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tv   Squawk Box  CNBC  May 1, 2014 6:00am-9:01am EDT

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"squawk box," right here on cnbc. i'm andrew ross sorkin, along with joe kernen. becky's out today. she'll be back tomorrow. a big close for the trading day on wednesday. we're still dusting off the confetti. it was not just a record day for the dow, cnbc celebrated its 25th anniversary. we were all here with our president, mark hoffman, bringing down the gavel remotely from our headquarters with more than 500 employees on hand to participate. it was a very, very cool moment. as for the markets, the dow as mentioned finished at new all-time high. that's incredible. the first record close of 2014. the dow adding 45 points to the close at 16,580. stocks moving higher after the fed's positive comments about the economy. and another $10 billion cut from bond purchases from 55 to $45 billion per month. i think, you know, investors might have been cheering on cnbc's anniversary as well.
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>> it was weird. it was fitting that that happened. it was good. we were hoping for it. >> we should tell you about the s&p 500 as well. it added more than 5 to close at 1,883. the nasdaq closing at 4,114. >> we decided that good news was good news now and bad news is no longer. we got a 0.1% gdp number earlier. >> right. >> economy starts with -- i did like this, andrew. it was hurt in the first quarter, hurt by frigid weather. >> yes. >> frigid weather. >> you know what that's an indication of, the warming. >> you're reading "the wall street journal." >> just think about the logic in that statement. that's not what i want to talk about. what i want to talk about, also a day they decided to continue to cut -- it's not like there was bad news that was going to cause them not to taper.
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there was nothing -- >> but there was a little bit of bad news in there. >> there was bad news. a lot of times market set new highs on bad news. then i started thinking about it again, kbe qe is very, very powerful. what was the maximum we got to, 85. >> 85. >> it's not the money itself, it's the psychology of once they say -- but is it? isn't it possible, 45 billion, we're still doing it month after month after month and the market is responding to all this excess liquidity, i think. either that or we better do 3% and everybody better be right. >> you're suggesting at the end of the year when it's all gone that that's bad news? >> maybe it's coincidence instead of leading. normally the markets wouldn't work like that. the fed still has the pedal on the gas, big time. 45 billion. that's big time.
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they did qe 1, then they did qe 2. the first two were defined. they came out and said we're going to go 500 billion. that will be the first one. we're still cranking out basically 50 billion a month. we're still in full qe, you know, heaven, whatever it is. but maybe that's not it. maybe the 0.1% is back end loaded. maybe there's all kinds of stuff built up now. maybe we get a handle on the third or fourth quarter. you would think. >> when it was all said and done, we hit the gavel and the market closed at a new high. the market cooperated with cnbc's own narrative about having coming into being -- i just miss it. i get 23 years. i had to stand off -- >> you had to stand up with us, please. >> i apologize. there we are. >> kohn was here.
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sue was at f & n. >> there you are, joe, on the right. faber and i, you can see us a little bit. >> sue was at f & n. she was sue mcmahon. the rest of us came back at the merger with cnbc insana and griffith. >> isn't that amazing to see how many people work here. it's like a family. >> it is. it's like a family that's had a lot of kids. yes. it's everywhere. that's what mark, our president talked about. >> global enterprise. >> it used to be sort of global. now it's in nine or ten langs, talking about -- they think we have two different languages in india. >> "squawk box" is a brand -- >> that will be the real celebration, that will be next year. 20 years for "squawk box" and one variation or another. but only held together by one constant. >> right there.
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>> you want me to point at you? i'm pointing at you. joe kernen. >> the producer, that's right. >> and mack who's not here again. anyway, a handful of key economic numbers are wedged in between the fed meeting and the jobs friday. jobless claims is at 8:30 eastern, economists expecting 320,000 unemployment claims filed for the first time last week. then personal income and spending are also out at 8:30 a.m. then at 10:00, a fresh read on the nation's economic activity with the ism manufacturing survey for april. at 10:00, we get an update on housing construction. it's all leading up to tomorrow. you're here. when are you going out. >> i'm going out to omaha after the show tomorrow. >> after the show? >> after the show. i'll see w.b. over the weekend and be back with you on monday morning. >> you leave here tomorrow. is it like nixon, you walk on the helicopter, you wave.
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and then the helicopter takes you to the gulf stream? how does that -- >> in this case, since we're so close to teterboro, we're driving. >> you're driving? someone's driving you? >> no. i'm going on a plane from newark to chicago. >> why are you stopping in chicago? refuelling? >> there's no direct flights. >> tell the pilot to make it direct. >> pilots. >> the pilots. >> another big morning for quarterly results, some of the biggest names we'll hear from before the bell, exxonmobil and conoco phillips, two big oil companies as well as mastercard and drug distributor cardinal health. also out today, t-mobile, viacom, dominos pizza, beazer homes and generac. this came out of nowhere, didn't it?
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cinderella story with as many times as people have lost power, quite a little system they have. someday if you ever are in the burbs. >> i may have to get generac. >> unless you want to go to a hotel for three weeks when the power goes out. >>. "the wall street journal" is reporting that coke is responding to warren buffett's decision to abstain from the shareholder vote, a topic he talked about with becky quick on april 23rd. >> we abstained because we didn't agree with the plan. we thought it was excessive. and i love coke. i love the management. i love the directors. but -- so i didn't want to vote no. kind of unamerican to vote no at a coke meeting. i didn't want to express any disapproval of management but we did disapprove of the plan. >> here's where it gets
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interesting this morning. we've obtained exclusively a new letter that activist investor david winters sent to coke's board of directors. he's cc'd is to warren buffett. this letter is a direct result of the interview that becky did and we did a day and a half ago when he called into the show, because dave winters is furious and he's now asking coke a couple of very pointed, let's say, questions. take a look at what these are. he says, we would like to know whether mr. muhtar kent or howard buffett, who is the son of warren and is on the board, made the compensation committee and the full board of directors awear of warren buffett's views on the 2014 equity plan. did mr. buffett speak with any other coca-cola directors regarding his view of the 2014 equity plan and if so, when? we'd like to know whether coca-cola reached out to institutional investors before the shareholder meeting to drum
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up support even after it knew its largest shareholder opposed the plan. if coca-cola did reach out to investors, did it state or imply that it received generally positive feedback from other investors? now, coca-cola says its compensation plan offers flexibility but no changes are being made to the plan at this time. and warren said on our air that he had dinner with muhtar kent in omaha, he talked to him three other times, i believe. therefore, the question gets raised, what, from those conversations, came back to the coca-cola board. i'll tell you, coca-cola was reaching out to me when we were writing that column and talking about it, telling me that it's a great plan. it's not any different. so how much did everybody really know about the fact that warren buffett was at least behind the scenes upset about this? >> and we also don't know exactly how warren characterized his feelings at the dinner and then subsequent to the dinner. even when he was talking to us
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and to becky, he said, i've learned over the years, if you're having -- in fact he mentioned dinner. if you're having dinner with someone and you belch at the dinner table, you'll be eating alone soon. you wonder if he was willing to tell us afterwards. maybe he didn't raise it in -- >> i think there's more diplomacy going on here. i think -- i'm sort of coming around to the view that the public abstention as opposed to voting against it was really his way of privately trying to move the deal. >> afterwards. nobody that wasn't at the dinner, people face to face may not say things. and he also expressed how much he admires muhtar kent. david winters is assuming that he told muhtar kent exactly how he felt at the dinner. only warren buffett knows whether he actually expressed dissatisfaction with the plan at the dinner or not. if he didn't -- because it's a big difference. if he said i don't like this plan and they went out and got
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some support from other shareholders, that's different than if he said, you know, i don't have a strong feeling one way or another. and besides, even if he's the largest shareholder, he's not a majority shareholder. not like it would matter if he told them don't do it. >> i promise you this, we will find out the answer in, literally, over the next 72 hours. over the weekend we'll have warren buffett these questions and have him on the program on monday. >> did your columnist retract anything? he had the dates all wrong as to when the interviews were. >> there was a major league timing issue with that. >> right. which totally changes the thrust of the story. people see what they want to see with a lot of these things anyway. at&t reportedly approached -- i'm trying to think i can say what pf means to cover myself. i didn't say anything. those are just letters.
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just letters. "the wall street journal" says the price tag would be $40 billion. directv's current market cap is what it is. directv is the second biggest paid tv operator with 20 million customers. at&t is a land line based business with 6 million customers. this has been talking about this for five years. >> for a long time t. would create a tv giant close to the size of comcast with time warner. they'll have close to 30 million subscribe subscribers. 30 million is a key number. >> yes. >> at&t and directv are not commenting on the story. check out the shares of both companies right now. i can remember at least two or three years ago where you didn't know -- royce randall, is this going to be directv, what's happening? >> to me, this is about a larger issue and it goes directly to the comcast/time warner deal. there's two things. one is if they reach a deal or
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at least anonsnounce a deal anye soon. this would push it over -- this would clearly push it over the line, the comcast/time warner deal. i would argue the story itself suggests to regulators the world is changing. it points at a bigger issue which brian roberts talks about all the time, in this new world we live in, you want to have a national footprint. if you want to buy the sunday ticket, you can't be a local cable operator. you have to have all the pieces. even at&t suffers from this. they are in certain municipalities. if you have directv then you have the national foot print, you can build out your broadband in certain places. it gives them flexibility and puts them on a comparable footing with comcast in a post-time warner era. the dominos are falling quickly. >> it's the age old argument, whenever you put big companies together, it doesn't necessarily
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mean it's anti-competitive if they have a bigger footprint and are allowed to do more in terms of synergies and costs. i would argue in opposition to your argument that at&t mobile would have -- what we wanted is to have everybody have all the spectrum and to build it out to rural areas and do all that. we decided not to allow at&t to buy t-mobile for competitive reasons when in fact it would have been good overall for the country overall. you still don't see it? >> i'm on the other end of that. i'd be a fan of this deal, absolutely. >> i don't understand that. many of the global markets are closed today for may day. may day, may 1st. let's get to ross westgate. he is standing by in london. were you part of the celebration yesterday, ross? it was all over. did you see the town hall meeting that we had yesterday? are you proud to be a long-time cnbcer?
