welcome back. i'm becky quick along with andrew ross sorkin and joe kernen. the united states is reporting its first case of mad cow disease in six years today authorities are assuring consumers and global importers that there's no danger from meat of the california dairy cow entering the food chain. mexico, korea, and japan say they'll all continue imports at this point but two major retailers did halt sales of the united states beef. they see no impact but as jane wells reported out last night, the damage is already done just by this report getting out. the cattle futures are down by 2.6%. a lot of this is what japan did the last time around, a major import over the u.s. beef. >> remember how scared people were? >> it took the age of 30 for this cattle, down to 20 months. the expectation is they were

going to get rid of it and move it back. that's going to have an impact. >> it's really hideous. it's scary the way it happens. it's why animals don't eat other animals. >> i remember being in london when it was a real bad problem. people would not go to mcdonald's because they were that scared. >> this was a cow that was about to be taken for rendering, which means it was going to be processed for animal food, but that doesn't make people feel too much better about it. >> rendering, is that the word they use? the you euphemism they use. >> it's not alive but it's a piece of chemistry.

it's like protein sitting there, but these are just really small protein pieces that can go in and wreak havoc and you look at a cow that has it, and it's not a -- >> it's like a zombie movie for cows. >> who are you? >> whou are you. >> >> who am i. >> jon fortt. >> what am i doing here? >> we'll introduce you to the viewing audience. let me finish this up. the feds wrapping up the two-day meeting this morning. a decision on rates will be announced around 12:30 eastern time and the policy members are expected to affirm the late 2014 late guidants. ben bernanke is going to be holding a news conference at 2:15. we're going to try to figure out if qe2 is still on the table -- or qe3, a pros spigot of it. can he walk this fine line of saying the economy looks okay but we're still here to catch you if you fall? you can watch complete coverage here on cnbc. by the way, we have a number

of quarterly reporting this morni morning. among the names, dow components and caterpillar. we've had a lot of components over the last serval days. jo not here today. we've got autonation, corning, eli lilly, harley-davidson, nasdaq, nor ville grumman. >> and zipcar. >> there you are. "squawk box" is the place here this morning. we're going to hear from windham, autonation, eli lilly. all of them first on cnbc soo. now back to apple, this morning's top corporate story, the world's most top story, you look at it. you say what kind of numbers would justify that, and that's what we saw. blowing past expectations. $12.30 a share was more than $2 better than estimates, but these are the actual -- the actual raw numbers are really the ones that

drive home the point. $39.2 billion worth of revenue in one quarter which was like $3 billion above expectations. and then the net income number was like this huge number of billions and billions and billions which five years ago, you couldn't -- let's say eight years ago, you could not have imagined. >> ipods, ipads. >> this is as we're becoming saturated here supposedly. but for once, apple's products are -- >> it's global. >> all of a sudden macs maybe worst. this truly is. and going to be down. joining us peter and cnbc's jon fortt. both of you feel free throw to use any type of apple, like slicing or the core or apple cider or peeling back or -- can you do that, jon fortt, in -- do you need it in your script or can you just -- >> no, i can make yu sick with -- they really polished up this

quarter nicely for us. at the core it was beautiful. not a single bad apple. >> peter, any worms you saw crawling around in the results? we can do it forever. right? we do it every quarter. it's custom-made for us. >> it just amazes us. they crushed numbers. the biggest high least was china. that number was spectacular for iphones. no one thought it could be that big. certainly we didn't. they beat our most bullish chinese estimate by 3 million units. >> if you look at it. it's here. you add up it, multiply it times the number. it's a huge number. >> there are around 4 million that can afford it.

that's a lot more than here. it ooh's big market and they've eclipsed us, which is staggering how quickly that's happened. >> but they still can't google tiananmen square and come up with anything but that's okay. how about margins? >> margins were spectacular, but they added $14 billion in cash. in cash, in the quarter. taking them up to $110 bill in cash. microsoft's entire revenue for the first quarter was 15 -- just over 15 -- sorry -- 17, but still. they did double mochlt's revenue, doubles microsoft's profit in this quarter. it's pretty staggering. this story for apple has become a china growth story that. i don't even have the biggest carrier in china yet. that's something that tim cook is working on. once that happens which everybody expected to happen, the growth in china should accelerate because there's this halo effect. they buy iphones.

they later buy macs and iphones. >> they added a starbucks last night just with this big increase? after they lost. but what's the name of the one they don't have yet over there? >> china mobile. >> a well placed bribe. >> china mobile mile work there. >> can i get that out before you -- >> i know where you want to go. >> can i go there? >> we're going to talk about walmart in a little bit. but go ahead. >> you decide when. >> no, we'll talk about walmart in a little bit. >> go ahead. >> once china gets on board in terms of what the growth story looks like, i mean it adds what in terms of number? >> well, peter might have a better sense of this, but in terms of subscribers, i think china mobile is twice as big as at least some of the other carriers. so if you just look at the growth rates that they've had on others and you add a china mobile, you can get a sense of what they might do, but then you don't know what the follow-on effects are for ipads. they haven't started selling the

new ipad in mainland china yet. consider that when apple closed yesterday afternoon, it was trading at a discount to microsoft. i think, you know, people are justifiably kind of afraid of the market cap if you've never seen something like this. >> right. >> but in terms of valuation in the market cap. >> right. in terms of the numbers themselves, 600 -- you know, when you start approaching three quarters of a trillion dollars but never hit it. but how bad is it that it saturated here, peter and what does that mean? >> it means everyone in the post market, verizon, at&t, means that whoever want answer iphone, has one. we can't look at verizon and at&t anymore for a gauge of how apple is going. it's not a good gauge anymore, and china mobile is about 7

million subscribes, double wa the other two carriers are combined. >> will they beat the numbers they gave for guidants? >> we think so. it's been ridiculous. they've been doing it by 20%. >> they've produced more in this quarter so they were able to take advantage of it this quarter instead of next quarter, but next quarter, why can't they do the sap thing for the next quarter after that? they'll do it but -- >> one worried about this last night. >> no, not at all. we view their guide amounts as particularly conservative and frankly we don't buy that it's going to be that big of a deal for them, especially as they have that. >> peter, do you care about this whole issue of subsidies? and we were talking yesterday. that you might see sort of a domino effect? >> i think if you step back for a second and ask yourself you're an executive at verizon and at&t, at verizon, half my sales were iphones. at&t not, three quarters of my

smartphone subscribers are iphone subscribers. are you going to speculate? or some other carrier comes in and says, you know what? we'll subsidize it. i don't think it make s sense. >> it used to be once a year you could do it. now it's every two years, right? >> we'll argue that was an iphone 4 event as at&t saw it coming to very i zop. if you actually strip out that year that they allowed that, it really has. changed. it was just that one-time event. >> and that subsidy is around $400? >> around $400 a phone. >> i got an i'm from somebody after you mentioned that. i'm curious about this. not the i foerngs what's the thick that's not a phone but looks like a phone. >> the ipod touch. >> how is it that the ipod touch sold for less than the iphone and is not sub sigh didded.

different screen, face processor, and memory. i could go on and on. >> it was an i'm question but now you've made me feel stupid, but thank you. >> peter, do we honors hely worry about samsung and nokia? >> not nokia but samsung has a couple of advantages that am doesn't have. one, they have all-laead screen. they consume 90% less pow sneer do you know about them? >> i do. i do. it's kind of an advantage, but apple's got enough cash to work with samsung's competitors and sort of lock up manufacturing of really high quality screens also. samsung hasn't been able to use that advantage but steve jobs pointed out samsung as being the lock-term competitor that apple was thinking about. when people were giving apple a

hard time about antennagate, he said do you want korean companies to come in and take over? it was something he was concerned about. >> if samsung actually had a superior product, people in china -- how long does it take before samsung becomes as cool as the iphone? i don't know how long you do that. people want the iphone, whether there's a new innovative product that's even better. don't you think that will last a while? >> it's hard because apple's got the software and the ecosystem tied up. samsung has been trying to do that. they hire and executive that used to work for going toll come in and run kbleed for them because they want to beef up the capability, but what samsung has got is a hardware story. they're the biggest maker of screens. they're big in memory. can tie all this together. but they haven't figured out the software and media parts of the

ecosystem yet. >> yesterday we thought it was going to be a miss when it came to apple. what does it tell us, that we no longer look at it? >> it's become so much about china. at&t in china were 31% sales in the holiday sales. just 21% one month later. that's an amazing shift. >> so that's not enough. it doesn't tell us about this hour. >> you'll be back on this show. >> this is an obscene hour for a california guy. i don't know you guys do it. >> did you come yesterday? >> i think so. i lofrt track of the time and the days. >> when did you land? >> monday, 15 minutes before midnight. what day is it? >> today is wednesday. not tuesday. >> i thought it was monday. i didn't think it was tuesday. how could you land on monday. i'm all messed up there. all right. in other headlines this morning -- joe, get ready for this. if you want to start talking, we

can do this. nearly half of mexico state has no plans to investigate walmart. the economy ministry says the allegations were a matter for local or state governments, not for federal authorities. that news, of course, comes after we saw the advice chairman at walmart get off t. >> i was always ambivalent. he's one of my favorites. raid the piece. he's my favorite columnist for "the wall street journal" but in this case i disagree with him. he makes the argument that it's mexico, it's bribery. >> no it's not. it his g-- his corruption, his development from the outside world. and what walmart brings are all these johns and the ability to sell all these cheaper products.

>> it was a defensive walmart. >> it's a hul growth story down there. it's been wonderful for walmart and the share holders obviously. i think at some point a company like walmart will not consider what the damage will be. >> the problem becomes when headquarters found out about it, it's the cover-up. headquarters finds out about it but they don't turn it over. it's the exists law. >> the rule law is importance and that's where the am biv lance comes in. especially in this country, you're not going to operate against the rule of law, but they would not have made the inroads without -- walmart as company can consider it's going to take a huge pr hit right now, it's going to pay a fine. >> it could be a billion dollar or more.

