not, he has earned the right to make his case to the american people and i'll respect that. >> at the least there are some guys -- >> couldn't balance his checkbook and wants to run the presidency of the united states. >> i wasn't going to say anything. >> i am. god damn kid knows more about foreclosures than i know about home depot. >> the other day said i don't
have a lot in ghon with donald trump. he definitely didn't have voters in primary states in common voting for him. >> trump had a deal with the banks. this kid didn't. >> ken langone if you haven't noticed is here. he's co-foupnder of home depot. and we'll have more time today because you won't have to answer andrew's questions about whether you will vote for hillary. >> leave andrew alone. >> but we donpn't need to go in that. >> everybody should have one liberal friend. he covers everybody. >> i was kidding you off camera. so you started with christie. he's gone. then you wrept went to kasich. he's gone. good tru does trump want you backing him some. >> no. my friend harris said you haven't had a winner since roosevelt's third term. last time i won was bush '88.
>> you soo -- >> but we were spoilers. perot. >> you know donald trump. when you read some of the media coverage, are there times when -- i see racist and just about every line. i see misogynist in just about every line. i see zen -- can can a guy like that get elected? >> yes. we're here to talk about david. what are we talking about trump? if i want to talk about trump, i get a hi get a higher rate. >> you were already fully engaged. >> i'm not engaged. i said i'm supporting trump. as of now officially i'm out of the political fund raising business. >> you are? >> i'm going to be 81. enough is enough. i've done my time in jail. >> all right. you had been involved this year, right sf? >> i was involved.
not very well. i spoke to john kasich the other day. he's a good man. he really is. >> would he take the vp? >> no, absolutely not. >> why not the fund raising business? >> why some number one, when they give money, they don't give it to the candidate, they give it to me. now, when they have a candidate, they call me and i have to give it to them. so when you're in the fund raising business, whether charity or otherwise, there are ious out there and guess what, you're on them. and more importantly, trump proved one thing. he didn't take money. what, $40 million he spent? pea nuts. >> what about now hoe. sounds like he's going to raise more funds. is it needs to? >> of course he needs to.
taco bell and pizza hut, that's who we're here to talk about. >> ken does come on when you're thought the guest host, but he is on today. >> my friend asked me to come on as a guest. not a host. >> people always ask you about the political scene. but one of the things that i think people -- obviously you're very successful, but you've invested -- >> i'm a loser in politics big time. p. >> when it comes to being an investor, you're a big time winner. when you look at a company, how do you look at a company's culture and how much of a value does that play in terms of who you actually invest in? in i only invest in companies in people i believe in. people create cultures. if you have a good person running a company, you have a good shot at having a great culture. but we have to be sure the guy can push it down a level.
we from day one when we started home depot, and by the way from day one when you came in in 1997 when we spun yum brands off and i'm proud to say i'm a founding director of yum after pepsi spun it off, the whole notion is actions speak louderyou got in p of people, they knew they were the most important person in your life that very second. and you can't fake that. and if you can get into the w l heads of people, and i call them little people, i don't mean it in if in that sense, but the people that you never hear about, the person who gets up at 3:00 because the job starts at 5:00 or the night shift people at taco bell -- >> or "squawk box." 3:00 in the morning. >> yeah, but you get paid a lot of money. but when when they understand that they really matter and they make a difference, that's the name of the game. so it's all about the people and it starts at the very top.
i remember i was contemplating making apeninvestment in a company and he was walking down the street with the ceo and all of a sudden he turns to a guy and he says go in that store and get me a pack of cigarettes. and i said ain't no way i'm buying this stock. no way. little things. one of the things i still love to do when i'm thinking about hiing somebody or a board member, i like to take them to a restaurant and see how they interact with the waiter or waitress. this this is what this is all -- the more we dumb down in terms of recognizing we're not so important, we aren't so critical, those 400 plus thousand kids at the home depot right now, those people are who your face at hope depot is. when you go in there, that kid -- by the way, anybody kid, anybody under 80 1/2. but i watched what david has done. so the culture is created by the
belief of the person starting at the top. and it goes down to every level. and what does that include? little things like i say the most important things, a kind word, a thoughtful gesture. and damn it, if you are a leader and you haven't got passion and enthusiasm for what you're doing, don't expect your people to have it. right? >> when we first were spun off, i took our chief operating officer and we all went to home depot and i noticed as soon as we got there to the lot, immediately started going and getting like a cart. and we had a pretty significant contingency of executives. the special aids wanted you to show you a display. and you dropped us like a hot -- and you went and saw that display or you made that kid feel so special. but one thing that i noticed that you it because i talk about this my book o great one, most important thing you can can do o listen to them.