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>> the closing bell was fantastic, everybody in the studio was out for that. it was great. really great. >> we're proud. >> did you enjoy it, joe? >> i did. we had six cannons pointed different ways with confetti. we were all waiting for it. it was loud. it's a big studio. kind of indoor fireworks which i think we don't do that enough, right? >> we should do those pretty much every day. we have our own indoor fireworks every day. >> at the beginning of "squawk box" we should do that. >> what's closed today, ross? >> take a look at this map here. everything that's sort of gray, gr gray/blue is closed for the may day holiday. which is a celebration of labor day. margaret thatcher, you may be interested to know, decided that the uk would not celebrate this particular holiday. she viewed it as more of a communist holiday which is why she decided not to take that in. it was up for proposal. a little bit of history i put
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into that. the rest of the continent is closed, apart from three separate markets today which of course include the ftse 100, the irish market, the iseq and the imx. the ftse 100 not doing too badly, up 0.25%. we've had good data out earlier, the manufacturing pmi coming in better than expected. came in at 57.3. 55 was the expectation. that boosted sterling up to the best levels against the dollar for nearly five years. here we are, 1.6910 is where we stand at the moment on the back of that. can it go further? we'll have to wait and see. the number of individual stocks, lloyds, first of all, this was the bank was nationalized by the uk government, they're back in private ownership up 4.7%.
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they're going to spin off their tsb business as well. bskyb. the pay tv operator up 3.6%. monthly revenues up 5%. 74,000 net new customers. keep your eyes on viacom, the guardian newspaper suggests when the results are revealed this morning, they'll also say they're in talks to acquire channel five, currently owned by richard desmond who owns the express group. that's where we stand in a thin session today, because of all those market closures. back to you. >> not so fast. you glossed over that. andrew wasn't listening. you said the uk decided not to celebrate it because they view its is a communist holiday? is that what you said? >> well, that was the view taken by margaret thatcher, because it was -- a labor day -- >> communist is all right.
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just say it. don't take it -- show me the chart of the people -- >> that's what the historical -- that's what the historical basis of that was seen as by margaret thatcher as to why she decided she wasn't going to celebrate it. >> the uk is open and then i do see a large swath of sort of communist europe is there, closed. >> i knew i was opening up a can of worms by saying that. >> let's talk to andrew. >> it was her opinion. >> did you consider not coming in today in solidarity with this is a communist -- did you know it was may day? >> i didn't realize it was may day. >> they close the markets and the uk stays open because it's a communist holiday. >> i have to get off the set then. >> i don't think you knew all these implications. >> this is a situation, i've come and i'm yom kippur.
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>> exactly. you're here. i get it. thanks, ross. you know what, that's exactly how i'll look at it. it's a belief but you sort of want to be here anyway. >> i like to work. >> the markets closing out the month of april on a high note. wednesday with the dow closing at a record high. the trading day also made special. let's show this again. special because cnbc rang the closing bell yesterday. did you see how i was out of the original shot? but did you see who did stake his way in there? yogin. >> he knew exactly where the sides of the camera were and he positioned himself, unbeknownst to me, for the shot. we also heard from janet yellen. we're still at 45 billion a month. we also had a 0.1% gdp number. everybody knew it was going to be down, probably 1 and change
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because of the weather. that did surprise a few people. let's see what our next guest has to say about it. chris rupke, what was the number you were looking for before it came out, chris? >> i think i had an optimistic number on it, 2.0 but it went the wrong way, 0.1. >> how much do you attribute -- >> if it went to weather or not, we don't really know. the winter weather was making the consumer go into a hole and not stick their head out. we were surprised that consumer spending was completely normal in the first quarter. in fact it was high normal, 3.0%. some of that was spending on utilities and housing and obamacare. consumers were completely normal in the first quarter which was odd. anyway, that's really just history. first quarter ended a month ago on the calendar and we're
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looking forward to greater growth in the future. >> we understand that. >> yes. >> but yesterday, we have people that work here and there are some that think we can explain this slow recovery because of a lot. there's others that seem to have apologized every single time we have a bad number, they give you sort of camouflage. rick will say something and zandi will come on an say it's weather. the economy is improving. we basically lost a half decade. we have explained so many bad numbers. we've had how many spring swoons where the gdp was supposed to recover and it didn't. this goes on and on and on. is it different this time? this will be a 3% year because we're not wrong. >> if you look at other data like the unemployment rate, the future is not uncertain. there's not the degree of uncertainty out there that the fed says. the unemployment rate has been coming down exactly the way it
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should. >> why are they saying it. >> for the past three years. >> maybe we shouldn't look at gdp. >> people would say the disincentives to leaving the work force -- >> i know. i don't agree with that. the participation rate. >> people say it's the baby boomers retiring. >> that could be not to downplay the recovery or i call it an expansion, you know, the 0.1% that we got in the first quarter, if it runs 3.0, second, third, fourth quarter it's only going to be 2.3 this year. so i'm just waiting to are that blow back to come where people go, oh, growth didn't make it. last year was 2.6%. 2013, this year it's going to struggle to get to 2.3. what are we going to do with that? >> it should be greater than 3. if it's going to be 3 without the weather, it should be greater than 3. >> exports were quite weak. >> where are we going to be for the year then? give me your number. >> it will be tough to make it to 2.6.
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it's probably going to be 2.4. >> that's not good news. it's bad news. >> it doesn't matter. the unemployment rate could fall 1 percentage rate next year for the right reasons. i think we're looking -- all looking to growth because people think growth has to be 3.5%. >> but the stock market is -- >> oh, okay, i hear you. >> the stock market is performing on the basis -- >> it likes growth. >> that it likes growth. it actually doesn't like employment, oddly enough. unless you argue that more people being employed means more people buying stocks. >> there are so many other numbers that are at record highs, retail sales, nominal sales, actual cash register sales. >> most people think that things are definitely getting better, upticking. a lot of people are at 3%. we know the good news. we're starting to see weird stuff. >> the math doesn't work now because of the 0.1 that we got in the first quarter.
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it will have to run 4.5 rers, so somewhere this year to kick us back there. >> coming up, possible suitors lining up to buy the clippers. also, a weird tesla story, both coming up in this morning's "executive edge." "squawk box" coming right back, when we return. ♪ here's a good one seattle... what did geico say the mariner? we could save you a boatload! ♪ foghorn sounds loudly ♪ what's seattle's favorite noise?
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suitors are lining up for the los angeles clippers, larry ellison, apparently is part of a tree kbr trio, part of david geffen and oprah winfrey that may be looking to buy the team. two others, chairman of mandalay entertainment -- >> what do you think of this? >> if you're adam silver, and the other owners, this would be a great thing for the league. you have to think. >> unfortunately it's the great thing for don sterling because he's going to get a lot more before it was worth before all this happened. in a perverse way, do we want them to bid up the -- do we want
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him to get a billion dollars out of this? >> i think it's fine. i'm okay with it. i think it will bring some respect back to that team, to the clippers. people will focus on the clippers. and then to have -- as david geffen says in the piece, to have a prominent african-american woman as an owner of an nba team, that's a remarkable thing, too. >> i used to live out there. i can tell you it's kind of -- now it's good that brooklyn has the nets. >> the ugly duckling. >> the clippers never got the respect. they never spent the money that -- >> geffen said in that article he'd be just as happy to buy the lakers if they would sell to him. if you're the nba, would you prefer magic johnson and guggenheim to buy it, they can probably afford to pay more or would you prefer the geffen/oprah/ellison. >> i'd prefer magic.
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>> you would? >> i would. >> i tell you why the lakers i might rather have. you know what the lakers have? >> what do they have? >> the laker girls! they always say it like that. >> there are no clipper girls, are there? >> noio. >> there might be. >> i know there aren't laker girls at the clippers. the laker girls are with the lakers! >> paula abdul was a laker girl. >> she was. >> probably the most famous laker girl. >> i would say. people are apparently leaving flyers on tesla cars in san francisco warning drivers that owning a tesla meant they are involved in, quote, organized crime. the flyer accuses tesla of manipulating congress and questions the safety of these lithium ion batteries that power the cars. they blow up if you get wet or bumped. that's what these flyers are telling the owners, the flyers have already -- they say -- i'm
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sorry. they say these batteries have burned planes, cars, homes and children. there have been tens of thousands of lithium ion battery fires and explosions. tesla has over 7,000 nonautomotive designed batteries in each car. that's what they're saying. that means there's 7,000 chances of having a catastrophic fire. all, in a sense hyperbole. they are saying that google is a silent partner with tesla. the flyer also says that google hushes up bad news about tesla by driving a tesla you are supporting spying, they say, it's not clear who is behind all this. the flyer ultimately urges tesla owners to give the car back. i don't think this is going to be a very successful campaign. >> did it mention common core in there? anything about birthing? that's a cool conspiracy if you think about it, that not only is
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it dangerous but that google who controls whether there is news about something, google could suppress it if they're in league with tesla. they want to know where you are to get more personal information. >> nothing about the nsa there. >> no. >> that's amazing. i will tell krogh, when it was happening, people do point out that the batteries cover the entire bottom of the car. if you were to believe any part of that, that one battery could do it if you hit a pothole or something, it's ram pan tpant f that. >> cell phones, 10 billion cell phones, you don't think we'd know by now what the increased health problems were. >> for years people thought the cell phone was the new cigarette. >> or aspartame. >> unlikely with as many people who have had it.
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>> i hope you're right. >> is good news really good news for the markets? that discussion, coming up next. if i told you that a free ten-second test could mean less waiting for things like security backups and file downloads you'd take that test, right? well, what are you waiting for? you could literally be done with the test by now. now you could have done it twice. this is awkward. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business built for business.
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that's why i'm with scottrade. announcer: scottrade- proud to be ranked "best overall client experience." the dow closing at another new fresh, all-time record high. how is that? how many different bays can -- they closed at a new high. it's not fresh. >> in celebration of cnbc's 25th birthday.
