tv Squawk Box CNBC May 23, 2016 6:00am-9:01am EDT
now. >> live from new york where business never sleeps, this is "squawk box." >> good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick along with joe kernan and andrew ross sorkin. the dow was down for the week but the s&p was slightly higher and the nasdaq saw a bit of a rally last week. you can see the futures are under pressure with the dow futures down by about 22 points below fair value. s&p futures off by 2.5. and the nasdaq down 5.5. overnight in asia you saw green arrows across the board. overnight we saw better news out of japan and hang seng. the market closed for japan down half a percent. the hang seng down .25%. the shanghai was up .60%. check out the early trading in europe and you'll see red arrows
there. the cac in france down by close to 1%. in italy the ftse was down by 2.19%. the dax is off by just ov over .60%. also, we'll check out crude oil prices today. crude oil after a big rebound you can see is down by 1.25%. wti for july, that is a new contract, is now trading at $47.81. okay. we have a big top story to talk about this morning. a potential deal, jer m bayer o a deal valued at $62 billion to buy monsanto. let's talk to bayer's ceo about th
this, werner baumann, your decision came about how? >> monsanto received a private offer from us. it was out in the open and we want to explain to the public and to shareholders what the content of the offer is and why it is so attractive to shareholders. >> should we be taking your public stance as one where there are private negotiations are taking place, or should we take you going public to educate the public on what is going on and to put pressure on monsanto? >> well, we are early days at this point in time. and we have submitted our offer. we are still waiting for an answer from monsanto's board.
off directors, we think the offer is highly attractive and are really looking forward to a constructive discussion with monsanto's board of directors going forward. but again, now we have to wait for monsanto's board to come back to us and react to our very attractive offer. >> can you walk us through how you think about some of the regulatory issues? and i raise this because clearly, for example, syngenta thought a transaction with monsanto would not pass regulatory scrutiny. of course, they thought the price was too low at that time, too, but to the extent that you could explain why this transaction would go through and perhaps that one wouldn't. or if you had been on pine on that one, i would love to hear your view. >> yes. that's actually an excellent question. the beauty of this combination is that both businesses are highly complimentary. it is very much a growth story that is behind the combination.
the product portfolios compliment each other perfectly. the regional fit is really great. and while there will be at one point or another some discussions with regulators, we don't see this as a major issue based on the assessment we have on the table from our experts and also our advisers. while i cannot comment on how things went with syngenta at the time, we don't see this as a major impediment. at the same time, we also believe that as a company that has a 150 years heritage in the u.s. as a good and strong corporate citizen that has more employees in the u.s. than monsanto, we are a very, very strong company to actually comply with monsanto and the great science and people they bring into this combination. >> werner, when the street sees a deal they think will get through without questions from regulators or hurdles, you
generally see the stock trading at the offer price. but you're offering $122 a share and this morning monsanto is trading at $111 a share. obviously, traders are thinking there are risks to get this deal done? what do you think they are if it's not regulatory risks? >> well, we don't see any major risks, to be frank. our offer is for already addressing the offer that is fully financed, and with it is an offer that does not have a lot of uncertainty. >> so they are wrong for not bidding it up to $122? >> well, i don't know if the street is wrong, but since this is breaking news, the street will also have to take some time to be educated and to maybe understand the offer.
from our perspective, it is high certainty from the bayer shareholders andry are not going to let this -- >> how does your tax structure allow you to pay more for a u.s. company, or does it? >> well, to address this very much up front and straightforward, we are in the business of building businesses. we are not in the business of engineering texas. this is something that stands on its own rational so there's no tech engineering to help us pray for this transaction. it stands on the own strategic measur
measures. >> can i ask, what is your corporate tax rate and how would that impact the combined corporate tax rate? >> well, our corporate tax rate is about 25%, give or take. the tax rate of monsanto is 26.5%. so very much alike. and you'll see with the small differential, other than thinking about very injeengeniu ideas. the u.s. in st. louis think it's a telling story on how we think about corporate citizenship and our ability to view fair
taxpayers also to the u.s. and that is about all i can say about that. >> thank you. we look forward to seeing how this plays out. we hope you come back as this does play out. so thank you. >> many thanks for having me. thank you. >> thanks. depending on the chinese to sell us bacon, hopefully we'll have a few seeds left to grow a few crowds if the germans like us. i hope we don't make them mad. it's a fairly busy week on the data front. look for april, a new home sale is tomorrow. we'll get pending home sales on friday. on friday it's the second estimate of first quarter gdp. and then later we'll get the first estimate on second quarter gdp. i -- i believe it is second on
gannett. and anthem and cigna have accused each other of regulatory submissions. it is much more difficult for companies not on the same page to get these passed. >> this is a fascinating story. >> i did read it. >> particularly the area that anthem is suing express scripps. cigna says don't do that. if you do that, express scripps will scream bloody murder at regulators and you will see -- this was seen over and over again in multiple transactions. >> you don't rile things ahead of -- there were debates on how to deal with netflix when they were trying to buy time warmer cable. prior to a company -- >> they are pushing for you to
agree to something now that you might not agree to later. >> it was a fascinating story to read. it's in "the wall street journal." this is for joseph, you will like the way you look. >> do we have pictures of the guy? >> george zimmerman, the founder of the men's wearhouse is plotting his return. he does look nice this morning. two start-ups to compete with. a combination of what he has built the last couple of years. there were some people there not that friendly with him. >> this is george zimmer. >> not george zimmerman. >> i wondered why we were doing that -- >> it was an unrelated story making its way in. >> if you are moving as we go to
real news. >> we'll check out the numbers one more time. i thought japan closed higher. >> on the way in, i thought the european markets were up. >> a little bit of weakness is working in. >> the dow is 25 points below s&p value. the nasdaq down by 6. on friday all the major markets closed higher. but for the week you still saw the dow down for the week. the s&p was slightly higher for the week. take a look at the bond market because this is where the real action was last week. you saw the ten-year notarize by 14 basis points after the fed minutes were released on wednesday. from the beginning of the week to the end of the week, i went to 4.8%. check out what is happening with
the dollar, it is down for 2016 against a basket of major currencies. it's up against the euro at 1.12. the pound is trading at 144.74. and gold prices are under pressure, 1251.80 an ounce. >> that's a big take in the journ journal. wait until june, we could be back to 108 on the euro. >> that's the big question. the currency issue, not the fed. the traders need to figure out up this, figure this out.
the dow coming off the first losing streak since 2014. joining me to talk about that and where the markets are headed from here, peter boomfar, chief market analyst and cnbc contributor. and peter, we'll start with you. the markets are ready for a fed rate hike. >> the skittishness in the markets that we topped out with a month ago is sending a signal maybe they are not. the markets won't be ready f for -- both bond and stock markets, we are seven year and is a bull market. that's elevated by fed --
>> do you any the markets will decline? >> i don't think the market is expensive, low rates, low growth, if rates back this up, then the market will be exposed as being somewhat expensive. i'm very skeptical that is going to happen. the. >> what kind of raan impact? >> when you look at equity evaluation, it's really the long-term interest rate that sets the discount rate. what is happening at the short end of the curve is not as important as the long year. in the context of where we are, that is not and huge move. but if the ten-year went to 2.5% to 3%, evaluation is testing the
waters here to see if they can get away with a june hike. with 50% odds we are not quite there yet. >> peter, you are still talking about the incredibly low historically based interest rates. now, when you compare it to what is happening in europe right now or japan, rates look pretty high. i guess that's the big question, historically the rates have been very low, but relatively to the rest of the globe we look pretty expensive. >> that creates the other issue of the fed with the dollar rally. but i don't think the fed will get away with a multitude of rate hikes rather than just one more. look at the context, the economy is growing less than 2%. earnings are declining and profit margins are rolling over. and the markets are expensive. to raise rates in that context,
i don't think they can -- do you think the markets can handle it? >> look what happened the first time and we had a hissy-fit. the markets have done nothing since. >> i think of that with children and the way to do that is not to cave. >> we know the fed has caved every single time so maybe this time they won't. >> you'll be telling people to get to work in the markets where their opportunity is, especially into the summer months when people tend to sale and go away. i think if the current impasse between the fed and the markets sets up another volatility event and we get another 5% to 10% decline, that would be an interesting time to look. but -- >> what about right now, though? >> the way i look at it -- the s& s&p was -- improving the lower
dollar and financial conditions. the last 100 points we are kind of a sugar rally based on the fed keeping up the dubbish rhetoric. and now the fed is taking that back. so the last 100 points is in question and we have already given back 50, 60 points. would i buy right this second? probably not. but as we get closer to sort of a better risk reward area that i think we should take a look at that. but right now the market is testing the fed. we'll see what happens. >> i think the emerging markets are more attractive than the u.s. markets. >> is that because -- i look at this, two, the commodities made bottom because the dollar bottomed for this go around. >> well, i think it's the dollar that tapped out and the response to the up -- there's been a
recant in oil prices and commodities are trading better, i guess, compared to what they have been. and again, the dollar topping out. so emerging markets dependent on commodities to me are much more attractive than the u.s. markets and outperform the markets over the next few years. >> bill, thank you. >> the sugar rally was bad because of the sugar high. now it can kill you and cause cancer. >> diabetes. >> i'm worried about this.
