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tv   Squawk on the Street  CNBC  May 23, 2016 9:00am-11:01am EDT

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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 redstone, his
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daughter sherri and the ceo and leader of viacom phillippe dauman. this morning he has filed a lawsuit just moments ago along with george abrams in the massachusetts probate and family court challenging changes purportedly made to the trust arrangements by an attorney claiming to represent mr. redstone. in a legal complaint, these two gentlemen, mr. dauman and mr. abrams who again have been removed from the trust that oversees the stake in national amusements that in turn controls viacom and cbs, they are going to the court saying they want immediate judicial relief and a court ruling to invalidate the purported removal of them by mr.
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redstone as trustees of the trust and also invalidate the removal as well as directors of national amusements. they would assume then want him, that is mr. redstone, to be deemed potentially incompetent and not able to make decisions. and very harshly worded language, guys, that accompanies this lawsuit. in a press release i just received phillippe dauman says of shari redstone after years of -- she's inserted herself into her father's home. go onto say in fact she's recently repeatedly arranged viacom board members to meet with her, we've heard some of this language in the last 48 hours as well. mr. abrams, for his part says my soul purpose in joining this lawsuit is to allow the court to determine whether sumner redstone, who turns 93 by the
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way i think this week, in his current diminished capacity has been subject to undue influence in his recent actions in changing his trustees and in changing other documents. they both believe that shari redstone is attempting to legally hijack her father's well-established estate plan by removing professional managers and reportedly installing herself and an employee and a friend as in control of the trust. so, you know, the stuff about his health care and the lawsuit with herzer, that was a sideshow, this is the main bout now for control of viacom and cbs between shari redstone, and frankly at this point the trustees who were appointed by sumner redstone previously to oversee both national amusements directors and most importantly the trust that will kick in upon his death or when he is deemed
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incompetent. >> why would she keep the current management around if she gets this? why won't she fire them immediately? >> well, there are certain governance issues that don't allow you to fire them immediately, but she would be conceivably able to file and given they're shareholders. >> wow. >> this is a fight for life for dauman and viacom, many people believe somehow, jim, this will mean there's a potential sale or something else in the offing, may be disappointed. the sense i get at least this is shari redstone's opportunity to assert her control by putting on people on the trust who will follow what she wants. now, she will claim of course and has claimed by the way many times that she is simply following the direction of her
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father. who is simply saying i am no longer in the belief that dauman is no longer to be the right man on the trust or mr. abrams who had been his attorney for the last 50 years, one of the attorneys. >> what are the directors saying to you? >> i spoke to director yesterday on the phone he was on the record. he says, listen, this is new territory for us. we can't control what happens in the trust, but as the lead director of the board, by the way he's only been lead director for about a month because previously was mr. redstone and then mr. dauman skprks mr. solerno on the board for over 20 years stepped up as the lead director. and he claims, jim and carl, that they had a meeting on tuesday and wednesday of the board where they went over for a day and a half all of the different plans the company had and the way the board was going
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about measuring management's ability to meet certain targets and that they didn't hear from mr. redstone at all. that he was silent the entire time. and i said, well, listen, sumner redstone has had trouble communicating for some time. is that any different? and mr. solerno seemed to indicate he would respond at least in the past to a certain extent and there was a belief on the part of the board that he was more involved. this is going to be very interesting because less than six months ago phillippe dauman was on the record testifying to mr. redstone's competency, so the question will become has he declined a great deal since then or not? shari redstone as she has said in a number of statements indicates that her father is fully on top of things as he has been in the past and these are simply his wishes that she's carrying out to remove mr. dauman and mr. abrams from the trust. that's the most important part of this by the way. seven people on this trust,
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previously shari had three people herself but four not necessarily in her corner, without them she will conceivably have control or at least the appearance of control and therefore be able to do what it is she thinks is the best interest of viacom and cbs or in her best interest. >> phillippe dauman well paid. >> very much so. >> especially given the performance of the stock. are they really aligned? >> that's the key problem i think for the defense they have a stock down dramatically in the last year and a half and performance as like you like to say suboptimal. >> yeah, suboptimal sdpl this is the main battle. it has been joined now as the fight really is under way for the future of these two companies, guys. and this lawsuit not unexpected. the conversations i had this weekend would have indicated it was coming. it now has. they are going to try to get reinstated. interestingly though if they are claiming that mr. redstone is incompetent, then the trust would kick in.
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so conceivably you would have them reinstated as trustees and then the trust would be in control of viacom and cbs. alternatively he will be deemed competent and they will be gone and conceivably mr. dauman's future very much in doubt. >> cloudy. wow. what a story. big egos, huh? >> trying to find parallels in or out of media that have this level of drama. as we said earlier the market focusing on fed speak this week, possibility of a june rate hike on the table. williams now says two to three hikes seem likely this year adding that timing depends on the strength of the data. and then there's st. louis's bullard saying a tight labor market and waning global weakness, weak gdp numbers and muted inflation expectations support the case against a rate hike. net-net, and we're going to get a lot more leading up to yellen on friday, they continue to lean hawkish, jim, almost all of them. >> i wonder whether because the
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market is not down that much if what's going on here is they're softening for june by saying, listen, two to three, two to three. that really does make june feel more foregone. we've been hit -- the stocks that need a weaker dollar have been acting terribly since may 10. and that's been the softening. but the fact is that the s&p was good last week. so it's making people feel emboldened, that we're ready to handle what comes. >> because the s&p broke that three-week losing streak. >> i think it got oversold, but i think also we want to hear yellen on friday. >> at harvard. >> at harvard. >> radcliff day. >> they kept radcliff, isn't that something? >> nice. >> by the way les moonves key speaker -- >> he's probably been on the phone with his bankers too. everybody holding on.
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>> friday is going to be a big day because historically that's not been a big day, i'm working. i'm coming. because she's coming in. >> was that ever in question? >> no. germany's buyer making unsolicited offer to buy monsanto for $62 billion in cash, more than a 20% premium over friday's close. earlier on "squawk box" buyers new ceo spoke about his company's decision to make the bid public. >> our decision to make this public follows the announcement of monsanto last week that monsanto received a private offer from us. it was out in the open. and of course we want to respond and explain to the public and to shareholders what the content of the offer is and why it is so attractive to monsanto shareholders. >> they also want to explain to their own shareholders why it is attractive, of course one of the key things we've pointed out a number of times last week is
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that bayer's stock price has declined dramatically. there was a lot of concern the company was going to issue stock. there was concern whether the offer included stock to monsanto shareholders. now we know it doesn't. it's all cash, but they will do a rights offering, something we don't often see here but common in europe for as much as $15 billion worth of stock. the deal itself though seen as creedive and then get back to, well, what's the real price here, what's the right price? speaking of people close to bayer, who are structuring the deal, they're talking this thing is as much as 16 times last month's ebitda from monsanto and then you have the likes of deutsche bank this morning, german bank, say this is a lowball offer. of course different multiples because of different years for monsanto versus the 15.8 times 16 ebitda that is being paid for
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stra general ta. we don't have regulatory impediments of any significance here. there might be some minor overlaps, we can deal with them. we've now made this public, we're going to reassure our own shareholder base as to what we're thinking, we're going to lever up to four times but quickly reduce that given the cash flow of the combined companies, we're going to stay investment grade. yes, we're doing a rights offering but this deal will be acreedive and that's where things stand. we'll hear from monsanto. the expect is they will reject, but will it be a constructive rejection or one that's more scorched earth is the key question. >> when will the formers contact senators and congress people and say this is going to go up big and we're not going to allow this. because this is a justice department that listens to everybody other than -- >> apparently anthem and cigna can attest to today on some of these reports.