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>> in celebration. the stocks shrugged off the dismal -- >> how do stocks shrug exactly? >> shrugged off the dismal gdp report and news that the fed had pe pared back bond purchases. joining us, two guests. are you down in pennsylvania, hank? you must be, right? are you near haverford. >> we are, right near the college. >> the solid -- is that liberal arts? very solid, good reputation. i'm going to listen closely to the things you say. did the -- what was your number before bread and how did you have to scramble to explain it? >> you mean the record close on the dow or the gdp? >> the gdp number. >> no, i think we br expecting a weak number, somewhere in the
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1%. this is definitely below expectations but, look, that's very backward looking. i think the market is looking forward and realizes that the gdp bakness in the first quarter had everything to do about weather. and we're going to get a rebound in the second quarter and we're going to get better growth in the next three quarters than we had in 2013. >> all right. so the -- does the economy and whether it does 3% matter to whether you add or take money away from investments at this point? or is it other things you're looking at? >> well, look, i think we're looking -- certainly we're looking at gdp but we're also looking at corporate fundamentals. you have a terrific balance sheet, record profit margins, companies are returning cash to shareholders and share buybacks, dividend increases. they're beating earnings expectations. this is all positive. the backdrop is we have a
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goldilocks economy that's not too cold or too hot. that's good for the stock market. >> i saw a chart yesterday of cash on corporate balance sheets. it was like at a ten-year low or something. the person making the case was that it was consensus that the balance sheets are in great shape but it's not true. does everyone say that or do you have actual numbers? >> well, look, certainly in the space that we follow in the large cap space, there's plenty of cash on the balance sheet. maybe if you lack at the total market, that might not be the case. but in our space it certainly is the case. just look at the record levels of dividend payments and share buybacks. i think that's a tangible confirmation. >> so lou, i tell you what i wanted to ask you, because we had a conversation earlier. as sort of a journeyman in a positive way, been around a long time. the qe that we see, do people
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trade on qe based on ten months into the future? or can that 45 billion that's still going in every month, does that excess liquidity prop up stock prices, even though we know it's slowly ending? it's still going in every month. is the spigot still open, is the punch bowl still spiked and everybody gorging? >> that was the question at the beginning of the year when they first announced the taper and the market made a high and sold off over the next few weeks or ten days. i don't recall now. we were thinking maybe it's the idea that we finally mark an end point to qe, that stocks won't get the same burst from it that they have. it seems to, as guys noted, the dow made a new record all-time high yesterday. and the qe tens. so i guess that's going to be the case that until it stops, there's going to be some support. it might be less support, because we do know the end and it is diminishing.
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45 billion a month is a heck of a lot of money. >> that's what i mean. if you go back to when they said they were going to do it, if you looked at that as all right, we just completed a -- let's say a $600 billion buyback, qe, they could have said at that time, if you add up the kbe they'qe that done for the past four months, now we're going to embark on a new qe, that would have been another round of qe. instead we looked at it like qe ending or tapering, but the money is still there and still coming in. >> you just made a new all-time high. >> right. >> kbe 1 and kbe 2, the market rallied up until the day it stopped. when qe has been around or strongly foreshadowed, the market has gone up during the last five years. when qe was not around, the market has had some trouble. so qe is still around.
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i guess we'll still get a burst from that. now there's other things going on in the world and maybe the qe does an offset. i hear the music in the background. may day is haymarket riot. i believe it was '56. >> you were surprised to see andrew in here today. i mean, ywhen you got up, you'r thinking should i? >> the producer said he would be there. i e-mailed back that it was probably a mistake on her part. >> hank and lou, i'm hearing stuff about corporate -- on the balance sheet. what's wrong with the nation's housing market? was it the cold winter? and ahead of the break, a look at yesterday's winners and loser.
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>> surely you can be serious. >> i am serious. and don't call me shirley. >> may day. >> what's that? >> the russian new year.
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welcome back. time for toward's squawk planner. another big morning for earnings central. we have reports from exxonmobil, mastercard and kellogg. we'll get weakless jobless claims and personal income spending data. automakers will start to roll out monthly sales figures. that is your squawk planner for the day. when we return, he's known as the father of indian i.t.,
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cnbc first 25 member. narayana murthy, next. that and much more when "squawk box" returns in just a moment. i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the exclusive confident retirement approach. to get the real answers you need. start building your confident retirement today.
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box." we are continuing our coverage of cnbc's list of the 25 most influential people over the past quarter century. we are very happy to have joining us now number 13 on our list this morning of icons, reb leaders. ryan muthy is the founder and also executive chairman. >> hello. >> started this company 1981. good morning to you. congratulations. the question i have, in 1981, what was the insight? and did you think that emphasis would ever be what it is today back then? we lost him. i think we lost him. >> when you were asking the question i think i could hear him say he was having a problem. because he said hello. he said i don't think i'm hearing you. you know, it's going to be at least a three-second delay because we're beaming it to the
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satellite and beaming it back down the. are we going to try again? i think we're going to work on it. >> amazing story about this company, though. when you think about what it created. it also changed management. and outsourcing. and a whole question about employment and wage costs that i want to talk to him about. >> well, you know how many times -- i'll be at home trying to get remote access. you call a local number. it sounds a little bit far away. i'll finally ask where am i. we're usually over in india, bangalore, working on i.t. stuff. >> in 1990 this guy had an offer of $1 million, takeover offer. they rejected the bid. >> right. >> today -- >> do you have the market tip at your fingertips?
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>> i don't. i think forbes estimates $1.7 billion. it wasn't until 1999 that it really took off. the rules changed in india. he was one of the first capitalists in a socialist place. i also wanted to talk to him about that. the whole idea about being a capitalist in india. >> it's even more capitalize than we are at this point, right? >> it depends on who you ask. >> thank you for joining us. we apologize about the technical difficulties. we were just talking about your history and the importance of emphasis. i mentioned you had a million dollar takeover offer in 1990 that you rejected. it was probably the right decision. what was the insight when you started emphasis and did you ever think it would be what it is today? >> well, you know, while we could not clearly predict where we would be, one thing we are very, very certain and that was
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to seek respect from every stakeholder. you know, customers, employees, investors, partners and society. through the journey of emphasis, respect has been the most important objectivity of the company. that was constant. >> one of the great successes of emphasis was effectively outsourcing a lot of business that was in the united states and elsewhere. and i'm curious how you see this playing out long term in terms of what started as a little bit of an arbitrage on employment, wages and prices. now that coming together, where that all goes. >> oh, yes. i think even the fact that there is, you know, huge talent available in countries like india, even the fact that there
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will be new opportunities like health care, like emerging markets, like egovernance, economics, i do believe that the future looks very, very bright for the social services industry which competes on differentiation, all through developing customized drafts for standard packages. therefore, as long as the innovation spirit is alive in the software services industry, i believe we'll have a chance to play in the global market with success. >> now, the world really is flat. the other question, you are seen as an icon in india and elsewhere as a capitalist in a place often considered a socialist country. you said famously, i always believed i'm a socialist in my
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heart and capitalist in my head. there's a huge debate about globalism going on in the united states. i wonder how that is playing to what's taking place in india and what you think of it. >> well, you know, i think there is a realization now that the only way that we can solve the problem of poverty is through the creation of jobs. jobs with good income. and people have realized that entrepreneurship is the best way to do it. and they also know that entrepreneurship flourishes under capitalism. therefore, there is an acceptance of the fact that capitalism is the way forward even amongst people who are through the capitalism area.
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>> if you could put one other person on this list, i don't know if they will be from india or elsewhere, who would you put on? >> oh, that's a wonderful question. i think all of you guys, the cnbc people, you have done a remarkable job. you people are very wise. so therefore i don't want to hazard any guess at all. i think you guys know who you are doing. so i will accept whatever you have done. >> okay. we will leave it there. congratulations on being part of the cnbc 25. it was one of those great, remarkable stories. thank you so much for joining us this morning. stkpwhrb it was a very gracious answer. he meant that we should be doing the picking. $31 billion market cap.
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a million was too low. coming up, avoiding taxes and rating the economy. roger altman is our guest in the next hour. next hour. ♪ [ male announcer ] when fixed income experts... ♪ with equity experts... ♪ ...who work with regional experts... ♪ ...who work with portfolio management experts, that's when expertise happens.
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let's make a deal. billions of dollars proposed in transactions flying around the globe. is this trend going to continue? we'll put that question to our guest host, roger altman. what's wrong with housing? still feeling a chill in the nasty winter weather? plus, gassing up is going to cost you more this summer. chief oil analyst at gas buddy gives us his predictions. what are you doing? second hour of "squawk box"
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begins right now. good morning and welcome to "squawk box" on cnbc. i'm joe kernen along with andrew ross sorkin. becky is off today. anybody with hatch a brain could figure this out. if you know anything about berkshire. >> en route. >> this is it. >> it's the berkshire weekend. >> woodstock for capitalists. >> do they still call it that? >> it's a weird name for it knowing what's going on. >> at a pickity age.
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>> i'm really sick of talking about this guy. the futures at this hour are after another all-time high yesterday up to six points. it is going to be a busy morning for economic numbers. and even busier tomorrow. 8:30, the weekly report on initial jobless claims. at the same time, personal income, consumer spending. yesterday's gdp was a really lagging indicator. we're making it even more lagging. the trade right now is on an improving economy and doing much better. 3% for the year. the.1% is an outlier. out with april manufacturing index. and then we'll get some housing data at some point as well. i have to make this really
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simple. while the government releases construction spending for march, boeing will put out a new version of its stretch version of the dreamliner. 787-9 should be completed in the next two months. one of six new jet models boeing hopes to get into service by the end of this decade. >> okay. we have a little macro to talk about. international monday tore fund approving a $17 billion loan program for ukraine. changes including raising questions, freezing minimum rage and raising energy prices, all steps that could hit households hard and strain the tenuous hold on power. imf's christine lagarde said the program is about making real change. >> under the program, we are not designing sanctions.