>> this is the guy we've had on, anthony fouche, now saying -- >> i'm from the pregnant, but when in a pregnancy, do you get past the point that it doesn't matter? >> no, they used to think the first trimester but the brain is constantly developing as the baby -- >> put you in a bubble. >> i killed two mosquitoes in the makeup room here. i'm a little on edge. and what this guy is saying today is that in the next month or so, he expects that people will be bitten with mosquitoes and will have zika transmissions in the united states. in the continental united states. >> most likely in the south. >> what this article says is mosquitoes range as far north as san francisco and new york city. and then there is another breed that goes all the way through new england. so, yes. just in case, anybody else is as freaked out as i am.
>> i wondered about you. >> i read it this morning with the same concern. >> okay. back to more mundane issues, st. louis fed president den bullard is speaking this morning on strong jobs, actual inflation and waning global weakness. however, he points out two reasons against a hike. weak gdp numbers and then inflation expectations. so he doesn't say which view is more correct. but i quickly deduce he gave three to do it and two not to do it. on a ben franklin close that would win. there's no way these device are winners. >> you are baiting them, you're tempting them. >> the fact is they have feet of clay. they will never do it in june. >> i bet they do it in july. >> that's what they are telling us. the markets are still only
figuring in 30% chance in june. it is much more likely because of the brexit potential they will hold up until july. a dead heat between hillary clinton and trump with just five months to go before the general election. we'll break it down when "squawk box" returns in just a moment. ♪ for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't.
the latest nbc news/wall street journal poll shows hillary clinton's vantage over hillary clinton has narrowed to just three points within the margin of error. john harwood is joining us with more. john, for those out there who thought this could never be, it sounds like it could. >> it's pretty remarkable, andrew. donald trump more rapidly than anyone expected has closed the gap with hillary clinton. look at the numbers for the poll, we show 46%, 43%, in favor of hillary clinton. it's a 3% margin of error.
the abc news/wall street poll was an 11-point spread favoring hillary clinton in april to just 3 points now. look at the numbers within the two parties. despite the stop trump movement with republicans, now 86% support among republicans. hillary clinton is just at 83% support among democrats. that reflects her ongoing struggle with bernie sanders, which is getting more and more intense. bernie sanders over the weekend saying he's supporting the primary opponent of debbie wasserman schultz. donald trump, even though paul ryan and some other leaders have held back their support, donald trump is consolidating republicans and that structurally in our country means a close race, guys. >> but i'm trying to figure out, in your heart of hearts, what does bernie sanders want? do you know? is this like legacy related?
is that really what you think it's all about? because i don't know, at some point i would just think he would look at, okay, am i going to help trump or am i going to help hillary? and if he really is a democrat at all, which he never was before, i understand that, but even if he is one now, i would start to -- i sound like the clinton machine. i would take a look deep inside and say, what the hell am i doing? >> democrats are counting on him eventually doing that. but i think what happens when you get in the campaign, joe, you come to believe your own press clippings and own message. and bernie sanders is convinced that this is his moment for sparking that political revolution. it doesn't appear that it's going to happen but it's very difficult to give that up once you are out and you're getting big crowds and you're getting a lot of people sending in money. his money is getting shorter. so there isn't going to be a
whole lot of advertising in california on either side. hillary clinton is hoping to have a narrow win in california and break the sanders momentum. but when you're in a race, it is very difficult to accept the idea you've lost and are not going to win. bernie sanders is not going to be the democratic nominee but that hasn't quite soaked in yet. and he says he's going to go all the way through june 7. >> john, do you think there's a chance that it never soaks in and that things go very badly when they actually get to the democratic convention? >> i doubt it but you can't rule out that possibility. bernie sanders, while revving up his supporters and going after clinton and complaining about the democratic rules, bernie sanders has always said i will work 24/7 in the fall to make sure that donald trump doesn't become president. and i think the baseline assumption of most in the democratic party, and even in the clinton campaign, is at the end of the day he's going to do
that. but he can't -- you can't predict how politicians react under adversity. and i think everybody's going to have a little humility about their ability to predict what is going to happen. >> i wonder whether the big donors that are supposedly holding back -- you saw the trump piece yesterday or maybe it was saturday, but a lot of these guys, even some of the republican elites, you just mention the supreme court to them and they start thinking how important the election is to them, if you think three our forjustices will put on the court next term, why isn't that registering with these fat cat donors? >> well, i think fat cat donors probably care somewhat less about the supreme court aspect of politics than social conservatives do.
>> maybe they want to have their chips in with whoever is president to get the crony capitalism. >> they care more act tax cuts that rulings on roe v. wade or gay marriage. in fact, a significant number of donors who are closer to the democrats on that issue. >> second amendment, stuff like that. yeah, more about access. they are buying access. it doesn't matter which side it is. >> but the real donors to watch at this moment in the campaign are those small donors sending in $27 to bernie sanders and turning out for his rallies. can hillary clinton consolidate those people and are they going to produce, reproduce that obama coalition so successful the last two elections? >> i just saw something over the weekend that he raised more many unin april than she did, even though the immediate headlines out of that were that she outraised him. >> right. she's trying to conserve money. she's at this point where she
sort of has it won with more contestants to go. she wants to conserve money for the general election and trying to make triage decisions about what exactly how hard to go at him over this last couple of weeks. >> all right, john. >> there we have it, thank you. appreciate it very much. coming up, the nation's brightest young economist. he may be in high school, but they are taking the stage this afternoon in the national economics challenge. as we head to break, here's a look at yesterday's s&p 500 winners and losers. ♪ (speaking japanese) oh watson, your japanese is very good. thank you.
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♪ welcome back to "squawk box" on cnbc, first in business worldwide. bayer announcing a $122 a share cash offer for monsanto. a bid valued at $62 billion overall including assumed debt. if the merger goes through, it would create the world's largest agricultural supplier. check out the shares this morning, monsanto trading near $111. so obviously the street is not valuing fully the bid at this point. a lot of questions about regulatory issues. bayer's ceo joined us in the last half hour on a first on
cnbc interview, werner baumann. >> we have submitted our offer. we are still waiting for an answer from monsanto's board of directors. we think that the offer is highly attractive and we are really looking forward to a constructive discussion with monsanto's board of directors going forward. but again, now we have to wait for monsanto's board to come back to us and react to our very attractive offer. >> and time now for the executive edge. today we're going to talk about this, 16 of the best and brightest young minds in the economic world are competing in the final round of the national economics challenge. steve liesman is moderating the competition live on "power lunch" today and is joining us with more. >> good to be alex tribeck once a year. more than 10,000 students compete in the spelling bee for economics. we are down to teams from four
different high schools in massachusetts, new jersey, texas and minnesota. last week we visited a team from indiana that unfortunately didn't make it, which is amazing on its own considering how smart these kids are. >> we're the team from caramel high school. >> i did get a perfect score on my ap macro economics exam last year. >> at first i didn't know anything about e con. it was a foreign concept to me. >> the index most commonly used to measure inflation is -- >> consumer price index. >> we know that these are the best teams in the nation. trade, monetary policy, fiscal policy, market structure, economic theory, production costs. >> we are long time second place and are hoping this year we can finally break that record and get to first place. >> i just like doing supply and demand a lot, whether it is normal supply and demand or
aggregate supply and demand. it's fun. >> everyone is expecting a june increase. it by no means is going to destroy the economy. >> and those guys didn't make it. joining me are two students in the final championship today, a freshman from west windsor high school in plains, new jersey. and anthony young from bel-air high school in texas. i just want to say, guys, we are going to ask them questions and i wouldn't tell them the questions backstage. so this is going to be real. let me start with you. first, you're a fresh man, right? >> yes. >> i've been doing this three or four years and don't remember a freshman being here. how do you feel about the competition today? >> i'm excited with nervous energy but hope to do my best. >> anthony, what is your interest in economics? >> i never had a huge interest in economics. but after starting ap mac this
year, our teacher did a great job. i have been considering it more and more as something to pursue in the future. >> you love wilfred friedman? >> he's pretty nice, yeah. >> we might be looking for a new senior economics -- maybe make him a junior to some day come back. >> he could have the job, most certainly. >> have you told these guys and gals that any answer can be correct depending on whether you can sell it? and that they can both win a nobel prize with opposite opinion. >> i'm trying to help and foster their education at the moment. >> there are no correct answers in economics. there's no objective truth in economics. >>. let's ask the questions, joe. we'll see how smart you are. i'm going to give you the first crack. folks, here's question number one. a dollar bill that has an "l" inside its seal is from what federal reserve bank?