but you have these round tables with people and you would literally give them your phone number and say if you have an issue, call me. >> and let me tell you something else. you're right. and you can't fake it. so god endowed me with a lot of energy thank god, and guidance as a youngster by my parents starting with my parents about the importance of being nice to people. of being kind to people, of saying thank you. of the little thing this is life that we kind of take for granted. kid is having a bad day, put your arm around him and say tomorrow will be better. particularly if that kid has done a good job. we all have bad days. but i go back to you and taking people with you, your last brooke, this guy can write books, oh, my god. i'm running out of space in my library for all his books. i love him. but you got to really honestly sincerely care about those kids
that are out there every damn day, pushing carts and taking a lot of heat from unreasonable customers and having to smile through it. and it works p. so people and culture are like that. and if you do it, it's wondrous what will happen. holy smokes, i can't believe this happened. who hell would are dreamed three guys, $2 million. i think we've given back almost $100 million to our owners. and we have a market cap today of $180 million. do you know where it came from? those kids in the stores. not us. them. >> ken, are you booked for -- you will be back to talk about politics as a guest host. when, do you know? >> june 8, i think. >> awesome. okay. good. and we'll ask you a lot of stuff then. >> are you pushing me out now? are you hinting get out of here
old man? >> they're yelling at me. >> fdny? you helped raise a huge amount of money. >> everybody out there buy ogo. by the way that's the other thing. all the money he makes on these books, all goes to charity. every single nickel of it. >> we'll show it a few times. i think we made a screen of it. thank you. coming up, this morning's biggest stock movers and jpmorgan chairman and ceo jamie dimon joins us live. we'll talk about the bank, markets politics and much more. the heirloom tomato.
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♪ no, you're not ♪ yogonna watch it! ♪tch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. welcome back. here is what is makes headlines this morning. retail stocks under pressure after macmacy's slashed either l year forecast. across retail, jcpenney down 3 1/2.
kohl's already struggling yesterday. two senators are urging airlines to crop their fees on checked baggage. he h ed harkmarkey and blumenthal sa could help long security lines. and commhipotle shares have tumbled. >> i'd love to ask you about chipotle. you never know when something will blind side you. you have to be ready for it and manage through it. >> absolutely. chipotle is a very good brand. we've done a lot of research with mmillennials. three brands overintexted. one is starbucks, the other taco bell and the other is chipotle. and i think obviously its had its challenges, but great brands will come back. it will just take time. i think they're in a deeper hole
because of their positioning, their quality of the xwreeingres and their process. so consumers will probably take a little bit longer to forget, but they will forget and they will come back. >> i was giving you a compliment about how you handled the ridiculous taco bell situation. you had that done in a month and that could have been existential, too. >> when you have a problem, you have to acknowledge and apologize if you need to apologize and have an action plan to do something about it. you have to be very direct. and we were blessed to have a really great public affairs guy who was a master at that and he helped coach me through a lot of those situations. but it's important that brands are strong andill come back. and chipotle has a bigger challenge because they have taco bell to deal with. our food is better, our food a better value. why ever go to chipotle.
coming up, jamie tie monddi join us live. his take on the markets and the financial industry. day, we're sw technologies make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients: to advance the future of medicine with digital,
jamie could i monddimon. you know it's coming. you're always very honest and straightforward. yesterday we had morgan stanley on and he said there is still a lot of financial activity not moving ahead and that no matter who is elected in november, it's going to get better than what it's been for the financial sector. do yyou agree with that? >> joe, good morning. scott, kelly and my buddies david and ken langone, a pleasure to be on with you. look, it's very hard to forecast the future. we see plenty of activity now bond markets seem to be rather wide open. there is a lot of m&a chatter. obviously far better in april and may than it was in january and february. and i'm hoping that whoever becomes president, the american economy continues to do well. i do think if the next president does the right things around immigration, corporate and
individual tax reform, proper infrastructure spending, america will be booming and that boom will help the people at the bottom of the ladder. in. >> you've been outspoken in the past, some of the great comments that you've made.n. >> you've been outspoken in the past, some of the great comments that you've made.. >> you've been outspoken in the past, some of the great comments that you've made. >> you've been outspoken in the past, some of the great comments that you've made. i'm sure there was a time in hillary clinton's past where she looked like she might be friendly to the private sector and banking group. in your heart of hearts, do you think she still is and has been pushed too far left by bernie sanders or is this the real hillary we're seeing now and would it be detrimental to your business? >> my friends out there ken and david know that another great board member of ours when yum brands went public a long time ago was john wineburg. he used to say some people grow in to the job and some people swell into it. you don't really know what someone will be like when they get the big job and that could be the president or the ceo until they're doing it.