>> then add up what it meant to them in market cap and you might still -- and that's a real -- >> i bet they wouldn't have let this play out this way if they could have avoided it if you look at the pr hit because the company has worked so hard to try to make sure people see it in a good light. >> but you cannot possibly operate in mexico without -- >> here's the interesting thing. the law itself, the foreign corrupt practices act actually lay s out some cases if you're greasing the skids. this is a question of whether they were greasing the skids. i wonder if that ooh would be the company's defense at that point. it was about two hours of sales for walmart. >> what did mexico say, this is a local issue and we're not going to investigate it at this point? >> because everybody's -- >> that's what you're

suggesting. >> i'm ambivalent about it. i'm also suggesting that it's almost similar to the whole steroids issue. i love seeing these guys hit the home runs and seeing clemens the way he was able to pitch we expect these guys to be unbelievable. >> you know, i'm curious how much this really hurts walmart's reputation with its mainstream consumer. >> right. most people say to operate in mexico, you've got -- there's no way to operate there. >> does your average customer think about it? >> you're not around most people. you're around people on the upper east side of new york. >> he was agreeing with you. >> no, he was not. you said most people don't agree with me. >> no. most people aren't thinking about whether mexico -- what they're doing in mexico. >> what jenkins piece did you think was off the mark.

>> the thing that concerns me is rule of law. >> this is u.s. law. >> it's u.s. law. >> the u.s. protects these companies in other ways too. you live andy by the law and with all the protections that come with it. >> if it's true, i think it's not normally the way they operate. it's a surprise to see this. >> i don't thing it makes them a bad corporate citizen. >> if you kick it back to the general council of the unit and the general council has been implicated in it as well, i don't think that's good corporate practices. this is assuming it's true because it's based on the information from one guy who

says he was part of the bribery. he must have been looking for a sort of payoff when he came out of it. >> this is the way. >> if you wanted to make -- looking at the growth story and the,000 of benefits for people that created it. >> now you're making argument that the ends justify the moons. >> i am. i said -- of course, carlos slim has never offered a bribe to anyone in mexico. >> that's why no one in mexico is offering this. it's pervasive. >> it may be persuasive but we have a rule of law here and that's the deal it's deal you signed up for. >> they got to chiechl. if you add up the two sides when it all comes down -- here's the at of benefit that they accrue

from this. >> if you're just playing by the numbers, i'm not going to argue with you. here's one thing to think about. the mexicans were doing this on their own. when it gets difficult is when a home office in the u.s., the board, all the way up to what may very well be the ceo know what's dwoeng on and then try to konk it up. this's a come plea lit different situation. >> they installed rodriguez to make it almost look like they -- >> then the guy who did this is now running the stores in the u.s. >> because he did so well. >> he was driving hard for growth. >> you read that piece, right? >> yes. >> it doesn't matter who they bribed. >> they almost called a finder's fee. >> michelle says there's a name for the people who do this.

>> they're lawyers. >> they're like lawyers here exempt we know what they're like down here. coming up, em pooir under attach, media mogul is facing a uk meet ya policy. tapping a few phone lines, what's a big deal. a live report from london next. arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz.

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welcome back. rupert murdoch is facing an inquiry. kay kay kayla tausche is joining us. >> reporter: we're outside the royal courts of justice where the big man is taking the stand. just at a mid morning break. this inquiry was set up by prime minister david cameron last summer to look at the overall ministry in the uk and figure out how endemic of not only the phone hacking but a larger practical question. and rupert indicated the following. this is how he kicked off the morning. take a listen. >> frankly i welcomed the opportunity because i wanted to put certain myths to bed. >> reporter: now, those myths concern his relationship with

british politicians. since his arrival here in 1968 rngs , he acquired "news of the world" and then he started the sun. it really devlved deeply into te history. that, of course, is of huge interest to brit here's because that was one of the biggest union-breaking episodes in history. now, we also learned this morning that the uk media arm of news corp. only makes about 8% of its revenue. only about 60% of that comes from news international. even so, with such a tiey piece of the company, how much power does rupert murdoch wield in the newsroom? we're piggybacked all of comments made by son james murdoch yesterday against some

of the politicians who were said to wave through the bid for british broadcaster bskyb. he's using it as a platform like everybody else. we'll move through the years from 1981 through to the future and we'll have those reports as they develop. back to you. >> great. kay kayla, thanks so much. stay out of the rain if you can. i'm sure we'll see you very soon. coming up, oracle and microsoft. ceo bill mcder month is going to come up. then we're going to check on the state of the consumer with the ceo of world winhamwide and we'll talk with the automaker's ceo mike johnson. all of that when we return

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good morning. welcome back to "squawk box" on cnbc. along with becky quick and andrew ross sorkin, i'm joe kernen. the quarterly street beat it. the revenue topped consensus and the stock will get back a lot. $55 -- ten out of 11 losing sessions as people wondered about the quick meteoric rise and whether it's sustainable. gop presidential candidate mitt romney swept all five presidential primaries

yesterday, pennsylvania, new york, connecticut, delaware, and rhode island. won them all. some amazing video from a jetblue aircraft, which made an emergency landing at new york airport. flight 571 hit a bird strike. taking off from westchester county airport. no serious damage to the plane was report birthday u you can see what's left of those geese on the windshield. sorry, andrew. that is the real strategy in these things, the animals. the plane returned to the airport and landed safely and no one was injured. right here, you've got a little -- >> a tear for the geese? >> sounds like the engine is -- >> they didn't go in the engine. it hit the windshield. can you malk bei-- imagine the

pilot when they hit the windshield. they did not go in the nnch. >> it's wind versus steam. >> delicate steel. >> they're backing its outlook. its q1 results fell shout of estimates. thec co-ceo bill mcdermott. good to soo you. >> good to see you. >> let's talk negative news before we talk positive news. what happened? >> i know he's going to have an answer. >> hearing you say it was below, i'm sure it was not below snow no, it was below. so what happened? >> north america had slightly lower than expected sales results because of the

execution. >> do you like that? >> isn't that great? >> wait till you laer the second line. >> everything has been swiftly addressed in the coverage mod. >> when you say something was wrong with the coverage model, explain. >> first at the top line, our coverage mod sl based on geography and industry. in north america they decided to mix those two things, to have the geographic person, the leader. >> so you're the sales guy. >> right also represent industries, and that's a model -- >> explain that. what does that mean? >> if you happen to be in the eastern region of the united states, you shouldn't also manage the banking industry. somebody that knows banking needs to manage the banking industry. they mix those two things? okay. >> and our motto is focused. >> and that was new? that was the different approach? >> yeah. they did that for this quart sneer who just lost their job for doing that. >> well, i'd rare not get into the particulars on the person

because the person running north america did lose his job, but he resigned and decided to do different things with his career. but let's talk about the overarching themes here. >> okay. the company grew. apple. maybe we have something do with app apple's success, all the itunes, all the downloads. europe is strong relatively speaking, latin america and asia is strong. also now that we're back to our coverage model in the u.s., we've reiterated our guidants in the full year. >> stock was up yesterday. >> because of the guidants. >> guidants. >> we guided to 15% growth in q2 and we do that because we have

realtime visibility on our business. it's looking great. why is it looking great? because we're innovating. everything is going with the device. you see it with apple. i fwoen is the new desks top. they have to manage all this data and they have to do it in realtime and data is doubling every 12 to 158 months and cloud. things are moving to the cloud quite quickly and we're obvio obviously a cloud leader. >> how much do you worry about europe? >> i don't really worry about europe in the context of southern europe, sure, there are some challenges, but if you look at germany, germany is growing 25% year-over-year territory, the nor dix. >> right. the question is when you talk to your come pate rents over there, will merkel be able to see this through? the resolve is weakening in other parts of europe than doing the ore thing.

germany's doing the right thing but now the kin ee shanns are changing. >> we talk about the tax environments really key and germany's done a good job on that. the thing about it is we have a very good portfolio. we're so strongly positioned. we are the strongest software company compared to any other. >> what are you doing in spain? are you big in resume -- >> we have a portfolio, so we can afford spain, italy, and portugal to be down and still come through with uk, france,

germany, and others and still have a very strong -- >> do you have a view on the french elections and what that does to the european nations? >> we don't need to focus on our elections for the company. if companies are needing to manage all these devices, if they want to move their business to the cloud -- >> you don't think if sarkozy ends up losing, it changes the complete dynamic around what happens to the euro? all the conversations we have about uncertainty here becomes the conversation over there if it's not already. >> we weather the changes on a global basis for 40 years. we're actually in our 40 year. >> but you were young. >> are we? >> you were navigating around since then. you don't look a hundred.

>> thank you. i don't feel ahundred. we'll deal with changes and deal with them like we deal with everybody else. it's three times our an yool guidants. >> stick around. i wrought in some very good pate. like that? >> i brought in some pate to have during the break. >> fancy. >> from the geese. >> yeah. >> from the windshield -- >> someone said in my ear, i hate it when bugs hit my -- >> exactly. >> when we come back, hotel "squawk." the ceo of windham is going to be checking this on our set. plus, eli lilly beating the street by 14 cent as share. the ceo will join us live at 7:10 eastern. ♪

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the hotel and lodging business paying off. beating the street by 5 cent as share, this happened in the last few minutes. joining us on cnbc is stephen holmes. he's the chairman and ceo of

windham. glad to have you here. >> thanks for having me. >> does this tell us people are traveling again? >> no. during the downturn people were traveling leisurely. occupancy in the hotels as well as the average rate being paid both increased. >> they're willing to pay up. >> we do have windham product, which is one of the upscale product. but we represent middle market, middle consumer. >> what does that tell you about the price of gas? people worried that if the price went up -- >> the fact is we've gone back and done correlations. i've been in this industry since the early '80s and you can't see any correlation. the only correlation is when there's a shortage. people don't travel as much.

but when they -- when there's higher prices, they may shorten their trip. they may go from new york to williamsburg instead of going all the way to orlando. but they still go out and travel. they value their vacations and fair family and friends. >> what about unemployment? how come that doesn't have a bigger impact? >> it does. that's what hurt us the most is the downturn. we're still concerned about it. the hotel industry is a huge employer. we employ, i think, around 6% of the u.s. public in jobs, so we feel it up and down as we hire and are not hiring people. so we see it ourselves, but the fact is that even during the downturn, we held our own because leisure travel is important for people. >> where are you in terms of hiring right now if we were to measure your employment base? >> we're up this year about -- our hiring pace is about 5% higher than last year probably. rough numbers nc numbers.

in that zip code. it's not wildly stronger. however, there are statistics that the hotel owners -- we're a franchise -- are hiring at 15% ahead of pace compared to last year. >> they were talkinger about how their sales model did not work for them but yours did. explain that for us. >> our model is a pretty simple model. it's a fee-for-service model. we don't hotels. we manage them. we don't own them. we have a less operationally leveraged model. in our time share business, time share is a phenomenal product. it shows no impact from ups and downs of markets. we sold throughout the downturn at a faster pace more efficiently than we did before. >> why?