>> st. louis. >> no. anthony? >> san francisco. >> how did you know that? >> "l" is the 12th federal reserve district. and it is from san francisco. that is correct. can we have a dinger or sound effect? >> does that count as a no? >> here we go. david ricardo is usually credited with articulating the vir child abuse of what as the basis for trade? >> comparative advantage. >> that is correct. >> you guys are good. >> finally we get a sound effect. can we do one more? >> go for it. >> what is the shape of the long-run phillips curve? >> vertical line. >> vertical line. that is correct. >> you guys are good. >> so that's the kind of thing we'll be getting into today. those are economics questions. >> when you start thinking about economics, is it more interesting when you see practical applications for how it plays out? is that something you have experienced to this point,
anthony? >> yeah, you can do all the there we you want, but until you actual see what you're learning in action it doesn't really click completely. and so it's really nice keeping up with the news and seeing what the federal reserve is doing or whether the companies are considering mergers, how they are determining their strategies and that will bring it full circle to appreciate what you're learning. >> it is an extraordinary time to be studying economics right now. >> shovani, are you following along with current events, too? as a freshman in high school that's shocking to think about. >> i definitely follow along with current event, not just for the competition, but because it does affect my life and is very important to know what is going on in the world. >> i need to say a quick word about the guys that put this on, the council for economic education, they are a national organization, you went last year to the panel with andrew on it, and they are trying to foster economic education throughout the country. and they try to teach teachers and are trying to bring finance
and economics down to the high school level so kids get out of school with some understanding of how to do things like manage their debt or understand basic economic concepts. that's why i'm involved in it. and good luck to you guys today. >> thank you. >> isn't it nice to know that both political parties have realized that comparative advantage was a flawed concept from the very beginning? we actually don't need that. >> neither party now can be seen as wholly aligned with david ricardo taught us 100%. i was agreeing with you. >> i know you were. i think people understand what i'm saying. comparative advantage is an open advantage. >> exactly. >> it's better to keep things here with both political parties. that's why you have to watch us. it's like watching a slow-motion train wreck. >> also known as a show sometimes. coming up, "the squawk" ceo from ryder is here. we'll head to a break and take a
quick break on what is happening in the european markets right now. "squawk box" returns in just a moment. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.
transportation is recovering after a dismal start to 2016. the sector gaining 17% since january lows. joining us now, robert sanchez, ceo of ryder, an industry leader in truck rentals and supply chain management. it's kind of counter intuitive to think oil prices this low would result in a tough transportation sector. but like everything else, if it indicates economic weakness, then you've got to look at, you know, some of the nuances to the knee-jerk reaction. where are we now, robert? >> well, joe, what we're seeing in the part of our business that is most sensitive to the ups and downs of the economy, which is our truck rental business, those are the iconic trucks you see on the road, that business is down. that business is slowing down. and typically that's an indication there's less freight movement. therefore, slowness in the
economy. >> how is overall freight movement at this point? because that was the worry, but it's not all it should be for a -- we see the unemployment rate ready to go under 5%. it seems like there would be some movement of goods and services. but you're not seeing it as much, are you? >> you're not. i mean, we're hearing the talk about raising interest rates and leading to probably a stronger dollar. typically you would expect to see a lot more freight movement in an environment like that, an environment that would lead to that than what we're see right now. it's flattish to up slightly, which is really not what you would expect at this point in the cycle. >> right. for everyone that says, oh, don't believe the gdp number at .5, i believe the unemployment number but then there's the transportation, the actual amount of movement and activity. and it's down from the year ago, isn't it? >> yeah.
if you look at what we're seeing on the freight side, it looks like a .5 gdp world. it does not look like a world that's grown much higher than that. so obviously it's -- there's been a lot of uncertainty the last several years in the economy. that hasn't changed and continues to be the case. so one of the things we're doing at ryder is trying to figure out how to make our business model work in that environment. so for the last several years we've actually benefited crazy enough with all the regulations and changes that have been imposed on the transportation sector, we have benefited in that more companies are outsourcing their truck fleets and outsourcing their supply chain of transportation to us because it's gotten more difficult for them to do it on their own because of the additional regulations and the additional cost. so now we're looking at this environment trying to figure out how do we make our products more flexible. today we are announcing more flexibility around truck leases to get more companies to look to outsource. >> all right.
so i don't think of you necessarily as a international concern that would be hurt by a stronger dollar. why would a stronger dollar hurt ryder if the rate would go up? >> well, if you think about what, what we're moving is product that may be produced here. so the extended hurts manufacturing and will hurt ryder. for example, the oil and gas sector, even though it's a small part of our business, still does impact us. and it impacts overall freight values and our customers. so anything that would slow freight down here in the u.s. is not necessarily going to help ryder. >> we have to go, but when you rent trucks to people, will you put a thing in there about driving in the left lane? like professional drivers, the minute they pass someone, they are over in the right lane. they know not to stay in the left lane if you're a truck. only time i see trucks in the
left lane at some, you know, some guy that doesn't know how to drive a truck. he's not a professional truck driver. can't you put instructions in there or something? >> well, joe, the good news is that ryder rarely good news is l rent trucks to consumers. most of the business to business. the guy you see driving a ryder truck is typically going to be a professional driver. they're probably going to be in the right lane. >> like u-haul. >> yeah. those are the guys. >> right. thank you. we appreciate it. we're back in a moment. >> good talking to you. >> the closet door open. >> yeah. >> economics. >> right. when we come back the angry birds movie soaring in the debut flying past captain america. we'll bring you the numbers from the box office when we come back. plus, more paying at the pump.
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jason sue day dis. captain america civil war dropped to second place earning $33.1 million. the marvel super hero sequel shows the face off between captain america and iron man. and the r-rated comedy neighbors 2 brought in $28 million. it star s zac efron and seth rogan. and empire heating up. this happened on friday but a lot of conversations over the weekend about it. the moving ceo of viacom and board member george avery from the trust, which is important to where this goes on the national amusement company. that trust will vote in control of viacom and cbs. this latest move could be a big
victory for redstone's daughter to cease control. he's fighting back raising questions about redstone arguing that the 92-year-old lacks the mental capacity to make the changes on his own. red stone plans to add general counsel as well as a family friend. it's worth noting, however, that dauman said in the other case, if you remember, involving redstone's girl where he was saying he was mentally uncapable that he was capable. so in one instance he's capable and when it comes to his own issues he's not capable. this is one of those soap operas that continues to play. >> this is going to be interesting. coming up geopolitical headlines. we'll talk to a former nato supreme allied commander.
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the latest nbc wall street journal poll showing hillary clinton and donald trump running neck-and-neck. the latest on the race for the white house is straight ahead. gary evans is back at it. the former mag enough hunter ceo starting a new oil company amid one of the worse downturns in oil in years. find out why he's betting big on a comeback in prices. >> and america is drowning in cheese. the strong dollar determines foreign buyers are hitting dairy farmers across the country. you can help. eat three extra pounds of cheese this year. we're going to hear from the executive at cabin creamery.
the second hour of "squawk box" begins right now. welcome back to "squawk box" on cnbc. check out the stock market futures this morning. it's been a little weaker. it friday was a big day for the indexes. the dow down for four weeks in a row. s&p slightly higher and nasdaq up about 1%. oil prices have come down slightly, but you have to remember this is a new contract that rolled july of 2016 contract ended. oil prices closed at $47.75 and that's where we are. gasoline prices on the rise. the average price of a gallon of
gasoline jumping 5 cents over the past two weeks to $2.32. >> that was a biggie. i say if you're going to do that be sure you have biggies coming up. >> you know -- >> it's just inflation. it's never a big gi. >> except for if you look at gas prices they are 55 cents. >> all right. >> lundberg survey -- that's not sit up and take notice. it's just -- the news items for you. >> okay. i rented a car this weekend. >> this is a big gie. >> and i tried to pump my own gallon in gas in new jersey and they -- >> you can't do it there. >> i get out of the car to do it myself because i'm a man of the people. and the guy looked at me like i lost my mind. >> you're taking his job. >> sit back and relax. >> i learned.
i learned the hard way. got the card out and trying to do it myself. >> watch this kid. efforts continue this morning to locate the black box from egyptair flight 804. the flight crashed last week whileful flying from paris to egypt. st. louis fed president said there are several factors working in favor of a fed rate hike. including a labor market and a waning global weakness. weak gdp numbers support the case against the rate hikes. we'll see what happens in june. now they're thinking maybe july. >> i think july. june is right -- june is days before the -- >> watching them just, you know, coddle the traders and, you know, when they said when they started acting like june was a possibility prepare for july.
>> right. >> thank you. >> legitimate breaking news, big news, by the way. the german drug bayer made a $62 million bid for monsanto. the price tag is a 37% premium to monsanto's may 9th closing price. the day before bayer made the proposal. it was kept secret for awhile but the company saying this publicly. bayer ceo joined us in the last hour to talk about the possibility of it. >> we have submitted our offer. we had -- we are still waiting for an answer of monsanto's board of directors. we think that the offer is highly attractive and we're l k looking forward to a constructive discussion. but we have to wait for monsa o monsanto's board to come back to
us and react to our very attractive offer. >> check out the shares of both those companies this morning. monsanto up over by 8.5%. the stock is trading at $110.26. the trade verse some questions about whether there would be regulatory approvals or other issues whether the deal goes through. it's all-cash offer. you can see bayer shares down by about 3.4%. >> and anthem and cigna. company are seeking regulatory approval which could delay or derail anti-trust rules. they have been accusining each other of violating agreements. so you can see cigna is up. donald trump gaining ground on hillary clinton in the race
for the white house. a new nbc news wall street journal poll finds that hillary clinton's lead over donald trump slunk to 3 percentage points. probably worth pointing out that the poll's margin of error is 3.1%. that's essentially a dead heat. clinton is viewed as the likely democratic candidate, the poll finds that bernie sanders leads trump by 15 points. 54% to 39. reports this morning that mr. trump will meet today with senator bob corker. many have said that corker is a top contender for the vp job. geopolitical headlines to tell you about. president obama announcing overnight that the u.s. is fully lifting the ban on the sale of military equipment to vietnam. lawmakers urged president obama to press for greater human
rights efforts before lifting arms. vietnam wanted full access as they struggle to deal with china's recla make. president obama confirming that the leader of the afghan taliban was killed in an air strike on saturday. the strike againtook place in a remote region. the taliban meetings are underway. joining us now to talk geopoliticals james starvidis. the first news about the taliban leader but that it was -- i don't know just kind of depressed about the other news that al-qaeda is moving back into strongholds in afghanistan that we had rooted out and a lot
of american lives -- it's never ending. >> yeah. i think that's the right way to look at it. this is the ultimate game of whack a mole. we take out one part of the organization and another part springs up. i think in afghanistan where i spent a lot of time as the nato director, this is tough to read. so kudos for taking out the leader. he was an impediment to the peace process. it's not the end of the game. we're going to be there for awhile. >> it's not the first time where i don't know i've felt sad about the gains that we have made there that cost some of our best men's limbs and lives and, you know, whether you agree or not, it seems unfortunate it starts to look like some of those sacrifices were either
squandered or in name. >> give it a little more time. it's been ten years and it feels like an enormous stretch of time, but i think -- i'm cautiously optimistic about afghanistan, believe it or not. if we maintain a reasonable level of troops there, say ten to 15,000. at one time we had 150,000 troops there. i think we can bolster the afghan security forces and bring it home. i'm more pessimistic about iraq. >> and the rest of the region. >> yeah. not a lot of good news here and the geopolitical overlay is both the challenge of iran in the region, but also the sunni shiite conflict. when you put those two things together, it's hard to see a sudden turn around in the region any time soon. we should not become discouraged, become isolationists and withdraw. what we need to measure are engagement. no more 150,000 troops in the region. work with the allies.
>> isolation is something that is more and more popular. >> indeed. >> you hear talk from donald trump and others about how our nato partners should be paying more of the bills. where do you think it's headed from here? >> if you look back on american history there's a vibrant strain of isolation runs through. we're a big continental power. we need allies, and we spent $600 million a year on defense. nato, the rest of nato spends $300 billion a year on defense. it's pretty comfortable. >> we're picking up a massive portion of the check we shouldn't. >> indeed. the way to look, i think, is to say collectively we spend almost a trillion dollars. we're a nation with the global interest. the europeans are more focussed on the european region. i agree our nato allies should
spend more. they should hit 2% of gdp. that would put the alliance in balance. that's not a reason to walk away from the lines. >> is that likely point in terms of any negotiation. how do the europeans and others feel about putting 2% of gdp? >> they feel challenged. i think a steady engagement with them will pay dividends in that regard. even if they only spent $300 billion. we have to remember the budget of russia and china combined is $200 billion. the europeans outspend our two likely geopolitical opponents bay considerable amount. we don't want to walk away from that. we want to encourage greater participation. >> i get that and i understand some of the disillusion in this country. we have a great economy and we help a lot of stuff around the world but we can't do it forever because it starts to hurt our own competitiveness on drug development.
so you see where some of this is -- so we got isis and al qaeda and we got, you know, you talked about in syria and iraq. is russia more of a threat? is china on the islands militarizing the islands? there's threats everywhere. >> the way to phrase is the great power competition is back. we thought as we came out of the cold war 20 years ago that we would be in this sort of hyper cooperative frame work. but we see a resurgent russia, we see china moving aggressively in the south china sea. i don't think we're going to stumble backwards into a full blown cold war but we're going it have a transactional relationship with russia. there are more places we have to confront even as we find zones -- >> so really, i mean, you could if trump were elected he might be a frenemy.
>> they share a certain pred election. >> could it be a working relationship with putin? is that something we should loathe or embrace? >> any time you have a relationship with someone who is anti-theatrical -- >> that doesn't narrow it down for world leaders. how many are not ant theatrical? >> most are with us. history works on our side. >> he's definitely not. >> he's not. >> being for mother russia and reasserting its dominance can never be symbiotic. >> i think we'll find zones where we can cooperate. question will find places where we must confront russia. >> is china scary or not. >> china is not scary to me.
they have a demographic problem. their economy is challenged in a lot of ways, which you know better than i. >> they play hard bam. >> they play the long game. >> they'll get us economically. >> they play the long game. we need to prepare. the country more determinative in the 21st century long-term is india not china. >> wow. >> good to talk about that. >> their demographics favor them in a powerful way where china's will drag them down. >> thank you, admiral. >> thank you. appreciate it. jc penney find out why he said the sector is oversold. and later america drowning in cheese. there's a surplus of more than a billion pounds and farmers are concerned about global command as european exports rise. we'll hear from cheese experts. squawk returns in a moment.
welcome back to "squawk box." we're honing in on one of the squawk portfolio. the capital of ceo of hodges capital management is coming to us with a couple of underloved stocks this morning. let's talk retail. >> i noticed the top here listed jc penney a completely unloved stock. i thought for a good reason. you don't think so. >> yeah.
they're cut in 2.5 years into the turn around. i don't believe it's kohls or macy's. this is a different story, i believe. there's a lot of low-hanging fruit in this name. they don't need big sales increases in order to do well. so, for example, like right now they're probably going sell their headquarters in dallas at probably -- i heard over the weekend there was over 100 bidders for the property. it's probably $450 million. they'll be able to knock down a considerable amount of debt. they can reduce payroll. 75% of their ad spend went to the academy awards. so they could be smarter with the ad spend. but with kohls and macy's. they have to almost revamp a lot of things they're doing now. jc penney has been doing this. they have sefora and the guy from home depot is going to
bring in appliances and, you know, you go back before johnson came in, 20% of their business was, you know, home type stuff. it's down to 10 or 11%. they can get that back up. there's a lot of low-hanging fruit in this name. that is realistic price. >> you know, the stock has come from almost 10 to mid 7 in the last couple of weeks, but we see $2 of earnings potential, probably three or four years out, but that can be a 20 or $25 stock. so technically this stock could go up three times in the next five years. it's got that kind of potential. and you're not talking about you're having to do a lot on the bottom line. you can get a 10% sales increase and earnings will go from -- >> you think zero? >> not at all. there's always a shot. but they can -- >> you remember the stories they weren't paying on time. you heard those stories?
i hasn't read those. we had them. there's been anxiety about the entire business. >> their debt was like, you know, over $4 billion. but they have almost half billion in cash. they get $400 million on the sale of the headquarters. and they'll earn a billion dollars this year. so, you know, there's a path to get this thing turned around, i think. >> you like three more stokes. capstone what's the story? >> big turn around there, too. all the stocks i recommended had all come from the 30s to low teens and continue to struggle. there's probably $2 of earnings potential in that name. probably a buy out candidate. endleak, i think is a mid stream processer from the mid 30s to around 15. >> are you -- >> not yet. >> are you recognizing that some may go lower. >> i don't know they'll let them go lower. the first six weeks of the year
they pretty much got crushed. you're starting to see. and i think all three have not necessarily immediately but have big upside. not just a little bit. big upside. >> and verizon for -- >> it's inexpensive stock. the election and the rhetoric that goes into medical i'm thinking about dropping it and airlines look cheap. >> which snarl. >> -- airline? >> american. the most upside, i believe. the easy money made is southwest. >> easy money. why wouldn't you do that? >> because we want a little more -- they've all come down. they've come down. i think american has the most upside. >> okay. great. we appreciate it. also, we should tell you don't forget you can track iphone portfolio member's top picks on cnbc.com. former ceo of magnum hunter.
a couple of great detectives. both of them. >> magnum pi and hunter. >> and hunter. >> putting them together would be an unbelievable crime stopping team. he's got a new business. has hunter in the name. energy hunter said it's a great time even though it's
the worse price drop in years. we'll hear from him when we return.
the angry bird movie soaring at the box office. it took the top spot debuting with $39 million. "captain america civil war" dropped to second place. and r-rated comedy "neighborhoods 2" brought in $28 million dollars. when we return the former ceo of magnum hunter resources joins us to talk about his new adventure. and later america has built up a glut of cheese so big that every person in the country would need to eat an extra 3 pounds this year just to work off that glut. how the strong dollar and european exports are killing the
welcome back to "squawk box." viacom's ceo has been removed officially from the trust that will eventually determine the fate of viacom and cbs. viacom founder removed george aprograms from the trust. all part of the ongoing battle, if not soap opera and saga over redstone's mental capacity. and dauman putting out a press release saying that mr. redstone doesn't have the mental capacity to make the decision. he said several months ago he had the mental capacity when it came to dealing with that girlfriend in that lawsuit.
we'll see how it goes. donald trump narrowed the gap with hillary clinton in the presidential race. according to a new nbc news wall street journal poll. the gap is 3 percentage points compared to 11 in april. tribune company rejected the latest take over proposal from g michig gannett. it did propose a mutual nondisclosure agreement to allow a path forward for a possible deal. tribune sold 7.7 million shares at $15 a share. same price as a gannett offer that tribune reject. boeing securing a major jet order today. viet jet will buy a hundred planes at list prices. the low cost carrier is seeking to expand in a market that has grown 20% annually in the last three years. that airline posting a more than 40% increase in net profit. it's also warning that worries
about terrorism could push the air fares down even further following the egypt air crash. all right. it's a fairly busy week on the data front. new reports today but look for april new home sales tomorrow. thursday april durable goods and pending home sales. on friday as we talk about last hour, the second mate on first quarter gdp. we waited for the first -- >> second quarter gdp should be soon, too. >> also, may consumer sentiment. as for earnings, look at this week for the likes of best buy, help, tiffany, lion's gate, and abercrombie & fitch. the g-7 are wrapping up a meeting in japan this weekend. the u.s. issuing a warning to japan against intervening in the currency market which they've been so effective at. >> with negative interest rates.
>> yeah. a strong yen. and something that we would never do here, in other words, delaying rate increases to make sure that the dollar doesn't strengthen. never would we consider that. japanese finance minister said that recent yen moves are disorderly and one sided. the u.s. treasury secretary jack lew doesn't agree. even amid growing concerns about the energy industry, our next guest is doubling down on the business by starting a new oil venture. gary owens joins us now. former ceo of magnum hunter resources. which was the manliest name of any u.s. -- >> i watch too many clint eastwood. >> you have. keeping hunter. now it's energy hunter. you're a guy that likes to roll the dice. if we had to describe you, you like to take risk with big
reward? >> definitely entrepreneur. i've been in the business all my adult life and i tell my friends and fellas that work with me over the years i've never seen an opportunity like we are seeing today. probably never will again. >> i guess because things are cheap. >> things are so bad. >> things are so bad. >> first time around what year was it? >> 1985. >> okay. >> you had a thousand dollars -- what can you get a for a thund? >> not much. i did a leverage buy out for $1.2 million and put a thousand dollars done. >> of a -- >> of a service company. >> 85 times were pretty tough. >> january '86, i remember, oil hit $11 a barrel. >> that was triple. >> okay now i don't see why it can be done again as the good wells have been drilled. >> i don't think so. >> there's two areas. you're going to do it again. >> that's the key. >> you're looking for oil. >> you hit the nail on the head.
with commodity prices where they are today, you have to be selective and know where to go to make money at $48 oil today. and the basin are the two areas where we have in the united states where you make good returns. >> why would someone sell to you if it's got oil and there's a lot of companies that are in dire straits. there's 70 some companies that filed bankruptcy, and there's a lot of opportunity. >> and they got land that hasn't been drilled, in your view, absolutely -- >> i'm getting excited. >> you have taken on any investors? me and andrew? >> we're starting now. i started it ten days ago. i'm up here with a firm. >> is it a limited partnership? >> friends and family -- >> friend and family. >> we just -- >> you're a friend and my family. >> we just met and i feel like we're friends. what do you think sorkin? >> i'm ready. >> we've been ready for awhile. >> let me call my banker.
we'll wire some money over. >> your assistant call your banker. >> yeah. we've been hearing from people for awhile that despite the come down in prices this was not the time yet that the prices were too high. you know, even hearing from people like rex tillerson the reason they haven't bought more actively they look around and the prices people are asking are contribute above. it's taken into account that things have come down and price have begun to pick up. why do you think you can chir i are pick? >> that's the key. you have to be in the business as long as i've been in it to kind of know the people, the contacts, the landowners, the land men, the opportunities. this is not going to data rooms. >> is it because you're looking for smaller properties? >> it's looking for million dollar deals. those are mainly large private deals. but there are lots of smaller opportunities. and the key has been the oil
service costs. they're down over 50% as well as commodity prices. so the things that we can, you know, oil that costs $10 million a year and a half ago costs $5 million today. >> right. you're looking at areas you can find this in smaller deals. >> it's the cream of the crop. you have to get in the key fields and find the cream of the crop opportunities. and they're usually very unique situations. >> this isn't horizontal? >> li will not drill unless it' horizontal. we're taking shale technology, horizontal drilling and applying it to reservoirs. people think the marcellus. we're taking that technology and going back to carbon and reservoirs. >> because you get more out of it? >> we're using new technology to get more out of a basin that has
7 or 8 zones versus one. >> so you're going to get the easy stuff you can already get and take additionally out of it. >> you think about a 100 fortunate interval and you drill it 8,000 feet and you've got 8,000 foot. >> if it go es 30 -- >> we can make money down to about $25. >> you're kidding me? >> saudi arabia goes down to 11 or so. >> i was have having dinner from a guy from saudi arabia and said why don't we form a coalition and stop this? i go we're shooting ourselves. it's crazy. >> do you think any other presidential candidates out there will have any impact on what you're doing? >> absolute lit. the reason -- the whole situation and the business is down because this administration has not had a military force in the middle east. >> wait a second, the reason oil was down, i thought, we have found better ways and technologies for getting oil out of the ground. so this is definitely a supply picture. we have so much more we're
producing. >> you're right but opec or saudi arabia had to do what they had to do because the military -- the lack of military support in the united states in the middle east. and they had to put russian. >> probably stuff they should have done for a long time. >> a long time ago. >> right. >> good luck. i'm excited. for you. >> thank you. >> i don't think we can, andrew. >> i think we can. >> i think we ruined it by having you on as a guest. >> you should talk to us before we put you on. i can't -- you can't do -- your entire portfolio has been -- i mean, right? thank you. when we come back oil glut, housing glut, we've heard about them all. but now there's a cheese glut.
welcome back. america is facing an overwhelming cheese glut. the strong dollar and slumping global demand causing supplies to back up at the same time production is surging. it's all conspireing to send prices to the lowest level in years. growing stacks of cheddar are the growing tip of the surplus. you have grains, meat, and milk swamping the markets. joining us now is bob wellington. senior vice president of economics at cabin creamery. explain it. we hear cheese glut and think it means lower prices for cheese. what is really happening? >> well, we're big a international player in cheese and other dairy products today in the u.s. about 50% of our milk goes overseas. that's a equivalent of 30
million pounds of milk a year. that's a important market and suddenly last year the europeans got off their you tuss as they had problems with the russian market. their primary market. that put a lot of cheese on the international market. at the same time we had a good crop year relative to milk production. that cheese belt that runs from minnesota, wisconsin, all the way to new york is making records amounts of cheese now. to put that extra cheese on the market, demands in the u.s. are strong but not enough to make up for it. increased milk production in the u.s. and around the world as well as decreased demand internationally. >> put this in perspective for us. when is the last time you saw a cheese glut like this? >> umm, the biggest issue we had in 2009, and a lot of that was consumption was the biggest issue. >> because prices were quite a bit higher and the consumer was getting hit hard? >> i think it was the economy and people were changing over some of their eating habits
trying to go to cheaper proteins and other things. >> right. so what does this mean for a business like cabot and what does it mean for farmers across the country? >> well, for farmers it's been a very tough situation. because usda uses cheese prices as a primary movers. they're getting some of the lowest prices they've had since 2009. it hasn't been so bad for the larger farms because they have economies of scale, they can use futures markets to hedge their prices. the small to medium farms are having an issue. as for cabot right now we're owned by dairy farmers. any time our members struggle, that's a problem for us. we make naturally aged cheddar. >> the longer it's aged, the better it is, the more you can charged. >> yes. that's a good point on doing that. and so the cheese that is being sold today was made anywhere
from a few months ago to a few years ago. so probably made in 2014 and 2015. so you're not going to see much price declines in those type of cheeses. not just cabot any kind of aged cheddar. a gallon of milk, for example, in yogurts, fresh cheeses like mozzarella and ricotta should be falling in price already. >> what are you doing as a result for the things you can't hold off the market. do you end up ageing more over a longer period of time as an economics example of supply and demand? >> we do add to a limited extent. cheddar is a defined market. you have to talk to some of our masters cheese makers. they would tell you they test that cheddar every couple of months. and some will reach the perfection in six months, some in a year, some in a couple of
years. you can keep it longer but in doing so, you have to make sure it keeps that sharp great taste. >> sure. and how do you see it playing out or seeing the situation resolving? >> well, i think it's going to be supply and demand. have to look back. the pressure of the lower prices on farmers should start to curtail some of that milk production both here and in europe. and at the same time the lower prices in various dairy products should increase consumption and move those back. the problem is it's going to take a good amount of time to do that and in dairy farm you can't switch between like soybeans and corn. >> right. >> so farmers basically have to increase milk production when prices go down because the cows want to eat the same amount. you need the vet bills and everything else. sort like a create problem for ourselves in the industry until enough farmers go out of
business to equalize supply and demand. >> eat up, there's plenty of cheese for the taking. bob, thank you for joining us today. >> thank you. when we come back making a bold call on payments processer first data. and later the summer redstone saga continues. what is need for the media vogel's empire. ed lee is to break it down.
let's take a look at the stocks to watch this morning. data shares could rise as much as 70%. that's not me talking. it performance kochbts to improving with it was an article in the weekly -- comes out on saturday, value. the payments processer fall 20% since the initial public offering this year. mining company free port has withdrawn its plans for an initial public offering of the oil and gas business. the unit first filed for ipo last june but 24% drop in oil prices since then severely cut evaluations, as you can imagine, for oil producers.