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we are designing reforms. we are trying to improve the situation that so that stability is restored, the exchange rate is supportive of more sustainable growth. and we are encouraging transparency and new business practices in a country that badly needs those changes. >> meantime, ukraine's acting president says russian militants have won the east and security forces were helpless to stop pro-russian separatists. russian president flood mere putin matched troops on the border with ukraine. a quiet first quarter. guess what, guys, deals are back. this is crazy. it's heating up. roger altman is here this morning, former deputy treasury secretary. and founder of ever core partners. one of the advisers to
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astrazeneca in the pfizer deal. roger is personally working on that. good morning to you. >> hey, andrew. >> i don't know if we can talk about it or not or if you're involved. at&t looking at directv. you have had a historical relationship with at&t. and the implications of what that could be. first, are there talks? >> you know very well if you're involved in these things, it's not appropriate to talk about them. so let's talk about deals generally rather than those individual -- >> that means you are involved then? >> no. i'm just not going to talk about something that is not public. >> can we talk about the astrazeneca question, though? >> it depends on the question. >> this is going to be great to talk about it. because we need -- roger, we know what side of the aisle he's on. he was a clinton democrat.
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>> let's start about deals, tax inversions. how should this company think about tax inversions? the iconic nature of a company like that. for the first time thinking they want to effectively relocate for practical purposes at least the holing company is for tax purposes for a 5% spread on taxes. >> it's a billion dollars a year. >> and the uk tax system as being better than hours. what do we have to do? >> you have a short-term problem and long-term problem. i'm talking about political timetables. of course screams corporate tax reform. we need to reform corporate taxes in this country. both sides, you know, republicans and democrats agree on that. but tax reform takes a long time. that's why i say it's a long-term problem. if you just study history, the '86 tax reform act, other examples took a long time. three and four years actually
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from beginning to end occur. it is not going to happen quickly here. so the short-term question is, should we just sit back and let all of this happen. >> right. >> or should there be some interim step. i don't think it's good policy. in other words, it's not good for the united states that major corporations think relocating for tax purposes did s the -- >> is this a game changer, though? 100 deals are already been done. >> so you're in the boardroom at all times with all these companies. are we going to see a series of these transaction? >> i think so. >> does it change the dynamic in washington? is there critical mass of the populus going to go, this is a real problem? >> not in 2014. there's not going to be -- not only is there not going to be corporate tax reform in 2014. there's not going to be any
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major legislation in 2014 since the election is coming up. >> that's true. explain one thing to me real quick. if that's true, and i believe in the next two or three years there will be a shift, if you're the board of a major u.s. company considering making that gamble, that's a 10, 20-year game plan. you're betting on british taxes or whatever you do the inversion in. >> right. >> so the question therefore becomes, that is effectively a gamble that at least the next 10 years we will never get this, correct? >> well, i don't know about 10 years. i think we will achieve it the next three or four years. >> no corporation would want to think about going -- >> andrew, no. first of all, we don't know when it will occur. you have a lot of present value
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at work here. even if tax rates would equalize in four years, the present value of redomiciling now may justify it entirely. >> you have never said 22%. all you have ever said maybe is 25 or 26 that you talk about. they're already at 22. when do you think we will get to 22 and britain is going to 21? and the other question, and this is where i want to take this, roger, this is tragic right now what is happening. and you say to get tax relief done i know it takes a long time. but you have to start it. you need leadership. you know leadership is going to be a 50% role. it's going to be pal active, addressing the symptom and trying to prevent corporations from doing it with a hammer. it's not going to be changing
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the underlying rate which would fix the arbitrage that's can causing it in the first place. >> the underlying rate has to be changed. the corporate tax rate in this country has to come down. the differential between the united states -- >> it's not going to. >> yes, i think it will. i think it will. >> will we have a new president? >> i said post-2014 is the first time to do this. perversely, the controversy over inversions will accelerate. in some perverse sense, it may be advancing the reform, which we should hope is the case. >> but there's two ways of doing itment won't the left, the far left, won't they want to do it the way i just said. where you won't be allowed to move it. instead of 20% you would need 50% to rebuild the domicile. >> on the percentage of your shares? >> yeah. >> that requires legislation
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also. that won't happen this year, joe. >> and republicans won't go for it that way. >> there isn't going to be -- this is my judgment. there's not going to be legislation. >> do you think politicians will ever tell us the truth about tax rates? there will still be a certain number of politicians that say the actual corporate tax rate in the united states is one of the lowest on the planet. they will still say that. >> the market is speaking here. as i said, one of the possibly perverse benefits of these inversion trades is i think it just makes completely clear the need for corporate tax reform. i wish it would happen this year. i don't think there's going to be a change. >> do you think we should be focusing on the minimum wage right now instead of this is? >> i think we should be focusing on this. i thought you wanted a tax credit instead of minimum wage.
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>> i happen to favor increasing the minimum wage. and expanding the itc is even stronger, if that's what you're talking about. >> that's what i'm talking about. >> one last thing. companies, we see it state by state in the u.s., toyota, california, now moving to texas. politicians can understand that companies will go where they are treated better. maybe you're saying there's a realization it may not be state to state. it may be country to country. that's when we finally get off. >> i think there's a great deal of alarm over these issues. >> there's two issues. there's the actual rate we have to deal with and territorial system. it's one that the money is stuck over there. and the rate. you have to do both. >> picking that point, a lot of people misestimate the size of the benefit office inverting in terms of, a, using that trapped
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foreign cash. >> right. >> productively. and, b, simply the annual benefit of having a lower tax rate. the synergy represented by those tax benefits depending on the situation can be huge. >> one last really quick thing. the view among the democratic party is let the money come back, right? either vacation or something else that it's not going to be used for investments that create jobs. and we see what happened last time. people will look and say it didn't work. how to you actually make that argument in this environment? we'll do the that as a team. maybe we can talk a little bit about that when we come back. thank you. great conversation. >> and there's a way of doing it. there's a way of leadership. >> you need to get the capital back. >> i don't disagree with you. but how do you do it? >> we need to get it back.
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and we should -- >> the far left on this is going to say this is going to create in equality. the beneficiaries will be shareholders. >> you can use it for -- we can do this. >> how do you do it? >> what is wrong with the housing department. we will talk el that question next. stion next. i bought a car, comes over... and you're like. if you're getting... a good deal or not. led up... all the information... you should be paying. you know, and with, my feeling is that... we got a fair price. there's no buyer's remorse, you know.
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well, it looks like -- starting to look like recovery in the housing market. in the winter, bad weather was blamed for stalled sales. it's 38 degrees on the east coast in may. anyway, we have a two-fer. diana olic and steve liesman. the affordability is off the charts great. compared to two years ago, it hurts. >> it hurts a lot, joe. you look at these rates. you say we're at 4.5 mortgage rates. that should be historically great. i bought my first apartment at 8% that was a long time ago. but when you look at these rates
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and you compare them to what the spending power is right now, especially because you have home prices so much prior than they were before. so we look at that 3.5 last year versus 4.5 this year. we look at pending home sales. they track each other exactly. last june we saw the rates jump 3.5 to 4.5%. they bump up a little bit last month. but really not enough. it's all because of prices. prices peaked in 2006, dropped dramatically. now they are coming way back up. they're still 20% below peak. why isn't everybody able to buy a house, right? the problem is you have to look at how we bought houses in 2006. we didn't put any money down. we didn't need any money to buy a house in six. so of course they could soar as high as they want. we need to look back to 2000 when we needed to put 20% down.
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people don't buy a house based on the mortgage rate or price. they buy it based on the monthly payment. when you compare it abouting to 2000 when we had regular mortgages, you're looking at more expensive houses, 50% to 60%. forget the boom. it's affordability. that's he what we're hitting this spring. >> are you here to say it's weather? >> no. i have one chart. i'm not even going to tell the story. >> i have three charts. >> let's get his out of the way. >> thanks, joe. that's the whole reason i did. net percent banks tightening credit standards versus loosening standards. what happened? it went way up. did it ever go negative sustained? no. if you look at every other incident where standards went up, there's a reasonable sustained period where they loosen up. so what that says is they want
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up. and when it comes down, it's not like -- what's basically happening is banks are not tightening further. it has to undo the tightening from the last period. that's not happening. you have banks with high credit standards that have never loosened up. that was for prime. subprime is worse than that. dodd/frank is out there. that's a big issue. there isn't the balance sheet in the economy for housing loans the way there was before. part of the shadow banking system has disappeared on. nevercomingback. there are rules now that say banks have to hold more on their books. deleveraging. people are reducing now. >> 15-year fixed. i refied. i'm paying twice as much more than i have to because i want out of debt. 10 years, i want to own that house. >> rising income. you can afford morehouse. at the same time if you don't
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want to have more debt, what you do is you refi and pay off your existing mortgage rather than going into a bigger house. >> i would have thought that a banker would tell you, and we have a banker here. he's not in this specific business. but you should go get yourself a 30-year fixed given what the rates are now. >> that's what a banker would say. that's not what people are doing. they are shedding debt. mortgage debt especially. >> i'm assuming in 30 years i'm hoping i'm going to look like a genius. >> people don't necessarily act rationally all the time. >> i may look like an idiot. >> are you still going to be in your house in 30 years? you're not going to be in your house in 30 years. you are looking at people much more mobile, a smaller time horizon of home ownership. >> can i ask you this question, all the analysis showed pent up household formation. after the sharp falloff in 2008
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with kids moving back in, there's now going to be a recovery. it's going to be a major recovery. how do these all square? >> household formation is coming back on the renter side. it is not necessarily home ownership. we fell to the lowest level in 19 years in the first quarter on home ownership. household formation is good on the rental side. people are renting, just not buying. >> they actually loosen standards when it comes to consumer loans like credit cars and autos. it's not happening in real estate. it isn't the balance sheet. >> i'm getting a mortgage. another one. >> shoe. >> i already have one. but i have to get another one for a different -- >> fico score on prime mortgage loans in 2013 actually rose.