>> we've got terrific business models shlg incredibly brilliant people running the businesses. >> why at a faster pace were you able to keep up with these sales through the downturn? >> some would say we have the best salespeople in the world and they do a terrific job. once people own one week i, that buy more points. we sell a points-based system. it's kind of building a momentum. more people who want it, more people are building it. the other thing is when the academy was down, the dedicated travelers were out there. not the marginal traveler but the dedicated travelers. >> did you lower pries? >> no. in fact, we raised the price. people don't wake up and say

i've got to get a cup of coffee and a time share. they are brought in. they want their lifestyle to be different. >> stephen, thank you very much for joining us. >> thanks, becky. >> again, stephen holmes is the chairman and ceo of wyndham. coming up next, mike johnson of autonation coming up next. [ male announcer ] introducing a powerful weapon in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula.

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auto nation posting better than expected earnings. the company's chairman and ceo mike jackson joins us now. mike, great to see you. let's get to the highlights of your earnings which is an ongoing story really as we've seen the auto sector, one of the real bright spots in the u.s. economy and you're just riding the back of that and on top of great execution, i'm sure. >> absolutely, joe. good morning. driven by 10% increase in revenue to 3.7 billion. we achieved an all-time record earnings per share of 56 cents. that's a 22% improvement. operating profit was up 6%. but even that is against a tough. comp. that's a 30% increase. to achieve that with $4 gasoline in the marketplace is quite

something. so we're humming on all cylinders. now fuel-efficient. >> you've seen that in addition to the fuel-efficient story you're selling a lot of suvs but they get better gas mileage anyway. >> yeah. i think that's really thor to here, joe. never seen a better match between what the industry is producing and what the customers want to buy. compared to 2008, if i look at the vehicles we sold it's a 20% lift in fuel efficiency overall and we're not asking our customers to down size or to give up performance. and it's being achieved with traditional drive trains. it's not by a leap in hybrid sales or electric vehicle sales but rather it's applying technology to these engines and giving them smaller displacements, more gears in the transmissions. we're able to offer our customers 20% to 30% lift in

fuel efficiency if i look at the percentage of vehicles we sold that achieved over 25 miles per gallon, 75% of the vehicles we sold and 40% of the vehicles we sold achieve over 30 miles per gallon. >> mike you watch the show and i know you've seen the employment, the unemployment, the claims numbers over the last three or four weeks. you saw the last employment report which was weak. you've seen some other stuff on housing this week. in your view -- and i looked at your stock. it's off a little in the last six weeks or so. have we entered into a repeat of what we've seen in the last two years or is that the wrong conclusion to draw right now? >> there's no question that automotive is a bright spot in what is overall a fragile recovery. so i think for the total economy

there's still question marks out there and what, indeed, will happen the rest of this year and let's face it, joe, until the housing situation is straightened out you can't really have a electronic vibrant recovery. so there's risk that are still out there. but, i want to come back to automotive and i look at the industry performance and our performance in the first quarter it gave me a lot of confidence because one of our risk factors was $4 gallon and it turned out not to be a risk but rather a positive. how often does that happen in life and in business. we saw it as an opportunity in the first quarter you referred to our stock price. we repurchased 9% of our outstanding shares in the first quarter based on the fact that the automotive industry is recoverable and solid in what's an overall mixed picture in the economy and i'm confident in our ability to perform. >> you're doing this at historically high unemployment rates.

you're having some pretty good success. that's what i'm getting at. do you think that the employment rate is going to stall where we are now or where we continue to come down and you would be doing a lot better at 5% unemployment. >> joe, i still think there's a question mark over the unemployment number and there's even a scenario that unemployment is worse than the number that's out there. there's so many workers who have been discouraged over the past two years that are sitting on the sidelines and have gotten extended benefits that leave them sitting on the sidelines. at a certain point they will all start re-entering the workforce and the unemployment number may get worse. so i think for the total economy, there's still the question mark on it. it's still a tepid, fragile recovery. we have a long way to go. automotive remains a bright spot and thank god we have that

bright spot and there's fundamental drivers that gives me a lot of confidence it will continue for automotive. >> mike, thank you. we'll end it. good quarter you had. and all systems go it looks like. >> before mike goes i want to thank him. because on my desk is now a fancy car and i told jeeves about it. >> you have the model of the bentley limousine, two in the world. >> it's beautiful. >> actual vehicle is on the atlantic some place on its way to you. >> all right, thank you, sir. >> great seeing everyone. >> coming up, eli lilly's boss will join us next. first here he is. we're welcoming dr. love in the house. he's as busy as ever. match is made in bull's heaven. stay tuned for that and more. if you are one of the millions of men

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. the power of profit. top investment tips from a super "squawk" master. >> drug giant eli lilly ready to report. we break down the numbers with the company's ceo. and we get his prescription for profits. >> it's fed decision day. two former fed governors preview today's big meeting and what it means for economic growth. the second hour of "squawk" begins right now. good morning, everybody. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe

kernen and andrew ross sorkin. here are your morning headlines. wall street is focused on the fed. the statement will be out at 12:30 eastern time. the latest economic forecasts are out at 2:00 p.m. eastern. at 2:15 we get the real show. fed chairman ben bernanke will hold a news conference. rupert murdoch facing a grilling this morning from the same uk ethics panel that questioned his son yesterday. apple shares up about 10% in the pre-market trading after a blow-out quarter with apple earning $12.30 a share for the second fiscal quarter. the street was looking for $10.04. more on apple throughout the morning because that stock has taken off. up $40 after hours. those futures across the board green arrows. dow up by 81 and s&p up by ov

11.5. our guest host this morning is a true value investor and one of our favorites. joining us now on the set is chief investment officer. we heard about rupert and heard about apple. i'm curious what your two views are. go to newscorp first since i know you are an investor in newscorp still. >> we owned a lot when they were taken over and had low cost basis and we own newscorp. >> what do you think of this mess that's going on in the uk? >> clearly an issue with regards to what happened around the world. walmart. foreign corrupt practices act. >> joe will get in on this conversation. >> then the question is what exactly happened. once that is sorted through there are consequences. >> when you think about newscorp and the mess in the uk does that

change your view on the company at all? >> no, because we've always known that they have certain assets, if you strip out the newspapers, if you strip out bskyb you have a stock selling at six times. >> you don't care? >> no. you can't say that. you have to put everything within the mix of making a judgment. what is the cash flow of the company? how good are they? what happens if, in fact, you have changes in management. is chase carey going to be terrific at running the business, keeping the franchise, generate cash flow. how do they allocate cash. is the stock buy back worthwhile. >> chase carey is he going to be a great ceo? >> he has been. he is. if you want to learn about tank warfare you read about ronald. if you want to learn how to run a good business watch chase carey. rupert has been terrific. and so within that framework i'm not here to bury newscorp nor am

i here to praise them. i'm here to answer your question. my answer is i think the stock is okay at 19. i own it. >> up just mentioned walmart. what do you make of the bribery case. >> when you're in rome you do what rome does. if you're a u.s. company the u.s. rules say you can't do it. you can't cover it up. if local customs are such. from your point of view, andrew, i know you're arguing the citizens of mexico have benefitted immensely by having walmart. >> that's joe's argument. >> i knew i got -- >> operation twist. >> "when in rome", you're in mexico. >> no. >> as an investor, though, does it change your view, your opinion of a company like a walmart when you see this

happen? >> andrew i served on the zoning board of appeals of a community for 12 years. i would go out and have what the rules were. then you look at the issues specific to each company. specific to each citizen. specific to each home. you visit sites. you do the work. you don't sit up at 30,000 feet and just make one shoe size fits all. from my point of vow i look at a lot of dynamics on walmart. we own a little bit in one of our funds. and we're not in any rush to sell it to the degree the stock drops from 63 to 57, would take a fresh look should we buy it. >> but the ends therefore may justify the means? >> no. don't go into this religious -- >> here's the thing. i'm not suggesting that they do. the argument financially is ultimately they do. >> what you have to look at is whether you buy or sell the stock. unless you're running one of

these funds where you don't own a tobacco company and you own pro peta stock. if there's a monetary price on what this is going to cost walmart and then offset that with what they gain by basically moving -- >> you got to look at where we are today. the water is under the bridge, so to speak. we have funds that are sri funds, socially responsible and they have reasons not to own companies. >> would this qualify as a reason not to own i want? >> it might. they review their list and obviously to the degree they put that on their list that you can't own i want as an sri fund you can't own it. from the point of view where we are today, look at the earnings power of the company, look at what they've done and then move on. then what happens? what happens when walmart goes through their intern alchange. >> if this is a situation where, against these are allegations, nothing has been proven at this

point. there will probably be an investigation that follows up. but if it leads up to the higher ups in the company and there's a change in the guard would that be enough to concern you at that point? >> may be an opportunity to buy it. walmart will be here after this -- >> if there's a monetary value, even losing mike duke he can assign a monetary value. >> again, you go back to history. valdez. the exxon had a ship and captain that clearly should have been investigated. crashes. do i sell exxon because of that? do i look at what happened in terms of an opportunity with companies that had invested in south africa? do i look at companies in the mcbride principle. we go through these issues first on a systemic basis. here you have an issue similar to what you had in newscorp. >> then you look at the actual -- >> not similar. >> the actual crime we're talking about in mexico and you

look at some of these other instances and you can also gauge about, you know, the seriousness. >> andrew, you go to the next one. you have an olympus. you have to look at each company specific and look at the ongoing business, the value added, the moat they built and there's always potholes. >> one other issue with you this morning. >> only one. >> we have a lot to talk about for two hours. apple. the big story of the morning. >> i own the products. i think they are terrific. our growth team owns apple. i on the value side, why? why don't i own it even though it's extraordinarily cheap. the market cap of $600 billion. >> how do you value that company? >> let's look forward, okay. they have a terrific 1% that's no longer with us.

he's in heaven looking down and basically said i created a new generation of products. i am the walkman of this society. i'm basically the nokia of today and i'll be your television set of the future. five years from now can they maintain a growth rate of 15%, in which case if they do and they have a constant multiple our talking about a trillion dollar market cap. i have a background and hear the foot steps of 1950s when bowling alleys were the hottest thing in the world. then 1960s the electronics. then the hamburger flippers. then the nifty fifty, the polaroids, and so on. then you go into the period in which the tmts -- >> you're suggesting this will not last? >> no, i think it will. i'm looking out five years from now a trillion dollars market

cap for a company and you do have a bell shaped curve of evaluations. i heard the same arguments on cisco. apple will be a terrific company five years from now. i don't know how i'll split it up to the degree that it don't own apple. my clients in the first quarter had a 25% rate of return. the market was up 50 because of apple. i look dumb. i didn't take any dumb pills. i just have to stick to my disciplines. >> we'll hear more -- he's got his smart pills. >> i took a dumb pill. >> throughout the next two hours. thank you. this is always fun. >> not really. >> you tell people those little blue pills you take are dumb pills in >> smart pills. >> comments, questions about anything -- >> what pills would those be? >> comments, questions about anything you see.

i see all these spots in front of my eyes. e-mail us. follow us on twitter. i don't know about twitter. >> it's out there. >> anybody that -- >> anybody can just write as many times as they want and you can't block them. >> major league, you know, ah. every two seconds. >> live by the sword you die by the sword. >> next we speak to the ceo of eli lily. the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

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take a look. you'll see some green arrows today. the dow futures up by 87 points. s&p futures are higher too, up by 12 points and nasdaq up by 50 because of what you've seen with apple shares overnight. a few headlines just coming into the newsroom. dow component is hiking its dividend by 53%. sprint expecting a smaller loss. stock is up by a few cents. 2.59. shares of harley davidson getting a boost after its sales beat the street. eli lily releasing quarterly results. 92 cents a share. well above expectations. joining us now, john lechleiter. president and ceo of eli lily

and you're navigating through all the things that we knew drug companies have faced and i'm alluding to the loss of a drug. >> for the first quarter, our sales fell 56% compared to the first quarter of 2011. we were able to offset a lot have that through very strong growth of our current leading product whicrew23%. in addition we grew 41% in china for the quarter. our health business grew 33%. so our great engines are firing just as we had planned to help us navigate through this period. we'll lose a few patents in the next several years. >> your stock will be up a dollar just on the bid. it's amazing, what did you say,

56% drop. i've seen a lot worse happen when a big drug goes off patent. >> we saw a very rapid decline in the sale of branded zyprexia when the generics entered in october. we expected that. investors expected that. that has levelled off a bit to where today only about one in five scripts for zyprexia in the u.s. is the lily brand product. the other four is a generic, including an authorized generic we offer. >> do you spend money on marketing? sometimes pharmaceutical companies get criticism for that. cimbalta is what you would like people to my grade too. is it better than zyprexia. why wouldn't someone go to generic zyprexia.

>> cimbalta is indicated for treatment of depression. zyprexia was indicated for schizophrenia. they are in different parts of space. cimbalta has to compete against a myriad of other generic versions of different medicines including generic versions of prozac. what we find is that for many patients, many patients, not all patients can get relief from these generic medicines and so cimbalta offers a gate alternative for patients seeking relief from depression or from one of the other areas where cimbalta is indicated. we're able to compete. the basis is a good value proposition, good efficacy and good balance of benefitted risk. >> john, as you're looking at

all of these transactions going on in the area that you're working on, pharmaceutical, looking at diabetes, hepatitis, you have certain core competencies. do you say we have to look -- how much resources and do you do it by organic or acquisition? any changes in your thinking on that? >> great question. something we're always looking at. always thinking about. obviously we have a great core competency in areas like diabetes in neuroscience, cardiovascular medicine and in cancer. i think we're probably best served by making sure that most of our focus and resources go in those areas because those are tremendous areas, tremendous unmet medical needs still. now on the other hand, we acquired a company last year, avid, radio pharmaceuticals which got the radio imaging

approved for detection of plaques in the brains of patients being evaluated for alzheimer's or other forms of cognitive disorders. that could be a platform for to us build on. we'll have to see how their pipeline matures over time. it's an example of looking at new opportunities in addition to really working on that core. >> john, we watched with the generics, with pfizer and generic lipitor coming on they were aggressive with their strategy, went into all sorts of deals they cut with insurers, pharmacy companies, patients to make sure they were meeting or beating the prices. some people say that's a blueprint with how the big drug companies have to operate when they come up against big generics. do you think that's a blueprint? >> i think there will be different approaches. lipitor was a huge primary care medicine in a different part of

space from zyprexia. our strategy with zyprexia to authorize a generic, the first time we approached it in that way. i think by and large lily is betting on its future on new innovative medicines. we recognize we'll continue to sell some brand of zypr.xia like we continue to sell today some brand of prozac. but that won't treatment lion's share of our business. >> a public policy question. i one eli lilly has been supportive of the obamacare. what do you think the supreme court will do and what do you think the impact of that decision will do to your business. >> i think the way the court comes out is anybody's guess at this point. obviously, when you run a businesslike lily that is so dependent on the direction health care takes in this country, we have a big stake in that decision. we're prepared to operate under either set of conditions, in other words repeal or maintaining that. >> you've been supportive of the

law, right? >> our trade association was supportive of the measure. lily last year paid $600 million more or less in the form of a fee, the additional medicaid rebate and the medicare doughnut hole bridging. we're all in you can say. at the same time we have very serious concerns about parts of that law, in particular the independent payment advisory board which we think is bad for patients and certainly bad for medical innovation and we've been very outspoken about that. >> and the criticism of the drug industry as well as the insurance industry has been called a bargain. you signed on because you thought that down the road it might benefit you, you might as well get on board and now it's going to maybe wasn't such a great idea to get on board with something that you probably knew wasn't a great idea in the first place. >> joe we supported the health care law in 2009 and 2010 because we thought that it was the best thing for our business

and we thought it was the best thing for people. >> but what about the insurance companies? everybody will get covered? you don't think the hm o's it's not a good deal for the country just because it's good for your business. >> joe, when you think of 50 million people and that's the number that i read the other day that are uninsured in this country, we carry an enormous cost and -- >> there's a way of getting rid of the states, let insurance companies sell across state lines. there's a lot of alternatives. in fact, it was discussed at the time, increment alalternatives that could have been done in a bipartisan way and hopefully if this goes the wrong way in june we spent a heck of a lot of time all for not when we could have done it in an incremental way and done the same thing, covered everyone and done it in a way where 17% of the economy wasn't basically hijacked by a very close vote. >> when health care reform passed i said this is just the beginning. every where in the world, every

country in the world, health care reform is top of the agenda. whatever the supreme court decides in june is certainly not going to be the final word in terms of how the shape that our health care system takes. we intend to continue to be an active participant in that process. >> we appreciate your time today. thank you. >> much longer debate. we'll have to have him back. migraine sufferers listen up, there could be a new wrinkle in relief for those severe headaches. two former federal reserve governors will weigh in. does the fed have any more arrows. larry me erand randy kroszner will sound off. >> time now for the trivia question. who was the first movie actress to appear on a postage stamp. the answer when cnbc "squawk box" continues. ha! isn't major medical enough? huh! no!

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"squawk" is back on a wednesday morning. a new study showing the main ingredient in botox may be helpful for people with chronic migraines. the wrinkle treatment doesn't offer much relief for those with headaches less frequent. those starting out with headaches daily reported two fewer headaches per month when they were given injections of fwox. while the study shows botox may reduce headaches by a couple days a month, some chronic my grand patients may benefit from the injections. it's marketed under multiple names. but botox is the best known. the stock is setting up 20%. anybody touch it? nobody here is touching or needing botox? maybe for headache purpose? >> people have side, you know, here in the head. >> i read this morning about the cold thing that you get when

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welcome back to "squawk box". it's just after 7:30 on the east coast. we detailed apple's blow-out quarter and 10% stock rise. let's highlight a few after the bell earnings report. amgen reported first quarter profit of $1.61 a share. that's 16 above estimates. however it did leave its yearly outlook unchanged. that was disappointing some investors. norfolk southern earned $1.23 per share. 11 cents above estimates. the railroad saw increased revenue for general merchandise and intermodal shipping. and aflac beat estimates by nine cents with insurer earning $1.74 per hair. aflac was helped by better than expected results in japan the source of its biggest revenue stream. >> give me an aflac.

aflac. you know. aflac. >> what's the name much that great actor. >> gilbert godfrey. he doesn't do it any more. if you see it in print don't you feel -- >> you feel like you want to said. >> gilbert -- >> aflac. >> they spent lots of money. >> they do spend lots of money. >> is caterpillar out yet? >> boeing is a buck 22. >> clean number beat by a mile. better than a billion numbers. 19.4 billion. now they are talking about 2012 earnings for share guidance. they are increasing it to 4.15 to 4.35. the street is at 4.47. i don't know what is going on with that. reduction in litigation related reserves. i'm sure it's medically matched. again, those the revenue came in

at 19.3 billion. they also talk about their backlog. it rose to a record $380 billion when you include 42 billion of new orders that are in that number. >> enough on caterpillar now. 237 versus 213 which looks good. how is caterpillar act. now in the press release caterpillar said they were raising guidance for 2012. i want to see if their guidance is actually above. >> bid ask is a little below. >> 9.54 is where the street is now. let's see. they say they are raising their fwidance. first quarter sales of 15.98. that looks a little bit below expectations, which was 16.2 for caterpillar at this point. that was a little bit below. they see 2012 at 9.50.