>> there's some bullishness. it says oil field services company is best positioned relative to the peers in the current oil market said the shares could rise 29% over the next few months. >> okay. george zimmer the founder of men's warehouse plotting his return three years. zimmer was ousted from the suit maker since his departure he launched two start ups. the combination of what he built in the last couple of months with men's warehouse would be a great business. he said most of the board and executive team at the retailer would be placed under his plan given they have felt about him thus far. there's a new study that is out that says lego toys are leading to more violation among kids. >> really? >> yeah. researchers in new zealand say weapons and war-like scenarios are included in 30% of lego kits each year. part of an effort to keep up in
a toy arm's race to keep children's attention in the digital attention. a lot of stuff is from "star wars" and things they picked up. >> but they also built their own branded toys. there's a characters they license like the "star wars" and now lego has a licensing of its stuff and some includes all sorts -- >> i see it with the kids from teenage mutant ninja turtles. i don't know if i would pin legos. >> i'm saying we have lots of legos in our house. >> i think you would be all right. >> multiple lego kits a week. >> it's good. it's stuff they're playing with. >> it's great. >> the imagination. >> has small amount of violence with super heros and stuff and bad guys and enemies. >> i know. okay. >> even the dinosaurs. >> exactly.
it's very complicated. >> this woman's facebook video showing her trying on a mask she bought at kohls went viral this weekend. >> i watched it twice and i didn't find it funny. >> reaching more than 100 million people. after kohls received an overwhelming amount -- i saw it but i didn't -- >> i clicked on it. >>well, if everyone jumps off a cliff, are you going to jump off a cliff? >> you say i need to be prepared forest fire the show. did you not prepare? >> but i didn't watch it. the mask is now sold out. thanks to the extra business, the retailer responded by giving candace pane and her family a few more chewbacca cash. and $2500 in kohls gift cards, 10,000 rewards points, and bunch
of "star wars" stories. >> 130 million people watched this thing. >> 330 million views. this is what america watches. you give me a hard time. >> i try to tell you the social -- all the stuff you're talking about it's a pox. >> a pox. >> yeah. it's a pox on society. it's the beginning of the stuffstuff you read about it's happening. >> you think it's one of the seven signs? >> yes. i think it's six of them. >> you believe this is a curse. we're going to be in our -- >> about that meeting on facebook. i can't remember how they phrased it. i don't know. but the end of, you know, the end of times. >> yeah. >> we got to tell you about this -- you all love ferris bueller. you have to. check out the classic movie ferris bueller's day off came to life yesterday in downtown chicago.
fans recreated the scene where ferris lip syncs "twist and shout." it's 30th anniversary of the market. >> let's get a check of the markets. >> the u.s. equity features have been relatively flat. they were up this morning but then they were down. s&p futures up by 1.57. the nasdaq up close to 8. the nikkei was down. almost half a percent for the nic nikkei. still some are down but they have come off the lows of the session. the dax down. take a look at the crude oil prices. they have come down showing a decline of just over 1%. this is a new contract that july
bayer announced a $62 billion cash offer for monsanto. why the head of the german giant sees no risks in the deal. >> they compliment each other perfectly. media mess redstone removes the viacom ceo and board member from the trust that could determine the fate of his empire. why shareholders could be caught in the middle. and video gone viral.
>> that's not me making that voice. it's the mask! listen! one woman puts on a mask and a major retailer can't keep it on store shelves. the final hour of "squawk box" begins right now. >> announcer: live from the most power of the city in the world. new york. this is "squawk box." >> welcome back to "squawk box" on cnbc, first in business worldwide. now less than 90 minutes away from the opening bell on wall street. the futures have turned around and are now positive again. positive then negative and then positive again. i don't know what is happening in europe. on the way in, i looked at it and the european markets were up but then they were down the last time we looked. there's crude down 53 cents. but almost $48 a barrel. you can't blame it necessarily.
any time it's near $50, it's -- it should be okay? >> look, it's a major portion of the s&p 500 earnings. that was part of what we were going through when things collapsed. >> and it causes demand for concern. >> right. >> i'll tell you about the other stories investors are going to be talking about today. german bayer offering $122 per share for monsanto. company ceo joined us earlier this morning to talk about it. >> we have submitted our effort. we had -- we are still waiting for an answer of monsanto's board of directors. we think that the offer is highly attractive and we're looking forward to a constructive discussion with
monsanto's board of directors going forward. now we have to wait for monsanto's board to come back to us and react to our very attr t attractive offer. >> take a look at shares of the two companies now. bayer is down. monsanto up materially but not the point of the offer. meaning that some people think this is either not going to happen or regulators could ultimately block it. we did ask him about regulatory environment. he didn't believe they would be an impediment to the transaction. a new study suggesting companies are drowning in debt despite almost $2 trillion in cash. the report by s&p global ratings finds that total debt of more than 2,000 nonfinancial companies went up to $6.6 trillion last year. new developments in m&a. the offer not the best interest of shareholders. it did propose a mutual nond
nondislow sure agreement. tribune sold 4.7 million shares at $15 per share. that's the same price of gannett offer that tribune rejected. here these shares are not worth it. this offer, the tribune offer not worth it but happy to sell some shares in exchange, by the way, of a board position. >> and will sign a joint nondisclosure agreement so he can't talk about it publicly anymore. >> the whole thing is complicated. i think gannett will ultimately come back with a higher offer. let's say they get to $18. do you accept it and give them credit for pushing them to this point? >> a lot of questions. it's interesting to see that. >> a few stocks on the move. the firm is best positioned in the current oil market.
and 49% upside in stock over the next 12 months. you see stock is up by over 1% today. big lots downgraded from hold to buy of duetch bank. the firm sees head winds for overtime payment rules. increasing competitive pressure stemming from walmart's success. that stock is up by 1.6% today. and free port has withdrawn the plans for an ipo of oil and gas business. the unit first filed for the offering last june. a 24% drop in oil prices since then severely cut. >> and the fed speak will continue unabated this week. i read this and it was really? you have the guy san francisco president john williams. you heard them talking in china. anyway, williams is about to begin a q & a session with the council on foreign relations.
the topic evolving challenges in a monetary policy. and we will bring you the headlines whether you like it or not. earlier this morning we heard from st. louis president jim speaking. beijing suggested a relatively tight labor market. they put up for pressure on inflation that raises the case for higher interest rates. and this follows an interview by boston's guy eric rosengren. he's getting ready to back monetary policy as it becomes more poll. we have six more guys this week. growing up i just -- maybe i wasn't paying attention. i don't remember g william miller or any of these guys. i don't remember greenspan.
i remember him talking because it was a way to cure insomnia. we didn't know this much. do we need to know this much? this is a different fed. this is a fed carrying the burden of all economic policies. and it feels compelled to try to guide markets. we're going to hear a lot more from fed officials and they're going to be telling us one thing, which is that the market is still under estimating the expectations of a rate hike this summer. >> mohamed, i know what you're saying. you like governments to do things. but, you know, there are private sector economies that did just fine for decades and decades. >> right. >> they made us bet they can't get out now. but this is their fault they became so -- >> a whole book about how the fed is going from being a part of the solution to part of the problem. they shouldn't be doing what they're doing. but exiting is quite hard. they have a small window, they
have a small window to start normalizing. i think they take advantage. >> they missed windows. >> they missed one last year and learned. i don't think the market realizes the fed learns. they had a big window. they missed it last year. this year with the dollar having weakened with financial markets relatively stable, they want to take advantage. >> no one expects to be right all the time. you don't want on the job training either for the fed. that's what you're saying we did. they learn and make mistakes and get it right next time. meanwhile, they have gotten us in a pickle now. we're paying the price. business investment is down. i don't know how many -- it's counter factual. i don't know how many negative things happened. >> the fed is like a doctor. if they see you in trouble, they will come to you. if they don't have the right medicine, they'll try to take care of you. the problem is not the fed. the fed knows it doesn't have the right the medicine for the economy.
it knows all it can do is give painkiller painkillers. >> there's accu -- >> your simple doctor what we need is to deal with structure impediments to growth that will require political will. why? because we fell in love with finance as a driver of growth as a way to a private finance. and since '08 it's been central banks. at some point we hand to off what to what drives economic growth. we just had a guy from the ryder. i would think it's a reliable
one. he said he doesn't see a 5 percent gdp. most people say gdp. the unemployment rate is the one to watch as far as what kind of economy we have. the transportation, that guy said we're down from last year. >> and we've heard similar things from buffett watching the transport with the raillines. >> yeah. i would warn you that composition matters a great deal. if you're in the old economy, it's very different than if in the new economy. look what happened to retail sales. it you're am zon it's completely different than a old style retailer. >> your order has to make it to your house somehow. they have to be transported. >> right. this other stuff is being transported less. inventory is down. there was a whole instruction going on. i think economic data isn't picking up as much as it used to.
the numbers i look at are wage growth, job creation, and whether the participation rate moves a lot. those are the three key issues. >> right. so while we have it here before we go and, you know, you'll be here for the hour, but, you know, you see what is happening in austria, you see an editorial where 20 years from now anybody who voted against brexit is going to say what was i thinking? that's what he's saying now. then you have the rise of bernie sanders and donald trump here. it's pushing back against something. it crosses borders and cultures and everything. what is it? >> people are angry. they've lost trust in the establishment be it governments or big institutions. >> is it immigration? >> immigration is -- there's a lot of issues that are driving this anti-establishment movement. what you're saying is right. anti-establishment movement doesn't have to come to government. it's already influencing how
policies are. on brexit remember in the short term and the long-term it's very different. in the long-term brexit is going to reck style one of the biggest problems in europe which is completely different as to what the european union should be. over the short term we have to figure out what comes after that. that's the reconciliation that the people want to leave have to convince voters they can implement. >> you're at 40 percent. >> i don't have an independent view but they look at the polls and suggest 30 to 34. >> that's all it is. >> that's what it is now. the vote can change the numbers in a big way. >> okay. nobody knows. thank you. we assume you'll be with us for the rest of the hour? you look good. you're looking a little bit better. >> yeah. coming up don't call retail dead yet. a new report this morning showing that american firms are finding new life overseas. retailers leading a global
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box." john williams speaking this morning. steve lieberman joins us. >> john williams saying he's two to throw rate hikes this year and three to four rate hikes in 2017. and in a discussion of the council foreign relations here in new york, williams saying he thinks the company, the country, is at or near full employment and sees the fed making good progress on the 2% inflation target. earlier this morning, speaking in beijing, jim bullard offered three reasons why he thinks rates should rise. joe pointed out three, four, two again. maybe that's a clue. yesterday boston fed president once among the toughest members of the fed continue support for a rate hike.
janet yellen will sit down in a conversation at harvard. mohamed, is it possible yellen could walk back the june talk from her committee? >> i don't think it's possible. i don't think she wants to. i think the fed is in concerted effort to talk of expectations of a rate hike this summer. >> and expectations mean what? it's going to happen? it's not going happen. are you betting july or june? >> so i see a definite by september. it could happen by june. a good jobs report and low probability of a brexit leave vote and stable markets. i think the brexit event is big enough it may make them wait until july. it's definite by september. it probably is by july. >> if they're not doing it in june at this point, they
probably have to continue with hawkish talk at that june meeting because you can't continue to set up expectations and then yank the rug out from under them again or move the football again like people felt they have done. >> like charlie brown. >> i think they can do whatever they want. >> they're on the verge of, you know, over the top exasperations. another question i have for you, mohamed, is the market fully priced for july? is there any money to be made by playing this? >> no. the market is not fully priced for july and the market is not priced but a possibility of a second hike coming late in the year. so expectations -- we've moved a low rate. we went up as for a as 90. we're about 87 or 88 today. the markets are getting it but not there fully. >> let's take williams outside the forecast. he said two to three this year, three to four next year 2017.
let's add and three and four is seven there's 1.70 plus 37 is 212. are you thinking a 2% plus fed for 2017? >> that's too much. i think you get two this year and maybe one or two next year. maybe. >> so one percentage point. >> the economy is weak. >> okay. >> there's a limit how much you can normalize. certainly you can't do it too fast. >> so if you thought about the 10 year a year from now, where would you put it? >> the ten year a year from now in the 30 year. tell me what is happening in europe. >> and that's it? >> the further out you go the more we are being pulled down by what is happening in europe. tell me what is happening in europe and i'll tell you a 30 or 10. it's not a u.s. call. it's much bigger call. >> thank you. we've been talking about so the-called retail wreck. a new report from the cbre group
shows that american retailers are expanding internationally. much quicker on average than the asian and european peers. what is the hottest destination? dianna joins us. >> u.s. retailers are seeking growth at one of the main drivers of growth is expand globally. the u.s. topped all other countries in opening retail brick and mortar stores overseas, according to cbre. where are they headed? no shock the top cities are in asia. the list starts with hong kong singapore, tokyo, and taipei. after that moscow, london, dubai. which stores are popular? blue jeans. who knew. u.s. retailers are taking home brands oversea dhs is more difficult because of the large size of the doors and the fact they're playing to different cultures. still, zara home and crate and
barrel have seen successes. as for foreign stores moving here it's less. the u.s. market is tougher and mature. and real estate prices for stores here are high. food and beverage showing bigge these. >> thank you. we've seen a few stumbling blocks, too. i think last week the gap was announcing it would be closing a lot of stores and most were international, too. >> yeah. it depends on what retailer you're talking about. they are seeing growth overseas. they're not seeing it so much here. that's why they're going. >> thank you. okay. coming up when we return call the laugh around the world. chewbacca masks are flying off the shelves because of this woman. we're going to show you the megaviral video. we're going to do it next. back in a moment.
sergio. and that ties him with the late spain yard. jose maria had six or seven pga wins but sergio has nine. and no one would say that sergio as good as he is as a ball striker and everything else. it's been the putter. one of these days you figure he might win a major. but he's got nine. >> he gets the young guys. >> oh, my gosh. and byron nelson -- it's nice. >> yeah. i watched the end of it. you see that? >> just fixated on the mets. >> for once you got something to be -- you got something going on here. >> walk order the set and nine straight. i said -- your talking about -- is it up to nine? >> the best form of defense is offense. 15 games behind.
11 and 32. it does matter if you center -- matter if you have a good team. rory mcilroy winning a tournament in his own backyard this weekend. the four-time major winner taking home the trophy at the irish open. he's doing something special with the prize money. he's donating the $750,000 prize to his charity. the rory foundation raises funds for children who are ill or disadvantaged and their families in ireland. "star wars" chewbacca masks are flying off the shelves after candace pane's video goes viral. the post quickly reached more than 130 million people since thursday. it's even 160 people who have seen it. kohls received an overwhelming amount of interest in the mask. the company bumped the price
down from $44.99 to $17.99. now the mask is sold out. the retailer responded giving the pane family a few more masks, $2500 in kohls gift cards, 10,000 rewards points, and tons of "star wars" toys. >> tons. really? >> maybe not tons. >> gazillon. >> i don't think there's enough musicals. >> annual music awards show. the weekend was the big winner taking home many awards. adel, come on, you lot ve adel taking home the top artist award. and britney spears kicking off the show with a medley of her hits. madonna did a tribute to prince featuring stevie wonder and celine deon gave an emotional
performance. this happened in las vegas where celine deon and britney spears have had shows on for some time now. >> you went to london to see adel. there's too many. it's like inflation. cheapen the grammys. america's choice, people's choice, and everyone tries to get naked. >> whoa. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. td ameritrade.
welcome back to "squawk box." here is making headlines at the hour. shares of fiat chrysler lowered. the automaker saying the vehicles are in compliance with the existing models. some have emissions technology after 22 minutes. the report said the company could be prevented from selling cars in germany if found to be have violated those emissions rules. gasoline prices are up 5 cents per gallon in the past two weeks, according to a lundberg
survey putting the average price at $2.32. and british finance minister said brexit could lead to a yearlong recession. rented polls show voters leaning toward remaining in the e.u. in political news a new nbc news wall street journal poll finds that hillary clinton's lead over donald trump is now slunk to 3 points. and the washington post poll before that, i think, it was up by two. and fox news poll up by two or three. and rasmussen. so this is not a big surprise. >> the margin of error is 3.1%. it's been the margin of error. >> it has tightened. i didn't think we needed to have -- so while clinton is viewed as the likely democratic candidate, the poll finds in a hypothetical match up that bernie sanders leads trump by 15 points. 54% to 39%. i don't know where --
>> if he was actually -- >> is he beating hillary clinton? what difference does this mean? >> if he were in the lead, that would not be the situation, i'm sure. it's interesting. it's been bernie sanders point as to why he won't get out. we know donald trump is on the hunt for a running mate. reporters are saying that he's going to be meeting today in new york with tennessee senator bob corker chairman of the senate foreign releasations committee. many said corker is the top contender for vp spot. a war of words over the weekend. red stone's media empire fight. we talked about it a little bit. but fascinating soap opera. julia joins us now. >> the surrounding the estate of redstone's mental capacity and who will control viacom. with redstone weighing in through a spokesperson dismissing viacom's claims that members of the board have denied
access to him and his daughter has isolated him putting his residence on lock down. the statement saying that redstone is still, quote, engaged, attentive, and opinionated as ever. stock is down over 40% in the past year. and the reason for dauman's removal from his trust. redstone objecting to dauman's plan to sell a stake in paramou paramount. addressed all issues including paramount. dauman issued a statement of his own pointing a finger at sherry redstone for trying to seize control when he father lacked capacity. the timing is interesting. viacom's board voted last week
to stop paying redstone after he stepped down. in february executive chairman for viacom and cbs following a psychiatric exam from that lawsuit from his ex-girlfriend, which was dismissed just a couple of weeks ago. >> okay. thank you for that. joining us now to continue our conversation on the summer saga. edmond lee. what do you think? what is happening here? is he competent or not? >> fascinating story. i agree with you. the problem is very few people have had access to him. that's the issue. we don't know if he was competent or not. there was a recent lawsuit from his former girlfriend that sued for the family assets. the judge said we'll clear from the video tape testimony where summer called her out and said he doesn't want her. but the judge did not rule on his mental competency. everyone video tape happened a month or so ago, they don't know. that's the issue.
of course. >> dauman was saying he was -- >> dauman gave a statement last fall where he he said he's opinionated as ever. now they're using the words against him. he's opinionated as ever and doesn't want dauman in the spot. how surreal. summer redstone is issuing statements against viacom. >> and dau march wman was consis guy. >> right. the smartest man i know. my friend, you know. it's out of character, which is what ddauman has been saying. what is -- >> but redstone hated dauman -- >> sherry. they've never gotten along. when dauman was named chairman as viacom. she abstained. she voted against him getting
that post. what is brilliant about the maneuvering after the girlfriend testimony the judge said he knows what he wants, after that is when they made his move. if you think about it. if dauman is going to claim he's not in his right mind, he has to make a claim it happened very recently. because they were saying that, oh, he knows what he's doing. >> okay. a couple of interesting facts sherry lovesless -- >> she does. they get along great. >> end game. what does it look like? >> yeah. dare i say in a post summer world. they merged cbs and viacom back together. les leads that company. i know that les it was split one thing that les was concerned about is paramount went to viacom and cbs but it happened awhile back. the other sort of -- i think the
more likely speculation is cbs spins off on its own and outside of the controlling national -- the controlling company that summer controls at this point. i think that is the more likely scenario. viacom itself is such a dying business. >> hold that thought for a second. julia is coming back to us. she has a statement just put out. right? >> yes. andrew, just a couple of moments ago i got an e-mail. the statement on behalf of sherry redstone. that's referring to dauman accusing shari of manipulating her father.
certainly a battle here between shari and dauman. >> as the world turns. i love it. >> that wasn't from her unless she's doing the john miller thing where she said shari says. >> john miller knows as -- >> right. >> this is going to go to the courts. >> supposedly. >> but shari was talking about herself there. shari would never -- [ laughter ] >> you do old media, too? >> i do it all. >> you are unbelievable like a renaissance man. >> i love media. i love this story. >> this is digital. >> all media is digital. >> take us out. >> i think that's a big part of it. the fact that viacom was behind is part of the reason why -- >> you said it.