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>> it should be falling. >> if standards were loosening, they would be falling. >> i have to give them everything again. it's unbelievable how closely they are watching. >> watch out for your appraisals. >> thank you, guys. when we come back, another big consumer issue. will it be a brutal summer for gas prices. chief oil analyst for gas he will give us his prediction when we return. >> time now for today's aflac trivia question. who is the shortest player ever to play in the nba. the answer when cnbc "squawk box" continues. aflac. ♪ aflac, aflac, aflac! ♪ [ both sigh ] ♪ ugh! ♪ you told me he was good, dude. yeah he stinks at golf. but he was great at getting my claim paid fast. how fast?
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it is still in position where we can't tell. when we return, a time to be optimistic about the economy even after yesterday's weak gdp report. tony will joan us with his view on growth and markets next. . huh, 15 minutes could save you 15% or more on car insurance. everybody knows that. well, did you know that game show hosts should only host game shows? samantha, do you take kevin
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welcome back to "squawk box". coming up at 7:30 eastern time on the east coast here. let's get you through some ofrlt headlines. automakers will be out with april sales figures. general motors expected 4.7% increase compared to a year ago. analysts see 4.7% gain for ford. 12.3% for chrysler. one of this morning's early winners, shares of directv. wall street journal reporting at&t approached a possible buyout bid. such a deal $40 billion.
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comcast time warner deal. sales of sony under pressure. it cut its fiscal year forecast by 70%. almost $300 million in additional costs for its exit from the personal computer business. i wonder what dan thinks about that? is he still in the stock? >> i don't know the answer to that. that was like a self question. >> i was asking myself. >> you were. >> i don't know. roger doesn't know. >> my big complaint about disclosure, you find out when they buy it but you never find out when they are out unless you see later. >> you heard earlier about, wow, m and a is back. he was in mexico with a corona. >> i was on vacation. >> that's what i mean. you weren't even part of the whole --
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>> they need to do their business. >> kenny chesney would say nothing wrong with being in mexico. >> no shirt, no problem. is it still time to be optimistic about economic growth. tony does the best imitation of tony. it's a compliment. >> i'm from staten island. people say are you from austin. or even england. tony from staten island, who had three camaros. >> continues to be bullish on cyclical growth in the u.s. he's here to tell us what he is advising.
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roger altman, evercore partners. .1%. just go. >> it projects strong growth this year. 2.5% to 3%. >> no longer the new normal. >> that's the cyclical, meaning a year. it has its annual secular form newport beach. the last time in our whole building. you may want to think about coming down. 22 stories we will occupy in a couple weeks. come visit. we can do a show like you once again. come on out. the short-term story looks good. >> here we are going along having a nice conversation. >> growth over the mortgage has been running the last five years, 2%. can it get any faster.
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i think about it in the way i think about my prius. the engine is just so slow. i go up hills in california. the thing won't move much. so the fed puts a lot of money in the system to hope banks will lend. it's one of the reasons it hasn't picked up a lot. it seems like over the short-term it could pick up, how fast can the engine actually go if there's isn't a lot of credit creation. if the households on average are getting older. we're at the golf course, grandkids rather than factories that can't produce as much. maybe it can't grow as fast. it matters a lot to interest rates. >> so you're not saying that the new normal is over? he was on the show earlier. i did read that some people think we are emerging from the slow growth. >> the view is excellent. we still have it collectively because of the major forces that
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i mentioned. the fed has mentioned it at the last meeting. they cited more precautionary savings. do we try to keep up the with joness by borrowing off our house and credit cards like we used to. probably not. banks won't even allow it. so it just seems like you can't grow as fast. another thing in terms of testing, nominal gdp grows 5%, 6%, 7%. the 10-year treasury correlates with nominal gdp. where the fed fund rate ultimately goes, how high will it put it when it starts raising rates? the fed usually would say the neutral rate will go to 4%. we think it will probably be less. bank of england said while we think the neutral rate, the one that doesn't promote much is 3%.
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it used to be 5%. it may be developing in the u.s. where the highest the fed fund rate goes is 2%, 3%. it has major implications for interest rates. the stock market will love that. in fact, in the next cycle if they don't go very high. >> you reminded me of a marty stein field price. for what we can expect in some of the financial markets. we don't need to sell things based on the scenario. >> and the u.s. becoming more energy competitive could be, as we are seeing -- >> that's another thing. can i ask a theoretical question. when we started tapering, we said, okay, the party is over. they are essentially in tightening mode. really? >> yeah. >> the latest thing i said was qe infinity ended in november. and a new qe started for the next 10 months.
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that's still 450 billion, isn't it? >> the first point is tapering is so 2013. the focus of markets will be on the policy rate and how high it ultimately goes. but if many had concluded that a half trillion of qe would be the equivalent in terms of the stimulus it provides. if it reduces its purses when it stops, it is orgably, a full percentage point. we don't know how to purchase these things. >> is the wedge still in between -- are stock prices high based on the fed? >> no. deputy cio -- it is italian.
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i will try to say it fast. sc in italian is shh. >> here's the thing. it is exciting. >> yeah. >> the 10-year has been really boring. that's what you want in bonds. since last june. remarkable stable between 2.5% and 3%. we will project soon the next six months or so. the range shifts to 2.75% to 3.75%. still a benign outlook. it is up 2.5%. it looks like a positive year for bonds. just the unusual. last year was a bit of turmoil after the taper tantrum that ben bernanke set off a year ago in may. the yield is stable. slowly rising.
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again, the key is the growth rate, how fast the economy can go and therefore how high the funds rate will go. that will determine how high rates will go. it hooks like a benign outlook but slowly rising. >> you need to ask the tmz questions. ask whether muhammad said the "s" word, whether he cursed. >> why denigrate tmz like that. >> don't you have any good political questions. bill groceries as he changed at all? >> he's amazing. >> is he more sensitive? >> i will ask this. i don't know if you can answer this in an honest way on tv. no, no. it is difficult. business week article with bill on the cover where he says am i jerk or whatever it is. it's this very sort of, you know, looking inside himself thing. what did everybody think of that?
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>> i read it. look, i live in newport beach, one of my two homes. i have a place in staten island. 30 minutes from disneyland. do i want to work with vince lombardi or work for bill gross? he's a gentle man, a great teacher, great wisdom. we love working for him. i do purchase as i just said, i live in staten island. i travel across the country and come back every weekend to be with my daughter. i travel every week to go work for bill gross because i love it so much. >> that's a great answer. good to see people come out and support hip. >> five years. that's a lot of miles. i use them wherever i can. >> good short-term growth, benign interest rates. you will see a lot more mergers. because all cash transactions at these interest rates are
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reported earnings. you are seeing record multiples. >> they live in new york beach but a second home in staten island. >> where else are you going to go for pizza? you have to come back. >> phil, you have breaking news? i hope it's big. a lot going on here. what is it? >> you need some news, huh? joe, we can report this morning ford motor company will be announcing that coo mark fields will be replacing ceo allen mulally as head of the operation at ford running day-to-day operations. a press conference with bill ford, and allen mullaly and mark fields. we don't have the exact timing when this transaction will take place. we have been reporting for some time that the board was eager to make this transition. there will be a press conference later this morning. mark fields, as many have expected, as we have reported,
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will be taking over as ceo of ford motor company. guys, back to you. >> okay. >> thank you, phil, for that news. good to confirm it. now we know. this is great. tony, thank you. we want to thank tony for joining us. earnings from exxon mobil. jobs will be in focus for the markets. we are one day away from the report. what market strategists are expecting. what it means for your money when "squawk box" returns in is just a moment. just a moment. why relocating manufacturingpany to upstate new york? i tell people it's for the climate. the conditions in new york state are great for business. new york is ranked #2 in the nation for new private sector job creation. and now it's even better because they've introduced
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international monetary fund approving a two-year $17 billion loan package for ukraine. following a board meeting as part of the deal. ukraine must raise taxes, freezing minimum wage and raising taxings all steps that could strain the interim government's tenuous hold on power there. further escalation of tension with russia and unrest in the east. acting president says russian militants have won the east. and security forces were
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helpless to stop pro-russian separatists. let's take a look at stocks to watch. cardinal heating, $1.01 a share profit. textron with first quarter profits of 31 cents a share. overall profit fell 24% as textron delivered few bell helicopter s and unmanned aircraft systems. yelp lost 4 cents. it sells more mobile ads. avon earned 12 cents a share in the first quarter, nine cents
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below expectations. revenue below. coming up, we'll talk deals and corporate taxes with roger altman. i have a couple other ones i want to talk to you about. top of the hour, jim paulson and josh feinman. squawk coming right back after this. this. [ grunting ]
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>> i was confused. we have quality control issues. go ahead. >> we can move on to other issues. i want to talk about coca-cola for one second. we had news this morning. we should probably bring it up at some point. dave winters sent a new letter to coca-cola in light of what has happened, "the wall street
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journal" reporting that coca-cola revamped its compensation programment he is raising questions about coming on air and said that he had talked to muktar. now he is saying, okay, those happened writer prao i to vote. did they go back and actually tell them of these things. he said we would like to know whether mr. muhtar kent or mr. howard buffet on the equity lane. did he speak with any other coca-cola directors regarding that plan and if so when. do they have to? how does this work? what should shareholders think of this? >> should ask that seriously of a lawyer. my educated guess, or semi educated guess would be no, it's not a requirement to do so. >> right. >> one would think it would be a good thing to do.
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but i'm not sure we're ever going to know those facts. >> we keep hearing a lot of deals in the headlines almost every day these days. >> and there's going to be a lot more. >> that's what i wanted to say. but they're not all being completed. there's lots of talk going on. you talk about pfizer, astrazeneca, direct of, at&t. >> which finally changed. i think there was a lot of misunderstanding about that. even in this past first quarter, only a month ago, total volumes had not risen. in the first quarter, the volume was down a year over year. what has changed is the return of large strategic transactions. and i think that's the new development here. and it remains to be seen whether for the full year mergers as a whole will be a lot higher than they have been. they have been in a bit of a rut. particularly if you look at the number of deals which for wall street as a whole is the more
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relevant. so we are seeing a lot of large ones. that's new on the scene. i think that's driven by the zero cost of cash which i said a minute ago makes it almost any price. that's why you are seeing record multiples in the sector. >> what inning does that suggest we're in? because in a way the m and a business can be at odds. a i barometer of confidence. >> i think we're in early innings. given the forecast, which our friend just laid out, benign interest rates and decent growth it will be more surprising on the up side than otherwise. you have continued low cost of cash, a bun band credit for prime bombers. not for nonprime.
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and you have higher confidence levels as it is showing. that's the prescription for larger deals. i think we will see a lot of larger deals. whether the totals as a whole rise much is unclear. because the rest of the world remains quite weak from a deal point of view. but i think you're going to the see a lot. >> joe, you want to jump in on this? >> no. >> let me ask you a different question. it is a banking question, regulatory question. the front page of the "new york times" yesterday, it seems for the first time prosecutors might try to bring charges against banks. they are talking to regulators how they can charge banks more broadly without revoking their shorter or selling the reputation to the point where it goes out of business. do you think it's doable, feasible. if so, how does it change the dynamic here? >> that's a hard question to answer because it depends so
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much on the precise accusations or charges. the precise ones. and how you pursue a case without, for example, forcing them to withdraw from the united states or forcing an institution oregon putting an institution at risk of really systemic in stability. i don't know the answer to that. because i think it's uncharted territory, which is why they are having the the conversation you just referred to. >> the other was with sandy weill. he had an interesting comment. he said he believed regulators should ultimately be supporting the industry. that it is to regulate the industry but in a positive way, if you will. notversarial way. >> the mentality post 2008 is not that. mentality is no matter what the
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events of 2008 and the tax payer rescue of the banking many are never going to happen again. their mentality for the foreseeable future is safety, not support. they're not quite the same. >> right. >> maybe in some long, historical sense his point of view is a good one. for the time being, and i mean the next quite a bit of time, that's not going to be the case. and you see the regulators -- the screws are continuing to be tightened in terms of the leverage ratio and the pushing aside of risk weighted assets tests because they don't like those anymore. and so the pressure on the larger institutions from a capital point of view and the impact on their returns is going to continue. >> joseph? >> yes. >> you have never been in quiet in your life. >> i know. that's okay. >> he's trying to avoid criticizing you. >> no. my only -- you're in a position
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now where you see the tax inversion. and you see the harm that it can do. we could look back five or ten years. but you won't criticize someone for using the the wedge issue of minimum wage to completely avoid the things that need to be done in this country. we could look back five years. the people he is trying to help could be helped by keeping these -- by going to keystone. >> i do think -- >> roger altman, thank you for being here. being here. is the best.
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earnings take center stage after the dow hits a record close. jim paulson and josh feinman. >> golf tips from a legend. we'll speak to senior pga tour pro. >> with the summer driving season just around the corner -- what are you doing -- what will consumersing paying at the pump. the chief oil analyst at gas buddy. do i even have my lights on? "squawk box" continues the show and begins right now. >> may day, my day. >> may day? what the hell is that. >> may day, that's the russian new year.
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welcome back to "squawk box" on cnbc. the futures at this hour are waiting for claims number. down five points after hitting an all-time high yesterday on the 25th anniversary of really a ground breaking moment i think in american financial history, the founding of cnbc 25 years ago. >> it was a great moment. >> mark hoffman ringing the bell. >> ford holding a news conference at 9:00 a.m. eastern time. phil lebeau has details on what we can expect and the news he proe broke earlier. >> we will be hearing from ford ceo and mark fields, co, who will be replacing alan mulally.
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they will announce the official transition. we don't know the exact timing. almost everybody says the same thing. this is not going to be a long, drawn-out process. alan will be moving on to another venture outside of ford. what it is remains to be seen. mark fields, who is effectively has been running the company on a day-to-day basis for six months now, will transition into the job. a press conference later this morning. this is the transaction, guys, we have been talking about for some time, that we have been waiting for. the most mulally era will begin at ford. a lot of challenges ahead for mark fields. historically ceo is rarely followed by another successful ceo. guys, back to you. >> okay. thank you, phil lebeau.
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>> do you think that's true? i don't think that's necessarily true. you can have a couple of good ones in a row. >> for the big three, you have to go back decades to find two good ones in a row. and you have to go back a long way to find a ceo's tenure that ends smoothly. usually, it's hey, you screwed things up. gets out of here. >> the big three before mulaly, you are looking for any good ceo before mulally, aren't you? >> well, that's true. >> where do you have to go back with g.m. to find the good one? >> you have to find one where they consistently posted profits towards the end of their tenure? >> was roger smith a good one? >> he had profitable years but not profitable years consistently all the way through. they had periods where they would lose money, market share, and they had to consistently downsize. >> and a series of guys historically not thought of very
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well. >> joe, because we are a society that loves numbers. between 2006 and 2008, under alan mulally, ford lost $30 billion as the industry was imploding. since then, ford has made $42 billion. so overall he put them in the black. they made about $12 billion net profit under his tenure as ceo. stock is up 92%, 95% since he took over in 2006. >> immediately went up, remember, two, three, four years ago it was here. >> right. >> it made all that month in the first year or so after the financial crisis obviously. >> right. >> i wonder if we'll ever know -- what it serendipitous?
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>> absolutely. he said we will mortgage the company in order to finance the turnaround. if he had come in say eight months, nine months later and tried to mortgage the company, the credit markets pretty much seized up. he wouldn't be able to do it. he is fortunate timingwise he was able to go to capital markets. now, you also have to give him credit. he had to shed the brands to ultimately sell them or close them down altogether and focus on ford and lincoln. lincoln hasn't been the success he thought it would be eventually. but they believe ultimately lincoln can okwork. that remains to be seen. profitable, growth, around the world and in north america it's been a successful tenure. >> all right. thank you, phil lebeau. >> you bet. >> we have to talk exxon. $2.10 a share. expectations, $1.88. stock is up immediately.
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that will help the dow a little. maybe we have already seen it move up a little. and that was net income -- this company in the past has made 10 billion. $9.1 billion. 8.44 capital expenditures. sometimes people look at oil equivalent. that was down 5.6%. people look at upstream and downstream as well. $7.78 billion. downstream is also much lower. $8.13 million in terms of downstream. the revenue in the quarter, which was a number that has changed, $106.7 billion. sometimes it's not comparable to what we see on the first call. 109755. but it is still a pretty sporty
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number whenever you're up near $110 billion in revenues. exxon, i think that is a new high for exxon. and it should be a new all-time high. it should not be surprising. saw a record close on wednesday for the dow after the federal reserve signaled it is optimistic about prospects for the economy. what can we expect from the jobs number that comes out tomorrow? joining us now is james paulson, chief investment strategist. jim joins us today from los angeles. josh feinman at deutsche asset and wealth management in new york. we're both expecting you to give us some saturday, insightful comments. if you say it was all weather, we can send this right now. cash, is that what you think? that was not a i problem yesterday? everything is fine? >> well, you know, the weather had an impact. no question.
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larger than expected, in fact. other transitory factors. the sequential monthly data is starting to look a little bit better as q1 was ending. i think it will. friday's employment report will be on the big firm side. >> josh, consensus can be right? >> once in a while. >> is there anything more crowded than the field you're in right now with your opinion about, you know, prospects for the economy? >> yeah. i think a lot of people believe that. the fed certainly believes that. that was the meeting yesterday. just because a lot of folks believe it, doesn't necessarily mean it's wrong. but the other point that i would make, and here's where i think consensus starts to fray a little bit. i think the economy has good pros specialists for growth. i think there's a lot of slack out there in the labor market. we have an eci estimate that got overlooked by the gdp report.
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inflation still very low. still a lot of slack. i don't see the fed rushing to the exits here. >> in your view, those were positive things. >> yes. >> because we just had someone earlier say it's going to be the falling unemployment rate that is the most positive thing happening as far as dynamics and the economy right now. it is positive. >> exactly. we still have a lot of wood to chop. >> paulson, i'm used to you with the pollyanna stuff. are you worried? >> well, we're always worried. i think the proof is in the market. the market went to a new high yesterday, joe. this comes despite a flat first quarter gdp. geopolitical issues in the ukraine. pretty hefty correction in momentum stocks.
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i think the market is telling you the momentum on the ground is pretty good. i really think the debate is not -- that first quarter number relevant. i think more of it is the debate are we growing two, two and a half or growing at three or better? i don't think that's in the consensus. that's another big catalyst. not that we're just muddles along at two and a half. but has the economy geared up to 3% or more? and if that's the case, i think that's what could take stock up to that 2000 level. another big wild card out there i think, before the year is out the consensus will decide whether the economic cycle has bottomed or whether it hasn't. how that comes out is going to ever big impact on the markets overall. if it hasn't bottomed, i think it will be a challenge for the global recovery and for the stock market.
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i think we're going to find out it has bottomed. that could be another catalyst for growth. if it does, it will be the first time in this recovery since early on that both the developed and emerging world were accelerating at the same time. >> when you asked the question about whether the market is recognizing 3% or above, what you're saying is you are -- you're saying you're expecting it to be 3% or above. you're making that forecast. the market hasn't seen it yet. >> that's what i think. i think that's -- i think people -- i agree the consensus thinks we didn't flat line in the first quarter or it is really concerning. >> on the up side. >> i think so still. i think they are, yeah. it's still to come yet this year. >> just in bull markets in general, jim, they go up on anything, don't they? they just go up and up and up.