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>> these guys are way too confident. they don't know this justice department. they don't know it. >> they know there's not overlaps and that monsanto was willing to pursue a deal with singenta that had more antitrust questions than this deal does. >> these things have changed. these guys should call me. i didn't get to solve twitter this weekend, but i'm much closer to where the justice department is. >> when did you have time to do that? >> in conjunction with the street. analyzed every deal. and it's really incredible the change. incredible the change. and they should go look at the study we did. because the study is out of control in terms of what this justice department is doing. and then they're making their winging it. >> it will be very important when we hear from monsanto in terms of do they bring up antitrust as a concern -- and, again, everybody expects they're going to reject. you always reject the first offer, or they simply talk about
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the fact they think they're more highly valued than being given credit for. don't forget the window to nominate directors for a nonstaggered board at monsanto opens october 1st. yes, we're not even at the beginning of the summer, but this is a new ceo right out of the box doing something incredibly bold by -- >> german. >> you do not want to make this a misstep. you're going to win this if you're this guy, i got to tell you. >> biggest takeover ever by a german company. guy's been on the job for -- >> three weeks. >> who's his counsel? who's his antitrust counsel? i think they ought to do some homework. >> wow. i bet you're hearing directly from them. >> i hope i do. >> instead of them coming to me the way they do, what is cramer talking about, can you get me to cramer? here he is. >> i got time. >> when we come back, tim cook's -- apple's tim cook met with india's prime minister and gave a revealing interview over the weekend. we'll talk about what he has to say about possibly lowering
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prices, also some of this news regarding taiwan suppliers on the iphone 7. also ahead the race for president heating up, goldman says that could be a good thing for some stocks. look at the premarket s&p down 0.6 for the month. we have not had a down may since 2012. more "squawk on the street" from the nyse in a minute. ♪ ♪ (charge music) you wouldn't hire an organist without hearing them first. charge! so why would you invest without checking brokercheck? check your broker with brokercheck. there's no one no one surface...e. no one speed... no one way of driving on each and every road. but there is one car that can conquer them all. the mercedes-benz c-class. five driving modes let you customize the steering, shift points, and suspension to fit the mood you're in... and the road you're on. the 2016 c-class.
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tim cook met with prime minister modi as the apple ceo looks to boost business and market share in that country. cook made an eye opening admission about the cost of iphones in the country. take a listen. >> i recognize the prices are high. what we want to do things that lower that over time to the degree that we can, so we're looking at a number of different things. what we wouldn't do is lower our quality bar. >> we know how important that market is to them. two things, it's 125 degrees in india, record breaking heat. and the second is this report that some of these taiwanese suppliers are looking at targets well above the street. >> it's economic daily news. this newspaper has historically had a great relationship with
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fox com could be -- that's why you see broadcom stock moving, you see skyworks, cirrus logic, this is all the idea that everyone has been gearing up talk about something that no one's looking for, the idea that iphone 7 could be good because it's been doa. all analysts been saying doa. in weeks to economic daily news i checked how authoritative economic daily news and fox con have been, 100%. they say things are good or if there's a lot of parts being order ordered, they're right. a lot of people knew apple sale. >> would be the highest production for an iphone in two years, at least two years. >> it's what lowell mcadams said would happen. all got lost in the apple is dead moment. remember when apple was going to
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file chapter 11 with the most cash ever? because analysts -- >> it's sarcasm. just make sure people know that. >> it would be ill advised for them to file chapter 11 with 50% -- >> some of our people on twitter don't understand sarcasm. >> no, they don't. i had to tell so many people i liked you this weekend. no, i really like him. >> it's true. >> although they thought that was sarcasm. >> you can't win. >> no. winning is not the point. >> it's not the point. >> ceos will weigh in and say thank you because they did think there was a split between you and me. >> okay. >> when we come back -- we'll get cramer's mad dash as we count down to the opening bell on this monday. take one more look at the premarket. more "squawk on the street" from the nyse is straight ahead. 't s. what are we gonna do? how about we pump more into promotions? ♪ nah. what else? what if we hire more sales reps? ♪ nah. what else? what if we digitize the whole supply chain? so people can customize their bike before they buy it.
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♪ all right. let's get to mad dash for a monday, seven minutes before the opening bell. beginning the week, we'll start with the as. >> different, david, two different firms, big cap firms, merrill lynch, and piper come out saying amazon is underappreciated. these two reports basically are what you've always told me, amazon web services could be gigantic, maybe worth a lot. bob peck said worth more than $100 billion. but when two guys come out at the same time you're going to get push to amazon. i just think these pieces are very reflective of all the excitement that's going on with that stock 27% retail. >> right. right. although were they really seeing
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something we haven't already heard about or focused on? >> none whatsoever. >> this is no longer a secret -- >> nothing i haven't learned from you. >> it's true. >> erg youf been saying is encapsulated. >> you like to point out when research is behind a stock -- >> two guys, when bam and piper, when they both jam it, it's going to go much higher than this. >> okay. we have another a. >> alcoa, bank of america merrill lynch upgrades it. the spin is coming and they're saying that the new part, the more highly added proprietary 75% aerospace and that makes me think about the big vietnam jet order, which was big. travel continues and i know the airline stocks have been doing poorly. but actual airline orders, aerospace orders are good and people are going to play call. >> you obviously know alcoa very well. you focused on this spin, but it hasn't really done a lot to add value. >> not at all because the actual raw aluminum has been hurt so badly by the chinese dumping.
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it's kind of like everything other thing that the chinese do. it's state-owned producing way too much aluminum. now, it shouldn't -- once this splits up, you're going to see the value. and the value of the proprietary is well in excess of the whole company right now. but when you're connected with anything chinese shs look at the way the tin, the iron ore stocks have come back ever since chinese quit playing games. i don't know what goes on over there, but the state-owned companies don't seem to listen to anybody including the government. >> the soes, state owned enterprises. >> so is bandit. >> yes. all right. we have so many other things to keep an eye on this morning with the opening bell less than five minutes away. stay right here on "squawk on the street."
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you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in just about a minute and a half. a lot going on as we set the table on some macro data this week. we'll get some housing numbers, a lot of fed speak as we said a
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while ago revised q-1 gdp. and then some of this m&a, jim, continues to make headlines. we haven't gotten to tribune yet or aries. >> no, i think just for a moment housing will not be that strong, gdp will not be that strong. it will calm the question, i believe, the people who say two, three, based on what, retail weak, housing weak, no increase in wages. where is it in the average? of course there's been minimum wage increases but the government can't control that. so i think the data if weak is going to make the two, three people look silly. >> really? >> yes, i do. i think it will make them look silly. >> so you're not saying july -- >> i'm saying one in june and then let's look at the data. i think that's perfectly in sync with what the head coach has said. but these people, these linebacker coaches. >> special teams coaches. >> it's time they should chill. chill. >> got it. >> let's get a look at the s&p
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here at the open. and at the big board ringing the bell today it's lily celebrating 140 years as a public company. >> 140 years. >> over at the nasdaq the uso supporting america's military service members and their families. goldman out with an interesting note looking at political uncertainty arguing that 171 days until the election equity market uncertainty almost undoubtedly will rise. >> well, they've been -- you know, they got very neutral on equities. that's in sync. at the same time they come out with a conviction buy list of schlumberger. you wouldn't do that, if oil goes higher people feel better about the market. a lot of cross currents, but i want people to be aware that we are still under the control of oil. and if oil goes higher, as the schlumberger piece would suggest because they're talking about offshore drilling.
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they have to get in sync at goldman. >> goldman did take slb to conviction buy as jim says 29% upside over the next 12 months. >> a lot. >> along with some other raises today. kbw cuts, actually, afl to market perform, aflac. big lots got cut at deutsche on some of the overtime rules. >> on walmart too. the sleeping giant is awake. a lot of stuff about foot locker. i continue to believe nike had the wrong shoes out there and that that hurt foot locker. and don't forget, please follow these west coast finals between okc and golden state, because the steph curry shoe is, i think, not part of the foot locker stable the way it should. and that hurt foot locker. under armour, i think kevin plank -- you know, everyone decided this is one of the stocks that is absolutely just under tremendous selling pressure. >> right. >> that's because people go to tjx like i did the other day.