>> is viacom coming back? does it lead you believe it's a value play? >> nothing i've seen the moves they've made. they're not going to move the needle. the things they're doing now is not going to get them to digital faster. it's not going to get them to the point in a place where they can take advantage. >> okay. we're going to thank ed lee. the next installment -- >> we're going to come back to this. it's going to happen. >> the soap opera. >> continue to battle. >> yeah. we'll be back. when we come back on the fed. the markets s in volatility. check out oil prices this morning. they're down but you have to keep things in perspective. this is a new contract. the july contract, essentially oil is very little change where it closed on friday. the drop of 1.7%. only a few cents off. where it closed on friday. stay tuned you're watching "squawk box" on cnbc. first in business worldwide.
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share, but we mentioned earlier they sold additional shares just now at $15 a share, the same price they rejected them at, bringing on a new board member as part of this. the company is called -- they own a number of patents in this particular case they're saying the patents are related to the news media. but as part of this, they handed out a board seat in addition to this. it's a friend, we should say, of michael fararo. they're stacking the board all over again. it it's been going on since he joined. he bought into the company at half that price months ago. they believe these prices they keep saying are too low. the whole thing, i'm sorry. i don't understand this. >> do they have any pat tents on -- >> i don't know.
the transaction itself. i want to make it crazier for you. oak tree capital one of the largest shareholders in tribune. he went to them and said we would like to effectively buy your shares to potentially probably give them to the other guy. oak tree said they won't give them the shares at the price. you have a strange -- basically it looks like he's trying to buy both control which he already has. given they have put board members on the member without a share member vote and trying to get shareholders upset about this. and they want them to talk constructively. so this is like a corporate governance nightmare, i'm sorry. anyway. i don't know if you have views on this. mohamed is here. you're an l.a. guy. west coast. you're not an l.a. guy but west coast guy. you should care about what tribune does. >> i don't have strong views. >> what is that company they
spun off gannett with the letters in reverse? >> what do you think? >> tangent. >> they merge them -- >> yeah. >> and it was gannett but -- the gannett name and we had the other company on that was spun off. >> it only had -- >> the broadcasting of gannett but they took the letters in gannett and came up with a new word and we didn't know how to say it. it was during the storm -- >> it was last week. >> i know i was confusing with the tribune media stuff that was spun off. that was a separate -- >> oh, yeah. >> i'm going look it up. >> please do, if you could. tegna. that has a nice sound to it. too bad that name is taken. anyway. >> i have a serious question for
you. given the mergers and acquisitions activity. when we talk about inversions and the different policy issues that are going on in washington, it's a macro question. what could you do from a government perspective that would actually raise gdp in america and what do you think is a realistic number you can get to? >> if you reform the tax system, and a lot of what we're seeing are the consequences of a tax system that hasn't been comprehensively reformed to see these. if you do a bit of infrastructure spending, including private/public partnership. you did get an additional billions of dollars of private sector money being deployed in the economy. and we get out of this 2 to 2.5%. >> to what? >> closer to 3. >> three is the best you can get? >> three is not bad. >> four? >> it's a big difference from two to three. four is hard. we need to do fundamental restructure reforms and a lot of
other things in the world right. four is hard. three would make a big difference. you would get importantly to the growth with more evenly distributed than now. you don't need a big bang from washington the private sector can do a lot of heavy lifting. >> can we talk serious politics. do you have a view if hillary clinton wins and if donald trump wins what it does to the economy? >> the biggest issue is do they get commerce. okay. it's not enough to get the executive branch. if you haven't gotten the legislative branch. if they don't get congress, we'll have more of the same which is gridlock. do they get congress? >> trump may have congress. >> you have to wait to see what comes out. >> it's a heavy lift on the house, for sure. there's 30 contested congress vengss. or contested elections i don't think they are that close. they are saying they are but --
>> this is the most unusual political season. anybody that says they know what is going to happen -- >> and without congress, do you think the president has any lee way to help or hurt the economy? >> they can do a few things to executive order, but they haven't got enough to move it in a big way. in a big way. >> what about the power of the conversation and the dialogue they can create or not? does matter? meaningful? not? >> it makes a small difference. on its own it doesn't get us either into lift off or it doesn't get into recession. so they can go around the 2 to 2.5% growth. more than like 2% growth. don't under estimate the need for policies. >> the view is the markets either think they like hillary clinton because it will create some kind of consistency and continuity. my question is with donald trump even if he couldn't do anything in terms of the things you're
talking about, can you scare the markets or talk them up? can you do both? >> first, i think the markets -- >> is that discounted? >> the markets understand balances in the system. that's why you haven't had any reaction one way or the other. second, which is important. we have a long way to go until november. we're going to learn more about what the candidates intend to do with the economy. so i think the market is being very rationale saying that's not very active. and the remember is in love with two big hypothesis. one is that whatever happens growth will end up being stable. low but stable. and central banks are in the business of financial monetary. if they are threatened, then it's a completely different look. >> mohamed is going to stick around and continue to talk to imhim. coming up jim cramer on the day's top stories including bayer's big offer for monsanto. and the futures around the flat
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so you think monsanto gone with this or what, jim? >> i think antitrust blocks this, i think buyer and customers the same, that has led this new much more active antitrust department to be able to block deals like this. i don't think these guys have thought this through. i don't think they understand the way the justice department works anymore. and i think this one is going to be -- have a very, very hard time, because they are big in crowd protection. that's what the pharmas want. i don't think this one will go through. >> you think we've dealt with the potential of a june or july rate hike? did we do enough last week to coddle all the traders where it might be happening at this point? >> on rate hikes or on this, i'm sorry. >> yeah, on rate hike. >> yeah, well, i'm listening -- i just think these guys are the, you know, the two, three, i don't know why anyone would say two, three.
i would say we're going to have one in june and if things continue to be strong we'll have more. why do we have to give a timeline that may contradict the chairwoman? >> that might be dependent on whatever data we're seeing too. that does make it more difficult. >> look, i'm all in favor of june. that's fine. but then let's see how we do, joe. if it continues strong, let's do some more. but why say it's going to be strong when we know that what happened in this country in january and february was very bad. i don't understand where these guyings read the papers. >> all right, jim, see you in about five minutes. coming up, much more from mohamed el-erian and tomorrow don't miss another special guest host -- i didn't know this. >> yeah. >> that's awesome. sam zell will join us. is it safe, it will not be safe, not for politicians tomorrow starting at 7:00 eastern. "squawk box" will be right back. it's more than a network and the cloud.
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interesting as what's happening from above. so think of all the discussions today. there's major disruptions going on. there's this attempt to combine existing platforms with new content. there is so much that is going on at the name specific level that investors would be well advised to stop focusing just on the macro. we're going to see enormous differentiation in markets and people are going to have opportunity because we're going to overshoot on the way down and we're going to overshoot on the way up as a market as a whole. and it's really good to have a list of names that offer you content and platform. and that is really a very, very powerful investing equation next five to ten years. >> what has changed let's say over the last eight years or so since you came up with the idea of new normal? are we on a better path since theb? >> so what has changed is that we didn't transition away from a new normal early enough. and the central banks got sucked in deeper and deeper and deeper.
now we have to deal with the consequences of central bank involvement in markets. and i think that's a really serious issue. >> i know you've said in the past this was a responsibility that government centers needed to pick up, needed to do more of the spending, but are central banks guilty of being enablers and allowing this to continue? >> so i don't blame the central bankers. i go back to where they're the only game in town, quote/unquote, they had to keep the game going and they underestimated how dysfunctional politics had become. if i'd been then unfortunately i would have done exactly the same thing. again, like a doctor you don't walk away from patient that needs you even if you don't have the right medication. >> the answer for this is there's a silver lining in all of it. >> the underlying economy is not that bad. there is cash on the sideline. there's a lot of innovations going on. the u.s. has yet to assert its leadership globally. and so there are a lot of good things that's why i'm not in the
doom and gloom camp. we have two very distinct possibilities and it will depend on how the system reacts. >> mohamed, it's been a pleasure having you here today. thank you for joining us. >> thank you for having me on. >> make sure you join us tomorrow. "squawk on the street" is coming up right now. ♪ i can't feel my face when i'm with you, but i love it ♪ good monday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. last full week of may, and the premarket is steady, the setup includes a lot of m&a, a lot of fed speak today and all week, yellen on friday, some more retail earnings, europe's in the red as pmis are the weakest in about 16 months and oil is under some pressure this morning. david. >> thank you, carl. yeah, we're going to start off with breaking news involving that incredible battle that broke out over the last few days between sumner