so i don't know. what i know that doesn't work is denigration, scapegoat, finger pointing and yetting. and with those workers collaboration and animal circumstance getting people together across the spectrum, not for profit, education, government and business, and things will work. you can make them work for everybody. >> jamie, i appreciate you calling in, i think you're in silicon valley. what are you doing out there? >> i'm with my management team and we are actually visiting all the companies out here, large and small, talking about cloud, data, security, machine learning, infrastructure, all the things that we need to stay on top of it. it's been great. we're learning a lot. probably going to make a lot of different things when we get back to new york. >> one of the things that we talked about obviously, you're in an industry that constantly gets vilified. how do you pump up the troops and make them realize the great service they're doing for our
country? >> first let me tell you i'm thrilled to see you on the show and getting through your treatments and all that. for all the people in the tv, david novak is one of the great business leaders the last 30 or 40 years. and david, you taught us all a lot because i remember when we went public at yum brands, there is this thought out there that you have to crawl over broken glass to succeed, you have to kill the other guy. and what is really is, people have to learn to work together. sometimes it's more about heart than it is about mind. and you work with the great andy pearson and it was amazing to watch the two of you bond and learn from each other. and the thing he learned from you was recognition. and recognition is actually -- i learned that from you. i didn't quite fully understand it until i saw you do it. but it's not that you recognize other people. at the heart of recognition is you're acknowledging you don't know it all. you're acknowledging other people are really good. you're applauding other people for their contributions.
you're telling them that you want to hear what they have to say. it opens up a whole other door of management if it's done right and it feeds right into that part of good management is also about the heart. it's about people trusting you and people knowing you give a damn. and in our business, obviously i worry about what does it mean when we have -- that we have to protect our company, serve our clients. sorry day we say to the troops we'll satisfy the regulators, obviously we'll take a lot of heat in the press, but to a great job for your clients. and we have a great company and we're doing a great job for our clients and that's what really matters. >> i'd like to ask you about the perception of the large banks. on april 5, you wrote an op-ed in the "wall street journal" on how large and small banks should be allies rather than enemies. somebody with the independent community bankers association responded by saying, quote -- and i'd like your reaction -- just because jamie dimon says
let's sing consukumbaya doesn't community banks will line up like a greek chorus. this is just an interest to link the mega banks to community banks in order to mitigate the political heat on them right now. ceos of all of the too big to fail banks are clearly worried about the political climate. how would you respond? >> i think the guy who wrote that is a jerk. i was stating a fact. we are one of the biggest banks. we to modo mortgage lending for them, fx for them. i have 800 of them or something like that. the american economy is symbiotic. every single time people do well somewhere, it helps other people. small business, middle market are sim ymbiotisymbiotic. huge company this is 40 countries around the world. a community bank can't do that. i'm completely sympathetic to the community bank saying some of these regulations are killing us, these railroad meant fwerea
banks. i completely agree with that. but it at the end of the day, we have been there for our clients through sick thick and then incg the community banks. we were there for them when they had nowhere else to go. we rolled over, all of the big bank, trillions of dollars of loans in the crisis when everybody else was running to the exits. everybody. and i'm talking about hedge funds, investor, individuals. but we rolled over the loans to middle market company, small business, small banks. and i just think this bank on bank violence and even this company to company violence is just wrong. we should stop. at one point it denigrates our country. we should work together to get things right and the business community should be more of one voice to make sure that we try to build conducive to growing business. 145 million people work in america. 125 million work for business. that's where the jobs come from and that's what we have to grow
and then that will help all these other issues that people talk about all the time. part of which are causing the anger in these population. >> where does that leave some of the start up online programs va the way that sentiment has turned kind of sour against lending club in these other platforms? >> when you say sentiment, sentiment is you. it's the press. you love them and then hate them and go up and down, stuff like that. i am a great believer that it is a wonderful thing in america that people try to compete with each other. it's called capitalism. of course companies are looking for weaknesses in banks and things they can do faster. business grows when they can do something better, faster, quicker or cheaper for a customer. if they can do that better than me, so be it. i have to learn or get better, or i lose. some of these online lenders are quite good at what they're doing. jeff bezos always says your margin is my opportunity. in this case i'm more expensive. but what they have done they're quite good not just about