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they sent me to the under armour stock department. people must think they have too much inventory. i got seven pair for about $9. >> really? >> yeah. better than kohl's. we didn't mention kohl's yet. >> no, it's gotten a lot of attention over the weekend because of the viral chewbacca video. >> iger must be so thrilled. buying some housewares, what do you think? >> are they selling a lot of the chewbacca masks? i saw the video, i did. >> so you did take your time out to do that? >> i did. >> a win for disney, kohl's and facebook, this did not happen on youtube or periscope. 135 million views. >> that is interesting. >> kohl's of the stocks reported last week i'm putting kohl's in the they need chewbacca more than anybody. they got to have like weeks
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worth of chewbacca because those numbers were so bad. worse than macy's, i thought. can you imagine that benchmark? >> that's saying a lot. how's sears doing? >> great. >> it's good? presentation good when you shopped there this weekend. >> beautiful. that was sarcasm. >> lucky strike, ballmore, sears. let's play jeopardy. what are three bowling alleys. >> that's terrible. >> celebrity jeopardy. >> that's terrible. >> go ahead. >> i wanted to hit walgreens. >> really? ? >> late on friday you saw barry rosenstein stepped down from the board of directors. >> yeah. >> we had a sense that the sale of stock goldman did earlier last week was potentially walgreens reducing its stake. my understanding was this is not in any way them turning on the them in the future but redemption cycles.
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>> really? >> not having the maintain the same level. i wanted to get to that because it was a story we sort of couldn't confirm or i wasn't able to confirm it was jana that sold. they did. agreed upon a certain amount of their stake for them to continue to have the board seat he had, they had two, i believe. >> so that's the pressure. look, i think walgreens is going to have a great quarter, but these sellers have really defaced the stock. >> and then the company's ceo. >> oh, i love that guy. >> who owns the vast -- far more than anybody else. >> we should get him on. >> he's been on. >> yeah, i know, we got to get him back talking about this change on the board taking control of it again. >> he's very aggressive. >> i love him. that's why the trust brought him. he's an animal. >> that's what you want. you want an animal sfwl you want an animal.
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people should buy cvs, they had a great quarter. >> not channel 2. >> no, buy cbs channel 2 because everything's in play. >> you mentioned that i'm reading through the complaint now this morning. we did get the lawsuit we were anticipating from philippe dauman, george abrams seeking to be reinstated on the trust that oversees the controlling stake in viacom and cbs through its ownership of national amusements. i'm reading preliminary statement here. i've just gotten the actual complaint itself. they are seeking a judicial ruling declaring that the reported actions some early dismissing replacing them should be made null and void, that they remain in office as trustees of that trust, and that all continued efforts allegedly brought in the name of sumner redstone to dismiss plaintiffs should be enjoined. viacom shares are up, although it remains unclear to me as to
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whether they're simply responding to the possibility which is now much greater that mr. dauman will be removed as the company's chairman and ceo, eventually, or sooner than might have anticipated, or, jim, to some idea that there's going to be consolidation here. the beneficiaries of said trust are not shari redstone, they are the grandchildren and anybody born prior to mr. redstone's death. he's obviously still with us. but if he is viewed or deemed inkme tei incompetent, the trust would take over. the interesting thing here is they're going to argue in terms of reinstatement of the trust that mr. dauman, mr. redstone whom they say suffers from mental illness and afflicted with a disorder impaired cognition, slowness of, apathy and depression because of his physical and diminished health he's unable to initiate or participate in meaningful conversation including
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communications. and they're going to argue he's been mentally impaired, which means the trust should take over but that they should be reinstated because of course his removal of them was not something he actually meant to do but he was in power of shari redstone. she vehemently denies that's the case. what an incredible battle going to take place here. >> how rich do you have to be, david? >> for these two companies. >> how rich? bernie sanders may have something. these are rich people. these are rich people. >> well, there are plenty of people whose affairs are not marred in this way. >> that's true. now, there was a deposition where redstone talked at length about what his former -- >> well, he did speak at length. he did say a number of things about his former -- >> he had strong words. >> he was able to -- however he was not able to remember his birth name. he was not able to do other things that -- your point's a good one. the same group that was testifying to his mental competency only six months ago or even less is now saying he's
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incompetent. >> yeah, that's -- i don't know. this is tawdry. it's dallas, beverly hills. >> it's unique. >> nice. >> finally, jim, i don't know if you saw over the weekend, jeff commencement speech in which he talk about an era now of global protectionism and in his result ge will have to localize a lot of their business being taken as a bit of a milestone in terms of ge's culture. >> when i spoke to jeff recently about this issue, you know, he reaffirmed don't worry about it we'll make the numbers. there's been a big step up here in terms of protectionism, in terms of attorney general being anti deals. when obama put through that big tariff on steel, i don't know why they didn't get more attention. that was really the beginning of, hey, listen, we'll do tpp, but we're going to play hardball. and this election, the democrats squarely in the cross hairs is
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protectionism. people keep saying, listen, sanders is making inroads and going to drive hillary to this view, which would be -- it's very union oriented view. i don't know. this is really the big story. i think this is a big story of our time. this total shift against our trade partners and a belief that our workers have been sold out by our leaders via digitization and -- >> you mentioned cigna briefly, carl, we're taking a look at the two stocks. this weekend "the wall street journal" reporting open disagreements between these merger partners. and they've got a long way to go yet to get the approvals for that deal of course. you're also talking etna and humana getting together, cigna shares down about 3.7%. remember, even prior to them entering the deal there had been disagreements there in terms of mr. cordani, the ceo of cigna
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and his role but apparently they are still moving ahead with a deal that may not see its approvals if they get them received until early next year. still a ways to go. >> wow. meanwhile united health by getting out of these exchanges not worried about the government approving any deal has just blown away the numbers. these guys obviously are -- they want the government to like them. they're not getting out of the deals. >> no, they're not getting out of the exchanges. >> these stocks would all be much higher -- >> the spread in these deals is so enormous there's not much play in them because of how long it's going to take and just the concern. to jim's earlier points about monsanto and antitrust earlier that this is going to be a tough one. we'll see. >> yeah, i mean, i think they're going to have to make some conditions that they're going to stay in these affordable health care. >> yeah. >> because right now united health pulls out of anywhere
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they can't make money. and because congress has been unable to adjust, they don't want to play. >> you can't do anything to deal with the aca except overthrow it i suppose. >> how about monsanto up only six? what does that tell you? >> well, it's 108 on a 122 deal on monsanto. it's over 15% discount, but it would take 9 to 12 months to get done, and then some questions still about what the response is going to be. but don't forget a lot of this would have been done in private for monsanto and bayer except for the fact that the monsanto executive said that stupid thing where he denied that there was anything going on, which was -- >> it was ill advised. >> yes. they had to come out and correct it publicly which put this in the public realm. guys, i did want to quickly get to a report here on tribune. >> yeah, what is the story there? >> and gannett, we've been following this for quite some time. yeah, give me the old animation. i feel better when i get that. this morning tribune rejects
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gannett but not without a lot of back and forth and interest goings on again here. $15 a share was the renewed offer from gannett to buy tribune, almost doubling of the stock price prior to their first bid. but gannett -- tribune comes out rejects and does a separate deal with a gentleman in los angeles for $70.5 million in which he'll buy stock at $15. and gannett comes out for its part said listen despite repeated efforts regarding our $15 a share all premium offer they continued to take actions that gannett believes are designed to convey disproportionate control of the enterprise to select stockholders while ignoring duties to tribune stockholders. they know this issue of 4.7 million shares of kmet -- not capital, the name of the entity, will also be added to the board. by the way, tribune went to oak tree, its second largest holder,
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and oak tree said in a filing on friday, mr. farrow, the chairman came to us and asked if we would sell our shares to an unidentified party who -- we denied because we believe that a better price than $15 per share would be available in the tribune would engage. june 4th is what g naannett is hoping for here. >> well, the stock has had -- if they walk away, seven. seven if they walk away. >> well, that's a possibility here. they're making threats. we'll see if they follow through. >> wow. >> meanwhile dow is mixed but apple almost at a one-month high as the best performer. let's get to mary thompson on the floor. >> hey, carl, it's been choppy trading in the early going on this monday morning. right now the markets higher across the board although very
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modest gains there. we are seeing the vix tick up a little bit. little strength in the dollar index putting pressure on commodities and yields on the ten-year pulling back after last week's big gains when we had a lot of chatter of course about a potential rate hike here in june or july in the u.s. let's look at the s&p 500 because it managed to break a three-week losing streak last week. right now up just fractionally. these are the things the markets face in the days and weeks ahead. of course more fed chatter about a rate hike. we had three fed members coming out this morning basically adding their voice to the expectations we could see a rate increase in june or july if the data supports it. but also of course over the weekend there was the g-7 meeting when once again finance ministers expressed concern about weak global growth and right now a number of people believe stocks are too expensive. last week there was a report out of goldman sachs saying at this point they wouldn't buy equities because the growth doesn't support the risk that you would take in buying equities at this point. so right now while the markets are showing modest gains, again,
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there were a number of head winds that face them in the days and weeks ahead. couple of things in addition to the fed speak that are front and center, of course the deals we've been speaking about them all morning. let's take a quick check of the stocks monsanto with the bid from germany's bayer of $122 a share, up over $6. cf industries walking away from its planned purchase of europe's oci, the reason the treasury's actions to prevent tax inversions its stock actually moving higher and tribune lower after it once again rejected yet another bid from gannett. we're also watching freeport deciding not to go ahead with a spin-off of its oil and gas properties. and its stock reacting to the downside, again, because of the weakness we've seen in the oil and gas area right now. let's check on this sector because as we said earlier the stronger dollar, one of the factors in slightly weaker commodity prices that we are seeing today and energy among the weakest performing sectors in early trading. right now the dow holding onto a very modest gain of just about 4 points. carl, back to you.
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>> mary, thank you very much. oil prices not doing a whole lot. let's get to jackie deangelis at the nymex. >> good morning, carl. starting on a lower note wti trading over $47 a barrel. we did roll to the july contract seeing some volatility on friday. that has started to ease a little bit. stronger dollar as mary pointed out certainly part of the problem here. the dollar index over 95. she also mentioned that june rate hike in play, that's what commodities traders are worried about right now. we did make a run at $50 last week but we couldn't cross that pivotal psychological mark. technical levels tend to be tested like that before they are crossed, so some traders are not ruling it out. now, the upside momentum that we saw last week, the sentiment was pretty strong, even support on down days was pretty strong when it came to crude prices, but this dollar remains the caveat, also this time of year remember gasoline demand is strong and that tends to push crude prices higher. wti and brent trading near parody right now so indicates the wti price and the wti commodity is more in favor with
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respect to the international benchmark. the rest of the energy complex is lower because of that dollar with the exception of nat gas, we are expecting to see a spike in temperatures that will boost demand for nat gas. and i will say gold prices falling under $12.50, that's pretty key. again, dollar oriented at this point, carl. >> jackie, thank you very much. when we come back, former fed governor robert heller will weigh in. does he think a june rate hike would be justified? dow mild start to the day up five points. don't go away. is car? came courtesy of james and patricia thompson. this tv? margaret and tom lee. the championship game ball? that was sebastian diaz. good guy. and all i had to do was ask for their money and pretend i was investing it. their life savings is now my lifestyle. female announcer: don't let someone else live the life you're saving for. find out if you're dealing with a registered investment professional at investor.gov.
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reliably fast internet starts at $59.95 a month. comcast business. built for business. - omg. you are so funny. in the time it took me to type that, if i were driving 55 miles an hour, i'd have driven the length of a football field blindly. not funny at all. don't text and drive. the more you know. as the race for the white house tightens, dallas mavericks owner and shark tank investor mark cuban is saying he's open to becoming a running mate with either hillary clinton or donald trump. >> if she really did come to you, would you listen? >> absolutely. but the key would be she'd have to go more to center. if she's willing to listen, if she's willing to, you know, hear other sides of things, then i'm wide open to discussing it. >> what about donald trump? >> same. you know, i'm an independent. i'm fiercely independent and
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think for myself. and i'd have the same conversation for donald. donald has a real chance to win, and that's scary to a lot of people. but what's scary about it to me is that you can see him now trying to do what he thinks is right to unify the party. and he's listening to everybody, which is fine on the surface, but what's also happening is it's coming across as if he's proposing things based off the last person he talks to. >> on that note he is reportedly set to meet with corker today. >> right. >> who's been talked about as a potential v.p. pick. >> these are people part of the affi affirmament -- >> i don't think that's going to happen. donald trump has spoken very positively about carl icahn. cuban is -- it's hard not to like that guy. >> very hard not to like him. >> he's great. >> that's a blessing that he just gave trump. >> in a way. although he did say he changes his opinion all the time, didn't
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he? >> well, maybe if you go with cuban you make a statement. that's pro business, that is very optimistic. cuban's an optimist. trump is not an optimist during this period. i think he's been slamming people. this is an optimist, change the tone. >> yeah. although hard to imagine cuban being sort of a silent partner in the naval observatory. >> yeah, he's kind of like frank when frank got in the white house as v.p. in "house of cards." do you remember? "shark tank" lives on. >> with vice president mark cuban -- >> we'll get stop trading with jim in a moment. dow now down 13 points. ssed most of the show. (woman) and there's no way to restart it. (jon bon jovi) with directv there is. ♪ you see, we've got the power to turn back time ♪ ♪ so let's restart the show that started at nine ♪ ♪ and while we're at it, let's give you back your 'do ♪ ♪ and give her back the guy she liked before you ♪
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time for cramer and stop trading. >> maybe goldman did this and not realized it, but i doubt it. they launched on human resources financial management software today, and their favorite one is intuit. basically i had intuit on, i think there's a lot of good things happening there, that's quickbooks, but most importantly they report tomorrow. so i don't think you would stick your neck out today and recommend intuit if you were concerned about the quarter. now, when i had management on, i certainly wasn't concerned about the quarter because i think that
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they're on fire. but i think it's important when we see these upgrades or launches or buys the day before, they tend not to be embarrassed when the companies report. >> jim, what's on mad tonight? >> well, i'm going to be looking at five stocks people hate that actually should be loved. and also, you know, the medical device business, i don't know if anyone's focused on it, it's a bull market. medical devices there's an amazing bull market. and i am on it tonight. >> you're on it. >> a lot of new customers moving into that age bracket. >> yes. so that's really a lot of what it is. it's baby boomers as a cohort. >> and all the fake stuff -- not fake stuff -- >> not fake stuff. >> well, i don't mean -- >> you weren't born with it. >> if you weren't born with it they put it in you. >> oh, okay. look, i'm going to go -- this viacom thing is too hot. i am going to do a think called
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trilianc. >> the norfolk county court will now decide the fate of viacom and cbs. >> learned hand there? >> love learned hand. >> jim see you tonight 6:00 p.m. eastern time, "mad money." when we come back, tim cook in india, more reports. dow's down seven points, don't go away. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company.
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good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen, simon hobbs and david faber at the new york stock exchange. mild gains this morning, dow in the green but big week ahead with specialty retail earnings, fed speak, housing data and yellen on friday. oil being a little troublesome this morning with stronger dollar action as well. >> our road map begins with the market. is the market really ready for a june interest rate hike? we've got new comments from the federal reserve. >> there seems to be no end in sight for trouble at the tsa. we'll get an update on what travelers can expect ahead of
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memorial day. the viacom saga heating up with the filing of a new suit this morning plus the board complaining about a lack of access to redstone. we have the late egs details on all of that drama. but let's start with the market, stocks relatively flat as oil prices slide, as carl just mentioned, and investors brace for a possible shift in fed views. so which sectors should investors be focusing their attention on this week? joining us is our very own mike santoli and david kelly, chief global strategist at j.p. morgan funds. before we get sector specific, david, on this question of whether the market is okay with the fed moving to raise interest rates in december, whether it can stomach that, have we gotten a verdict yet? >> no, i think the market is still pretty complacent. the market just doesn't believe the fed will pull the trigger. this is a fed cried hawk so many times. and so as promised to maybe raise rates so many times that
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now when you see this concerted effort among fed officials to raise expectations of a june increase, i think the market hasn't quite bought it yet. i think there may be a surprise in june if the fed follows through and that could be a laggard for the bond market. >> what are you watching, mike, to tell whether the market can handle this or not? >> well, i think what we're doing is challenging some of the premises since february we've only given back about 20% of the gains, but i'm looking at the dollar sensitive areas. on the back of stronger oil, weaker dollar and fed on hold, those to me were the three legs of the stool for the rally. and we're at least modestly challenging all of those. in terms of sectors i'm definitely looking at those consumer staples, those kind of bond like stocks that people have piled into as bond substitutes because they assumed by the way that rates were going to be low for a long time. so that's one thing that i think, you know, campbell's soup on friday was a little bit of a tell. you thought this was in your safe part of your portfolio,
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it's down 6.5% in a day. >> so do you dump, david, some of the winners of the year, the utilities, telecom that pay dividend and bank on low rates? >> i think you try to turn to financials that will do better with higher rates. we need to be more cyclical. i think growth will pick up later on this year and the fed will raise rates. i think that's just not quite priced into the market right now. >> yeah, it's interesting, david, the front page of the journal as you're probably aware has an article that says if they do raise rates then there's going to be no turmoil in the markets because the dollar's down almost 3%, oil is higher and we're no longer flirting with recession or thinking about recession in the country. you're challenging that clearly. >> not really. i think the economy will do fine. i do think that interest rate sensitive assets will be challenged by it just because of the attractiveness of higher
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rates at that point. but i think the economy can with stand and i don't assume the dollar will necessarily rally when the fed raises rates. we've got this notion that that's bound to happen. i don't know that it's bound to happen. >> right. >> i think the fed could raise rates and then i think the dollar can rally again. >> i think you're picking your words really carefully, david. whether the stock market can deal with rate rises because, a, probably doesn't think it should come and it's not just one or two rate rises, is it? the idea they're beginning to drive a wedge into the market which means much more rate rises further down the line than the market is expecting as well, potentially. that would be the argument. >> you know, i don't think these would be aggressive rate increases whatever happens, but i think the market's wrong on both counts. i think we'll get rate increases but it's not bad for the economy or the market. what is bad for utilities and the bonds market that could
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actually cause a rotation towards equities, which should not be as hard hit by rate increases at the bond market. >> i mean, there are two camps, mike, one that says history suggests that an environment of rising rates isn't necessarily a bad thing for the market. the stock market can rise during that period, but there's another that says this isn't normal at all. we're in an earnings recession. we're in a period where the overseas growth is barely happening at all. so which one are you thinking wins out? >> well, the second point that you bring up i think is what the market has to adjust to, and that adjustment probably would not be painless, which is that usually when you're raising rates, when the fed is raising rates profits growing, you're confident in the growth outlook at least to some degree. so i think right now what the equity market is trying to deal with is an economy that seems to be perhaps strong enough for the fed to move but not strong enough to instill confidence that you have corporate profit growth coming back. >> well, the other point you make very clearly in your column is that most investors are
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fearful. >> yeah. certainly most retail investors, the majority of the public has been withdrawing money from stock, mutual funds and etfs, they've been sitting on the sidelines when they have been participating in stocks it's what they believe to be safe sectors absolutely. they are not considering the possibility the market can have one of these adjustments and go to higher -- maybe they don't care to stick around and see. >> a lot to think about, guys. thank you for kicking off monday here at the open. let's take a look at shares of bayer and monsanto. early this morning bayer making public its offer to acquire monsanto for $122 a share in cash. the cash being perhaps something of a surprise to those of us who've been following this closely since monsanto first confirmed that it had actually been approached with an offer by bayer last week. the cash offer of course at $122 a share, bayer says is worth
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$15.8 times the last 12 months of ebitda monsanto put up. they claim that's a significant multiple and one that of course will deliver significant value to monsanto shareholders. however, others weigh in saying, well, based on the projected ebitda of the company in 2017, deutsche bank for its part saying this multiple is well below that. that singenta is receiving from camp china. all of this will be things for shareholders to figure out. the key here bayer in coming public is able to start to explain to its own shareholders its rationale mind the deal and the structure of the deal itself. as i said cash $122 right now at least would be exchanged for monsanto shares, however, bayer would turn around and do a rights offering for as much as $15 billion paying for roughly 25% of the $62 billion that it will be spending to acquire monsanto. so that will have a dlilutive
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aspect, at the same time being accredit cretive to earnings. you can see this morning shares are down yet again having the effect -- well, shouldn't have any effect on monsanto shares given it's only a cash deal, but it also may have effect in terms of confidence overall in their ability to get this deal done. that said, bayer's ceo is new to the job having been on it for only three weeks although he's a longstanding executive at bayer. he's only taken over the ceo role very recently. this is a very bold move for them to do. and as i pointed out a number of times if they want to follow it through should they receive a rejection from monsanto over time and a continued rejection, they can actually try to act to throw out the board of directors at monsanto given it is not staggered and it does come up at least the window for that election comes up at the beginning of october of this year.
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so at this point we've got now, guys, a public offer that is out there, the ability for bayer's shareholders to understand some of the rationale behind it and for monsanto shareholders to decide as well what their thoughts are. the hope had been on the part of some that i'd spoken to you would get a higher price, and of course that still remains a possibility given often in these situations monsanto and/or the target company would reject initially. antitrust also a concern at least some would say, including our own jim cramer, although for its part bayer says we don't really see any real overlapse of significance and don't believe we have a lot of concern on the antitrust. >> do you get a knockout on the first offer? >> sometimes. you get a knockout when they agree to a deal. >> first offer is enough, okay, i'll take it. >> baa in this case the talks became -- they were not able to do these talks in private because monsanto executive came out stupidly and said there was nothing going on and then monsanto quickly had actually correct the record publicly
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which put this out into the public realm. >> all right. when we come back, if you're planning to fly any time soon, listen up. the trouble at the tsa shows no end in sight. the major lines you might be seeing at the airport. apple's tim cook was in india over the weekend, but the stock's moving on these reports of much higher iphone production targets than analysts expect. semis are leading the nasdaq, that and a lot more when "squawk on the street" continues. anything worth pursuing hard work and a plan. at baird, we approach your wealth management strategy the same way to create a financial plan built to last from generation to generation. we'll listen. we'll talk. we'll plan. baird.
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man 1: i came as fast as i man 2: this isn't public yet. man 1: what isn't? man 2: we've been attacked.
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man 1: the network? man 2: shhhh. man 1: when did this happen? man 2: over the last six months. man 1: how did we miss it? man 2: we caught it, just not in time. man 1: who? how? man 2: not sure, probably off-shore, foreign, pros. man 1: what did they get? man 2: what didn't they get. man 1: i need to call mike... man 2: don't use your phone. it's not just security, it's defense. bae systems.
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long security lines at airports leading to rising tension amongst travelers ahead of the big travel weekend. and lawmakers of course are taking aim at the tsa. joining us from chicago is our very own phil lebeau with the latest. a tense situation, phil. >> it has been, simon. the interesting thing is we're noticing a little bit of decrease in the length of lines reported over the last week. in fact, over the weekend there was a far fewer number of reports in terms of people saying, look, i've been in line for an hour and a half or two hours. so the situation appears to be improving. remember, you've got a number of major metropolitan areas that are now focused on the tsa, that includes here in chicago which overnight the mayor's office announced that it will be issuing tsa report cards basically every two weeks telling people here are the lengths of the lines, here's what the staffing is, how many canine teams are involved. for the tsa this is about adding staff and overtime as quickly as possible. remember, they made the announcement about a week and a half ago that they were going to be shifting resources because we're heading into the holiday
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weekend. they know that they're going to have long lines, and then after that the airplane schedules ramp up. critics have been calling for more private contractors to run the security lines at airports around the country, but the head of the tsa points out even those private firms ultimately have to report to the tsa. >> remember that private contractors contracted to the federal government still works for tsa, it's still tsa management staff that runs it chl the cent doesn't work for the airport, it works for tsa is trained at tsa standards has to work at tsa standards, that said i encourage anyone to take a look at it. >> you can bet there are more airports interested in hiring private firms to run the security operations, even though they report to the tsa, because that way the airports to a certain extent can say, look, we have certain standards we want to meet in terms of getting people through the systems, through the security checkpoints and with those standards in place they hopefully can put some incentives in there for those private firms to run the
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operations. but we'll see how this weekend goes. carl, it's going to be a very busy, busy summer. and this is just the start this coming weekend. >> yeah, maybe more people taking to the roads instead, phil. thank you very much. our phil lebeau. for more on what travelers and airlines can expect, tom blank is the former tsa deputy administrator. he joins us this morning from washington. tom, good morning to you. >> good morning. nice to be with you. >> is privatization the answer here? >> well, i think the jury is probably still out on that. listen, it probably can't hurt. it's worked very well in the major airports where it's been put in place, like san francisco. but the administrator is right, you do have to do things the same way. the question is how much more flexibility would private screeners have. i think one of the things that has happened here is that over the past couple of years tsa has become fully unionized. i think it's a government agency that wouldn't be thoen for its flexibility or being nimble anyway, and now with full
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unionization that may be contributing to how tsa can respond to the situation that it has. if you switch over to private screeners, you may be able to move people around, address long lines in a more quick and nimble way. so that would be one question that i would point out about the conversion from private from tsa screening. >> yeah. when people ask you why the problem has become so acute, what's your general layman's answer? we've heard everything from just general traffic trends to bad projections on prechecked clearances. why is this happening? >> well, if tsa were a business, we'd be saying they made bad assumptions about their marketplace. they made an assumption that their precheck, the fast line, was going to create enough efficiencies that they could save 3,000 head count, and that turned out to be inaccurate. now, whether it's the $85 fee
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that is preventing people from joining precheck or not, that's not known. but tsa believe that they could keep the lines short and do it with 42,000 head count rather than 45,000 head count. they made a mistake in those assumptions. the second thing is last summer they got a very bad security report card, which means they have been taking their personnel resources and retraining them, so there has been less than 42,000 even available. and we're changing the culture out there from one of convenience to one of security. and then the airlines came across with increased passenger bookings. so a number of these things are creating a problem for tsa. and it probably won't fix quickly because it will be this fall before congress allocates tsa more money to hire more people and train them and deploy them. >> one reason you didn't mention, tom, i was sort of surprised you didn't mention is i wonder if it's the airlines'
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fault at all for all of these excess baggage fees? i mean, when you have to pay $25 to check bags, you're going to carry on more. and so many people have carry-ons and that takes a lot longer to screen and check for. should the airline haves to pay a fee or should airlines beheld responsible at all? >> well, it's certainly a factor and a good point you bring up. i think tsa should engage in some negotiations with the airlines. i think ranking people in the administration might want to talk to the airlines about perhaps a temporary suspension in baggage fees because there is no question that increased amounts of carry-on do take more time for inspection. they take more time obviously in the cab into get them all loaded. and it's clearly a correlation between the amount of carry-on baggage that tsa has to process and when those baggage fees were fully implemented. >> at the same time, tom, i think for people particularly who are watching the show from
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abroad they will say to have these sorts of delays, mass delays for the sake of three or four or 5,000 people, new staff members in a population of 300 million seems odd, why not give them an extra $100 million, whatever you feel about the tsa and get the whole thing shifting. there's got to be an argument for just kind of throwing a little bit of money at it, hasn't there? >> well, there's two points. one, congress could act to do that. tsa and the department of homeland security could ask to reprogram funds that are curr t currently appropriated onto tsa to fix the problem. but another factor is that in europe while government oversees security, the airlines and the airports are primarily responsible for it. therefore as businesses they have the capability to respond more quickly to changes in the marketplace whereas here in the u.s. a government agency just doesn't have the capability to
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do it. >> tom, we're going to see how the summer goes, that's for sure. thank you so much for your time. >> thank you. >> tom blank, former tsa deputy administrator joining us from washington. up next, the head of the bank of japan defending his credibility in the face of recent criticism. what he had to say about the state of the global economy. plus, federal reserve members revealing new hints about when we could actually see an interest rate increase. are the markets ready? we'll talk to a former fed governor when "squawk on the street" comes right back. it's more than a network and the cloud. it's reliable uptime. and multi-layered security. it's how you stay connected to each other and to your customers. with centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services -
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the bank of japan under pressure. a few recent policies have spooked investors, negative interest rates and intervention to keep the japanese yen from getting too strong. japan is trying desperately to boost growth and raise inflation, but efforts are falling short. cnbc's sat down with governor kuroda this weekend at the meeting in japan. here's what he had to say about some of the criticism. >> i don't think our credibility
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has been reduced in any way because as you may know also the u.s. and central european banks have delayed and delayed when the target is met because, i mean, not just japan but also u.s. and europe having space, breathe, shop including quality prices including oil prices and that has affected the inflation rate among the three major countries. >> he was also asked whether he's actually targeting the currency at a certain level to help meet his inflation goal. listen. >> policy is really targeted to inflation rate. but of course inflation rate is affected by many factors including output gap, inflation expectations and so on and so
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forth. and they in turn could be affected by exchange rate and so on and so forth. so we do not have a policy to target to exchange rate, but if -- including exchange rate affect expectations or understood lying inflation trend and if we judge necessary then we you would would not haste -- >> governor kuroda there saying they're not explicitly targeting the exchange rate. guys, here's the problem, the japanese yen is about 10% stronger against the dollar, so far this year. the japanese stock market is down more than that. topix down 13%. on a year when they did move into negative interest rates and they're doing everything they can to try to stimulate the economy. when you hear this debate over whether central banks are maxed out and whether there's any
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efficacy left in their policies, a lot of people are looking toward japan right now. >> well, i don't think the americans quite believe what he's saying, do they? they do think he's trying to weaken the yen which is why you've had comments basically saying watch what you do. you know this the classic argument is providing your policy internally for what's happening for your economy you have free reign, but if you target or move the exchange rate that's when your colleagues will take issue. which is what's dpoen on it would appear behind the scenes this weekend. >> disagreement which is why yen is strengthening again because people are skeptical japan will go through with threats to intervene if it doesn't have the u.s. permission. bottom line is what japan would love to see is the federal reserve raise interest rates and get the stronger dollar and do the dirty work for them. up next, tim cook gave a revealing interview in india. what he said about the possibility of lowering iphone prices. more twists and turns in the viacom saga. a new suit filed today and fresh
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complaints from the board about access to redstone. david faber has the latest details when "squawk on the street" comes right back.
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good morning everybody. i'm sue herera and here is your cnbc news update at this hour. president obama meeting with vietnam's president at a formal welcoming ceremony outside the presidential palace in hanoi. the president is trying to bolster trade ties with the communist nation. a bit later at a news conference president obama lifted the u.s. arms embargo to vietnam. >> we've agreed to continue deepening our defense cooperation including patrol boats and training for vietnam's coast guard and to work more closely together in responding to humanitarian disasters. and i can also announce that the united states is fully lifting the ban on the sale of military equipment to vietnam that has been in place for some 50 years. syrian state tv says at
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least 65 people have been killed in a series of suicide bombings and explosions in coastal cities that are strongholds of president assad. isis claiming responsibility for the multiple attacks. 18 girls were killed in a fire at a boarding school dorm in northern thailand. the victims were aged between 5 and 12. firefighters took three hours to extinguish the blaze and pulled survivors and bodies from a second story window. new england patriots quarterback tom brady will appeal the federal court ruling. his lawyer telling abc news they're appealing to the entire second circuit court of appeals. we'll keep you posted on that one. that's the news update at this hour. simon, back down to you. thank you very much. meantime federal reserve members are speaking out in force making the case for a near-term raise in interest rates. st. louis federal reserve president saying labor markets are relatively tight this may put upward pressure on inflation
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going forward raising the case for higher interest rates. boston federal reserve eric rosen gren telling the ft i would say most of the conditions laid out in the minutes as of right now seem to be on the verge of broadly being met. and san francisco fed president john williams in new york earlier saying the exact timing of the rate rise depends on the data. two or three rate rises this year seems likely. in other words, we better start doing it now to get them all in. bob heller, former federal reserve governor and former cnbc contributor. good morning. >> good morning. >> bob, why do you think we are getting what somebody described as a communications assault from members of the federal reserve? yellen will come through of course on friday. they are out in force. what are they trying to achieve? >> well, first of all they were just speaking anyhow, so at the moment however i think they're trying to send a signal that june is definitely on the table. whether they actually do it or not, that's the second question.
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i certainly think they should be doing it, so i hope they will. >> it seems unusual, bob, i mean, i don't know if you can back it up with impiricily, but they all seem that a rate rise is coming. did they shift their expectations or did the market just become very complacent? >> well, i think they're very, very close to their actual targets they want to achieve. look at the unemployment rate at 5%. the inflation rate they talked a lot about, they wanted to get inflation up to 2%, and now they're there. the cpi index is above 2%, actually, on a year-to-year basis. and the personal consumption expenditure deflay tor, which comes out only every quarter of a year is just a tad below the two, 1.75%. >> yes. >> so we're right on target. so i think the fed should normalize its policy as fast as
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they can. >> it does feel like no matter which way they go they're going to face enormous amounts of criticism, bob, if they listen to your point of view then they could face a lot of criticism that the economy is still weak and that corporate earnings are still shrinking and globally there's not a lot of growth. but on the other hand if they don't move then people are going to say they're behind the curve. it seems like damned if you do, damned if you don't. >> well, they are definitely behind the curve. in the old minutes the last time around they say that the federal reserve monetary policy as well as fiscal policy is not posed properly for the economy to withstangd any major shocks. so they should have been normalizing a long time ago. at the moment you have only 2% growth. why? because there are too many regulations. the government is piling on new regulations. and that is what's holding the economy back. it's not federal reserve policy.
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federal reserve policy is still very accommodative. >> well, the other problem is that in the past when they've tried, bob, recently the markets have moved against them and they're like, oh, well, we can't do it now. even now there's a suggestion, you know, they can't move aggressively because the dollar will react. and that will undermine them. so they're kind of in this dance with the markets trying to warn them it's coming, hoping they're not going to react. and if they do react, stepping back inevitably. i mean, it's a little like the boy who cried wolf, only ultimately the wolf did come back. >> well, i think you're saying it just right. it's a children's game, almost. we want to avoid a tantrum. who throws tantrums? 2-year-olds throw tantrums. doesn't mean that the parents should stop and let them do whatever they want to do, give them all the candy they want to have? no. the federal reserve should be focused on its goals long-term price stability is the most
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important one as well as increasing economic growth, low unemployment rate. and we are there right now. >> right. >> so policy should be roughly at normal. >> and what would you say to those people who believe that the fed itself has totally distorted the situation, that in a sense it's force fed everybody candy to the point of being really assets that are massively overvalued and therefore could be in a sense punctured by aggressive moves in interest rates or monetary policy. that's the fear. if you talk to a lot of investors, they'll say, hey, this doesn't end well. it might not end badly toe, but longer term it doesn't end well and that's what haunts a lot of people. that's also why the fed has problems, no? >> you are 100% right. you know, at the moment when interest rates go up, bond prices will go down. what will happen to all the pension funds in the country, to all the insurance contracts that are out there? these companies will start losing money. they need to earn at least 3,
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3.25% to just break even. and there are a lot of pension funds that assume that they have 7% rate of return. how are they going to get 7% of return in this environment? and bond prices will fall. and that's when we will get into trouble. but therefore all the more important get it even now. >> the problem, bob, with your argument is that it completely dismisses what's happening in the global economy and global factors. i know that's not part of their dual mandate, but surely in an era where we are completely globally connected, which we learned during the financial crisis, the fed has to take into account that when it moves, when nobody else is doing it, that strengthens the dollar and wreaks all sorts of havoc on global economies, emerging markets, that ultimately will impact the u.s. inflation view and economic view and its outlook, will it not? >> well, these other countries what they got to do is they got to implement appropriate policies.
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there's no way the federal reserve can increase the growth rate of france, of greece by monetary policy. france and greece got to pursue the proper domestic policies, fiscal policies as well as structural policies even more important. once they get their structural policies right, then they can have higher growth. it's nothing to do with federal reserve policy. >> the problem is all the central bankers say it until they're blue in the face and none of the politicians follow through. bob, we have to leave it there. thank you for your time. bob hellor joining us there as we get more noise from federal reserve policymakers. well, we had the latest shots fired in what is now an all-out war for control of viacom. the war between shari redstone, the daughter of sumner redstone, and the existing management at viacom, and by extension perhaps a war that will also include a war of control over cbs, the other company that mr. redstone currently controls through his
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80% ownership of both companies through his 80% ownership of national amusements. and that is where we find the center of the lawsuit filed this morning in the commonwealth of massachusetts. the probate family court of norfolk is where in fact we will potentially see a judge decide the fate of these two companies because that is where philippe dauman, the ceo and george abrams, long-time attorney for the redstone family, have both filed a suit saying that they need and want to be reinstated as trustees of the sumner redstone national amusements trust. that trust, again, controls the stake in national amusements which by extension controls viacom and cbs. late last week both of those gentlemen were removed from that trust. they say by that lady right there, shari redstone, who they say has shown or has exerted undue influence on her father,
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sumner redstone, who in the complaint they describe as significantly infeebled who can no longer stand, walk, coherently communicate, can no longer read or write, lost the ability to swallow and requires all sorts of different help basically doing the basic functions of life. the simple argument they make is that shari redstone has in fact exerted undue influence on her father who in turn then has removed them, illegally, from their roles on the trust. we will see what of course follows here. this is not necessarily going to be a judgment on mr. redstone's competency in a way, i believe, a separate judge would have to rule on that but certainly we'll go to it, the argument of undue influence certainly hinging on the fact he's no longer capable of making his own decisions in a complaint that is well worth reading they go onto talk about how he is virtually being held a prison in his own home and unable to have contact with anyone from shari redstone deems
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unfavorable. this is an important battle here. i don't want to make light of it in any way because it does go to the heart of control of both viacom and cbs. >> do we understand as we look at those public companies continuing to trade cbs and viacom what that could mean for the share price? is it clear what the narrative would be any situation? >> it isn't. shari redstone has been much more focused in the past on the management at viacom. if you recall she was the one lone dissenter when red stepped down and became clear she is not in favor of mr. dauman's continuing as the chairman and ceo one would assume based on previous comments. cbs has been much less of a focus for her, but to your point, simon, we don't know -- the expectation i have based on conversations i've had is not
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that shari redstone would move in either way to sell any one of these companies. >> would she injekt shareholder value into it? is the assumption she would make them be run more efficiently? >> well, that remains to be seen. >> okay. >> that remains to be seen. we do believe she would potentially want to replace the board of directors at viacom and therefore install new management at that company. of course the company has had a very rough go the last call it year and a half to two years as has the stock price down only 2% this year but down about 40% over the last year and a half. >> the saga continues. >> oh, boy, does it ever. meantime, a new nbc/"the wall street journal" poll shows hillary clinton's lead over donald trump shrinking to only three points. just about five months away from the general election, what is behind those new numbers? that's next.