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>> that is true. 1%. they just go up. >> look what we're doing, though. we are sort of refreshing this thing. the market really hasn't done much since last summer. and at the same time bond yields have been flat. we're used to the two, three, quarter. sentiment is not out of control because we have had momentum checks. we are setting up for another run. that might not be the last call for the year. but i do think the rest of this week's reports could be the starter. maybe it's going to take another month. >> start with you, josh, and end with paulson. appreciate it. >> good to be here. >> if you're mad about prices at the pump now, wait until the summer driving season. we'll find out where prices are headed. as we head to break, just out
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welcome back to "squawk box". take a look a lot shares of exxon mobil just reporting. those shares out. it was up a little bit more earlier. shares we thought were surging. it earned $2.10 for the first quarter. estimates of $1.88. one number not in the quarter, capital speexpenditures down 28 from a year ago. i'm surprised. i thought we would have a little bit more of a push this morning. gas prices have been rising. they tend to rise in the summer months. could this time be different? this time may be different. the founder of the oil price information services company gas buddy. he's here to -- is dotcom technically part of the title?
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>> usually they like to look at that. yesterday might be as bad as it gets for the second quarter. you'll be paying less on the first day of summer than you are this weekend. maybe less memorial day. >> that is surprising. tell us why. >> number one, there was too much money with the price of cruise and chasing lean. there's $45 billion that's long crude oil betting on higher price outcome. 10 or $12 billion in gasoline. when you talk to refineries, they're worried about gasoline. it may go up in little spurts. generally the next five years or so it will move down. you don't have the millenials and young people driving anymore. an aging demographic that's driving less. and the average car is 11.4 years old. when you turn that over, you get a lot better mileage.
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it's what i would call the ben bernanke sort of change. >> so we're finally there. >> yeah. >> this is it? >> i think this is it for maybe the second quarter now. in the third quarter you might see a surprise spike to hurricanes. we export about 1.2 million barrels to diesel. and 750,000 barrels a day of gasoline. if you get some damage or some shutdowns in the gulf of mexico that could have really interesting consequences. >> are you on diesel or gasoline? >> i'm sorry? >> are you on diesel or gasoline? >> what do you mean? >> your car? your vehicle. >> you don't know whether a porsche runs on diesel? 911 carrera. >> i thought you were a diesel guy. >> no such thing. >> diesel will get more transaction in the next few years.
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to get to 36 miles per gallon you have to use a bigger molecule. that will be diesel. people don't realize if they pay $3.80, $4.10 for diesel, they are getting more bang for the diesel. 40 different vehicles being issued in the next few years that will run on diesel. >> don't buy a diesel car. >> why not? >> they smell. they make sounds. 85 mercedes. worst car i ever had. >> i thought everybody has to buy a diesel. >> if you're going to buy a vehicle, buy a tesla. trade in your prius. >> let's say we are july 1st. what does it look like? >> 3.50 or less. we are 3.65 now. we may get a nickel or so higher. and then we'll get to that
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number. if we don't have a hurricane, a lot of places will be below $3 a gallon. very, very dramatic swings in gas prices. >> do you care about ukraine and what's going on there? >> i think i care about it. we're very insulated against that. we are producing 8.3 million barrels a day, which is the highest since you had your diesel back in the 80s. it could have outcomes with codependency in europe. but we have $70 billion worth of crude as well. we're going to be producing 10 billion barrels a day. >> thank you for joining us. i'm going to trade in my hybrid bike and see if i can get a diesel. >> i think a cayenne you can buy diesel. but i wouldn't. david winters sends a new letter to coke.
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weekly jobless claims. personal income and spending data. later, a record close for the dow. cnbc celebrating a 25-year anniversary. on the right. on the right. he knew. i just missed it. >> did you see my little face? >> is now the time for investors? anyway, we'll discuss its in just a bit. just a bit. financial noise financial noise financial noise tdd#: 1-800-345-255050 tjust waiting to be found. ties tdd#: 1-800-345-2550 at schwab, we're here to help
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welcome back. coca-cola could be rethinking its equity compensation plan according to the wall street journal which says coke is responding to warren buffett's decision to abstain from the shareholder vote. he talked to becky quick on april 23rd. >> we abstain because we didn't agree with the plan. we thought it was excessive. and i love coke. i love the management. i love the directors. but -- so i didn't want to vote no. kind of unamerican to vote no in in a coke meeting. i didn't want to express any disapproval of management. but we did disapprove of the plan. >> he did talk to management including muhtar kent. david winters has september a letter to coke's board of directors. he says, we would like to know
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whether mr. muthaar kent or howard buffett, son of warren, made the compensation committee or full board of directors aware of mr. warren buffett's views. did buffet speak with other coca-cola regarding the views of that plan. if so, when? he wants to know whether coca-cola reached out to investors before the shareholder meeting to drum up support. if coca-cola did reach out to investors did it stay or imply it received generally positive feedback from other investors, trying to suggest that maybe they were disingenuous perhaps. we don't know. and also raising this question, it offers flexible but no changes are being made. we'll see how the story place out. becky and i will be in omaha at
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the annual meeting. and i imagine this question will come up and hopefully be answered. >> fed chair janet yellen speaking at the inspect community bankers. plus, another piece of the jobs puzzle. take a look at u.s. executive futures. futures. aflac. ♪ aflac, aflac, aflac! ♪ [ both sigh ] ♪ ugh! ♪ you told me he was good, dude. yeah he stinks at golf. but he was great at getting my claim paid fast. how fast? mine got paid in 4 days. wow. that's awesome. is that legal? big fat no. [ male announcer ] find out how fast aflac can pay you at
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welcome back to "squawk box". just seconds away from jobless claims and march personal income. rick santelli is standing by in chicago. steve liesman is in the studio. joel has come into the studio. chief economist at -- sorry. that was rough. >> let's not talk about it. >> you know what, let's not. home of comcast. yeah. but it was -- man, seventh game. that's even more painful.
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anyway, are you going to behave yourself today? >> me? >> yeah. >> it's not me. >> i'm going to let you and rick -- leave your mikes on. >> your complicity in all of this -- >> stop talking right now. give me the numbers, rick. they're coming up right now. >> yes. personal income and spending. income up 0.5. much better than we are anticipating. slightly higher to.4, .5. up 14,000 from $330,000 to $344 now. 2.77 million. i know the markets aren't going to look favorable on a jump in jobless claims. i have to say at least the credit markets didn't actually move in an aggressive fashion.
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we were closer to 300. i see rates really haven't ticked down much. we're 265 in a 10-year. two basis away on the 30-year bond since june. it's may dayment a lot of markets aren't trading today. we'll have to monitor. so much news, so little time. suffice it to say, tomorrow's job report will show continuity. is it improving the economy or job growth? the question is how much better it could have been or how much lighter it is based on history and other bouncebacks after recessions. back to you, joe. >> okay. rick, thanks. talked to steven and joel now and get more on the numbers. chief economist. you have all your stuff working. >> finally got it. >> are you okay? >> finally got it. >> what do you make of it?
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>> do you have things right now you want to say? >> there's a nice bounceback of durable goods. >> we knew that. >> again, it fits in with the theme of a spring bounce back in the sense that march was better than february, which was better than january. >> what we have seen is the worst month was january. >> yeah. >> it slowly improved. the weather is kicking in. i think we'll have a lot better spending as we go through the rest of the spring. and the income numbers really do hold out some hope that spending will continue. >> let me just throw that out at you. >> i don't have the details in front of me as far as that goes. but the fact that it is wages and salaries is really critical. that's been the lagging aspect of this recovery. that's where we haven't had enough in terms of the spending power of households to be able to drive the economy.
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the missing link has been the weak income growth. if we're now beginning to see that kick in, i think that's reflective of the tightening labor market. that's key. >> is this number figured into the gdp from yesterday or an upward revisit to it? >> this number is already in there. normally when we get this number it's a nonevent. the government has already calculated it. basically we have to go back and look at january or february to rationalize it with march. >> but we do get the march detail, which we didn't have before. >> that's right. >> it shows that am sexuccelera. maybe we could pivot, joe, if you don't mind. talk about the book. >> i wondered what that was. >> big picture of economics. >> how to nature gate the new global economy. let me just ask you a question,
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joel. how do you navigate the new global economy? >> well, you use your friendly economic gps. really what the book is all about is the idea that too often we think that as business people, or as the average individual looking at the world, there are simple and black and white answers to any of the problems we're facing. the purpose of the book is to show how economics provides you a perspective. the answer to an issue depends on the context that you are trying to deal with. where you are in the economy. what are the issues you're face something. >> the only one i have ever seen that has an acid test. a different kind of acid test. tax cutting acid test. what do you mean by that? >> first of all, it came from the idea that in a previous world i was a professor.
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actually a tenured professor at the eisenburg school of business. i taught finance. one of the tests is an asset test. it is the idea that you don't cut a tax unless it significantly creases economic activity. you can get rid of it, but does it reduce economic activity significantly. what i tried to do in the book. and i chose some examples that were really out there to get people -- >> you hate lower the death tax, the estate tax. >> i hate lowering it. i'll tell you what. it is fairly basic as an exist. it doesn't fall on the people that create wealth. i go around a lot of businesses and ask, how many people sit around? i'm not going to add another 5 million or 10 million to my wealth. after i dry my heirs may have to
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pay a tax on that money. changing it is not going to change the behavior. >> no. i did say that. >> that's wonderful. >> rick is telling something wrong with your theory. >> why are you here for may day? >> isn't capital supposed to be sitting on its butt and never working? workers come to work every day. maybe they take one day off. >> this would be the day you take off. >> it is social justice. with the estate people argue irrespective of the effectiveness, i agree it is worthwhile. the idea that -- >> steve, what you're talking about is an issue -- you're
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talking -- steve, you're talking, rick, you're talking fairness. and i believe the first person to say if i was designing a tax structure from scratch, i don't think it would be in there. but that's not the question. you're talking about changing your tax. if you're changing tax, what's the economic impact of it? that's really what you've got to keep in mind. and i've got a tax that's a lot -- >> so you really think you would move from a passive to a proactive way to deal with this? >> another point i bring out in the book is this. we talk a lot about not double taxing dividends. why doesn't anybody talk about the fact that we double tax the income of small business owners. they have to pay all the payroll taxes, not just for themselves but for the businesses as well. if i'm a slow business person, and i am, and i'm the employer, i pay social security and medicare tax for myself and for my business.