they are calling that a raise but the estimate is already 9.54. so the raise they are giving is still a couple of cents shy. and seeing how much they beat first quarter by, you would think that the full year number would maybe, that might be causing a little bit -- you know what? >> caterpillar we look as a global economy. >> sometimes i want goes down three at the beginning end the session up three. very volatile. and very cyclical. and what happens in china. >> china play is what happens with housing here and what happens in agriculture here. >> and it's like better to look at it on a yearly basis because they call them lumpy the quarterly results a lot of times are lumpy for caterpillar they can get a deal at the end of one quarter or miss one deal and analysts don't know it. >> the bid ask for boeing is higher. >> bid ask for caterpillar is

going lower. traded at 167 at one point. >> we'll continue to keep an eye on that. that's the knee jerk reaction those. the fed is wrapping up its two day meeting. chairman bernanke is set to hold a mid-afternoon news conference. joining us now is randy kroszner, former federal reserve governor. and larry meyer former federal reserve governor and manage director of macro economic advisor. steve liesman is in d.c. gentlemen, welcome to all of you. randy, why don't you tell us what you think is going to happen because my guess is we're not going to hear a whole lot at least not in this statement. >> there's been very little new data to change the fundamentals of the statement. there's been somewhat disappointing employment report but not off the rails.

but i think the discussion in the, in the press conference will be very interesting because operation twists, the purchase of the longer term securities, selling of the shorter term securities is supposed to be coming to an end in the middle the year and the chairman will want to give owe guidance. he doesn't want to leave that until the june meeting. that's something very interesting. >> all right. what do you think, larry? >> i think the statement is the least interesting of what we're hearing today, no change in the policy message at all. we got the forecast coming out and as randy said not a throat say about that. a few changes there. but nothing material. so, in addition to the press conference i would say that it will be interesting to look at the rate projections. we've said that they are much less important than the guidance in the statement. but they are more flexible. they are going to change more rapidly let's say than the guidance in the statement. i think what i look for is some

firming in those expectations. a few people moving the expected timing earlier, and the level of the funds rate at the end of 2014 being a little higher than the last time. so the markets will -- the markets look at everything and that's about what there is to look at aside from the press conference. >> obviously the press conference will be the big deal. steve, i want you to talk about that in a moment. before we do i want to go back to boeing. i said it's 122. it's 122 but 11 cents and litigation costs, litigation reserve. the lean number is 111. street expectation 94. revenue was 19.4 billion. that stock is indicated higher on both the bid and ask. steve tell us about that press conference because that is what everyone will be watching today. >> yeah. i think the way to do that becky is to set the stage for what's going on out there. i see the board being in a bit of a stalemate created by the

economic numbers. we have the gdp tracking forecast for the first quarter. now we're tracking about two four. so there is a slow down but not enough to give juice to the doves who want to do more and not enough for the hawks who want to do less. right now i think we're in a stalemate and the problem as larry suggested is that operation twist is running off. i think there was a key statement made by the vies chairman who said she does not see the end of twist or failure to continue it as a tightening of policy. so even she's prepared for it to run off. guys can we have the conversation now that we'll have tomorrow. i'm looking at futures being up now. nasdaq was up 2%. the s&p 0.6%. what's interesting to me here is the market is going to get a message at 12:30 today that the fed will not do more. i'm interested to see if the market can actually stay up and look through that message coming

from the fed. >> larry, i think the challenge for the chairman is to be able to say we won't do more right now because we think the economy is going along quite smoothly but don't worry if the situation changes we're here to catch you. >> the committee is solidly in this camp. it's the deterioration camp. if the economy plays out as expected and reflected in the forecast, they are not going to do anything. on the other hand, there's some threshold, there's some deterioration in the outlook that would motivate qe3 bp we haven't passed that threshold by any means and we have to see a deterioration to get that. the chairman will make that point. the march minutes were very clear. but one of the messages that the chairman will try to reaffirm is that. >> randy, that's a pretty tough message. i guess part it is trying to read the tea leaves of the economy lately. that's been tricky on all accounts. what can the fed tell us that makes us feel okay about what

we've been seeing. >> it's very tricky because between now and the next meeting in june they will get a lot of information. two employment reports. we'll get the actual report on first quarter gdp. a lot to chew on between now and then. but there hasn't been a throat chew on so far. i think what the chairman will probably be pressed on in the news conference, we'll see what steve asks him is what are the conditions under which you're going to act because there's bean lot more discussion of well if this, if that, here are these kind of conditions. here's some of the rules that we're thinking about. in that attempt to be more transparent i think there may be a little bit of confusion coming in. this is an opportunity for the chairman to give a clear view here are the different paths that could happen over the next few months and roughly this is the way we'll be thinking about that. it's a tough message. >> steve, i don't want to steal your thunder. but if you're chewing around on an idea what are you thinking in

>> i like randy's idea. it's not a bad idea. what are the conditions. a little open ended. gives him too much wiggle room. have to fine tune that. you like wiggle room? >> as a fed governor. >> exactly. the idea -- there's another issue that i think is worth talking about which is politics and there's a lot of talk out there that a window for the fed to act is closing. not because the fed is strictly speaking influenced by politics but it doesn't want to be seen being influenced by politics. >> then that's a double negative if you're reacting now because you don't want to look like you're being political. >> absolutely. >> come back and act when you feel like it. >> if you think we're heightened to the political environment now, we'll be hyper sensitive in the next couple months. so the thinking that i've read is that sometime before june if the fed will do something it needs to do something otherwise it's going to be forced to act

in the middle of the heightened political season. >> i don't know. what do you guys think? >> let me just say on the conditions for further action. i don't think -- this is a very big discussion inside the committee. some people call it conditionality without conditions. i don't think we'll learn very much. this is an important discussion of the committee. the chairman has already said basically that we'll have to see a deterioration, the unemployment rate will basically have to, you know, be more disappointing, inflation will have to come in very low. we shouldn't expect anything more than that. the markets certainly crave more guidance, they are not going to get it, i don't think. in terms of the politic, well usually i say it doesn't matter but this is a special situation which is so politicized. they won't be rushed to do anything in june to say oh, well normally we don't think enough has happened but we'll get it done in case. i don't think that will happen.

i don't think there will be enough information in june to warrant additional asset purchase. >> agree with you on that. larry, randy, gentlemen thank you so much. steve we'll see you later in the program. >> durables. >> coming up at 8:00. >> a programming note. cnbc will have a special half hour of coverage around this. hosted by brian sullivan. it starts at 12:15 p.m. at 2:15 p.m. eastern fed chief ben bernanke holding that news conference. he'll explain the fed's policy move. it starts on "street signs" at 2:00 p.m. eastern. >> liesman said gerbils >> yeah. >> we'll be right back. corporate caterersso at&t d how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities,

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it's just another way you'll be traveling at the speed of hertz. according to the signs, ford is having some sort of big tire event. i just want to confirm a few things with fiona. how would you describe the event? it's big. no,i mean in terms of savings how would you sum it up? big in your own words, with respect to selection, what would you say? big okay, let's talk rebates mike, they're big they're big get $100 rebate, plus the low price tire guarantee during the big tire event. so, in other words, we can agree that ford's tire event is a good size?

big big we're back on this wednesday morning. caterpillar out with first quarter results this morning and we have more on those numbers. good news all around. what's the big takeaway for you? >> profitability is much franker than most people expected.

top line was a little bit soft. mostly timing. but the number was quite strong for the quarter. and 2.37 beat everybody. >> how is that changing your forecast going forward? it's a line that mr. herndon hates. >> you know, they grow their guidance from 9.25 to 9.50. we're at 9.60. might raise it a little bit. the economy is a big factor. domestically the business is quite strong. you're seeing weakness in china and brazil and europe beginning to hit and we just went into a case, they dropped their global forecast because of international markets. you're seeing the effect of markets outside. secondly caterpillar is selling off the service business. they announced a billion dollars worth of deals. so you can't push the numbers

too far but they are going to do 9.50. they will be fine this year. you have to temper it in the fact this is a very tough global environment. >> is there a takeway about the u.s. economy here? >> the takeaway right now is the construction markets are showing a little bit sign of life. we're hearing that from all the companies both residential and nonresidential are starting to perk up and the equipment purchases by the dealers have remained robust and try to get into position to handle which shall be a better market for the next year. >> looking into 2013 and 2014, assuming you get brazil and china now back on track so to speak for cat, what are your numbers for that period of time? >> well, the company is talk about trying to get to $15 plus by mid-decade and that does not seem to be a big stretch. how quickly they get there is

your global economic forecast. if you're going to do ten bucks this year not hard to do 15 or 20 next year. >> assuming they hit it earlier than later what do you think it's worth? >> you know, if it isn't $150, probably say what is wrong with the system and it's not hard to get numbers closer to $180. >> was the revenue number 15? what was the revenue number. >> the machinery and power number was 2.88. >> the total, we're showing it in line. revenue was light. >> that's the machinery and power number, which is the machines and power systems. the rest is the credit companies. credit companies comes out basically in line but the machinery and equipment number is what you look at about 100 million. >> they got a great balance sheet, great cash flow. is there another bucyrus there, eyes of the future so to speak. another deal that puts them into

another portion of the market that they are not in currently? >> well there's always one that's possible but i think for the next 12 to 18 months they will sit there and absorb all the mining. they made three big acquisitions. i wouldn't aspect them to do a big one in the short term. >> thanks for joining us this morning. >> my pleasure. >> all right. when we come back, a new case of mad cow has beef futures down by 2%. we'll get the latest on the most recent case and find out if there's any threat to our food chain. so far it doesn't look like it but, again, that action is in the cow future. also coming up, apple crushing the street targets, calming fears that the iphone was past its best days. what's next for the most valuable tech company? "squawk" will be right next. hey, did you ever finish last month's invoices?

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take a look at the futures. we're looking at some sharply higher open especially for the nasdaq. those dow futures up by 55 points. s&p futures are up by a sharp

11.5 points. nasdaq futures up by 51 points. a 2% gain for the start of trading today. largely driven by what you saw out of apple. right now you're looking at a live shot of the testimony where rupert murdoch has been testifying today before that uk panel that's investigating media ethics. this is coming a day after his son james appeared before the same panel. murdoch is rejecting allegations that he used his media empire to unduly influence a succession of leaders. the u.s. is reporting its first case of mad cow disease in six years. they are assuring consumers there's no danger. nbc chief science and health robert bazell joins us this morning. weird thing to see. in the past just because you see

one doesn't mean it's like that first roach where there's more necessarily but it is disconcerting, right? >> mad cow is a disconcerting thing because when you see the disease, the equivalent in people, 175 in britain with their massive outbreak, it's horrible. one cow doesn't mean much in terms of threats to human health. as you mentioned earlier on, action in the futures markets because south korea was making noises about possibly banning imports of u.s. beef. japan did that after the first mad cow case in the united states was discovered in 2003. >> how does one cow self-generate one preon. >> this is a disease that can be

spread by preon, pieces of protein that are similar to the disintegration of the bain in alzheimer's. when an animal eats another animal particularly the nervous tissue of the gut and there's these particles called preon that spreads nerve disintegration. britain got into trouble because they had a disease that was massively spread through their sheep herds and when they started feeding sheep brains to their cows it caused the outbreak. america dodged that bullet because we didn't have native scraping and even though we were feeding animals to other animals that practice has been banned now so there can be these occasional cases caused by spontaneous mutations. there's going to be an investigation in this california case and so far it looks what that is. they looked at the feed. no evidence in the feed. the thing to watch for and which

would cause everybody to go into a tizzy if there were other cattle on this same farm that had it. so far it's one cow. >> robert bazell, thank you. we've seen you on our other sister networks all day long. still to come this morning apple, the fed earnings and much more. jeremy siegel gives us his outlook. and mohamed el-erian with his latest market predictions. "squawk" will be right back. duff & phelps finds the sweet spot and investment banking services. that powers sound decisions.fy

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apples blowing past expectations. we'll ask an analyst what did the stwreet miss. >> a tryoff "squawk box" masters in the market this hour. our guest host will be joined by jeremy siegel. he's not ruling out dow 17,000 by the end of next year. pimco's mohamed el-erian tells you how to prepare your portfolio. >> breaking economic data. durable good numbers for march due at 8:30 a.m. eastern.

third hour of "squawk" begins right now. ♪ welcome back. welcome back. to "squawk box" here on cnbc first in business worldwide. i'm joe kernen along with becky quick and andrew ross sorkin. our guest host on this wednesday, chairman and ceo of gamco investors. checking u.s. equity futures. pretty good session. up another 50 this morning. we'll see whether -- i love when liesman brings us tomorrow's news today. >> i love that too. >> we'll see if he's right. his take is that we're going to think this afternoon at some point that qe3 is off the table. >> yank the blanket out. >> can we ride a bike without training wheelgs. will we ever?

can stock market participants ever ride a bike without training wheels. >> yes, we can. >> without more methadone. >> nasdaq up 2%. that's because of apple. we'll talk more about that in just a moment. media mogul rupert murdoch is facing a uk ethics inquiry. murdoch says that he's not angry at prime minister david cameron for set up this inquiry. we'll continue to northern the testimony and bring you any highlights as they happen. also all morning long we've been getting some earnings reports from some major companies. boeing posting better than expected earnings and revenue. now there's a lot of back and forth with these numbers. right now we're going with a 1.22 versus the 94 cents the street was looking for. there was 11 cents that was positively added in because of lowering some of the litigation

expense or litigation reserves they had set aside. the expectation at least we believe at this point is that most analysts knew about that 11 cents, no matter how you spill it even at 1.11 they beat the street expectations. they came in with better than expected revenues and the company is trying to reflect a reduction in litigation reserves. that stock -- whoa out of whack bid. that stock has been indicated higher. bid and ask is probably wrong. don't pay attention to that bid ask. boeing will open higher. it's a dow component helping the dow. another dow component caterpillar their earnings beat the street. revenue has been light and that's questionable where that one will open. right now you can see it's indicate ad little lower. 107.15 to 107.20 after closing at 108 in 340.

this is the world's largest construction maker. that outlook is still below the street's consensus. delta airlines posting a loss. that matched expectations. sprint-nextel had a lost of 29 cents a share. shares of harley davidson getting a boost after the sales beat the street and you'll see right now 52.40 to 52.50 closed at $50.36. >> joe, we do have fans who are watching. apropos of our walmart conversation and ethics. i got an e-mail that says andrew if you fine yourself in a mexican jail and your schois -- your choice is a $500 bribe or not i hope you do the right thing. >> hollywood had -- >> hollywood is looking. >> they may have.

we don't know. sec is looking. >> there are places in the world where i think you do, a bribe might be necessary. >> next company has no reason to bribe anybody. maybe. let's get back to apple earnings. the company reported quarterly results after the bell last night that blew past expectations. we have a brain trust on apple this morning. joining us to discuss what's in store for apple the personal tech columnist for "usa today". dan morgan senior vice president of the portfolio manager and cnbc technology correspondent john ford. >> he's terrible. he's terrible. >> trying to make this more difficult. >> you said it right. >> don't know where to start but i'll start with ed, if i could. you look at these numbers and you think to yourself where can the stock possibly go? >> well, up and up, right? some analysts are saying $1,000 a share.

i'm not a stock analyst. i don't know if it's possible. i want does seem this company prints money taint -- i mean people ask when steve jobs passed away in the fall, you know, what's the future of apple. how long can they keep this up? obviously they are keeping it up. >> you're a tech columnist. do you look at different tech stuff. microsoft, windows. is there anything on the horizon, okay i can see somebody make even a modicum inroads. >> i've seen windows 8. traditionally when he the old pc versus mac. that battlefield comes windows 8 versus mountain lion. it's an interesting, you know, it's an interesting thing to look at. the operating system for the pc is no longer for the pc. >> it's tablet, iphones. >> exactly. the new windows is, you know, a

flexible operating system that's supposed to make nice on tablets and pcs and we've seen apple move in that direction with the latest version of os10 which borrows elements from ios. >> is there anything that google is doing that you say okay -- we were talking about samsung with john ford earlier how much of an impact they can make and how apple and steve jobs used to consider them the competitor. >> well you can't under estimate google. we saw what they did yesterday moving into the cloud base with google drive which is an interesting area. apple has its icloud and a whole bunch of competitors. i wouldn't rule out apple. they tried with chrome. it hasn't gained a lot of traction. >> dan, where are you on the stock? >> still very positive. still on our buy list. you know it's like you said an unbelievable stock. trading at 14 times earnings. they grew earnings last quarter

90%. do the math on that. it's hard to figure where they are going to go. but like we were talking about before they just keep delivering every time we get data out there and another great quarter and we move forward. >> priced into your forecast is it china and the growth there? do you need a new product like an itv? what gets threw? >> china was huge with the 4s. everybody was worried about verizon and at&t, what was going on in the u.s. and china was the driver. it's interest field goal you look back at some of their older products like the mac and the mp-3 player the growth rate was 15%, 17% on the quarter. they do need to keep put out new products like the ipad to keep this growth up because eventually you would think some of these parts may get mature. is at any time tv? i know they have routers they are making now. they are doing all kinds of stuff. we'll see if the tv can duplicate the growth and success they've had with ipad and

iphones. >> what are you hearing, john? i'm curious what the next great thing is. >> new macs. they telegraphed that in the call said this coming quarter will be heavy on ipads and macs. we're expecting a significant mac refresh this time, more models with flash not just in the macs about book. based on the way the mac is growing in china and how china is growing for apple that could be significant. on the tablets you were talking about microsoft and whether they can make inroads. or google. specifically on windows 8. i've been talking to microsoft and to intel about this windows 8 issue. intel isn't expecting significant tablet growth from windows 8 until corporate picks it up. that won't happen until later in the year in 2013. then what microsoft has done with windows on tablets where i'm concerned is call it windows rt. i'm worried people won't know

what that means and the windows 8 marketing could get lost on people on calling it windows rt. the ipad still has got some advantage from a marketing standpoint even if windows 8 is good on tablets. >> give us the bearish case on this company. everybody here seems to be quite bullish. take the opposite side of this. >> let me real quick say china. so much of apple's growth is pegged to china. if things start to go wrong for them there for some reason that would be very bad. apple was able to deal with that. >> could they address the labor issues? >> yes. >> dan, anything to worry about at all? >> just as you were talking about before, the battle lines are lined up. you got google android, you got microsoft, you got nokia and different competing operating systems. it will be interesting to see if

this open system, being on microsoft with their ability to sell their system to any maker of phones so to speak will that outdo apple who is proprietary. we'll just have to see. that to me would be the biggest risk going forward for them. you know like in the pc business that happened during the '90s. >> my concern is what i don't know and that's spectrum capacity and get spectrum to create the highways to deliver all the goods and services that the, all of the companies that you're talking about are going to have available for the consumer. and i don't know where that's coming from. and how quickly it arrives. >> we'll leave it. very special thank to you the apple brain trust. >> when we come back we have a "squawk box" market master. a mega bull, he's predicting that the dow will hit 15,000 by the end of next year and says 17,000 isn't even out of the

question. wharton school professor jeremy siegel will join us after this. in the next half hour we'll talk to mohamed el-erian. "squawk" will be right back. the next revolution in music is happening here.

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welcome back to box, futures right now looking good, up 60 points or so. check out the shares of icon. the famous nick dunn has tweeted about this because i am on twitter. earnings and revenue fell short, company also cutting its full year outlook citing continued softness as men's brands and that will be down 23%. could be one of today's debacles dejur.

and walmart, it's being downgraded to hold from buy and argus research bribery. it's one of the top analyst firms. >> synovis. >> i thought i got it right. you did the opposite. >> i tweeted about you two. >> joining us is "squawk" master of the markets jeremy siegel. he's finance professor at the university of pennsylvania's wharton school and professor siegel you say dow 15,000 by the end of next year. how do you get there? >> becky take a look at earnings. and even before apple last night, earnings this quarter are up over 10% year-over-year. expectations were all down to

2%. i mean the earnings is such a persuasive story on valuation for the market. honor neffly if you ask me what's keeping the market down i'm increasingly believing it's the, what bernanke called and we'll hear from the fed obviously later today the fiscal cliff that's coming at year end with $500 billion worth of taxes and spending hits and i think that's really keeping a lid on the market. >> that's pretty scary. what do we do with that fiscal cliff? does that change the total outlook for things? >> mean it definitely does. i mean i don't think there's very much of a chance that it's all going to go into effect because if it does go into effect there will be a recession in 2013, and that's not in the interest of obama or the administration at all. i think we're going to get some extension and let next year the

congress and the president whoever he may be, handle it. and i think most of the american public today thinks there's no hope of congress administration getting together on this. >> right. >> i think next year is the year they are going to get together on this. >> we have another market expert here. somebody who knows about this stuff. do you agree? >> the fiscal cliff has to be resolved if i want isn't obviously you have a challenge. but the uncertainty over it is an element with regards to the market. a lot of speed butches. the qe3 that you talked about. the happening in europe. it's happening with regards to other dynamics. uncertainty over regulation is an element. but going back to jeremy's comment earnings are an important element of the market. second part is the multiple on those earnings and multiple on interest rates and confidence and psychology is handcuffed and hobbled by this uncertainty over the cliff. and so you can have an explosion up.

the good news is that pension plans are getting more cash flow because of the lower discount rate and secondly they are under invested in american companies, under invested in equities and that flow of funds could have a powerful lift. >> do you think jeremy is right we could get to 15,000 by the end of next year. >> you can run the numbers and tans is market of 1900 and 12,000 in 2000. at some point in time that was a 6%. jeremy the math is on your side. it's going to happen, you know that. particularly inflation and nominal earnings. >> with these interest rates, you take a look at the opportunities in the various markets and equities relative to interest rates as i've been saying are the most attractive in over half a century of my analyst. >> jeremy assuming the ten year goes to 4% has the market already baked that in in terms of their thinking on multiples? >> yeah.

i absolutely do think so. look, the ten year will only go to 4% if the economy really improves. and that's going to brighten the earnings side what we call the enumerator what you do to get a discounted value for a stock. in the early stages of even fed tightening and it will be very interest field goal we see a couple of those fomc members jump their estimates of when we're going have to start tightening, i wouldn't be surprised even with the weakish data to get a little bit of a push. at the beginning of fed tightening that's not a problem for bull markets. they go on anywhere from a year to five years after the fed starts tightening. so i'm not worried about that. initial stages that's fine. later stages when they really tighten the slow inflation which we're not having now, i mean that's the time to worry about the fed not now. >> do you worry with the fed, though, what ben bernanke says at 2:15 could he throw a wrench

into things if he says we don't need any qe3 or all terminately he says we're concerned about the economy but our hand are tied. we won't do more right now. >> first of all, i would be surprised that the market has been thinking that qe3 is even a possibility. really there's no possibility of qe3 without a significant worsening of the economic picture and certainly we have not seen that. so, you know, i don't think the market has to worry about that. i think what's much more interesting is these two day meeting where's we see the individual interest rate forecast. now, remember the statement says until the end of 2014, keep interest rates at extraordinary low position but we'll get a total of 17 estimates and see if some of these people move to say maybe it's 2013. maybe it's 2012. if you would have asked me two or three weeks ago i would have

said that might have been a very significant jump with the weak data in the last week, probably fewer that are going to jump. that's a very important indicator as we go through watching the fed through the meetings this year, exactly where they place that beginning tightening on the market. >> jeremy we're out of time. before you go you mentioned dow 17,000 next year. what are the odds of that? >> the odds of that on the basis of valuation are 50-50. the odds of 15,000 are probably close to 3-1. >> wow. >> a lot of speed bumps, lots of things that can derail the projections. >> there could be. that's what the stock market is all about. >> that's why we stay tuned to cnbc. >> couldn't have said it better ourselves. >> i agree. >> mario gets to stay for that comment. jeremy thank you very much. now you know what to say next time to stick around. kidding. >> thank you. >> kidding.

see you again soon. >> coming up our third "squawk box" master of the market of the morning, pimco's mohamed el-erian will join us in the next half hour. but first breaking economic data. an indicator for the health of manufacturing, durable good orders for march due at 8:30 a.m. eastern. tomorrow check it out we're kicking off a very special two day series on "squawk". the disruptors, the young guns, the next big things in tech. you may not have heard of them or their companies just yet but they are designing the programs and products that everyone is talking about in the very near future. stay tuned for that and a lot more on "squawk". tdd# 1-800-345-2550 the spx is on my radar.

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helping you do what you do... even better. ♪ welcome back to "squawk box", everyone. the united states reporting its first case of mad cow disease in six years. today authorities are assuring consumers and global importers that there is no danger of meat from the california dairy cow that entered the food chain. mexico, korea and japan all say they will continue imports but two major south korean retailers did halt sales of u.s. beef. the eu says it sees no impact on import prs the states. cow futures have been under pressure. they are down 2.6%. the big question is what happens down the road and whether or not japan will lift some of the bans they had on cows that were under 30 months to this point. >> coming up, we're just minutes

away from the durable goods data for march. as we head to break take a look at the dow futures. it's guaranteed to grow grass anywhere,

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we are just seconds away from durable goods data. rick santelli is standing by at the cme and steve liesman is in washington. rick to you first. >> and the survey says durable goods taking a beating. down 4.2% on headline. that's a little over two times the expectations of down anywhere from 1.75 to 2. revisions last month lower from 2.2 to 1.9. let's take out transportation. down. let's look at a proxy for business investment and capital orders, nondefense, down .8. if you switch it from orders to shipments that was the only part of this report so far that i see that looked better up 2.6. the aftermath in the marketplace

is a basis point and a half or so. concession on a ten year note yield and you pretty much kind of slice the gains of pre-opening equities as demonstrated by the futures markets in about half. but, of course, fed meeting and euphoria over apple duly deserved, probably will continue to impact that equity market as we get close to 9:30. back to you. >> rick, it's funny the manasda futures didn't budge a bit. let's bring in steve for more on these numbers. steve you hear numbers like that and what do you start thinking? >> it's weaker than we thought. let me give a little bit of the background. everybody expected durables to be down today, the headline number because boeing reported a real decline in aircraft orders down to about 53 and it's been going gang busters earlier this year. but there was hope, there was a forecast out there that the

nontransportation part of the numbers would be better and i'm looking here at the number that rick just high liked as nondefense aircraft. down 0.8 now. it has done reasonably well in the prior month minus 2.8. but there's questions about business investment. i look at the different categories like manufacturing, primary metal, general machinery, all of those were down. some were a snap back. there's a lot of volatility in here. this number adds to the question marks about the recovery. are we going to relive this springtime swoon that we seem to have the last two years? are things rolling over? that will raise that question. i don't know that anybody will make a definitive judgment based on this number here but certainly help to add to the bearish case out there for the economy right now. >> so, let's try and move forward to the bearish case for the economy, steve. how does the fed address that today? durable good is one of many numbers. what will they tell us?

>> i don't think anything is definitive enough to cause anybody to move either way. we're still tracking a two four on the second quarter gdp. that's down from the furs quarter. it's not closer to having a zero handle on it which is kind of a slam dunk case for additional quantitative easing. it's weaker but not substantially. and those shipment numbers that rick told us about will add to second quarter of gdp. orders tell us about, you know, where things are going, the number followed by the market. shipments is what feeds into gdp. >> rick, very quickly, we are very -- i know you don't want to hear from the fed there's a possibility of qe3. the market is a different story. if they don't hear that message today will it be strong enough to with stand. >> we have this bipolar equity

market. no matter what the economy is doing, if you get a spat of negative numbers or a down draft they are going to want more qe. already the fed gives it or not they won't completely withhold it. you're always in my opinion two consecutive weak months away from the qe3. >> rick, woungt you agree that if you're going to play this game you should play it in a way to win the way you see the possibility of victory, not way the europeans played it. by that i mean if you're going to do it you ought to hold out the possibility it could happen again. what the europeans have done they've done i want twice and backed off and said you know what it's not coming again and that's a green light to the shorts. >> i can't disagree with you on that, steve. you want me to debate a strategy that i find flawed even though it's the better -- but i understand that logic.

i do. >> all right. we'll leave it on that note of agreement. rick, steve, guys thank you very much. steve, of course will be part of cnbc's special coverage of fed's discussion interest rates. that's today at 2:15 p.m. and ben bernanke news conference at 2:00 p.m. >> our third "squawk" matter master, mohamed el-erian will tell you,000 repair yo how to p portfolio. hang on to that. we'll be right back. and standard leather-trimmed seats, then your choice is obvious. the lexus es. it's complete luxury in a class full of compromises. see your lexus dealer.

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welcome back to "squawk box" this morning. little bit of deal news out this morning. check out shares of georesource the oil and gas exploration company is being acquired by halcon. was that on your list? >> no. >> we should -- do you do match making before the show is over >> always. >> here's a "squawk" master. mohamed el-erian is the ceo and co-investment officer at pimco, world's largest bond fund manager. his fund nearly oversees $1.8 trillion in assets. i have no room to talk. you started out what five straight? i know you had high hopes.

you grasping to one game above .500 with the mets. >> it's april 25th and still above .500. that's an achievement. i know a team in cincinnati that's a game below .500. we can talk about that team. >> better than for our five which was a couple of days ago that beat san francisco. >> let's not forget the red sox. >> how long was and you know i love you and i'm not mocking you but how long was the new normal. how long was that going to be? >> we said originally back in 2009 that we are on this bumpy journey to this unusual destination which is a three to five years. now the length depends on policymakers and policymakers have been postponing the deleveraging which makes this journey even more uncertain. that's why you're getting this tug-of-war between the uncertain macros and the policy sector.