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will the volatility index, you know, the vix, prevent the fed from raising rates in june
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in our traders weigh in and what to do about it at tradingnation.cnbc.com. more "squawk on the street" coming up.
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a new nbc/"the wall street journal" poll shows donald trump narrowing the gap with hillary clinton. john harwood has more on that. >> check out how much it's narrowed in april hillary was ahead 11-point spread. look at these new numbers out this morning 46-43 clinton with just a three percentage point edge over donald trump, that's within the margin of error. now, you wonder why has that happened, well, look at this next chart. this is how each candidate is doing within their parties and you see donald trump with 86% support from republicans is doing better than hillary clinton's 83% among democrats. that's a world of difference from april when donald trump had only 72% of republicans. hillary clinton is lagging behind now because she's got this continuing fight with bernie sanders, which continues
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to get bitter. over the weekend bernie sanders not only criticized debbie wasserman-schultz, the democratic national chair, but said he was going to support financially her opponent in the primary. so that gives you an idea of how much the stakes have been raised in this democratic fight. there's still a lot of hope among democrats that by the end bernie sanders is going to revert to party unity, to supporting hillary clinton, to trying to mobilize his supporters. but right now it's weighing her down in the polls, carl. >> you know, john, within the gop, the commentary seems to be the reason he's getting extra support is simply he's doing well in the polls and he's winning generally. does that also apply within the democrats? if you say -- actually hillary isn't winning as well, do the super delegates reconsider what they might do further down the line? in other words, does it open up to sanders to a greater extent or not? >> i don't think so.
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look, super delegates are not swayed by general election polls showing bernie sanders hasn't been vetted nearly the way hillary clinton has running further ahead of donald trump. you cannot find a politician in washington -- don't know whether this is right or wrong, but you cannot find a politician in washington who thinks in the end bernie sanders, democratic socialist from vermont, would actually be a stronger general election candidate than hillary clinton and that's what drives the super delegates. >> clearly here in the business world we're buzzing about mark cuban's interview on "meet the press" and what he said about how he'd consider pitches for v.p. from both democrats or republicans. do you think there's anything to this story? do you think that either campaign would actually be looking at him? >> there is not the slightest chance under the sun that hillary clinton would put mark cuban on her ticket. it is possible that donald trump could. similar personality, but that's very unlikely as well because donald trump has said what he wants is an experienced politician who can help him pass
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the program saying i've got the business part covered. so it was interesting and mark cuban -- it's notable he considers himself of vice presidential caliber but he's not going to be on anybody's ticket. >> there was also a report republicans had approached him about a third party candidacy. it didn't exactly come from nowhere. >> well, third party candidacy's an entirely different thing. if he wants to put himself forward and do that, he would find some support. i'm not sure it's what the never trump people are looking for, but that's a different ball game. i'm talking about on one of the two major party tickets. >> yeah. thanks, john. >> john harwood there. changing gears to the real estate market as retail in this country struggles. retail real estate is actually leading a global expansion. our own diana olick has more in d.c. on that. hey, diana. >> hey, simon. u.s. retailers are seeking growth and the best driver of growth is to expand internationally. the u.s. topped all other countries in opening retail
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brick and mortar stores overseas last year, according to cbre. all right, so where are they headed? no shock the top cities are in asia. the list starts with hong kong, then singapore, tokyo and taipei. after that moscow, london, dubai, beijing, bucharest and doha. now, which stores are most popular? well, blue jeans, believe it or not. u.s. retailers though are taking homeware brands overseas which is traditionally more difficult because the stores are larger and they're catering of course to different cultures. still zara home and creighton barrel have had some successes. as far as foreign brands moving stores here, it's a lot more difficult for them because the u.s. market is more competitive. it's very mature and real estate prices for stores here are very high. now, globally food and beverage sellers led the categories of foreign retailers entering cities, specifically coffee shops and restaurants accounted for 20% of foreign retailers entering cities with asia, again, showing the biggest demand for these. after that of course it's all luxury.
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back to you guys. >> all right. diana, thank you very much for that retail real estate snapshot. we are just 74 days away from the olympics in rio, but all eyes are on zika. the world health organization is meeting right now on now on tha. we will get the take-aways when we come back.
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♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
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the world health organization is assembling today, the zika virus a major topic ahead of the olympics in rio. >> that's right. the director general of the w.h.o. telling the world health assembly in prepared remarks that quote, the rapidly involving outbreak of zika warns us that an old disease that slumbered for six decades in africa and asia can suddenly wake up on a new continent to cause a global health emergency, saying zika reveals a consequence of the failure to provide universal access to family planning services especially in latin america and the caribbean, where zika is spreading now. she points out that what we are seeing looks more and more like a dramatic resurgence of the threat from emerging and reemerging infectious diseases and said the world is not prepared to cope. here in the u.s., officials are making similar warnings while we
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don't have local transmission via mosquitos yet we have had more than 500 travel associated cases in the u.s. states and many or locally acquired cases in u.s. territory. the cdc said it's monitoring 279 pregnant women with zika. all of this as the battle continues in congress for funding to fight the virus. both the senate and the house have passed bills that fell short of president obama's requested $1.9 billion in funding. the house's bill would give a third of that and require some resources to be diverted from other disease work like ebola. many say now we need to do more to be prepared for infectious disease threats like these. former ebola czar ron clain this weekend called for the creation of a new agency, phema, for public health emergency management agency, saying zika spreading mosquitos aren't going to wait for congress. >> i would have thought those comments from the w.h.o. are controversial but we will leave it there. thanks very much. let's send it to jon fortt
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for a look at what's coming up on "squawk alley." >> well, we will start with tim cook in india. is he making any progress in making that fertile soil for apple to grow and maybe avoiding some of the mistakes mark zuckerberg and facebook made. we will touch on sumner redstone and viacom. and we will have insight into what's next in the world of potentially consolidating broker jamgs. that's coming up on "squawk alley." ♪ [ male announcer ] tora bora fallujah argonne khe sanh midway dak to normandy
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relatively quiet start to the week. obviously there's a large number of fed speakers out today and as we look forward into what's upon us for the next four days, all talking about this rate rise in june. markets are flat. apple is notable for the fact it's been able to make some gains in that environment. more noises coming out of asia that maybe some of the suppliers think the orders they are getting would indicate the iphone 7 when it gets here perhaps will be a better seller than many had feared. >> the dow is up about 14 points. s&p 500 is flat. of course, apple has been running higher ever since it was revealed that berkshire hathaway took a $1 billion stake.
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apple is trading at a one-month high. you can see it. there are some of the biggest movers, up 1%. we are coming off of four straight weeks of declines for the dow. that's the longest stretch since back in 2014. as for this week, new home sales tomorrow and the data really starts to take on a significance now that the fed is itching to raise rates this summer if the at a ti data could keep up. janet yellen will speak at harvard with an economist and her words will be parsed for any signs that she -- >> you couldn't be more explicit than they would like to raise rates in june. >> but we haven't heard from her. we heard they were looking towards raising rates but they consider all the factors as they come in, including the dollar which is getting a lot of play which is stronger against the euro, breaking below 112 against the euro. that's been one of the linchpins of this entire global market stability with commodities and
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stocks. for now, little action. we will see what happens as the data comes through later in the week. on that note, let's send it to "squawk alley." >> good morning. it is 9:00 p.m. in new delhi, 11:00 a.m. on wall street. "squawk alley" is live. ' . good monday morning. welcome to "squawk alley." jon fortt, kayla tausche and myself at post nine along with terry kowaja and dan fr oman. good morning. a lot to get to. tim cook continuing his tour around the world. his latest stop is india. over the weekend he met with the prime minister modi discussing everng

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