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why do we not worry about double taxing small businesses -- >> i worry about it. i worry about all taxes. >> i agree. we've got to worry about it. >> taking a dollar from farmer a, giving it to farmer b or taxing it, giving it to uncle sam puts a level of in efficiency. no academic professor in any university is going to tell me that dollar is more productive in anybody's hands but the guy who sweated to make it. >> but the reality world is we have a tax structure. >> you're reality. >> thank you, everybody. >> remember the time where he goes, little bill says to this
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horrible englishman, you're talking about the queen on independence day. and just smacks him and knocks him out. do you remember that part? here we are talking about all these taxes on communist may day. >> coming up, we'll talk about at&t. new details after the break on that. check out the futures after jobless claims and personal income data. a very big jobs day. "squawk box" coming up after this. this. financial noise financial noise financial noise
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welcome back to "squawk box". i'm phil lebeau are breaking news regarding ford meter company. sit official. mark fields will be replacing alan mulally at ford. guys, stick around a little later on "squawk on the street". coming up at 11:00, we will hear from ford chairman bill ford first on cnbc about this transaction from mulally to fields. again, effective july 1st. >> thank you, phil. at&t approached directv on a possible deal. the price tag they said would be at least $40 billion. directv's current market capitalization is the the second
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biggest paid tv with 20 million. at&t has the hand-line based tv business. a combination would create a tv giant close to the size of comcast with time warner cable deal in hand. close to 30 million subscribers. they are not comment on the story. i can tell you i have confirmed the story with a number of sources and can give you a little bit of background what's happening here. this is very early days, my sources say, in terms of where this stands. but the calculation is this. given the comcast/time warner cable deal on the table, the view is at&t and directv want to merge and they have been talking about this for a very long time, what you want to do is announce a transaction while the time warner cable and comcast deal are on the table for regulators in washington to force the issue. meaning, either regulators approve the comcast/time warner
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deal and the at&t/directv deal, which might have more overlap and be harder or they kill both deals taillights. it could put pressure on both transactions and really make this a washington story in terms of whether regulators would go forward. that's at least the conversation going on right now behind closed doors between at&t and directv about whether something like this should move forward. it is very much connected now to the comcast/time warner cable deal. >> they delayed it? it makes it more opportune to do it now. >> it makes it more opportune to do it now. >> they have wanted to do it. if you were to bring a transaction like this to the table, what happens? >> i understand what you're saying. for the last three, four years, they have wanted to do this.
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>> it's been one of a number of transactions. it's something they have looked at. given this other transaction, there's now a view that potentially now could be the moment. other people say maybe right now is not the moment. maybe what you want to do is let comcast and time warner merge. let that be approved. that would force the issue. if you were to announce after an agreement was already passed you would have a better chance. that's really what this is all about. >> coming up, jim crippler's take on the top stories. "squawk box" will be right back. tomorrow, it's jobs friday. join us for a special look at the state of the economy and how markets will take the government's april employment report. mark zandi, gary stern and more. and matthew rose previews the big berkshire meeting. shire meey
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welcome back. jim cramer joins us now. lots to talk about. exxon mobil. i'm curious about the
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directv/at&t negotiations. i'll take your lead here. >> i think that directv/at&t always talk with each other. i've got to tell you, this is david faber's story. when i read through i kind of say, i don't believe. we're not talking price. why would they want directv? it has all this latin american business. at&t said we're not going to go international. it created a whole new world. i think it makes sense that everybody has to talk to get bigger. >> right. >> i think a lot of this, by the way, has to do with the regulators. we just reported earlier that the conversation is actually in large part because of time warner cable and comcast. if you put both deals on the table at the same time you have a better chance. >> look, the field is very, very competitive. and i think that is what matters.
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tmobile/sprint. that's another one. t-mobile has some pretty amazing numbers today. the telco business and the drug business are two sectors that have the fever. they have the fever to slightly this morning. i thought they might be up a little more given the beat they had. >> well, it's a production growth story. you got to listen to the call too. these guys, i think chevron, up huge, has a little better momentum. this group has been strong. bp, signaled things when they raised the dividend. royal dutch reported better than expected quarter and all those that happened this week, exxon has been moving up. moving up in anticipation. this group has earnings momentum, exxon the least momentum of the group. no one ever got hurt buying exxon and that's going to be the wrath you'll here today. >> we'll get jobs numbers tomorrow, playing into that. how do you play today? >> look, i know this is kind of
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contra, but these numbers don't matter as much to me as they typically do. i think there's a bounceback. you guys were talking, april, apparently, there are few companies i talk to about april where april isn't better. it's possible we get back on track. but i don't want to be political. i just think it could be back on track. >> okay. jim, we'll see you in a couple minutes. great to see you in person. briefly during cnbc's 25 anniversary. and the markets cooperating very well with us. that was nice to get to the highs. joe. >> thank you. people just watching the first on cnbc coming up. arnie sorensen and alan krueger well, know that wasn't alan krueger two guys the ceo of t-mobile, one guy not, one guy was alan core danny. just fix all that. someone is watching. i'm watching. i realize. he's won eight major championships, former number one player in the world. tom watson joins us next.
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astrazeneca wi "squawk box" will be right back. . beautiful day in baltimore where most people probably know that geico could save them money on car insurance, right? you see the thing is geico, well, could help them save on boat insurance too. hey! okay...i'm ready to come in now. hello? i'm trying my best. seriously, i'm...i'm serious. request to come ashore. geico. saving people money on more than just car insurance.
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[ banker ] sydney needed some financial guidance so she could take her dream to the next level. so we talked about her options. her valuable assets were staying. and selling her car wouldn't fly. we helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today...and tomorrow. so let's see what we can do about that... remodel. motorcycle. [ female announcer ] some questions take more than a bank. they take a banker. make a my financial priorities appointment today. because when people talk, great things happen. our next guest inducted into the world hall of fame in 1988, releasing theers have of his dvd set, "lesson of a lifetime 2"
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which includes over 20 new lessons and been in studio before, but joining us on remote tom watson. tom, terrific. great to see you. thanks for joining us. >> thank you, joe. >> i watch the first set and it told me a lot of what to do, worst problem is between my ears. is this going to help me there. >> it was predetermined or determined in our last interview just this much below a hack. this -- this new version here is actually -- it talks about, for instance, when you get on the first tee what to do. what to think about on the first tee. many -- most people on the first tee have the first tee jitters and that, you know, is simple things like that. over the years of experiencing
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the pressure we have tricks of the trade mind you that we can use to try to alleviate some of the pressure. >> that -- and there's all kinds of psychological things that help. i have just an overall question for you. i'm going to look at these and obviously you've extended -- you can learn from the first set of dvds, but this is the one where, you know, you can take it beyond that and maybe, you know, work on some things that aren't just, you know, technique. >> well, there are certain things on there that i didn't put on the first dvd because i didn't think of them, honestly. i remember after the finishing up the first dvd, i started to think about other things that would apply and one thing in particular was the 40-yard wedge shot. people have a hard time when they're close to the green making an abbreviated swing and hitting the shot consistently. and i show what to do there. it's kind of is pretty sim. what the -- where you should be
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in your dress, where you stand up to the ball and how you stand up to it that allows you to make a shorter swing and be consistent about it. >> can i ask you, what i was getting to, if i go out after not playing for six months, and think that i'm going to be able to do these field shots and touch shots and then, you know, under a little pressure, if there's -- if i'm playing in a tournament or something, should i be expected to be able to perform without being able to fall back on practice? >> no. >> that's my problem. >> the full answer, no. >> that's my problem. if there's any pressure at all and you know what you're supposed do, but if you can't fall back on sort of the muscle memory, i think it's impossible to do it. maybe i shouldn't be frustrated. >> i think what you're talking about is routine, what happens after a six-month layoff is that you lose track of your routine. what you -- when you practice a lot, you create a routine. i talk about that in these new lessons of a lifetime lessons,
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and about how do you -- what to do and to eliminate the pressure and one of them is to create a routine that you can bank on. you can go to when the pressure is on and you rely on that routine to take you through the shot. you know, you have a routine you go through and you should be thinking about one thought in the golf swing. it could be the back swing, the follow through, but you aren't allowed to think about one thing at a time. i'm not smart enough to think about more than that or have time enough in a golf swing. >> tom, you've seen some of the conjecture about what to do with the game and you're a purist and i'm sure when you see a hole the size of a manhole cover to make it easier to get into the hole and try to bring back the 5 million golfers we lost over the past ten years or something, what should we do? this is everything goes through these cycles? i guess we shouldn't panic on something that was invented a
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couple hundred years ago, should we? >> this is what we need to address right here, the amount of time that people spend on this device is taken away from all kinds of, you know, of quality of life, and one of them is golf. golf takes a long time to play and one of the things we do is try to address -- let's play three holes or six holes or nine holes rather than a full 18 holes. just to get out to enjoy the game of golf. you know, we're trying to -- i'm trying to address how do we increase the number of young people to get into the game and that's -- this cell phone stuff is hard. it takes a lot of their time. >> can you make it easier for me? that's my problem. >> he couldn't make it easier for me. >> but that's what you need. it's like they need to get like -- in tennis ne started with the -- they started with the oversized rackets, that changed the game. >> the drivers are bigger. >> you're exactly right, joe.
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the drivers are bigger. it's easier to hit the ball. to take it beyond that, i have reservations about making --s. >> all right, tom. i'm sorry. we're going to have you back. you can't fix andrew, believe pe we only have five seconds. >> thanks for having me on. i appreciate the opportunity. >> great to see you, tom. thank you. >> join us tomorrow. "squawk on the street" begins right now. welcome to "squawk on the street" i'm carl quintanilla, with jim cramer and david faber. ford confirming it has chosen mark fields as its next ceo. he's going to succeed alan mulally who will retire on july 1 after more than seven years on the job. ford's actually getting ready to hold a news conference right about now. we're going to dip into that in a second. as people familiar with fields by now, running a lot of the important meetings, joined back in '89, ran mazda for a couple years, pride of rutgers univty


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