andrew ross sorkin and gary kamins kamins kaminsky. joe will be back tomorrow. >> thanks for bringing the donuts. >> should i put my jacket back on? >> no. he knows i'm a dunkin man. not betwegood for you, but it's good thing for you. >> here we go. anyway, gary, thrilled to have you. we do have a lot of news to tak about. here comes donuts. >> what a way to start the morning here. this is more important than the fmoc meeting, can i just say? >> gary, you are dangerous. >> as andrew was saying, not good for you, but very good for you. >> very good for you. >> i'm going to watch from here, although i had hard peanut brittle upstairses. so keep those away from me. the fmoc concludes with a rate decision tomorrow at 12:30 eastern time. plus we get theman bernanke.

never sure what will get said at them. also we have the case shiller home price index at 9:00 a.m. and then coming up at 10:00, new home sales and the house price index, consumer confidence and the richmond fed survey. so plenty of things to dig through. not so great in europe. >> we do have a number of corporate quarterly reports that hit today. before the bell, listen to this, 3 m, at&t, united technologies, u.s. steel, amgen, hershey, reynolds, american and coach. and of course the big name after the bell, apple. shashs of that company up nearly 43% just since january. even though the stock has taken a hit in in recent weeks and i think its he pulled back about 1 11%, patty he says this could be

the last stand for earnings and i think that was coming from if the apple earnings don't impress us, then nothing's going to. that's kind of like our last stand on earnings. you either get it from that or you're not. >> and we have an analyst coming up in a bit to discuss a preview of these apple earnings. and i think it's very important that we an understanding about what the printed numbers are, what the analysts have put in print in terms of the estimates and what they've been telling clients what they really think. >> you think there's a different number out there. >> i think there's a huge -- i said to becky i don't want to use the phrase whispering number, but there's a huge as per pirs -- >> what is your aversion to the phrase whisper number? >> it reminds me too much of the

late '90s. but a huge as pergs between the printed number and a lot of people mentioned you may see a printed up side surprise, but the reaction won't be what you think. >> if whisper the number around, then you can say you're really smart about this. i'd like to have two numbers that i can -- then i get the range. >> exactly. it is one of those unusual things that sell side analysts get the luxury of doing. >> if you look at how the s&p as moved, may turn out to be the biggest single factor. i apologize if i have a little bit of that glaze on my --

>> the sugar is kicking in, right? >> just kicking in right now. these donuts are too good. let's talk about the other big story of the morning. european debt auctions. netherlands successfully selling two bonds at auction, raising $2.6 billion which which was within the government's expected range. the sale comes a day, though, after the dutch government collapsed in a crisis over budget cuts. spain short term borrowing costs nearly dufbled at a well sold auction of three and six month treasury bills. another example of investors demanding higher premiums. and italy, yields rose 3.5%. so we're seeing the costs go up and up. >> we have roger altman today and he has some very different thoughts. he's concerned about where the economy is heading quarterly in

europe and says the one thing that could derail this is if spain gets shut out from the market. >> and so much focus has been on the actual capital yields. but people are once again starting to think about austerity and the actual impact on the economies. at the end of the day, you have to be able to grow to deal with -- >> but then we go back to keynesian -- austerity, stimulate, how? >> you have to have some growth. you talk to any economist, and we'll talk to steve about this later today, you have to grow. you have to eventually be able to grow your way out of things. >> if you look it at the front pages of all of these, the ft is the leaders face the austerity backlash and they're saying the

reason for the selloff is because of what happened this france with the election and what happened in the netherlandss with the dutch government packing it in. but we talked to ross yesterday and he said the real downturn came after the manufacturing numbers. the real drop in the manufacturing numbers particularly this germany and that's the after pekt. that's the slowdown in the which i. >> so do you want to shut everything down, basically try to rein in everything. but at the end of the day, you can't grow. >> so as a model for us, how do you do it? >> oh, god. >> we'll do it later. >> we'll do it later. >> but it becomes a very interesting issue. >> it absolutely does. we'll ask governor huntsman later. >> we have a lot of people on. let's check on the markets this morning.

>> a little better than yesterday. >> yeah, a little bit greener. let's it take a look at the crude markets. there we are with the s&p. looks like not much movement in terms of energy prices. let's take a look at that ten year. 1.95. >> unbelievable the rates. >> interest rates are low. incredibly low. has it had much of an impact on the economy? continues to be debated. >> he'll and you can to you about a ten year arm later. i'm back on that subject. >> just taking a quick look at the currency markets, gold also continues -- and is gold a risk on or a risk off trade these days? it depends on who you ask.

but the major correlations that we saw a year ago in terms of gold and sort of this is a place to hide and everyone should own a piece of gold in every portfolio, that sort of has not been a great strategy in 2012. >> all right. let's move on in our news. james and rupert murdoch are taking the stand into media et iics in the uk. kay kayla tausche joining us from london. >> reporter: this is the first time the murdochs will appear in front of that end commission assembled last summer by prime minister david cameron. this morning we're just getting started about an hour into what could be six hours of questioning for james murdoch who has taken the stand today, but already very sensitive issues brought up, the first being the failure of his leadership over hacking and over some of the lawsuits. even though he has said in

previous testimonies that a lot of this did not happen necessarily under his watch, but before he actually joined as ceo of news international and deputy of news corp in 2007, but they're saying why didn't you ask why this was allowed to happen and put training processes in place to keep that from happening again and why did you inquire about lawsuits that have been very, very financially not so incremental for the company and how they stack up to more than 100. the second question is whether the end profit of news of the world and the sun justified the means of reporting. james said, no, it was only reasonably are profitable, but it would not go very far to justify the fact that they did launch the sun on sunday to replace it. finally a lot of questions about the political nature of some of the appointments of he had it tors and executives after james joined the company. a lot of claims in the media saying that they appointed a certain executives and editors based on the fact that their political views aligned with those of the murdochs.

of course politics a huge issue. not only phone and e-mail hacking, it's thing length and extent of bribes to police, to certain politicians and the coziness of the newspapers under news corp properties and politicians. of course this inquiry is five months long already. and the turning point was in february when deputy assistant police commissioner sue acres said there was a culture of illegal payments across all news corp properties. not just the newspapers. and of course a lot of fingers being pointed at bskyb with revelations that executives there knew of e-mail hacking and earlier this month james stepped down as executive chairman. keep in mind that previous testimonies by james and rupert were in front of parliament committees that even though the questioning was harsh, it was still proper along party lines. this panel is made up of more than a dozen members that have not only done their own forensic

research, but also aren't are relying on more than five months of extensive testimony from former journalists, former politicians, people involved in all of these cases. but as if what james has said today, he stands by his previous testimonies and we'll bring you more takes happens later in the day. back to you. >> kayla, what happens in terms of the power that this inquiry has, what can they do? >> it's really unclear at this point how long the inquiriry will actually go. i think a lot of people thought when it was assembled last july that it would get off to a quicker start and that it certainly might have ended by now. another key thing to be watching for is when news corp's own management and standards committee issues it report, that report is also being assembled, that will likely coincide with when this will wrap up. as far as what inch ple indications this has, it's going to be very damning not just for news corp, but also for the entire regulation of the media industry here because we should note that allegations against the daily mail and the daily

mirror have also been revealed at this inquiry. but as far as any sort of regulatory action against news corp, that could definitely be in the cards. >> all right. kayla, thank you very much. kayla tausche is monitoring things in london for us. in other corporate headlines today, texas instruments is posting better than expected earnings and revenue. perhaps more notably, the which i am chip maker forecasting growth ahead of wall street's estimates. analysts say the news signals potentially the end of a prolonged inventory related decline in demand. earnings down about 60%, but that was better than the street has expected. it was a different after hours story at netflix. the video rental company is projecting slower subscriber growth for its key u.s. video streaming service. shares of netflix got killed, down about 16%. the company added customers, but

that is a business that is critical to the company's future takes moves away from mailing dvd and signature red enveloping. i think they're talking about 200,000 subscriber adds after something like 1.7 million before. so a big rush of people to sign up. the question is whether that growth can continue and the company saying no, probably not. >> was part of the issue here the fact that there is a little bit of expectation now for the rest of the year that management who has not had a great job of making predictions? >> we can promise you these prices, and then we can't and having to go back. a lot of ups and downs. >> so many stocks out there. if you're going to have -- and the volatility has been on netflix both on the up side and down side. could have lost a lot, could have made a lot. but when you get those kind of moves, so many stocks out there there -- it's like go to vegas.

>> you're putting netflix in the vegas category? >> if we could bring up a three year chart of netflix, there's a tremendous amount of volatility in a single name. i guess some people like it. >> before i use this tease, have you been to google this morning? >> yes, a zipper. >> if you haven't been to google, it's the most unique home page in a long time. it is to celebrate gidian seinbeck who invented the modern day zipper in 1913. >> it says the 132nd birthday. >> thank you.

i didn't -- >> news you can use. worth providing to those who are at your computer. coming up, who would think three european bond auctions would be the talk of wall street, but in fact, things like are driving global markets. so we'll head to london for the latest and we'll talk to a portfolio manager to put it in perspective. tomorrow "squawk box" is on ceo call. we'll talk earnings and outlook with the ceost of eli lilly, s.a. a p., wyndham worldwide. plus a trio of squawk market mast masters. don't miss "squawk box." if respect if respect between listening to the numbers... ...and listening to your instinct. duff & phelps finds the sweet spot that powers sound decisions.

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u.s. equity futures looking good actually. dow would be up about 23. nasdaq also looking up at about 10. s&p 500 up about 3. of course this all comes ahead of a big earnings parade and it's already starting. baker hughes reporting first quarter results of 86 crepts a share, a six cent beat. company had warned of -- why are you looking at me funny like that? are there more donuts?

that's unfair. and that's resulting from a decade low in natural gas prices. ross westgate is standing by this london. ross, do they have dunkin donuts in london? i don't remember. >> you know, they do. yeah, you can get them. is that a prerequisite? >> it might be. i just got a note from someone i know in israel who was saying that they were watching the show and they don't have them there and that they were envious. so i figured i'd ask. >> andrew is on like his fourth donut. >> it would be nice if could you hand those through the television screen. that's what i want. just pass stuff through. >> the imagimagic tv. it looks nice because of all the green arrows and the auctions that actually went off. >> the auctions went off. we were really focused on the dutch auction. not very often focused on the

dutch auction. just remind you particularly in germany, the dax down by the end of play over 200 point loss. might be up less than percent day. put that in on-to-context. but we are weighted to the up side. the focus the dax only up under half of 1% at the moment. so nowhere near clawing back the losses from yesterday. focus on three auctions catoday starting off with a dutch auction. we saw spreads between dutch benchmarks, ten year and german bunds, widen out to a three year high during the course of yesterday's session. this after the dutch government of course resigned because it couldn't agree on fiscal deficits. so we had a dutch auction this morning, t2 and 25 year. didn't raise the amount they were looking for. just shy of 29 billion euros is what they got. but yields were okay. and we saw the dutch bond market

holding on to its gains this morning. yields a little bit lower and the cds spreads came in. now in spain, we saw yields yesterday touch the 6% mark. we're just below it today at 5.94%. we had an auction here, as well, 3 and 6 month t-bills as expected, those yields more than doubled in the auctions in april compared to previously in march. they raised the total amount they wanted. and in italy, zero coupon bonds again this morning. yields again higher, but they did raise the money they wanted. but paying higher yields in both italy and spain. the key test was really in netherlands and we took some comfort from that. but as you can see, yields are still pretty elevated. in fact we've started to go back up. you see the yields heading higher again. so as we go through the u.s. session, just keep your eyes on what's happening there. back to you. >> ross, thank you very much. andrew will pack up some of these and send them over your way. >> thank you. >> we'll see you again tomorrow.

joining us right here onset is doug kotai. do you want to start with things overseas or things happen position right here? >> i'll do both. excessive pessimism and global risk is a losing strategy for the past three years. we're in a bull market. you need to be globally diversified and what should you have done is focus on the fundamentals especially corporate profits. corporate profits since first quarter was supposed to be away 1%. right now it's 10% with about 8% top line. so we focus on the fundamentals and there's more behind that, as well. >> the market is panicking, but you're saying panic at your peril? >> yes. it's always been a good strategy to use this global risk to get back in's been a buying opportu. sell in may doesn't work this year. i think this goes right to the

summer. what i worry about investors have missed this bull run especially the best first quarter since 1998. i want to get my investors back in the market so they can start getting reasonable returns. >> what if you're in the market, would you it continue to put additional money in as mum mu n come back in? >> i would look at their overall portfolio and make sure they're broadly diversified on the equities side in both u.s. domestic equity and emerging markets as well as europe, but also in fixed income. what i like in fixed income is global buying. that's an opportunity because you can diversify in currency and pick up yield, i did verse guy in bonds. >> you mentioned the earnings for this quarter have been an upside surprise. was the analyst community just too conservative or are the earnings accelerating and we can read that through into the rest of the year? >> wall street has been

pessimistic for the past going on 11 quarters. we expected them it continue to be pessimistic and that's why the opportunity is if you look at these past few quarters, as wall street has completely been behind the curve, they will t continue to be. it took wall street almost three years to catch up to earnings. i expect earnings to do well this quarter, next quarter and the quarter after. >> what about somebody like an apple, it has not been a laggard until recently. to that point, it's been on fire. is that something that makes you more nervous when it's been at the front of the pack? >> well, as a strategist, i don't look at particular stocks. i look at broad based. and broad base already that again we've had some really good broad based earnings across all sectors. the sector in plarticular i lik

is consumer secondary. >> where is the dow at the end of the year? >> 1425 at least and we think that's based on $105 earnings. >> the s&p, 1425. >> i said dow, but that's okay. we'll take what we can get. >> okay. 1425 for the s&p. but that's 105 earnings with 13 p, we think that very easily it could go up to 15 p ratio, that would be an all-time record high. that's why we're trying to advocate investors get back in this market, take some volatility. en investors have been doing this all or none strategy. how about a diversified portfolio taking the moderate risk to get the wealth. >> thanks for coming in. >> coming up, inside line on apple ahead of the company's earnings after the bell. but first, take a look at yesterday's winners and losers. ♪

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welcome back. we are watching earnings, they've been hitting the tape

all morning alone. utx just hitting. united technologies coming in with earnings of $1.31 a share. now, that does include some items, it's got about 30 cents in items of favorable items offset by about nine cents of restructuring. if you were to strip that out and take it back down. but the company does say that the street knew about those favorable tax benefits at 21 cents. so they're saying the numbers you would compare is the $1.21 to the 1.20. company says analysts were made aware of the favorable tax benefits. if you're looking at sales, the number came in at $12.4 billion and that is light of what the street had been expecting at $12.7 billion. you look through though the company does talk about organic sales. up 1% over the quarter and of course we always look to see what the company has to say about otis elevator. $3.05 billion for pratt &

whitney. otis elevator, 2. $77 billion. >> they do make specific reference on the otis new equipment orders down 9% over the year. say it was driven by the expected show start in china. and they also mention a march 15th analyst meeting. i guess there was an analyst meeting on momentum in the hvac business. >> that's an interesting call, too, that it was stronger momentum in the u.s. residential hvac business, which could lead you to think maybe things are starting to pick up a bit when it comes to residential housing here in the united states. >> correct. >> well, we'll keep an eye on that. but right now, that stock -- hard to say where that will open. we'll talk to an analyst about this later today, as well.

but it does say $1.31 versus $19.1 $1.20. >> i coughed right into the camera and it just didn't -- we is more news. >> classy. >> it is classy. what else is going on? >> in our headlines today, google is reportedly rolling out a service to store kept on account line. it will let them compete with the likes of a drop box also the service could be announced as soon as today. it's going to be called google drive and it will be offered with both free and premium for-pay versions. storing stuff in the cloud, are you in to that? >> i'm a drop box guy. >> sucker. >> i'm not a sucker. it's life changing. >> do you do instragram? >> i do in-a gri do instragram.

drop box will change your life. walmart losing $10 billion of its market value yesterday. that comes after investors citing concerns that briry investigation in mexico could be very costly and hinder its plans to grow. two u.s. lawmakers launching their own investigation into those allegations. and in mexico, the frontrunning presidential candidate and lawmakers there also calling on local authorities to investigate that came after that "new york times" sortory. this is just perhaps the beginning. in washington, senate committee is holding a hearing on the collapse of mf global. according to prepared testimony, the trustee for the failed commodities brokerage, they'll say he supports civil fines for executives when their firms lose customer money even without proof. and this is interesting. that they knowingly broke the rules. the trustee is tasked with recovering as much as possible for former mf customers. >> where do they get it?

i saw one of the congressmen leading the charge saying that they should be taking back bonuses from -- clawing everything back all the way. >> this is like the card with madoff. find all the money and get it back. but it also create this is whole other thing, who is the net winner, who is the net winner. interesting issues always. >> but it makes sense. the idea that you're getting bonuses whether or not there was any wrongdoing will. >> absolutely. >> also apple today, this is probably going to be the biggest news of the day, apple due to report its miss cal second quarter numbers after today's bell. p let's get to the core of apple's business, if you like that little play on words. ben, let's talk about what you're expecting to hear after the bell today.

>> i think it should be a pretty good report. we're looking for iphone sales of 33 million which is above the street. and just launched the new ipad. and this could really propel a little bet of up side to the quarter, as well. i don't think that you see as much up side as last quarter which was frankly staggers. there was an extra week also last quarter and no extra week this quarter, but nonetheless, i expect a solid report. >> so the last couple weeks stock not good. that's been obvious. any chance that this whole situation disappoints you, that people have not run out to buy the ipad 3 or as many iphones as people expected or is the retreat in the stock a function of people saying let's hold our fire and watch tim cook deliver the results and it will rocket back up tomorrow? >> there's a lot of reasons for the sell off in apple. the questions is around

qualcomm. also subsidies of verizon, saying they're looking on cut subsidies as well as those fears. and many other fears. apple is a well owned name. and you can have these kind of cycles where it has a big correction. it's corrected many times in its upper trajectory and always rallied back. our big thesis is within six months of the launch of a new product, stock's a winner. goes up over 30%. we still think the iphone 5 ships by the fall which is the eye on the prize. and a lolot of the near term st could be noise. but we respect the stock's volatility and are here to answer your questions. >> ben, good, because i have a couple. apple will print this number later tonight after the close. at and t will report this morning. will might go come out of the at&t earnings that could have an

impact in terms of what we may see later today on apple? >> well, at&t will give their iphone activations and we'll be looking for the trend will sequentially. remember, apple launched its phone in china and launched in the u.s. way before that, so we should see a downward tick in the activations from at&t just like we saw at verizon. but we i think verizon made up with a lot of that with the launch in china. also whatever they say about subsidies. however, i would expect at&t not to say anything worse in an what we heard from verizon last week. >> and you mentioned your iphone forecast and he sayou said we w ahead of the street. there seems to be a huge dispersion between the printed numbers and what you and your competitors have been telling

clients, the so-called whisper number. why is that the case and what do you think the real consensus numbers out there are? >> it's hard to figure that out 100% because there are so many numbers at apple that people key on. eps is sometimes down on the list. there's the iphone number that people think is important, thip number, and then the gross margin number, as well. >> so which of those three numbers is the one that most people, the biggest investors you talked to, will key on tonight? >> it's all if you add the eps plus the guidance and whether people choose to believe it. apple is usually conservative, they usually guide flat to down. and if they say something about a short annual which would get people worried, if they say something about maybe a product

transition, which i don't think they'll say. but those things could get people worried. but in general, we think people are looking for up on the iphone number. we're at 33. the ipad number, people are expecting a strong double digit million number. and then obviously you ask why is it the case with apspell p there is no other stock like this in the large cap arena where numbers are constantly moving. we started out way above consensus and now people have blown past us. it's hard to keep up. >> ben, everyone will listen to this call this afternoon. do you think tell cook will address, a, potential itv, will we hear anything about that, is he going to touch the dividend in terms of the mechanics of that, and even china in terms of fox con and work conditions. are those conditions that will

come up? >> i think foxconn will. i think he'll be very unfront about that. they've already done their dividend. i think that we'll just -- we actually won't hear much about that, they'll stick to what they said. and what was the other thing you mentioned? >> tv. are you a believer? >> i'm a believer, but i think it's coming next year and i think his silence will be deafeni deafening. i think he'll say we don't comment on new products which is pretty indicative that there's something in the works. we don't know quite what it is, but we think it could be substantial. and coming next year and at the want to get your content. so they're probably in touch with many media companies. >> ben, thank you so much. >> appreciate it. >> if you have any comments or questions about anything you see here on squawk, go ahead and e-mail us at squawk at cnbc.com. we're watching the twitter feed, too. @squawk cnbc. i like this song. when we come back, earnings is a

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let's take a look at the board. dow component united tech knowledges posting results a few minutes ago. $1.31 a share. revenues were a bit light. let's head to the futures pits in chicago and ira harris. good morning, ira. you saw you some earnings earlier today. you saw what happened over in

europe. what's the focus came, is it back to u.s. earnings or still on europe some? >> it will be europe. of course apple late today. but the market is starting to change its focus as we're starting to look more especially aft after the french elections and the fed, more importantly tomorrow's press conference with bernanke to see just how much attention the fed is giving to the european situation. but you would caution we're looking at the two year german note which actually was yields his than the japanese two year yesterday, about nine basis points. and that should cause a lot of concern for people because germany which is the most robust of the economies at nine basis points on the two year shows you that there is -- that people are really running for safety in europe. >> and we had a strategist on earlier in the hour and he said, yes, europe, you've got all these problems, but really investors should be piling in to

u.s. equities because at the end of the day while that's great in term of being newsy, the equity market is so undervalued. does that make sense to you? >> yes and no. because when we see europe, we get that effect which is a plas sif weight on this market and the european economy is every bit as big as the u.s. economy. but what he's saying is right as you know probably as well as anybody, how do we value earnings in a zero interest rate environment. and that's where we're at and that's what's causing so much disso d dissodance. >> we had an analyst on talking about the expect stations are for p and he wiapple. can it be a single driver for the equity markets if they come

out with a huge number and taup guidance later today? >> i think you you and i would agree no because if that's what the locwhole economy is based organization we've got other problems. the energy sector is critical and if we're not firing on on all cylinders, we're really having some problems here. but the market looks to hang its news -- it's news driven so it needs good news. you'll probably get it from apple. but they cannot be the only story. if that's all that's moving this market, we'll really are rub n into trouble in the fall. >> becky, i snuck my way into the control room. and andrew, did you put these dunkin donut -- here i am standing here, you're like dunkin everywhere today. what's up with this? >> because i got my whole box

right here. this is just, you know, we're advertising today, but i don't know. are you eating in there? >> we'll see when i get back to the desk. >> all right. gary, you're allowed to come back to the desk. we'll let you back. when we come back, we do have some of the stories that have us squawking both on camera and off. plus gary has a little breaking news on the wardrobe front for andrew. this is definitely an example of breaking news being used. and tomorrow, we have the ceos of auto nation, ely lie, and mohamed el-erian. a lot going on tomorrow. stick around.

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>> the father-in-law typically nopes the right answer. >> i didn't think you'd want to be, though. but anyway, fascinating article. >> becky, i have known mr. sorkin for many, many years. andrew i've helped up out on a number of things, stories over the years. i didn't ask for -- too big to fail, i did help you with a

couple things. >> very helpful. >> andrew has never given me good investment advice, he's never given me any kind of tips in terms of anything. but i will say, i will say about a couple -- was it a couple months ago -- >> a couple months ago andrew mentioned to me off camera, he said i got to tell you something, men's undershirts always a problem. if you wear them, they sort of stretch out, they bulk. and you say to me there's a company, tommy john and i thought tommy john yankees pitcher, tommy john surgery. went in one ear and out the other ear. i'm reading something that said this is the most revolutionized product -- >> you didn't believe it when andrew told you, you wait until you read is somewhere else. >> i'm reading it and i must give you complete credit. >> are you wearing one? >> i am. >> you found -- there's very few products out there. you -- in my mind -- this is breaking news.

andrew ross sorkin, the con owe sewer when it comes to men's undergarments gave advice that is truly a garment that made a difference. >> the better part is you didn't believe it when he told you. you had to read it somewhere else. >> it makes a huge difference. how did you find can't in. >> i think my mother-in-law. >> we're talking about father-in-laws and mother-in-laws. >> very expensive. >> if you wear men's undershirts, worth the investment. >> coming up, we're going to welcome john huntsman, we'll ask him what undershirt he's wearing. he's worn many hats. china ambassador today is crowned our guest host. stay tuned for that and a lot more. more. presenting androgel 1.62%. both are used to treat men with low testosterone.

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the economy, jobs and business opportunities. former gop presidential candidate and utah government john huntsman sounds off. >> storm clouds forming over the economy. what market master roger altman is seeing that's got him very worried. >> and the results are in. find out how the nation's top economists and money managers are feeling about the fed. the exclusive answers you won't find anywhere else are just ahead. and the second hour of "squawk box" begins right now. welcome back to squawk this morning. it's kind of like a cocktail party happening in the morning

here. i'm andrew ross sorkin along with becky quick and steve liesman. the fed gets set to begin its two-day meeting. we'll get prices on housing this morning. new home sales at 10:00 eastern and the fhfa reading of home prices shortly after 10. united continental said to be near a deal to buy more than 100 boeing 737s, that's according to the wall street journal. it would mark a win in its ongoing battle with airbus. and james murdoch is testifying in a london inquiry about media ethics and says he's assured news media ethics were being followed. the futures now are looking good and positive today. the dow looks like it would open up about 32 points higher right about now. becky. >> andrew, thank you very much.

cnbc has polled the nation's top economists who follow the fed and we have the exclusive results right here as the fed begins a two-day meeting. steve liesman joins us with the results of the april survey. steve? >> i'm in the exact same spot andrew was in. we changed the back drop. magic of television. >> increasingly, this is interesting to me, the fed believes in this late 2014 guidance on rates being low. let's take a look at what the numbers say. we polled 53 economists, wall street fund managers and strategists. will there be more qe in the next 12 months? 33%, the same number as last month, saying yes and the no number, you can see 56 down a little bit. why is that? a little bit more increase in the don't know/unsure. follow that don't know/unsure as i show you these results in this

age of transparency we're seeing more of this don't know/unsure. of those who believe there will be qe, 65% of that group looks for it to happen in june. the amount about what it was in the prior month, around $450 billion is the average amount expected. what else does the market expect the fed to do? again, not much. only a quarter of our respondents think they'll extend operation twist when it ends in june. sterilized qe, reduced interest rates on reserves, only 15% and start from the bottom, go up from the top, 42% say the fed will do nothing. what a great move, that was terrific. now, do you believe in the late 2014 guidance from the fed? in march there was less belief that you would have thought. only 40% thought they'd stale low through 2014. now that number is up to 49. we're about split in the market. more believers in terms of the fed staying low.

does the fed have policy right now? what happened is the market seems to have moved more towards fed chairman ben bernanke. is it to accommodative? 53 in march say they were. take a look at the april results, 36% now, more than half believe the fed has the policy just right but there is criticism of the federal reserve. we asked about this issue, about the issue of whether or not this late 2014 guidance is something that is a good decision or is it a mistake? 21% are unsure about the 2014 guidance. any time the number gets over 10% unsure, you know you have a problem. again, let's do the long stretch, up 42% say the late 2014 guidance is a mistakes. tune into cnbc's coverage tomorrow of the interest.

we'll have coverage all day long. also, we asked our survey respondents whether or not they thought fed chairman ben bernanke will be here after 2014. >> they think that guidance for 2014 is a mistake because they think it too aggressive? >> well, we asked. you have to pick your questions. we said is it a good decision that has helped lower interest rates or a bad decision that could undermine the fed's credibility? 42% picked that one. you can't solve for every question on a binary question like that. >> meantime the job market and economy will be among the critical factors in the presidential race. joining us is john huntsman, the former gop presidential candidate, governor of utah. he also served as u.s. ambassador to chans from 2009 to

2011 and currently sits on the board of caterpillar and ford. >> and a great company called huntsman corporation. >> of course. thank you for joining us today. >> how often do you get to sit back, roll up your sleechs and talk about the situation of the day? >> do you want a donut fod? >> oh, no. you automatically have flashbacks to new hampshire. >> andrew's eaten four of them. >> only 180 calories. >> we want to talk to you about the economy and the presidential election. i'd like to clear up remarks you've made the other night that have gotten a whole lot of ink. i think you said there was something that you said about the gop and comparing it to the communist china. at least that's what some of the articles have come out written.

>> i thought this show was about the truly important issues of the day. >> truly but this is something that's getting so much ink. >> and it really shows how the nonsensical loom very large in some minds. you're talking for at least an hour on the issues of the day and reflecting on where my party is and where it might go and i reflected and shared a story of where i was disinvited to one party event for speaking out for the need for courageous, bold, visionary behavior on the part of a political party, in this case the republican party and if you don't get it, there's going to be likely an attack from a third party and i was disinvited from an event. >> what was the event? >> it was a large donor gathering in florida. i mean, that was completely inconsequential. but i likened it to the other things i'd been disinvited from

in china from another party for speaking out. but the bottom line being, you know, in order to win, a party must have a big ten approach, must be inclusive, must be accepting of ideas if they happen to fall around core themes, a confident foreign and defense policy abroad and that's kind of where traditionally the republican party has been. i love to see it get back to its core themes because i think that's where a lot of americans are. >> i agree with you. i think that there is a majority of people in the center who don't feel they can connect with one party or another. is that something you found on the campaign trail? >> you find the fastest growing party in the country today is the unaffiliated party. the young people are just not affiliating with parties anymore. they're unaffiliated. they're looking for a candidate specifically, they're organizing and rallying around specific

issues. if you got half of the american electorate today which is unaffiliated, which is the case, you got to say what do parties do to remain relevant? what does a duopoly do? you have to be at the cutting edge of ideas and argue particular late a vision that is jermaine to people's lives. >> when i look at washington now, it seems things are so bitter now and there's no movement at that takes place on either side. you watch people who used to be in the center who would be people who would cross party loons, someone like a judd gregg or evan bayh and they've gotten disgusted and walked out. >> that's right. people who used to get the handoff from capitol hill left or right and synthesize those ideas into doable legislation, they're goond you have those sides with their backs against

the wall playing the blame game and a lot isn't getting done. the trends going forward will be fair live unpredictable. you have the voting public reaching the 212 degree boiling point because, for example, we don't even have a budget for heavens sakes for three cycles. the most fundamental of expectations from capitol hill aren't being delivered. >> here's a romney question for pup and it goes -- but it goes to this issue of being moderate or being in the middle and what's happened. during this campaign people sthsaid that he started closer to the middle. people said you were in the middle and maybe that was part of the problem, can you discuss that if you want, but that during this campaign he's had to move more to the right and others suggest he's moved more to the right for the purposes of the campaign but ultimately if he gets the white house, he'll move back to the middle. do you buy that? >> well, you can speculate all you want about the political gyrations of one's journey from

start to finish, whether they go left, middle, right. the issue today is leadership. i think the american people are looking for someone who is going to speak out on a pathway forward to get this country moving again. period. end of conversation. because this nation could be at full employment. this nation could be back on its feet economically if we had some leaders who were willing to stand up and articulate a pathway that spoke to certainty, around taxes, around energy policy, around foreign policy, around education policy. it's all totally doable. we're shooting at each other, we're wasting a lot of time and band width on the nonsensical. the market is saying we want to get back on our feet, back in the game, we're a entrepreneurial society, the greatest the world has ever known. give us a chance, give us certainty. >> there was an article in the

wall street journal this past weekend about people leaving california and jobs leaving to utah. i'm a dual citizen, new york and utah. i've seen the growth since 2002. you talk about employment opportunity. why has utah in this case taken millions of jobs away from california, technology jobs? what has the state specifically done to bring those jobs to utah? >> it's very simple. there's a clean regulatory environment. there is certainty in the marketplace, there is access to available labor, there is a business friendly government for the most part. it was a great joy serving as governor for the state of utah because i could say the competitive environment in my neighborhood included california. i loved that part because had you all sorts of opportunity to draw from in california in terms of bolstering and strengthening our own economy. you need strong educational institutions, you need certainty

in the marketplace and you need a decent tax policy. we delivered a flat tax when i was governor, we fixed the tax code and cleaned up the operating environment and it became very attractive. then it's written go b in the newspapers, the state is on the move, recognizing what it needs to do to be competitive longer term. people take note. as companies makes long-term plans they say i want to be in a location that's friendly to my aspirations long term. >> you mentioned full employment. there are a lot of questions about what full employment is today. hopefully can you hope us get to the bottom of that, too. >> we'll talk. >> still to come, we're going to be connecting with at&t. we'll get earnings and comments from the ceo of at&t mobility. but before that at 7:30, squawk market master roger altman is turning sour on the state of the nation's economy.

maybe you've got views on this, mr. huntsman. he joins us next to explain. squawk returns after the break.

take a look at the futures. they are indicated higher after a pretty severe down day yesterday. s&p futures up by just over 5. we have earnings continuing to

roll in through the morning. radio shack just out with its numbers, reporting an unexpected loss for the first quarter, losing 8 cents a share for the quarter. analyst himself been looking for a profit. analysts calling the quarter challenging. the bid is at 5.65, ask is all the way up at 6.14. can you expect to see that shake out before the market opens. >> while china may have some of the biggest and most profitable banks in the world, many of the state-backed entities are hungry for capitals thanks to an aggressive left-handing spree urged by the government. we have richard haas and mr. huntsman here this morning. great to see you, richard. we've been trying to get a gauge to understand what's going on in china and understand the economic impact if there is a problem around the corner. we've had a number of people

come on the set and tell us that china looks good but it really isn't. and i'm thinking of our famous short seller, jim chanos, who told us there are problems at the banks. how big a problem do you think we may have confronting us or is there a problem at all? >> there are structural problems in china. this entire export model can't last, can't couldn't on exports to europe or the united states at the same level. and some top of that you've got this rickety political system that's not nearly as dynamic as the economy. so you've got tremendous challenges facing the leadership. and as we've seen with the leadership scandal, you've got

two problems. underneath that, there are serious structural problems in this country. >> john huntsman, would do you business in china? >> i would. you have to develop a relationship, learn how business is transacted on the ground. this a long-term play. you don't go in and succeed and expect to be profitable overnight. profitability in u.s. companies in china is pretty high. anyone who has done business in china would say it's a long-term play, the marketplace is expanding, the consumer population is very quickly. >> richard, you mentioned the scandal that we've all been reading about for many weeks now about this murder for lack of a better -- have we described it bed murder. >> well, we'll see what comes out. >> in terms of the -- you talked

to lots of different leaders both in business and politics around the world, is there a sense there is going to be a pullback as a result of all this? >> i think there's already you are seeing a slowing in china. one question is what is the floor of the slowing? does it get into the 7s and all that? that could cause political problems. i don't think the rate of growth can get much slower than that. it's been fairly robust rates of economic growth, increased standards of living for more and more chinese, shift them from rural to urban areas and people have been willing to live with the relative lack of political freedom. if the economic growth begins to slow, then you'll probably see a little bit of repression in order to manage what will be the greatest friction of chinese society. but it's still a long-term, very

good bet but you have to at least anticipate bumps in the road. it's not going to be a smooth linear future where we'll extrapolate for the next three decades from the last three decade. >> held help me understand going from an export economy to more of an internal economy, if you're going to replace european middle-class consumers, you're talking about a fracture of the wealth. how do you replace that european demand internally in china? how do the numbers work? >> that's going to be, if you will, the big challenge facing the chinese leadership. one will be to provide a little bit more of a safety net so the chinese people themselves don't have to save as much and can begin to consume more. >> i want to read the governor something. we just about is from "new york times" yesterday. it sfrankly our banks make

profits far too easily? why? one can only go to banks for loans and capital. as we're deal wishing use to get private capital into the sector, we have to break up their monopoly. what does that say about the banking system in china right now? >> it's amazing how wise and outspoken one can become as they're on the way out. they'll be out after having served as prem year. he's to be seen as the economic visionary of the country. he's saying ut time to reform, look at the financial sector and services and beyond. this for a long time has been a bone of contention in the international marketplace, the slow pace of reform within the banking sectors. i want to go back to a point richard sew right earlier and that is we're likely to see

slower growth rate in china. this is going to probably create higher unemployment. investors are going to say i want an alternative. all that easy money that's gone into china. that's where the united states has a huge community to begin winning back our success. >> richard, it a much longer conversation. we'll have to have you in because unfortunately we spr to run. >> we have more to come from our guest host john huntsman. and evercore chairman roger altman will join us. time for aflac's trivia question. on this day in 1990, what some by alana myles reached number

one on the billboard hot 100 list? the answer when cnbc continues. s in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at aflac.com. plegh! sadly, no. oh. but i did pick up your dry cleaning and had your shoes shined. well, i made you a reservation at the sushi place around the corner. well, in that case, i better get back to these invoices... which i'll do right after making your favorite pancakes. you know what? i'm going to tidy up your side of the office. i can't hear you because i'm also making you a smoothie. [ male announcer ] marriott hotels & resorts knows it's better for xerox to automate their global invoice process so they can focus on serving their customers. with xerox, you're ready for real business.

we asked total strangers to watch it for us. thank you so much, i appreciate it, i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money ? if your bank takes more money than a stranger, you need an ally. ally bank. no nonsense. just people sense. mcallen, texas. in here, heavy rental equipment in the middle of nowhere, is always headed somewhere. to give it a sense of direction, at&t created a mobile asset solution to protect and track everything. so every piece of equipment knows where it is, how it's doing or where it goes next. ♪ this is the bell on the cat. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪

now the answer to today's aflac trivia question. on this day in 1990 what song by

alana myles reached number one on the billboard hot 100 list? answer: "black velvet." >> aflac! we're back on this tuesday morning. i like that song by the way. in the news google hitting the cloud, the company to roll out a service to let consumers store photos and other information online. the move turns up the competitive heat on high profile web startups such as and i'm a consumer of it, drop box as well as box and evernote as well as with microsoft and its sky drive service. a lot of people in tech land going to be watching that one. among the other stories we are following -- >> we've got at&t earnings out. dow component out. the numbers are better than

expected. it looks like 60 cents a share versus the 57 cents the street had been expecting. revenue right in line with expectations at $31.8 billion. the stock is indicated higher. the bid is at 30.75, the ask is at 30.94. we look at the dow to see if that's getting a little boost. we're still indicated as where we had been before. as you look through the numbers here, randall stephenson, the chairman and ceo making comments about they still have what he's calling terrific momentum in mobile internet. the smartphone and computing device sales continue to set a record pace, mobile data revenue up 20%. we're talking about that through all these different companies. >> in terms of the transition, you mentioned increase in revenue in terms of mobile data.

. we should point out voice revenue was down 10%, which is a further indication of this transition continues. you know, voice -- it's funny they call it voice revenue, right? >> as opposed to land line? >> yeah. >> wireless income margin was up 22%, wireless ebidta up -- >> 4.3 million iphones were activated, 21% new customers to at&t, 4.3 million iphone. >> they're happy to tell you that's 1 million more than verizon sold. >> still a big competition -- >> you an iphone man, mr. huntsman? >> right here. >> you got rid of the blackberry? >> got rid of the blackberry.

i'm a new man, what can i say? >> you at&t or verizon? >> at&t. >> they'll be very happy you helped their cause. >> did you do it their quarter? >> i just transitioned. >> you're one of the numbers we're looking at. >> i was thinking where my minor contribution purchase have shown up in those numbers. >> also hershey reporting better than expected results for the first quarter, earning 96 cents a share, well above estimates of 81%. among key factors, price increases, which didn't hurt de demand. lexmark beating street expectations and coach beating the street by 2 cents a share.

and yahoo! has ended talks on selling back its stake in yahoo! japan with no agreement. the two sides are holding out the possibility of further talks. the potential sale is part of yahoo!'s efforts to try and raise cash. >> it's the nuttiest thing ever. >> you have 3m numbers. just looking through the numbers here now the segment numbers and the one thing that stood out was they -- the company says they continue to expect 2012 organic sales volume growth of 2% to 5%. thech say continue to expect. i just want to confirm that in fact is what the previous guidance was. >> okay. >> it looks like it's in line. >> we will keep an eye on that and we'll bring you some more numbers as they come to us. up next, a market master turning sour on the economy. plus "squawk box" connecting

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welcome back, everybody. we've been talking about the earnings that have been hitting again. we have three dow components out tonight. it looks like all three of them beat expectations. very strong earnings across the board. 3m is reporting this $1.59. they mention a charge of 4 cents a share. by any measure they handily beat expectations. the street was only looking for $1.49. also talking about how they're tightening guidance. >> they say the previous range was 6.25 to 6.50. the mean number was 6.32 to a year. >> 6.35 to 6.50 which is above where the street is. the street is only 6.32. you'll probably see positive guidance. also at&t earnings, 60 cents

versus the 57 the street was expecting. they had very strong sales of their smartphones. the ask was 31.25 after closing at 30.61. utx is also indicated higher after it came in at 131 versus 120. now he is looking at economic clouds gathering. roger altman is the charm and founder of evercore partners. roger, what do you see that worries you these days? >> hi, becky. three or four weeks ago it just seemed to me that conditions were in place for a steadily improving equity market environment for the rest of this year. the macro environment seemed to be stabilizing. one of my own favorite indices the yield on the ten-year treasury had risen to about 225,

indicating to me growing confidence in the overall macro environment. but now it seems to me that a series of old and big question marks have returned. and i would particularly note europe, basic weakness in the u.s. recovery, and we've talked about that a lot on this show, and some growing talk and uncertainty about the giant fiscal cliff or so-called fiscal cliff at the end of this year and the degree to which it will cause market volatility well in advance of that. if you look at the ten-year treasury today, it's in the low 190s. i find that to be a proxy really for risk-off or the fear factor, whatever your favorite phrase is and a fundamentally bearish signal. >> roger, the things you're pointing to, though, probably haven't changed all that

drastically as much as the perception of some of these might have changed? this is that what you're talking about, the animal spirits and how it's flowing? >> yes. because perception is reality. perceptions on europe on behalf of all of us ebb and flow. but today i think the perception is the crisis is again front and center, not just in terms of bond yields and we can all see what the spanish bond and i tallion yield and political tumult, which seem to be a rebus to you a sfarity, the spreading recession, you can see it in the purchase manager's index out this morning and a sense that the crisis is boiling up again. and then in terms of the u.s., i'd like to see it differently but the consensus forecast, at

least the latest for 2012 is about 2.4%. >> right. >> and that by historical standard continues to be continually weak. >> our guest about john huntsman, how do you much up these two pictures? >> i think there's something happening in the marketplace. and roger would be in as good a position as anybody to be age to talk about the sustainability longer term of what we're seeing in the returns. they'll be good, it will continue to be good and it will surprise pleasantly the marketplace? is that sustainable longer term? for example, energy prices. the fact that a lot of our information -- ilt got to be the translational equivalent of about $10 barrel per oil. how does that factor in some of

these improved earnings? is it temporary? is it sustainable? those will be the rogers out there and that is a looming crisis with iran and how that might rattle the marketplace, what it would do, even the very talk of it and how he sees that playing out as we move toward november and beyond. >> well, governor, that's a good question. i think there are two giant possible exoj nous factors which could be very destabilizing, though i don't think they're very much in the market right now. one, as you say, is iran and god forbid, for example, that israel moves militarily on iran or otherwise the iranian situation blows up. and the other is an outright implosion in europe. i don't think either of those is, as i say, playing through

the markets right now but they are big risks. >> okay. roger, i want to thank you very much for your time. i'm not sure if you were having problems hearing at the end. >> no, i heard it all. >> thanks for joining toud opinion again, governor huntsman will be with us for the rest of the program. when we come bark the man who brought the iphone to at&t first. he'll talk to us about earnings, wireless and state of the consumer. squawk will be right back. tomorrow "squawk box" is on ceo call. we'll talk earnings and outlook with the ceos of eli lilly, sap, windham world wide and auto nation. plus a trio of squawk automakers. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern.

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all right. we've been poring through at&t's quarterly results. john ford joining us on the newsline with the company's results and what they may tell

us about apple's iphone sales. what do you see? >> at&t says they activated 4.3 million iphones. that is down about 43% from the holiday quarter. put that in perspective. people thought that verizon's number was weak, last week they reported 3.2 million iphones. that was down just 31% from the holiday quarter. i was saying last week i felt like analyst expectations were getting a little of out of line with reality. they're expecting in the mid 30 millions in terms of iphones. these numbers will make it really difficult for apple to get there. based on these numbers, you'd expect something in the high highs, 30 million would be a go number for apple based on these numbers. so that's really what we're looking at. is apple does 30 million iphones, that would be down just 19%. that would require international

sales to really be unusually strong. >> john, we have an analyst on the program earlier this morning. 33 million, is that the consensus numbers in terms of iphones for the quarter tonight? >> that is a pretty good number based on what people are expecting. they're looking for revenues to be at around i think $36 billion and when you consider where iphones are as a percentage of apple's revenue, they're a big driver. that's what you would need. >> john, very helpful. thanks very much. guys, this gets back to this whole issue about what is the real number out there. great work by john there in terms of trying to read through it on what we may see tonight. >> let's talk more about the at&t number and the wireless business. joining us first to discuss smartphone technology and the future of the consumer, ralph is the president and ceo of at&t mobility. it's great to see you this morning. i don't know if you had a chance to hear what john fortt was saying about expectations of

iphone sales. did the iphone sales on your side meet your expectations? you have a new consume who are just helped you this quarter, governor huntsman on the set has his iphone and he bought it from at&t no less. >> i love governor huntsman. thank you very much for your business, governor. weep love customers like you. >> help those earnings any way i can. >> we had a terrific quarter. we emeet eps earnings estimate. we did it on the back of our wireless instrument which sold a trillion amount in the quarter. it beast lat year's first quarter record. and what is really significant and i wanted to talk a little built about that is the increase in smart bones that we have seeb year over we're in at the end of the first quarter of last year to 41 million, an increase of 10

million smartphones. that's being driven by a phenomenon i call the mobile internet. if you looked at the smartphone shipments that took place last year, for the first time ever smartphones exceeded pc shipments. that's why you're seeing this great growth in smartphones. smartphones increase our data growth and they lower -- that's exactly what we reported this quarter, increased subscribers and lower turn. >> you were the often who famously brought it to at&t and were all under all sort of secret wrapts when you brought it to him. one of the questions have i is the enormous subsidy it pays people like governor huntsman, some clo p reports it's close to

$400 and we just heard verz icon and trying to find alternatives. >> house of representatives does at&t think about that? >> i think we're open the honor in trying to figure out if customers loved the subsidy model. if you look back at our enings before we had the iphone. today we're impropertying 42% margins and 1.1% churned. weep think the ones to americans like but neftless we look to lower -- >> are you saying they like it when you give it to them for free? >> that seems to be the model the customers like, to give a

new phone when the new one -- >> but -- >> the nokia lumia is a terrific deech vice. it has a very low cost with great features. >> if verize onnon trying to break away from that subsidy, would you follow suit? >> we are always looking at ways to interview good, innovative model. the company wouldic trito take a yes on that. but governor huntsman has a question as he's clutching his iphone. >> as a consumer you're always looking for the next big thing and what you're hearing from consumers in terms of what they want around the bend that they're not getting today. if you had to guess over the next couple of years, what will be the next big thing we'll find when we tune on tho these phones? >> what we're hearing from customers is something revolutionary. two years ago they were telling us the technology was too much for them, it was too

complicated. now we're serving customers in their relts are dra so the what we're seeing in the consumer and indiana price base is people using mobile technology in business to improve their -- i think one key area is what we call digital guardianship where you can monitor your home as -- u feel like you're at home no matter where you, we think that's going to be a terrific new line of business we're closely looking at. >> i'm not sure if andrew to the an answer to the orj nat question about apple. the 4.3 million phones that was reported today, how did that compare with your internal guidance, your own inmodeling in

terms, we had an that's what i mentioned, this nen om none of the mobile internet is going to continue to drive growth in our businesses more and more people want smart phones. in the first quarter of this year 778% of our sales were smartphones. >> ralph, we're going to have to run in the moment. have you seen the next iphone 5, even if you can't tell us about it? since you saw the first one, i figured you might see the next one. >> i was lucky enough to see the first iphone but i can't comment on what's coming from apple. i have the latest and greatest folkia handset right here. $99, go check it out. >> at the risk of upsetting your suppliers, what phone are you keeping in your pocket today? >> i'm carrying the latest one, the nokia lum ina.

>> i don't know if the apple people will be happy to hear that. >> i always carry an apple as well in my bag. >> i warn you. ralph, we didn't get to talk to you about blackberries on the show. ne >> and coming up in the next hour, what could make your portfolio bloom this spring. and at 8:40 this morning, gas prices, the jobs pictures and where this economy is headed. we have montana governor brian schweitze schweitzer. squawk will be right back.

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the government taking april showers bring may flowers. this year the question is are investors selling before may and going away? >> under fire again. >> i was not aware of that at the time. >> the murdochs called back in to testify before lawmakers. >> you thought your commute was bad. you haven't seen anything.

chinese roadways are so packed the government is now auctioning off license plates. a $10,000 price tag. you'll have to see our live report from beijing to believe it as the final hour of "squawk box" begins right now. ♪ here we go. welcome back to "squawk box" right here on cnbc, first in business worldwide. i'm becky quick along with andrew ross sorkin and gary kaminsky. our guest host is john huntsman, former ambassador to china, former candidate for the gop nomination, member of several boards and of the huntsman group. take a look at the quickly at the u.s. equity futures this morning. much better picture this morning in you're a bull.

the s&p is up by 5 points above fair value and we do have three dow components that came out with quarrel results just over the last hour and a half. united technologies earning $1.31 a share when you strip out items, 11 cents better than what the street was expecting. the bid right now is below where it closed yesterday, $79 versus a close of $79.75. the ask is up at $81. 3m beating the street, an even better enough than you might have expected. $169. and that company raising and tightening the guidance. the street was only at 632. look at at&t. it came in with earnings of 60 cents a share. that was 3 cents better than expectations. revenue did come in just about in line. that stock is indicated to open higher. perhaps the fame of the day,

though, apple. >> i think we can conclusively say now as a general q1 lookback, earnings have clear lirr exseated the 1%. >> every day we sit here and the numbers are grt. >> we say what's expected overall 500 earnings, i don't want to say blown away but clear lirr exseated. maybe the performance of the equity markets was justified if you're looking at earnings and a multiple of s&p 500 earnings. >> dunkin donuts -- >> you're on a sugar high. >> in the netherlands the government raising $2.6 billion. that was within its expected range. that sale comes day after the

dutch government collapsed in a crisis over budget cuts. let's get a check on the european markets, see what's going on over there. can you see the ftse is up, as is the cac 40 and the dax. not a bad way to start the morning over here. let's take a quick look at the euro for those planning to travel to across the pond. are you traveling across the pond any time soon? zlt other pon >> the other pond? you're going to asia? i'm supposed to go to paris. i now watch this every morning. trying to figure out how much the croissant is going to cost there. >> and we're joined now with more from london. kayla. >> andrew, the inquiry just but the last couple hours since i joined you guys have focused deeply on an issue you and i

both know well and it was newscorps takeover. the question was whether political coverage was motivated to get that put flew? if you look at the timeline discussed, here's what they're talking about. in august 2009 is when james said they first started discussing real plans to take over the remainder of bskyb. murdoch reported the son did have plans to endorse the candidate for the prime minister spot. and in june they approached bskyb with an offer to take over the company. here's how murdoch said he would describe the way that timeline took place regarding the regulation. take a listen. >> i don't think government's approach to the bid was something -- which governor's approach to the bid was

something that was necessarily high on our mind. between new york and london we had legal and blackaffairs executives working tight live on this and they made an assessment from a regulatory perspective, there was, you know -- it was a sound transaction and that we would be able to get it through. >> so the question was not necessarily whether they would get the transaction through but really how long it would take. we know with a lot of these european deals, they can take a long time. look at the timeline once the regulation started set in. it was november 2010 when the european commission opened its investigation and later in november james murdoch met with politician who is backed the deal from the conservative party to talk about the priority to get the deal through. in early 2010, there was the removal of the secretary of

state and then two days after that they went to a different at brooks' house. you obviously cannot proved any sort of timing of the deal. they tried having a mega phone at all affected a politician's want to meet with you to push your bid through? he said, no, he didn't think that but he did admit most of the meetings with the politicians were about the bskyb bid were. we do have an outline of the equivalent of subpoena media and support when they heard the james and rupert in july and then james in november and now we were told that report was coming out next tuesday.

it looks like we'll get the first report and that's coming next tuesday. >> the fmoc is beginning a meeting in washington. a new survey finds wall street is not expecting additional quantitative easing. but economists believe the promise to keep interest rates low until late 2014 is a real one. liz ann, we've watched the markets go through a little bit of a swoon over the last couple of weeks. do you think that sell in may is getting moved up to sell in april? >> it might be a little bit. remember, we had a 30% rally. most of the sentiment data showed we had gotten to an elevated number level of optimism, it tended to increase vulnerability and russia back in the spotlight. it's not a big surprise to see

consolidation. i think it's a little bit too soon. you guys touched on very, very stong earnings before but i think not only value lagss but earnings, notwithstanding what's going on in europe. >> with earnings so strong, why do you think the issue in europe -- >> we dealing with liquidity and it has implications for the u.s. economy. in the last 26 weeks, about going 26, 27 consecutive weeks without missing any economic numbers relative to expectations, the last couple weeks have been a little choppier. we have our sights more on the macro and less on the micro. it's there to prevent the correction from being more severe than it otherwise would be. >> good morning. roger all theman joined us, he

pointed out the ten-year and sees a 1.95 print. that gives him a concern given what we've had in earnings that you tib to see this huge move into this risk-free asset. what does it say to you when you look at the ten year if. >> we've had this several times. i think there's muscle memory here in terms of investors in the market. in mid 2010, mid 2011, many of the same indicators dipped into a level that i don't think suggested any kind of real risk of a double dip recession but significant enough sort of mid cycle slow done and i think we're going through the same thing. i think there a lot of offsettings now that didn't exist back in mid 2011 and mid 2010 that make this a little bit different but nonetheless we have the vigilanty's vuch playing over in europe. even the slightest amount of tend ni-- weakness.

>> there must be some underlying artificiality in the market that investors ought to know about. help us understand the pockets of artificiality that might be giving rise to some of the these returns, currency issues, low energy prices, whether it's natural gas or other inputs, other market anomalies that might be artificial that we want to all be smart about in terms of where in might take us in the next quarter or two. >> you know, governor, it's an interesting use of a term. i think some of them might indeed by artificial. i'm not sure sure on energy prices. currency i believe we're going to see more strength in the dollar. the prior weakness may have been a shorter term benefit to multi-national earnings that isn't going to be lafsing and

then of course the productivity story and efficiency story is wayning a limb little bit. it's been to the again pit of corporate earnings. i'm not sure sure the earnings is dead. the nature of the math is going to suggest that. you had an 81% all-time record for earnings. the bears will argue analysts simply set the bar too low when there was macro concerns in the last half of last year. that said, even into second quarter with a 5% year after year expectations, we're looking at the strong, decelerating rate. regardless what has driven that, that is sill a positive story to the near and medium term. >> the street is still basing its forward earnings look. >> and even on five-year normalized earnings, a four and a half year lookback and two

quarter forward look, right about a 19 multiple, which is not as inexpensive as 14 on ford earnings but in a low-inplace environment that's still about a multiple point lower. even if you're more conservative valuations are still somewhat reasonable. >> and the biggest market externality is what? >> i think there's always that exogenous risk of military eruption between israel and iran and the impact that would have on energy prices. i'm not so much about the economic situation in europe because i think that's largely built into exexpectations, a pretty -- if we're wrong about some likelihood of a bank crisis, that's not priced in the market. >> why was technology your only overwait in there?

you sound very positive. >> i kaubd about the elevated environment we set up some concern in the near term for the market. so given that short-term concern, not that wear timers or take the card more to the vest, which means you move more toward a neutral stance until some of those exsess work themselves off and they haven't quite gotten there yet. >> liz ann, thank you very much. it's great talking to everybody. gary, you wanted to mention something? >> we've mentioned a lot of others tonight, lab tech, these are industrial companies and obviously with ksu continue to see upside surprise and positive commentary. so it continues. >> still to come on squawk, call it the oil economy. parts of the u.s. are booming as companies rush to find new

sources of energy. and forget texas. plus, jam jam. we're not talking about l.a. and new york but china. phil lebeau is in beijing. >> you think you've got it back when you're driving to work? huh! dry driving around beijing as we've done the last few days. plus you're getting the chinese driver's license test coming up here in just a bit. in just a b. the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. (sfx: car garage sounds) today my journey brings me to charlotte, north carolina, where i spent the day with geico driver casey mears. i told him the secret to saving money on car insurance. he told me the secret to his car setup. first he adjusts... first he adjusts... (sfx:engine revving drowns out gecko's dialogue) then he... then he... (sfx:loud drilling noise continues to drown out gecko's dialogue) ...and a quarter cup of pineapple juice.

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welcome back to "squawk box." looks like the s&p opened 4 and a fraction high. coach reported third quarter earnings of 70 cents a share, beating the streets by 2 cents. revenues were in line. shares at this point looking -- where are we here? hopefully you guys see tonight board there. radioshack posted loss of 8 cents a share. shares at this point take a look

at the board. and there we are. basically looking down around 50 cents. hershey's first quarter earnings, beating the shares and revenues topping expectations. we'll look at shares at this point. and finally illinois tool works, beating revenues by 2 cents. i'm trying to be in the control room, give you the real time data and look above my shoulder. not the easiest thing to do. >> you did a very nice job. and that undershirt, you can't see it through the shirt. >> that's the whole point, my friend. thank you again. >> tommy john. there it is. >> the world's biggest automakers gather in china this week. that's where we find our own intrepid reporter phil lebeau. he has a bit of news on ford. phil. >> real quick we have breaking news. fitch has upgrated ford's credit

rating to investment grade status. that is significant. it's been a number of years since ford has had investment grade credit quality rating. fitch one of the first credit rating agencies to move ford up to investment grade quality. we're here in beijing because the beijing has been on the corners here in china and that being the world's largest auto market. but we'll are concerned with another one of these -- take a look at china's ought though station versus the unions. that's nothing compared where it's 424 vehicles per 1,000. by the way, people think ultimately it will be in the hundreds here in china and that means even more congestion, in shanghai and beijing, they auction off license place.

over $9,300, that's when you have to pay in order to get a plate to drive your vehicle. here people a license play had to enter a lottery. the rest can't drive their car here in the city. will it ultimately be a drag on sales in big chinese cities? >> that is absolutely a con restaurant on sales but it's a good thing to do because for the population here, it will make the quality of life better. >> by the way, the odds of getting a license plate here in beijing, 1 in 48 -- actually 47.9. 62,000 traffic fatalities here in chan last year. way more than what we had in the united states. and, guys, because of that the chinese driver's license test is not like what we have in the

united states states. it's not just about how and unfortunately a fatality. here's one question for you guys. going to put this to you guys, see if you have the answer. one question from the chinese driver's license tested when carrying a wounded person in coma or in danger of suffocation, they should lie face down, face up, on their side or on their side and faced down. what do you guys say? >> on their side, c. >> andrew? >> can i see the options again? >> you're wrong. >> on their back? >> on their side and face down. face down, face up or on their side or on tlt side and face down. hey, i -- listen, i'm just going by the book here, becky. they say on their side face down. if somebody asks you the

question, you know the answer. >> i would not be getting my license there. >> what happens if more people got their licenses. what kind of trouble would you have in term of traffic if everybody actually got one. forget about what it does to auto sales. >>-the-don't have the infrastructure. they are building it out very rapidly here but, becky, i can tell you, you drive around, congestion is just the way it goes. you take forever to go from one place to another. >> governor, did you have a driver's license? did you pass this test? >> first of all, i'm impressed to hear there's a driver's test in china. i hadn't realized that. it also explains why i went by bicycle. realistically it was about the quickest way to get from point a to point b. j did you lay the bicycle.

>> you've got things conspiring together, which will make for a ve interesting marketplace as we look at china to unfurl itself. but those ford numbers were great. a consumer great, investment great. that's a huge deal, kudos to alan malawi. >> you're on the board? >> yes. >> you've seen quite a bit of improvement come right through? >> my goodness, talk about a turn around story, a few short years of desperation and the announcement we just heard about. that's a big deal. that's a very, very big deal. >> we'll have more with the governor throughout the morning. phil, thank you very much. we'll see more of phil le berroa

little later on, too. when we come back week still have that fed meeting, a flurry of housing numbers out today and we'll see what the traders there are focusing on after all this news we've been hearing. squawk will be right back. for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding.

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welcome back. ben bernanke arriving at the fed in washington just a few minutes ago. a two-day meeting concludes with a rate decision tomorrow at 12:30 eastern followed by a news conference by chairman ben bernanke at 2:15. i wish we had -- remember we used to have remember the brief case indicator? >> there was an attempt at a tie indicator and other things. >> there's things you shouldn't tell from bernanke, you wouldn't want to be able to tell at a poker table. >> coming in this morning,

wabtec, this company if you take a look at the numbers, it's been a very -- look at that bad/ask. this has been a very interesting midcap company, very correlated to economic, industrial growth. like many of the numbers we've seen today, big up side surprises. that's been a great long-term way to create capital depreciation. rick santelli joining us from the cme. steve liesman sitting here on set with us. steve, you started to mention about the indicator or the lack of the indication. what do we expect will come out of the fed by tomorrow night? >> i think we get a little bit of tweak on the outlook for the labor market. it was a little worse than last time they came around. nobody is expecting much. it's a bit like -- i don't know if we ought to call it world war i and french warfare. i think the hawks are looking

for inflation to happen -- they don't want to happen. whereas the doves are saying i think is going to be worse than we expect and if it does, we're prepared to come forward with more quantitative easing. but the status quo, it's that there's an even fight right now between doing more and doing less. >> rick? >> i can't speak for all the boys and girls down here but what i can speak to is most that i reference with this topic believe they're always going to hold out the possibility and that isn't going to go away any time soon. and consider this, just a slight change in sentiment after the march 13th meeting, whether it was the right conclusion or not, potential that less accommodation would be out there, we saw a rise in rates around 240 in a ten-year.

now here we are 46 basis points lower in yield and i find that very compelling on a number of front. i think it gives us a glimpse of how much anxiety there is in europe but i think we need to look to the stock market for the real answer. because one thing i can speak to, steve, as many traders down here believe, if the daf range or the s&p or nasdaq get bumpier, i think bernanke will -- >> i think it sees it as a significant conduit so a big drop in stocks would bring the fed more likely into play here but i don't think it's enough on its own. s 46 basis point on the ten-year you talk brk the fed got a result that it wants as a result of the market believing it's going to do less. it makes me think that the less

the fed does, maybe the more rates will fall. >> keep m mind we went from this level to the march 13th meeting up to the 2.40 area based on the statement and then basically everybody looked around and said nothing's really changed except for more mics, more interviews on more channels, more venues. >> they sure talked a lot in this intervening period. the take away you have to believe bern ski ki is happy with, qe three is less imminent or or more imminent. i'll talk about this when i come back at 10:30, when you look at what's happened to the outlook for que, stocks have fallen with the decline of the belief that there would be additional qe. it seems like at the moment

these two aren't married at the hip that's like extracting from it -- >> i'm sorry, i didn't meant to interrupt. >> earnings will trump everything this morning, steve. >> when you look at the broad outlook, the dow in june and december which we track in the survey, they kind of mirror each other. when the probability of qe3 goes down, the outlook for the down goes down right along with it. i'm just talking about sort of the broad strokes. >> guys, thanks very much. we'll see you both later this morning. we're going to turn now to governor huntsman. >> our guest host today is governor huntsman. we have not gotten a lot of time to talk to you about the economy and where it stands. you have a lot of perspective about this. based on what you're seeing in

terms of orders, where do you think we stand right now? i think there's some mist being coming in are real and i see that with some of the the questions that i'm close to. so there's something happening out there in terms of the early stages of a recovery. the question will be is it sustainable, is it long lasting. and then what will be the public policy response as to really getting this nation where it needs to be. we're beginning to take flight and the massachusetts is trying out for a message of certainty. give us a predictability it s going to be, what energy prices are going to look like and we could be off and running in directions that could be very, very good and positive. >> you think it's been a lack of leadership we don't have those issues? that's what you had said earlier. >> there's no clarity of messaging. no leadership. >> give us an example. >> there's no tax plan. when is the last time somebody

took a tax plan, put it before congress and said here's where we're moving to the marketplace, begin to adjust accordingly, make your adjustment plans around where this nation is going from a policy -- >> should it be simpson-bowles. >> an updated version of the tax system would be great. you've got no leadership moving him forward. it's been done on a bipartisan basement. if you -- >> is mitt romney the person who will provide it. >> we'll find out. he didn't provide tax reform when he was governorer but

certainty around a few key things like taxes, energy, health care. >> when you say you want certainty on these issues, walk us through a conversation, if you could, inside the board room of a ford, of a caterpillar, of your own business where you've thought about either an investment or some time of decision, maybe yourself, has said you know what, we have to hold off on that because we don't foe what's coming next. >> we have profits we want to repatriate from another country. we want to bring it home, reinvest it in manufacturing right here at home. how cool would that be? you don't know what the ritz are going forward. nobody is talking about the certainty as something as simple as repatriation of foreign profits. >> a lot of investors for ochious reasons focus so much on china. maybe you could help us with some certainty as it relates to china. are the numbers reported out of

china, are they real? are they made up? do they have any substance behind them? so much is discussed every month about the numbers out of china. many say the numbers are just made up. >> i think the numbers are becoming more and more reliable. that could have been said early on but because china is working to sort of regularize and standardize its approach to engaging with the rest of the global economy being they or they have to come do. they know the numbers are in important in terms of their long-term viability. increasingly they're become better. that doesn't mean they're perfect. i wish the defense ministry were as transparent and open in terms of what they're spending and what their numbers look look as the central bank is. but i think they're getting better. in order for the global

marketplace to work, the data must be reliable. >> that was not exactly a ringing endorsement of mitt romney. when i asked you if he's going to be the person that provides the leadership that you see as lacking. are you 100% behind romney at this point? >> absolutely i am. listen, the economic message is going to carry the day in november. and i think that message will resonate or not through the critically important industrial states in the midwest. there may be three or four states that are going to be critically important for victory in november. luke at the auto marvers in the states, just as one example. three or four state where a lot of subcontractors are. these will be the states that will tell the story in november. you can have him abouts prospects for job creation is going to do it. he's best positioned by virtue of his own training and background. >> we're going to go to break.

when we come bark i want to pin you down on something, not in a bad way but get to a question we talked about in the 7:00 hour. >> steve, i'm sorry, we'll continue this question for you offset. when we come bark state of the states. the governor of montana willin joining us. stick around, squawk will be right back. right back. the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

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welcome back, everybody. weefr joined by montana governor brian schweitzer. >> it's good to be here. >> we talk about the state of the states. there aren't too many bright spots but montana is one of them. >> we've led seven years in a row the largest surpluses, right on through the great recession. some people think that's because you got oil. that's only 2% of our budget. 2% of the revenue that we spend in the general fund that we spend in montana comes from oil and gas. what we've done -- back in 2007, 2006, states were kind of awash in cash. when the rest of those states were committing those dollars, we were chat enging expenses. we say, well, we quit paying phone books, challenged how much we pay for leases.

when we retired it's called vacancy savings, we won't rehigh. with technology, we probably don't need as many people. we didn't cut down on education, in fact we put more money in ed education. we educate, incarcerate and medicate. >> that's about it. i love this western state can-do attitude. the creative thinking. i mean, whether you're a democrat or you're a republican, we always figured out a way to solve problems, to take advantage of our geographic location, our natural we sources, our labor base and to make it work. yeah, some other parts of the country could take some lessons from what we're able to do out west. >> john, when people would come to western governors meetings and they would watch how we

worked together on this eveni s evenings -- things like natural resources and energy, you can't tell who was what party. >> it's a can-do environment. i'm in new york because i'm promoting montana tourism. we don't have stop in salt lake anymore, i'm sorry. a nonstop flight from newark to mat. we're out here with 15 -- >> who is dry flooiing the direct flight now sp. >> united. >> i want to come to yell sostone this summer. >> book the ticket book early. but honest li what do you think what are facing some of these big cities and states that are out here. it's not as simple that you all make it sound when you look at the problems these states are

faces. >> educate, incarcerate and medicate. it's how you distribute those funds and challenge expense. >> new york, new jersey and illinois in particular have major problems with the pensions that have been promised to people out there. >> every state has got pension problems in in montana i proposed a pension fix without raising faxes and we would be sound by 2019. we'd be the only state in the union to be sound. >> how does it work? >> employees put some more money in, the employer puts some more money in and some of the natural we resource revenues we bring into the state on an annual basis we'll direct into the pension fund. >> do you think think can serve as a model to a state like new york and new jersey in the context of how many people are in these states, how many people you're having to take care of? how many people are you incarcerating, how many are you trying to educate? >> all percents.

if you've got 1 million people or 10 million people, you muscular dystrophy butte that wealth approximately the same. look, the problem that you have in some of the bigger states and we don't want to make light on what happens in the east coast. in a state like montana or utah we say, all right, it's on our shoulders and it's today and we're going to fix it and we go to work. >> you two have very similar ways of viewing the world and the country but what about this election? we just talked with governor huntsman about he's supporting mitt romney. where do you support on the election? >> i'm supporting the crass, barack obama. i supported him last time he ran and i'm supporting him this time. i think john and i share a lot in often times democrats like to kick me in the hind end because i'm a fiscal conservative and sometimes they don't like the

way i manage the state in terms of how we're managing the money. i think john and i both while we were governors we kind of laugh sometimes because we're about this far apart politically. >> do you agree with the certainty argument he's made? >> absolutely. >> and therefore do you blame the president for creating urn sen tear? >> we managed 5 million acres of land and resouss in montana. one of the concerns we had was how we were going to tax and regulate some of these industries that were working in montana. i made the point more than anything it's certainty. they want to know five, ten years from now what are going to be the law of the land and if they don't -- they can work with the tax environment and the regulatory environment. they just have to know what the rules are. >> then why are you supporting

president obama? >> washington dnc.c. is a big >> frankly, there's a balancing act. we need to be energy independence. john led the way because while he was governor, he said why don't we run our vehicles on natural gas. you were just ahead of your time, my friend. >> what's the economy going to grow in montana this year? >> well, we're on 6.2% on unemployment. we'll grow 3, 3.5% this year chatty since i've been governor, we've had a pretty good run. >> thank you very much for joining us. and we are definitely looking at montana as a place to go. >> it's a great place for a family to come and visit. best wildlife. tallest peaks. i know the governor of utah would disagree.

but, trust me, we're at least as good as utah. >> i think we should bring the show to montana. >> coming up, the count down to the opening bell. stay tuned for thastd a lot more after the break. is to take you from where you are... to where you need to be. and we're not just talking about points on a map. with a more intuitive delta website and mobile app... and the most wifi equipped planes. we let you be everywhere at once. innovations like these are extending our reach

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let's get down to the new york stock exchange. carl u jim and david join us now. jim, we've had a lot of big earnings coming out this morning. we have apple after the bell this morning. what are you paying attention to? >> first, apple. saying that the iphone is disappointing. this is a one-way stock. suddenly, no matter what apple does, it's negative. and i think that's setting up for what would be, at least, some cushion if if they don't deliver the exact number because the stock has just been in free fall. >> people sticking with 45, 50 bucks for next year? so that kind of still helps things. but that at&t number of a activations has people worried. >> my favorite tweet of the morning is apple is throwing up backstage before the performance. and we'll see if that happens. >> who is the stand in? do we have a stand in? >> sams ux ng.

>> okay, guys, we will see you in just a few moments. >> i like that throwing up backstage. when we come back, we've got some final thoughts from our guest host. back after a quick break.

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we've got a special two-day series coming up on squawk box. the disrupters. a look at silicon's valleys the smartest that could be producing the next big tech products that we all use. guests include the vinklevoss twins. you know who they are. scribe ceo come qhing back for an encore performance and many more. we've got probably a face book in there somewhere. the disrapters begins thursday right here on squawk. skbl let's get some thoughts from our disrupter who's here with us onset today. governor, we've talked an awful lot about how difficult things are in washington right now. but we just saw you and governor schweitzer. >> i think it's important to remember that it was such a nice reminder with him sitting next to me. he's a democrat, i'm a

republican. the way we used to work together, not looking at partisan battles, not looking at lines of divide, but looking for solutions and bringing people forward and building communities and expanding infrastructure and educational opportunity. i think the people in this country need to know that hope isn't lost. that we still have some tremendous resources that we've got to be drawing from. we have a rule of law. we have a constitution. we have great universities and colleges. we've got a terrific military. we've got the creative entrepreneurial class. what we also have is a dysfunctional washington. and we need to take care of that. >> and some massive budget deficit problems, too. of course. there's nothing that can't be addressed if you get people of a good mind and a better vision of america together. and that's what every american needs to remember as we move into november. >> governor, it's been a pleasure having you here today.