>> i got so many thing i want to ask you your opinion on and some of the recent things written, something in the "journal" today about this whole viewpoint in europe about the latest is that it's austerity's fault, that it's not the rigid labor laws and the structural problems, that it's austerity and that somehow if the government, if the governments of southern europe were allowed to start spending freely again that in some keynesian way it would solve all the problems. should we learn that austerity doesn't work from what's happening over there? >> what's happening, and i was over there last week, is people are trying to simplify four different narratives in jump. depending where you look you get very different conclusions. if you look at greece, unfortunately there is no alternative to austerity but it has to be combined with structure reforms to promote growth. if you look to germany they are

doing great so there's very different narratives in europe and people are trying to simplify too much. the reality in europe and the u.s. is this is a day and a time to be very differentiated. don't go for the simple headliners because that will mislead you. >> you think germany can maintain its stance and merkel has the support of at least the german people who knows what happens in france. >> today yoigermany is a good he in a challenged neighborhood. in the next few months something has to change. the neighborhood has to get better or the house will come under pressure. >> what does the new normal mean for the employment rate. the biggest, easiest gains in this country have already been had or will we have a nice steady move down month after month where we get down to hopefully the old normal at least below 7% eventually some day. >> unfortunately, and i can't stress enough the word unfortunately, but

unfortunately, joe, the easy gains are behind us. now we're dealing with longer term unemployment. remember we had over 5 million americans that are long term unemployed. that's a real problem. in toward get to the next stage we have to teal with really difficult policy issues and it's not going to happen this year because our politics are so polarizing in washington right now. >> i had lunch yesterday with a ceo of a french company who argued that sarkozy is going to lose and ultimately the euro is going to break up as a result. i know it may sound far fetched but i'm curious what your view is of the politics that's going on and what the result may ultimately be? >> so he's pointing to something important which is that the core has uncertainty now. france, he netherlands and the perry fercy of the eurozone has more uncertainty. he's right in pointing frampbs

is an issue. i wouldn't go as far as went. i wouldn't think that it would turn france upside down. he's going to have to cost adjust as he sees the reality. >> it changes the dynamic with germany. they have been fast friends or at least partners in this and that may change potentially in a big way. >> absolutely. merkel is campaigning for sarkozy. she wants a partner in france and if he doesn't win she has to have a new relationship with the new person. >> jeremy siegel says 3-1 odds that the dow will be at 15,000 at the end of next year, he said 50-50 shot it gets to 17,000. what do you think of those odd? >> becky he speaks to this tug-of-war. we have strong corp operates that are telling you they are resilient and well run. we that have three major uncertainty on macro. we have europe, fiscal cliff

that hasn't been priced in and the geopolitics. those who say dow 17,000 are saying that the corporate strength is going prevail. those who say it's much more uncertain say wait a minute that's a tug-of-war. that's why it's really important to look at individual companies and sovereigns that have high margins, that have low leverage and that are exposed to growth and that's what the results are telling you. that's what apple is telling you. and it's really important to be differentiated today. >> all right. >> i echo your comments, mohamed. you're amazing. how do you big payable teams? >> let's not go baseball. >> both of you guys. >> come on. >> you're a yankees fan. >> next thing you'll tell me i'm a yankees, i'm a rangers, i'm a nets. >> it's cablevision thing. >> it's france, it's new york. i grew up before these teams

were around. >> i don't know, mohamed. i don't like the new normal. i really don't. i guess you were kind of right. it's not good for any of us. >> what's your handy chandicap s the euro breaks up. >> i don't think that's a likely outcome. it's a possible outcome but not likely. in terms of not liking the new normal, remember it's not what should happen, it's what's likely to happen. et cetera navigate to what's likely to happen. >> i know. >> that's the key issue. >> have you changed the tails on percentage probability? >> no, it's a very bi-normal world. we have risk on/risk off because people romance either mode and in reality it's a bimode.

and we have to get used to that. >> when do the reds and mets play? >> won't be in contact with you then? >> we can't talk then because it gets too nasty. we'll see. there's always hope. >> focus on the hockey. >> watch it every night on cnbc. our thanks to pimco's mohamed el-erian. we're very pleased to have him as an advisory board member for our second -- some people search for alpha. we deliver alpha. delivering alpha conference. unique meeting featuring the biggest hedge fund managers and investors from around the fwloeb. i want takes place july 18th in new york city. check out delivering alpha.com for more information. >> when we come back we'll have more on the walmart corruption scandal. it's raising further questions about the company's history in

mexico. our michelle caruso-cabrera will join us live right after this. "squawk" will be back right after this. according to the sig, ford is having some sort of big tire event. i just want to confirm a few things with fiona. how would you describe the event? it's big. no,i mean in terms of savings how would you sum it up? big in your own words, with respect to selection, what would you say? big okay, let's talk rebates mike, they're big they're big get $100 rebate, plus the low price tire guarantee during the big tire event. so, in other words, we can agree that ford's tire event is a good size? big big

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welcome back. the "squawk box" walmart corruption scandal brings another major controversy to light. the wonderful michelle caruso cabrera joins us with that story. i'm wondering how we would -- you know, if we had a conversation with you about this. i did ask one question in makeup, michelle, and that's i wonder if carlos clem ever deprived anyone in his entire career. in mexico, there's a different wore for bribe down there, isn't it? it's normal payment. [. >> speaking foreign language ]. >> and what do we do with

lobbyist and what do we do to pass the affordable care act in the different states that weren't on board. they got wear rights and -- what is all ta called? >> yes. you highlight all the moral ambiguities at the center of the issues when we talk about the practices act. they're all great practices, joe. i'm in a city where back in 2004, there was a large controversy about a walmart here. this country has been revived across the country. this is famous for two large pyramids. now, about three miles that way is where the walmart is. they began construction back in 2004. it's actually called -- [ speaking foreign language ]. and it was built smack dab in the middle of the era and the time period highlighted by the

"new york times" investigation which they alleged that walmart paid $24 million in bribes to officials in local government in order to speed up the construction of the stores. at the time, protesters tried to stop construction at the store for a number of reasons. they said it was the archeological zone. there might be ruins there. it represents, in their words, a terrible commercialization of mexico's historical cultural patrimony. they claimed that it was going to be an eyesore from the top of the pyramids. by the way, we climbed up to the top of the pyramids yesterday. you can't see the walmart at all from the top of the pyramids and, in fact, it is -- by the very large power plant right next to it. we spoke to one of the leaders of the protests yesterday. from my conversations with her, it's clear that her protest was an economic protest. she was fearful that the walmart would hurt the mom and pop businesses. frankly, it actually did.

there were 200 people there when the store opened. they were so excited. they were thrilled to have free parking. they were very happy about knowing there would always be supplies there and, of course, the prices were a lot lower than what they were used to paying. emma at the time saved an article which i've got here which recounts a very interesting conversation that apparently happened at the time. one month after the controversy broke, the newspaper reports that walmart had a meeting with a lot of the officials and they offered to make an economic contribution of roughly $60,000 and the mayor told the newspaper at the time that walmart had offered to deposit it directly in the city's treasury, but he said, no, that's not a good idea. you ought to donate it within the community. and then he went on to say that in no way did walmart offer to pay in order to speed up the permitting process. there's no evidence in this controversy that walmart paid any bribes. walmart would not respond to our questions about this controversy. however, the minute this started, when i talked to people

here, they said, oh, maybe that's how they got the pyramids built and that's how they got the walmart built. we have no evidence that that's the case, but it's revived the whole question. the mayor said give it to the community. no, that's not -- that probably didn't happen. >> we're going to try to find that mayor today, by the way. >> check out the home in jenkins. i don't know if you got the journal down there -- >> i read it, yeah. >> maybe refer people to that piece. we've got to go. >> the question is -- okay. go ahead. >> sorry. unfortunately we have to go but it is a good piece. i disagree with it, but i love jenkins. let's get down to the new york stock exchange. i imagine apple is on the brain along with some of these others. >> jim has 500,000 followers. >> and he does. >> you have a minute to go? it goes on until friday. don't stop tweeting. we're going to have two people

come to see the show. >> when i came on set this morning, i said who is the lucky man or woman? but he won't say. >> not over yet. they're still picking them. >> we listened to what apple said last night. i'm curious to know whether or not you think the outlook from boeing given up to the skeptic i about the economy as well as the supporters. >> i wish caterpillar had been a little less down beat about some of these emerging markets. brazil started to come over over and over again. boeing, this is a long cycle. it's fabulous. we're obviously in maybe second, third inning. it's great proportions. >> jim, apple? >> don't trade apple. i keep saying this is an investment. it's where the country seems to serve by media, by analysts, to say this is a trade. it's always been an investment. do not trade it. >> cramer, i didn't get to awe hear all your comments on walmart, but should a shareholder that knows what happened now, do they say, good

job, guys? or i am ashamed of you, i'm going to tell is stock? >> ashamed of you, sell the stock, because if i were the justice department or an aggressive prosecutor trying to make the case in time for the election, i would go after both the audit committee and the management and you would see -- >> but it's very possible for political reasons that that is going to happen? that's the real world. >> the prosecutorial discretion, joe. we're in america. >> tough to operate in mexico, though. >> election year. >> i want to point out in the hot file, we're reporting that newt gingrich just a few minutes ago making comments, i think it's pretty clear that governor romney is ultimately going to be the nominee, saying this after yesterday the sweep in five states here in the northeast. >> wow. is this the finale for him? he's finally hanging up or getting it close. >> he can count. >> that's shocking. that's like when i found out that there was bribery occurring in mexico.

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