technology but making it simpler for the customer. going online and getting the loan in 15 minutes as opposed to 15 days to a bank. my attitude is those are great stuff. if they can make it better, they should. the biggest issue with online lenders which i've been very consistent about this they call marketplace borrowers, they have to borrow in the marketplace individuals hedge funds or securitized markets, they won't be there in tough times. and that's their problem. not the other side of it. and so you saw that january to february, you saw a lot of them looking for diversified source of funding. i think -- i mean, i was with one yesterday, i think really good so you have to evaluate them one by one. i don't want to draw them all with the same brush. >> jamie, you've been outspoken on the regulatory headwinds you've been facing. i think you go to work maybe with the helmet on some days. so here we are bernie sanders won again yesterday. elizabeth warren is, you know, a demagogue in the democratic party. neil cathinks big banks should
broke up. do you expect the regulatory environment in the next few years greater to, equal to or less than the last eight years? >> oh, i think it's slowly getting better. when i travel around america i get a huge amount of complaints from small businesses, middle markets, large companies, it's no question part of what's slowing the economy. i'm hoping -- i don't know, joe, but i'm hoping the next president looks at it and says what's the good regulations? what are the ones hampering and haven't created good and it's normal to clean them up and protect the people, protect the consumer but also the economy. >> that's funny. >> so it can't get any worse. that's amazing with the rhetoric that we have on really both sides. but i think you're probably right. how could it get worse? >> changing subject a little bit. i know j.p. morgan chase is doing a lot with detroit. what's going on there and why, jamie? >> obviously one of the most important things we do as a bank
is bank consumers and small and large businesses in the city, and that's what we do in detroit. but what we saw in detroit was a governor, a republican governor, a democratic mayor who said we've got to fix this city. the population had gone from 1.8 million to some 700,000, a train wreck you could see decades ago, two former mayors in jail, they need to fix it, we need jobs, education, street lights on, police going to more areas, we need to get rid of 40,000 abandoned homes, build affordable housing. so they had to make progress across this huge front and do it all at once. but that is the right thing for the population. not yelling and screaming at each other. so we said we're all in. we're going to help these guys. we sent a team of people up to detroit literally for a long period of time said what can we do to help to accelerate this. we do things like start affordable housing, start entrepreneurs. we've been up there many times. we have given a lot of advice
for not for profits and that mayor is unbelievable. actually, the population from what we can estimate has actually started to grow again. companies are moving in, there's affordable housing. we're training kids in robotics that are immediately hired for jobs at the local manufacturing companies. and it's starting to work. i'm hoping if it does work we look back and this has been a renaissance and an example of america after having made a mistake coming together and fixing it. >> jamie, this is scott again. could you have foreseen the kind of market reaction that took place after you bought shares of j.p. morgan? around these parts we're calling it the dimon bottom. the dow's up 12% since then and financial stocks had done well since you made that move. >> listen, it could just as easily gone down after i bought it and say dimon is as dumb as the buyers. i thought it was cheap, massively reacting to some of the news around the world and fortunately it happened that way and i see how risky that is now
that that got so much press. >> i just said, you know -- >> how much did you buy, jamie? you're a billionaire. >> found pocket change in your couch cushion. >> that was not a commentary on the market, commentary on his stock. >> what do you make the market took it as a vote of confidence that no matter how much stock you bought the fact at that moment on february 10th or whenever it was, it marked a near-term bottom at least for the market. that people saw what you did and said, okay, if jamie's jumping in to his stock at this time, maybe we should start buying stocks again. >> i think it was serendipity that i bought at the bottom as opposed to i made the stock market go up. the stock market has, you know, hundreds of millions of participants making their own decisions every day. so i think it was just fortunate on the other side. >> all right. jamie dimon, thank you for calling in. we appreciate it. >> guys, david, i miss you. >> miss you too, pal. >> getting better. >> thank you very much.
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our guest host has been david novak, former ceo of yum brands. you want to talk about this china spin? >> absolutely. i think what we're doing is creating a very unique situation for our company. first of all yum china has been the growth driver of our business and we think will be a growth driver in the future. >> has had a number of problems. >> yeah, but -- >> not forget about that. >> let me tell you something, two most powerful brands coming and look at mcdonald's, nine months ago everybody said it was dead. we are the mcdonald's in china. what we're doing is spinning it off as our largest franchisee. so yum china will become the largest china we have and give us a 3% franchise fee into perpetuity. this is a very unique situation that allows us to give china an opportunity they've earned. it's a great business. they have over 20% operating margins. they'll have free cash flow. they'll be able to self-fund all their cap x as we go forward. and they'll become more and more a chinese company.
and, you know, they'll be a pure china play. remember in china we own all our assets. as china becomes our line licensee, 90% franchise owned and we become a company that gives asset light and we create two great companies. so this is where we really create two powerful independent companies that can grow as we move into the future. >> good having you here. >> recognize you as a good guest host and for bringing great guests. and you deserve that recognition. thank you. >> thank you very much. i appreciate it, joe. >> you're welcome. join us tomorrow. "squawk on the street" is next. ♪ this is how we do it ♪ this is how we do it good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange