>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. what is that? are you getting sick, too, joe? >> allergies, i think. >> it is the season. trees are coming back. pollen is here. we'll lead off with the markets this morning. they went into rally mode after the fed minutes yesterday. signs that the central bank will remain more dovish and less aggressive to hike rates. that sent stocks flying. joe's right. we were watching for what was going to happen with this. sure enough it looks like the fed put maybe back on. there was a unanimous decision to drop thresholds being used to telegraph a possible rate hike. and the markets, you saw the dow yesterday, it took off, adding 180 points for a better than 1% advance. the s&p 500 gaining over 1%, adding 20 points to close at 1872. finally we are above where we closed the year last year. we're looking at a gain of 23 points for the course of this year. the nasdaq stormed back.

internet and biotech names lead the way. it added 7 points. in europe right now, markets around the globe taking cues from what they've seen right now. i take that back. you see red arrows. the dax in germany down by 0.4%, the cac down by 0.4% and the ftse down by a few points. dow futures down by 52 points below fair value, s&p 500 futures off by just over 6 points and thes that dock down by about 15 points. the bond mark set where a lot of the attention is being paid. the ten-year is 2.545%. the markets get the weekly jobless claims report coming at 8:30 a.m. eastern time. economists are expecting a reading of 320,000, down from last week's reading of 326,000. right now let's get over to andrew. he has some of today's top

corporate stories. >> thank you, becky. big news this morning. this may weigh on some of the regulators in washington. at&t is in advanced talks to bring ultrafast internet to six north carolina cities with speeds up to 1 gigabyte per second or ten times the current fastest options. "the wall street journal" reporting that the telecom giant has been exploring the initiative for months. the cities which include chapel hill and raleigh issued a request for proposals for which at&t responded. google announced in february it, too, was considering north carolina among dozens of areas to expand its fiber network. they began offering upgraded service in austin with speeds up to 300 megabytes in december. when i said this matter for washington, it matters in the context of the comcast/time warner cable deal. comcast, the parent company of this network. they've argued that in fact there's more competition out there constantly and this is going to be referred to as one of those.

also this morning, becky, a little bit of news for you, blackberry, though you've given up on your blackberry. >> i'm using it right now. i have not given up. >> they may be considering exiting handsets completely. you may have an antique there. >> i knew thisay>> the ceo says would consider such a move if it remains unprofitable. a time frame for such a decision would be short. blackberry is looking to expand its corporate reach with investments, acquisitions and partnerships and take a look at shares of blackberry given that news. $8.10. that's up -- it's up on that news if you can believe that. >> what else do they do? >> what they do, they have servers. >> the secure servers. the secure servers push everything to these devices. also, a key departure coming from apple. greg christie, a vice president in engineering that helped develop the software for the

original iphone plans to leave the company later this year after being with the company 18 years. his group is credited with developing the slide to unlock function that we use every single day. for those of us with an iphone. his departure comes from the company as johnnie ive increased his roll in the company. he had organizational control over the software group before. this may be removing a long-term executive who apparently has bristled at his authority. that's a bit of the inside dope, inside the corner office at apple. that stock up to 530.12. >> is a gig gigabit.

different than a gigabyte. >> i see one times ten to the ninth. it's very complicated. >> a gigabyte -- >> g-i-g-a-b-y-t-e. >> this was a bit. >> i think a bit is more than a byte. >> for you -- >> it's a byte. we're being told it was a byte. >> it was spelled b-i-t. >> eight bits per byte. >> this is bits, isn't it? this story involves bits. it's not a gigabyte. that would be an error. we don't like errors. what is your verdict, if you are talking on camera and it's running out of your nose, do you "a," pretend you don't feel it or see it. >> hide under the desk. >> i get it.

i understand. >> which do you do? >> i think you do what you do. >> pretend you don't see it. >> you do what you did. otherwise -- >> part of it is you're on three hours a day. you've been doing this for a long time. >> it's method acting. >> i pretend and let it drip. >> do you remember how in g1 -- >> there's a kleenex box right there. >> whatever he was feeling at the time. >> i think you're right. >> you can't expect i'm not going to make fun of you. >> it's method acting. >> my ass itches. >> aaah! too much information. >> we had to walk in and see this. we had to walk in -- have you ever seen someone's butt crack on the cover of a newspaper? is that what we've come to? >> i think we have. >> they don't normally do that. that's elaine.

i don't want to see -- i don't want to see biden's ass, do you? >> why do you keep saying that word? >> you're not allowed to say ass? i think you are. how about butt. >> i've had it stream down my face on the air. >> you don't think people at home see and go, what's wrong with him? >> i'm hoping it drips down. >> let me read this walmart story. then i want to talk fed. >> did you see the ten-year today? >> 2.654. >> 2.65. at this point what i'm surprised about is that we can still get a bump from the fed. i thought at this point the fed, they're getting out, we need the economy to validate the stock market. do we still bid it up because of an accommodative fed? >> that's what i don't understand. >> it's not tapering in this case. now you know what we're hanging our head on. >> how long they stay with low rates. maybe there's validity to that.

>> i think this is the cup half full or half empty? i think not getting inflation above zero or 1%, that's what japan's problem has been. >> when the stronger economy comes they're going to raise rates. >> if you read the fed is worried about low inflation, i don't bid it up 180 points. i think there will come a time when it's like we're not going to do 3%. >> do you think people will realize today? >> we're flat on the year. we're up a little. it only takes us one day to put it flat again. we're getting nowhere in 2014. it's tough. if it was the fed that did it and they're getting out, it's going to be tough to make any more advances until the economy does. i'm not convinced. he sent me something. did you see this in france? >> bill miller today. >> he thinks everything is a screaming buy. >> we'll talk to him. >> sterling sent me something yesterday.

i don't know if we've do an executive edge. a new labor agreement in france, where it's a 35-hour workweek, they've gotten an agreement where no e-mails or telephone calls can be made after work. so to be more -- >> you can't rely on you -- >> most of them are in that mode already. >> don't dismiss this. they work long hours. >> i called cantino at 9:30 last night. he picked up the phone. >> that's a thing of the past. you'll have to turn off your business phone now. >> is that when you added donahoe? >> potentially. potentially. potentially. i don't know what you're talking about. >> i'll send this to you guys. >> let's go to walmart. >> let me send this to you guys, this no after-work e-mail. >> he said he wouldn't buy another hotel in france.

>> a new french labor deal, literally, unionists are hailing it as a milestone in human evolution. it will return society to move civilized practices where you're not allowed to get correspondence from work once you leave the office. >> can i make a comment? there's a great article about how how on wall street they're making the kids can't work on saturdays and sundays. >> at least one day. >> what they discovered is that the kids work just as much as they ever did -- >> but they work at home. >> not at home. it gets pulled to the other days. >> right. >> they pull all-nighters on the other days. if they're not taking the calls after work, it will get expanded some other place. >> they will get to full employment because they're divvying up the work for everyone. unfortunately employment is like 11%. they thought it was a good idea to start. walmart is partnering up

with wild oats to bring more organic food to the masses. it says here at nonorganic prices, wild oats launch will roll out in 2,000 walmart stores and add about 100 items to the retailers 1,600 item organic food offerings. according to the organic trade association, sales of organic food and beverages in the u.s. reached 31.5 billion in 2012. it's popular. people pay more. they think it's organic. i like gmos. if you can make it so you don't need pesticides. my idea is for chickens with like six wings. >> that's a little weird. >> you like chicken wings? >> yes. >> how about three breasts? >> dark meat or white meat? >> how about three breasts? huh? it makes sense to me. made sense to me. to do it that way. some people might not like that.

>> i like the idea of something you don't need pesticides for. >> then you wouldn't really be able to catch it. >> that's a little weird. >> let me tell you about more weak data. chinese trade data showing that exports fell unexpectedly for the second consecutive month in march. that was the worst showing in more than four years. exports fell by 6.6% in march from a year earlier after an 18.1% slide in february. and imports fell 11.3%. that was their weakest performance in 13 months. >> all right. the reason he's here is because it's the constitution and they got john hancock. "rolling stone" doesn't known that john hancock signed the declaration of independence, not the constitution. >> it was an art director who i'm sure i messed it all up. >> you know what brian said last night? he thinks he's funny.

he said no word on whether if they had known in hindsight whether they have have changed it. >> so to speak. >> that's a cheeky response. >> it's a cheeky response. see what the yield was? 5 to 5.5. greek government planning a widely anticipated debt sale for the first time since 2010, cnbc's chief international correspondent michelle caruso-cabrera joins us now. it wasn't that long ago we had 5% stuff here. it was like 15 years ago, wasn't it? >> right, right. >> we used to sell 5% five years. >> so long ago, right. >> it's not that bad, though, for them. >> it's fantastic. the guidance is morning is 4.95%. it's a screamer. this deal is a screamer. the original rank was 2 billion to 3 billion yesterday. maybe 2.5, now it looks like 3 billion euros they'll be able to borrow at a yield of less than 5%. the order book is huge. if you watch "squawk box" every

day, you know when european bond deals price, you usually get it somewhere between 5:00 and 7:00 in the morning. this is so big and they have to many allocations, they think it will take several hours before we know the absolute number. they're thinking 4.95%. here's the head scratcher. debt-to-gdp profile is 177% according to citigroup. why are people eager to lend money to a country that is still pretty much insolvent. investors are absolutely hungry for yield. that's a big one. the other reason is that we've got private sector haircuts are not necessarily popular with european leadership. remember, they punish the private sector so brutally during the debt restructuring for greece two years ago, there's not much appetite to do that again. they also don't think it would help very much. also, the ecb, don't forget, they've got your back. we keep hearing about the possibility for quantitative

easing when it comes to the european central bank. also, a really improved debt profile. when they did greece's restructuring they ended up with more debt than what they had before. now greece owes it to the official sector. other european countries, european taxpayers. guess what? greece doesn't have to start paying that back until 2023 with little interest deferred. principal deferred. it's a sweet deal they got. if you do this deal pricing today, it's only five years. by virtue of the calendar, you end up senior to all that debt that's pushed out to the future. this is why they are able to borrow at less than 5%. it's pretty incredible. it's a big milestone event for the country which, remember, set off the european financial crisis. guys, back to you. >> i don't see, if you're covering this from over here, your credibility is -- >> i asked.

i asked shouldn't we be in athens? because it is 70 degrees there today. >> i think you should be in the general vicinity, like santorini. >> live from santorini. >> talking to the common man. >> you're right. one of the reasons we're here is because i have to interview the italian finance minister later this morning. he's here in washington. >> that's no reason either. >> that's the excuse. >> like the guy that catches the octopus in mikinos. this is clearly a loss. we're losing credibility. every minute that you're here and not in greece. >> i'm with you. >> i need to get paid. >> tell nick. >> all right. okay. thank you, michelle. >> see you later. coming up, much more on the market rally sparked by the fed minutes. we'll figure out if that's a good thing or bad thing. plus, today's executive edge. could the color of your conference room ruin your next

deal? we'll talk to an expert who says the answer to that is yes. she'll explain why the color of your office might be what's making you feel bored at work. "squawk" returns with that and a lot more, just a moment. ♪ [ male announcer ] when fixed income experts... ♪ ...work with equity experts... ♪ ...who work with regional experts... ♪ ...who work with portfolio management experts, that's when expertise happens. mfs. because there is no expertise without collaboration.

♪ it's not easy being green ♪ it seems you blend in with so

many other ordinary things ♪ have you thought about using the color, the psychology of color to help boost productivity in your office? studies have shown that certain colors are better than others when trying to get the most out of your workers. the color green apparently inspires creativity and white makes people feel bored. maybe that's why everyone is so bored, the walls are white. our next guest is an expert in using color and psychology. tell us about this, sally augustin. >> there are colors offices can apply that will enhance the performance of their workers. environmental psychologists have learned that when people are in a space which is primarily green, they're more apt to think broadly and that leads to

creative thought which is something that's real important to all of us today in no matter what job you're doing. >> i have not been to many offices where the walls are green. what kind of green are we talking about? bright green, dark green? >> all greens seem to produce this mind-opening effect. the kind of green you want to use on the wall of the offices would be a light sage green because that green will produce this creativity related effect but it will also make the space seem larger and it will make people in the space feel more relaxed as well. >> i'm relaxed looking at your coat. >> look at my tie, sally. we are a great minds think alike here. >> that's right. that's right. >> every meeting that i've ever been to, i can't make it through -- i put my head like this in these conference room meetings. >> because they're white. >> every once in a while i fall

like that. i fall like that or i drop my pencil. the white walls put me to sleep in the conference room. >> the one thing i disagree with is yellow. >> it's difficult with white. when we're in a space with white or beiges, we tend to mull over the thoughts that are running through our head. unfortunately for us as a species, lots of things that are running through our head really aren't that upbeat. it produces this stress. >> i hear crickets. that's all that's running through my mind in these meetings. that's why i fall asleep. >> what's orange? is that something you'd put in a store, the idea of good value? you wouldn't put that in an office, would you? >> well, you could put it in an office if you have a retail section of the office. every so often there's a retail area appended to more traditional workplace area.

but you might use it in your -- say a call center if you wanted to remind the people who are working there that value was one of the important attributes of your brand. >> and pink, have you had a good experience with pink on the walls at the office? >> well, pink has its place. when we look at pink, we calm very quickly and stay calm for about 20 to 30 minutes. it can be handy to have a space that's the color of pepto-bismol pink in your office. >> that's a darker pink. you want a pepto-bismol pink. very specific about the kind of pink. that's more of a bubble gum pink as opposed to a light pink. >> yes, that's correct. it's the color of pepto-bismol that has this great calming effect on it. calms us for 20 to 30 minutes. for most of us if we're calm down for 20 to 30 minutes, that gives us a chance to regain our

composure, no matter what kind of argument -- we've just had an argument with a klein the or whatever. it gives us an opportunity to regain control and return productively to our workplace. >> and for colleagues that are meek, we should put them in a black room because that will make them aggressive? >> particularly in uniforms, people tend to behave much more aggressively. >> i like yellow, though. i know you said that's the most disliked color. yellow makes me happy. >> we're soulmates then. i really like the color yellow as well. for those of us whose favorite color is yellow, we're much more attached to our favorite color than other people are to their favorite colors. so those of us who like yellow bond to it much more than people who say they're favorite color is blue, for example. and there is a place for yellow

in a workplace. you wouldn't want to necessarily put it in a conference room where you might be negotiating deals, because that might get the meeting off to not the best start. but warm colors, like yellow, orange, et cetera, do spur our appetite. it could be that you could use it in a cafeteria, for example. >> we wear blue shirts a lot. >> look at cnbc. >> a lot of blue. trust. >> exactly. exactly. >> what's the color of your office, sally? >> my office actually is a warm brown, very light brown. >> you didn't tell us about brown. >> brown is interesting because it can have warm attributes and when it does, it makes us feel warmer in a space. that helps us -- makes us link more to other people.

increases our socialability. >> i've been arguing for a brown family room with animal head and a brown couch. >> animal head? >> maybe fake. brown is -- it makes me want to watch football and -- >> you're losing that argument right now, i take it? >> i also have a joke. pink -- >> no, i can't tell it. the punch line is i think i'm going to paint the ceiling pink. i can't tell it to you, sally. >> when you paint the ceiling make sure the lightest colors are overhead. intermediate colors are on the walls and the floor underneath you is the darkest color in the room because that makes us comfortable. we're a species that developed on earth, gravity keeps us oriented with our feet towards the ground. the ground is darker. you can paint the floor white if you want or whatever, note it

will set people on edge when they go into the room. >> no, no, no, white floors. i have had that feeling, i feel like a mouse and someone's writing down. the markets are front and center after a big rally and a big pharma conference in washington this morning, eli lilly ceo and chairman, john lechleiter will be our special guest. as we head to a break, take a look at yesterday's winners and losers. mine was earned in korea in 1953.

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♪ i wanna rock 'n' roll all night ♪ ♪ and party every day ♪ i wanna rock 'n' roll all night ♪ ♪ and party every day >> good morning and welcome back to "squawk box" here on cnbc. i hope you trust what i'm telling you, you see blue everywhere, right? i'm trustworthy. i'm joe kernen along with becky quick and andrew ross sorkin. something you're listening to one of the -- the executive producer's favorite stupid band. and apparently kiss is being inducted in the rock and roll hall of fame later today along with peter gabriel and nirvana

and hall and oates. who else? i said peter gabriel already. some other people, too. >> i think we're trying to get one of the guys from kiss to come here. >> that would be cool. >> he's been here before. i think we're trying to get him back. >> i'd like to get the big guy. >> gene? >> jane wells had him on before. >> he was checking out jane, too. that guy makes wilt chamberlain look like a monk. this is going to be big news because it matters in the context. >> explain that to me. >> let me explain. at&t is in advanced talks to bring ultrafast internet to six north carolina cities with speeds up to one gigabit per second or ten times the current fastest options.

google also announced in february that it too was considering north carolina among dozens of areas to expand its fiber network. why is this important? >> why north carolina. >> it's an open market. >> research triangle. >> open market. what's important about this in the context of the comcast/twc transaction, one of the big issues in washington is would comcast have a monopoly. if you see other companies regulating like this, innovating, it may suggest to the regulators there is competition out there and people are continuing to innovate. >> are you seriously going to argue when these two companies don't operate in any of the same geographic areas, you think there's going to be an issue here? >> what you've seen -- >> only one senator said he was going to block it. the guy who wouldn't be a senator if it wasn't for "saturday night live" and nbc is the one person who said he'd

block it, al franken. what's in it for me? would he be senator if he wasn't on "saturday night live"? >> no. the tea leaf suggests the deal is going to move forward. all i'm suggesting is that -- >> the tea leaves. >> behind the scenes there are arguments that it could potentially be anti-competitive, one being innovation won't be as fast as you might expect. this is one of those points that people will look to and say, there's innovation going on in north carolina, that could spread to other parts of the country. >> it bolsters the case that there's competition from other companies as well. >> you know the sad thing? who's that other guy, franken and davis. >> i don't remember him. >> the actor? >> no, the comic counterpart of al franken, franken and davis. >> he's an actor, comedian. >> where is he now? >> who was the guy that started "american idol" with ryan seacrest? >> forget. >> who was the guy with tom

hanks on "my two buddies"? what happened to him? think about it. >> we're still together. >> yeah. i don't know which one of us is going to end up like -- i don't remember the ryan seacrest guy's name. >> i don't remember. >> who was the guy on boo"booso buddies"? peter xa larscalari. >> did somebody give that in your ear. >> no. >> that was good. >> brian dunkleman. ryan seacrest makes $100 million a year. what is this guy doing? these two guests are waiting. >> they want to talk about the markets. >> they do. >> let's do that. we saw a huge rally yesterday after the minutes from the federal reserve policy meeting were released but is this rally sustainable as we progress into

earnings season? joining us with more, our two guests. joseph, let's talk about what happened yesterday. was this the right reaction from the markets, a more accommodative fed reason for rallying. >> i'm not so sure the fed's comments have been as controversial as everyone makes it out to be. i do think we have slightly more dovish information. it all reiterated the same thing we've been hearing over and over again, which is, look, tapering is different from tightening and while you're likely to see interest rates rise, the fed is in no position to tighten interest rates and policy. >> the guy passed away in 2010. i don't know what happened to him after "saturday night live." >> i'm not sure either. >> that recently happened. doug cass, actually, he knows

everything. doug knows everything. >> so what joe just said, is the market hears that the fed will be keeping interest rates lower longer. that's a surprising reason to rally. you would think the market at this point would want to see the economy is improving, there's a lot of great things out there, it might lead to higher rates but it's okay because the economy is improving. what happened? >> we're still in the sweet spot where the economy is improving. i think the news yesterday suggested we're not going to see the fed tighten prematurely before the economy is ready to handle it. it is a good spot for equities in terms of economic growth being supportive and very little threat or tightening from the fed. >> that's an interesting point you made. he thinks the economy is still improving and going along. if you can have your cake and eat it, too. do you think that's what's happening? >> there are things keeping investors up at night. the fed is just one of them. we have numbers coming out of

chi china. taking a step back and looking at things in perspective, while we're looking at relatively weak first quarter growth due to weather, we are expecting a moderate bounce back. we might see 3% towards the end of the year. >> do you think we get to 3% gdp for the end of the year? >> i think we get better than that. we'll be over 3%, probably between 3%, 3.5%. earnings will be soft this quarter, right now consensus estimates is lacking for flattish but typically companies beat by about 3% or 4%. if we have a 3% to 5% earnings base in the first quarter and the economy starts to sk se-- accelerate -- >> i'm talking gdp growth. >> i think we get to 3.5 the second half of the year. >> how does the fed it into keep

rates low for so long. >> they continue the tapering process. we're looking at a first rate hike in the middle of next year. >> not the first quarter? >> i doubt it. >> what do you think, joe? >> they made it clear, everything is data dependent. if we continue this tapering down each other, whether it's six months or a year after that, rate tightening is most likely going to come at some point next year. i can't tell you if it's the middle or the end of the year. >> you don't think it's the first quarter? >> i highly doubt it's the first quarter. especially if the inflation numbers remain this soft. we have the labor market healing. wages are creeping up higher and higher. you have the biggest component of what drives inflation which is the housing market, also gradually picking up. i suspect you'll see inflation numbers pick up a bit. >> you sound optimistic. what do you think that translates into for stocks this year. >> we're looking at 1950 in six months on the s&p. we're constructive. i think the earnings picture is going to be the main driver.

last year, clearly, it was multiple expansion. this year we're shifting more to an earnings driven market. >> is it 5% or 6% growth? >> six months. >> what do you think about that? >> i would echo the same. valuations at these levels, it's hard to assume multiples will continue to expand. i'm looking for about 4% to 6% in terms of enings growth, another 2%, 2.5% from dividends. i think we're looking at decent returns in u.s. equity markets despite these levels. >> you'd be telling people to buy right now? adding to their positions? >> i think you want to take advantage of the volatility and get into the markets. the underlying fundamentals have not changed. volatility has clearly picked up. there's a lot of noise. to the extent you can read through the noise and focus on the fundamentals and earnings in particular, i think you'll do okay. >> joe, thank you both, jeremy. >> viewers are interested in al franken. were there absentee ballots, andrew?

"the new york times" should have been all over this, right? the chads and stuff. all of a sudden they showed up in a trunk? >> with al franken? >> yes. during the recount when he became senator. >> google it. google it. >> it is masters. >> i thought about that today. >> the tie and the masters. >> that's a big day. >> you're color coordinated. >> are you going to repaint the walls? >> i'm not going to repaint the walls. i wanted to wear a green tie, green jacket, everything else. we have a "squawk" market master. >> what a segment. very clever. >> for a while they want us to wear a green jacket. i won't wear a green jacket out of respect for the tradition of augusta. anyway -- some day. i fantasize about being a member. bill miller joins us at 7:00

a.m. eastern. >> what color is your tie. >> it's like a mood ring. what was pink? relaxed. >> relaxed. >> black was aggression. >> i'm feeling aggressive because you won't work with me on the franken stuff. what am i now? did we do orange? >> orange is good value. >> if you can do this -- >> like home depot. >> can you make my teeth white? that's probably asking -- at 7:00 a.m. eastern, bill miller will be on. we have john lechleiter. i almost said frank lickliter. gunderman group is a go. yes! not just a start up. an upstart. gotta get going.

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welcome back. it's time for the "squawk" planner. this morning, jobless claims and the latest report on import prices will be released at 8:30 eastern time. the official start of earnings season is toll. we'll get jpmorgan and wells fargo reporting. today, family dollar and rite-aid are scheduled to roll out their results. and ally financial, their ipo begins trading today. they'll be under the ticker a-l-l-y. >> what happened to the music, andrew. >> what music are you talking about it? >> they upgraded. >> that is our "squawk box" music. >> it's brand new. we've upgraded. >> where's the old music? that's just our music. you don't have it for us so people can remember? >> you miss it? >> i do. >> they won't play it. when when return, the biopharmaceutical industry top innovators and researchers are

gathering for pharma's annual research meeting. the theme, from hope to cures. next, an exclusive interview with eli lilly ceo john lechleiter. i like katmandu. play that. "squawk box" will be back right after the break. ameriprise asked people a simple question: can you keep your lifestyle in retirement? i don't want to think about the alternative. i don't even know how to answer that. i mean, no one knows how long their money is going to last. i try not to worry, but you worry. what happens when your paychecks stop? because everyone has retirement questions. ameriprise created the exclusive confident retirement approach. to get the real answers you need. start building your confident retirement today.

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ed the top innovators are gathering in washington for the phrma annual meeting. joining us is one of the big phrma heavyweight. john lichleiter. john, good to see you again. i know you've been dealing with these oil companies from time to time with the patent expirations on a couple of important drugs. you try to replace those with drugs in the pipeline. are you managing through that okay? vista was the latest to go off patent? >> that's right, joe. we saw this period coming four or five years ago. cymbal ta went off patent late

last year. last month, vista. but i think investors are beginning to see sort of through this period. in the meantime, we kept investing. we brought our pipeline along. we had four regulatory filing last year. we could be launching three this year. we're very confident with our ability to grow from this point. >> john, i watched a report. i think it was on -- i'm not sure what network. but it was trying to explain the difference in drug prices in the united states versus other countries in the world. i thought it was as simple as price controls. but they made the point that we still can't negotiate. the government still can't negotiate for lower prices in a lot of arenas for drugs. what is the pressure foggy to be as cost containment becomes more

and more important? what do you see happening in terms of drug price something are you going to be able to maintain what you need to continue to innovate? because it's hurt innovation and the rest of the world, controls. that was one of the questions that they don't -- >> he doesn't want to answer. >> are you back, john? >> i didn't even see you lean over and pull a plug. i don't think you did that. no. we're taking some hits. is it something you're going to be able to -- >> he doesn't want to answer the question. >> joe, can you hear me now? >> maybe we don't need audio, john. how would you answer that? i worry about innovation based on regulators doing the wrong stuff. >> joe, i think it's extremely important that our products be priced in a way that recognizes the full value that those

products bring. i've said publicly i believe in many cases outside the united states where there is a single payer system our products are undervalued relative to what they provide, the benefit they provide patience. the benefit they provide the health system by offsetting hospitalization and other medical costs. yes, this is a very, very important aspect of our business. we point to medicare part d. the drug benefit for seniors as being an exceedingly -- a program that has helped seniors tremendously. at the same time price competition within medicare part b resulted in overall prices for drugs for this program being much, much lower than predicted in the past. this is something very important to us. when lily losdo you make of all

release of the data related to the doctors and how much money they were making? >> well, i can't comment specifically on that aspect. certainly we are as an industry releasing data on a quarterly basis on how much doctors receive from us for services rendered. being part of education programs. consulting for our companies. helping us design clinical trials. we're committed to making sure that data is out there. >> when you saw the doctor, david, did you see waste or potential abuse in the system? >> well, i'm not an expert on that. i think there are many, many opportunities to improve on the delivery of health care to make it more efficient. one of the stories is so many people have trouble sticking with their medicines. we know if you have something

like hypertension, when you have start on that medicine you need to stay with that medicine. many plans have such a high deductible it will discourage people from starting on medicines and staying on medicines. this of course is a huge hidden cost for the health care system. >> what's going to finally happen with actos? i saw there was some awards. they are going to fight that, i guess. how is it finally going to play out do you think? >> joe, i think this is a situation where you need to look beyond the headlines. we do not believe it went with the plaintiff. we will appeal. it continues have been very important for the treatment of type two diabetes. the punitive award is excessive and we believe it will be

significantly reduced. >> okay. john, appreciate it. thank you. it's always good to see you. >> good to see you too. >> from hope to cures. we have been waiting and waiting and waiting. i know you have been working hard to improve all of our lives. appreciate it. thanks. >> you bet. thank you. >> when we come back, a squawk market master bill miller will be our guest host. he is starting at the top of the hour. that's hall and oates. hall and. [ male announcer ] when fixed income experts...

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a big surge for wall street. fed minutes showing the support of central bank. now the focus returns to economic data with jobless claims on the way at 8:30 a.m. eastern time. >> searching for value.

bill pweurl is omiller is our g. >> what can we expect from jpmorgan and wells fargo? "squawk box" begins right now. good morning, everybody. welcome back to "squawk box" here on cnbc. we've been watching the futures today. after a big rally yesterday, there are red arrows. dow futures down 22 point below fair value. s&p down close to three points. nasdaq off seven points. it's the bond market we have been watching closely too. the 10-year note is yielding

2.657%. that's well below 2.7% we have been flirting with for a week or so. more concern about the strength of china's economy. exports fell unexpectedly for the second consecutive month in march, the worst showing in more than four years. exports fell from a year earlier. it comes after 18.1% slide in february. that was their weakest performance in 13 months. the markets will be getting weekly jobless claims reports at 8:30 a.m. eastern time. they are expecting a reading of 320,000, down from last week's 326,000. l.a. financial, initial public offering has been priced at $25 a share. that is at the low end of the range. it values the bail approximated out auto lender at $12 million. it will raise $2.4 billion, making it the biggest offering so far this year.

it will be trading under ally. >> at&t is in advanced talks to bring ultra fast internet with speeds up to 1 gigabyte more 10 times the current fastest options. it has been exploring the north carolina initiative for months. it would include chapel hill and raleigh. google has already announced in february that it was also considering a north carolina among dozens of areas to expand its fiber network. >> christy was the vice president and engineer that helped develop software for the original iphone. he is planning to leave after this year after being with the company 18 years. his group is credited with also developing and everyone use this, the slide to unlock

function. his departure comes as johnny ive expanded his role played a central role in redining ios 7. we have a little bit of coloring behind the scenes. this just removes a long time executive who may have bristled at his authority. our guest host one of the most famous valued investors. bill pweurl. chairman and cio of lmn. thanks for being here. >> our guest hosts have been in real estate. they have been pessimistic of their expectations not just for the economy but the stock market. how do you see things right now? >> it always sounds smart to be pessimistic, cautious.

if you're bullish as i am. neither i nor sam nor barry have any idea what the markets are going to do. ignorance is never an impediment to an opinion. the selloff we had in the last few years, from momentum stocks, except for apple. ibm and sisco. that made everything a dartboard that you could buy in my opinion and do well in the next 12 months. conditions aren't evidence. the bullish thing in the market is every time we get a 3% to 5% selloff, people flip out. >> they rest on three foundations. one is liquidity. the second one is growth. and the third is valuation. while the fed is tapering they are still net injecting

liquidity. earnings have been rising this year over last year. valuation is not demanded by historical standards. so we ought to see the path of least resistance is higher. if you chart the markets since 2009, it is a stairstep function. every time it goes up, people want to buy it. when it goes down, people want to sell it. people claim the end of the bull market and beginning of something terrible. >> we live right in the trees. i do. here the thesis. maybe the 10-year is indicating that it wasn't as manipulated by the fed but it actually deserves to be where it is because economic growth is not that great. and my question to you is, if we don't get the 3% that everyone seems to think that we're sort

of upticking from this 2% we have been in five years, if we don't get it, does that matter to the stock market? >> the direction matters more than the speed. >> some people think the fed has the market where it is. >> i think the economy is well supported by fundmentals. >> it's not worrisome, though? >> there's no qe over there. over here the qe has been the reason the market has done so well. there's no qe over there. >> but here you have seen multiples expand considerable the last two or three years. earnings have not.

we're on the other side of qe. maybe they still have that in front of them instead of the rear-view mirror. >> the markets have done well. they talk about the deflation ear problems. >> we have had trouble moving like this year. we are around december 31st close. do you think that's not necessarily going to -- >> look. 60% two years ago. 32% last year. accelerating into the fourth quarter. >> right. >> every 60 or 90 days we have to be 2%, 3%, 5% higher, there's no historical evident for that. i think if the market went nowhere, it would be higher. all that would happen is it would be cheaper at the beginning of the year than the beginning and it's more

attractive. >> as a result, what you have seen, thinking these are still fair valuations, what are some of the stocks that you like the most? >> one of the difficulties of being a long-term valued investor is the names don't change that much unless the prices do change a lot. we are where we have been. the husbanding stocks, builders, which did poorly last year, those things are extremely attractive because that's a long cycle. the airline stocks is 7. technology is quite attractivement it's time to buy ibm again. six down quarters of revenues. that one is attractive.

apple is still considered a great buy-in here. a big name is qualcomm. they have changed their capital allocation to being the best in the market. a company growing double the market, double the dividends, below market multiple. 75% of free cash flow. >> qualcomm, is that a new name for you? >> it's a relatively new name. we have been in and out of it over the years. >> but you're adding to it right now. >> now it's big position. we added to it last fall. >> in terms of what you said about ibm, you said this is a time where you think it's finally kind of turning a corner. is that because it's such a long losing streak on revenue? >> we have gotten ibm mostly right the last 20 years. we got a lot wrong. we got ibm mostly right. ibm has been asleep the last year, year and a half because of lack of revenue growth. i think the global economy is

getting gradually better. it is just too low for the company, especially if revenues grow again. the same with best pwaoeufplt it went from 14 to 40 because revenues started to grow at the same level. the flip over from refuvenue decline to revenue growth is a big switch over. >> maybe the middle class has not done well. margins are as good as they are going to be. profits are as good as they are going to be. we worry about whether the consumer in a 2% economy where wage growth is slow, there's a notion that consumers need to be able to support companies. to grow. and it's not happening. we want to raise the minimum wage. we want to do this. we want education. we're stuck in the muck. the overall middleclass appears to be stuck. ever think about that?

is that a false narrative that companies can't do well if we don't have consumers ready to spend? >> they are already significantly deleveraged. they are going in the right direction. median income hasn't grown in a long time. that's a significant issue. consumer spending looks okay. it's not great. one of the things that i think kind of interesting is people talk about how we need to have the unemployment rate drop and growth has to pick up. if the unemployment rate is dropping. say we do 190 or 220,000 jobs, that's unsustainable growth rate. you will hit a wall as soon as you get unemployment down to 5%. then you have inflationary pressures, all that stuff. i think growth rate which is enough to keep the economy going, which is enough to felt it slowly falling -- >> this is like goldilocks. >> it is an interesting thing.

socially it's not goldilocks. with interest rates not causing problems, with multiples not too high. that's why the market is just off all-time highs and why profits are at all-time highs. >> i'm looking at this tree right now. i was so easily swayed. >> goldman put out a report suggesting a 10% correction before the especially of the year. however, suggested by the end of the year we would be back to flat. in terms of viewers trying to figure out whether you go in or wait, there is still going to be opportunity letter. >> you know, i'm in a complete opposite thing. about the time that warren

buffett was born, dow was in the 40s. that's a decent move over the time. that works out object. >> when you said ibm, we hear things from china. we heard lousy numbers. >> ibm has tenacles every year. they sell mainly software and services. it's hard for revenues to keep dropping over time. i think it looks decent and solid. 20 bucks share of earnings. next year, $195 stock. earnings will be higher the year after that. >> warren noted on that the

financial crisis of our lifetime -- i don't know how long we're going to live. hopefully a lot longer. it's unlikely we have a repeat soon of what happened in 2008. a lot of people think we're still set up for that again. mark faber. they look at all the debt, all the printing. do you think we have seen it for at least -- can we breathe easily the next 20 years? >> i don't know if we can do that. but i think the conditions that gave rise to the financial crisis are largely ameliorated. but not the same ones we saw before. the banking system is far, far better. one of the great things right now is people's risk aversion. look at asset allocation. they're still terrified, which is good. >> we have a lot more to talk about with bill today. fortunately he is our guest host. >> you like square circles. >> around the stable.

>> what do you make of that? because you're curious. >> he's got me. he knows me. anyway. coming up, greece getting back into the game. what does that mean for the european economy? the official start of earnings season is upon us. what can we expect from the banking giants? preview at 7:30 a.m. bank of england rates unchanged. y relocating manufacturing to upstate new york? i tell people it's for the climate. the conditions in new york state are great for business. new york is ranked #2 in the nation for new private sector job creation. and now it's even better because they've introduced startup new york - dozens of tax-free zones where businesses pay no taxes for ten years. you'll get a warm welcome in the new new york. see if your business qualifies at startupny.com ♪ i ♪ and i got the tools ira

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♪ >> linda ronstadt. 11 grammys. she never married the governor, did she? they were just dating. do you remember that? >> i don't remember that. >> you remember that, right? they were an item. >> do you think i would remember that? >> do you know who she is? >> i know who she is. but how old was i when this happened? >> do you know jerry brown the first time around? >> not really. >> remember a guy named reagan, governor. >> he turned into president at

some point? >> some people could dispute -- no, he did. eight other band. a lot of people going into the rock and roll hall of fame, which is in cleveland, isn't it? >> i have been told that is the case. >> in fact, if cleveland wants to brag about something -- >> that's what they brag about. >> greek government. michelle caruso-cabrera joins us 23409 from athens but d.c. >> greek debt deal looks like it will be a screamer. heavy, heavy demand. 20 billion euros worth of orders. they will be able to borrow $3 billion. that's the upper end of the range. they initially said they wanted to borrow 2 billion to 3 billion euros. remember, when an issuance is super hot, a lot of investors

asked for double or tribble what they want, knowing they will not get the whole thing. true demand is lower than that. but higher relative to what's available. yield is 4.95% is the guidance we're getting. coupon, 4.75%. why a difference? if you get in on the ground floor, you are buying the bonds at a discount to face value. their duration is five years. and like any hot ipo, the chances of retail investor getting in on this are pretty much zero. don't be confused. things aren't enormously better in greece. they are still loaded with very, very high debt levels. they still fight with imf every time for a disbursement. they are the equivalent of insolve insolvent. it represents 34 countries who went through a restructuring.

what happened to greece's debt to gdp ratio? it is expected to go up. usually, as you can see from the line green lime, usually it goes up. it was an absolutely mess. why then are people so willing to lend it money? first of all, low yields all over the world. you want to lend germany money for five years? what are you getting paid. something measly. .86%. .59% is what you will get paid. so almost nothing. the debt to gdp profile, even though it's high, debt profile is center extended. they don't have big repayments on any of their debt until 2023. this bond expires five years from now. guys, back to you. >> michelle, thank you. she probably knows about this. it was 1974.

>> linda ronstadt, mexican-american. >> that's got big. she met jerry brown. he was very disciplined. they had the same liberal cause. but he was very deep. she was going to dinner at rosemary clooneys. she had roses that were hers. he said let's take these. so he was verify -- it's all in here. anyway, when we return, much more with guest host bill miller. alkermes chairman and ceo. o. uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions.

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at your ford dealer think? they think about tires. and what they've been through lately. polar vortexes, road construction, and gaping potholes. so with all that behind you, you might want to make sure you're safe and in control.

ford technicians are ready to find the right tires for your vehicle. get up to $120 in mail-in rebates on four select tires when you use the ford service credit card at the big tire event. see what the ford experts think about your tires. at your ford dealer. >> welcome back to "squawk box", everybody. we're listen to go peter gabriel, his song "in your eyes." he is one of many being inducted into the rock and roll hall of fame later today. when we come back, we will dig into the platinum portfolio.

jpmorgan and wells fargo about to turn in their quarterly report cards. rt cards.ial noise financial noise financial noise financial noise

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>> welcome back to "squawk box" this morning. we have the morning headlines for you. the treasury department have sold 95 million shares of their stock as part of the government's ongoing effort to recoup companies in the financial crisis. it got $25 per share in their ipo. the former financing arm of g.m. ran into trouble by making bad bets on subprime mortgages. further sales expected to be coming later this month. i'm not sure they will ever get their money back on g.m. also, a computer bug called heart bleed is causing major security headaches across the internet. website are scrambling to fix

it. credit card numbers and other sensitive information. the breakdown revealed this week affects a widely used encryption technology that is to protect on line accounts. most taxpayers think filing a tax return is simple. the associated press and poll finding that 90% of americans would rather leave the nation's tax system as it is, complications and all, than pay more money and fill out a simpler tax return. >> pay more money? >> that, i don't understand. >> only 7 pefrs said they would pay more. >> why would you have to pay for more? >> the pay it was worded, are

you prepared to pay more? >> can't you have a simpler return that you don't pay more? >> you wouldn't be paying an accountant as much. completing a federal tax return is easy. those who hire a tax preparer are apt to say it is hard. and i have to tell you i'm in the midst of it right now and owe my accountant stuff right after the show. they have been after me. >> it's complicated too. if you bother to file the more extended version of it. >> right. >> where you try to get exemptions or trying to get a mortgage deduction. that's 28% of the people do. >> right. >> so it's complicated if you try to take advantage of anything in the tax code. >> i played with turbo tax. it's kind of hard. >> and gave up and went over to somebody else. >> i have an accountant. >> the irs isn't going to look at either one of you guys.

you'll be fine. >> she knows you by name. you will ones -- the millionaires for more taxation. none of them send any money in. you don't do that either. none of them do that. because they want other people. >> that is the most ridiculous loaded question i have ever heard, though. >> which one? >> would you pay more for a similarer return? would you like a simpler return maybe is a better way of asking the question. let's get a sense of how the quarter might be playing out. joining us on set is gerard cassady at rbc capital markets. what do you think? what are we going to see?

>> we will see challenging numbers for the big banks because the capital markets business this quarter has been weak in the trading area. that's the big 800 pound gorilla within capital market. we will see bottom line numbers under pressure. >> do you think that comes as a surprise? do stocks trade lower as a result? >> no. the problem are -- we are hoping there may be better than expected, meaning they go down less and the markets react favorably. everybody is expecting lower revenues. >> what does that mean for let's say the rest of the year? >> i think it's going to be interesting. loan growth is starting to accelerate in march. it's growing at double digit rates of growth right now. commercial real estate has picked up and turned positive for the first time in the fourth quarter of last year. i think what we're going to hear is the rest of the year could

really start to accelerate. >> it's good for the banks but of a broader sign of what's happening in the economy. >> that's right. all we need now is consumer lend to go pick up some speed. it could work out well for the remainder of the year. >> our guest host is bill miller. financials are stocks that you watch closely. what do you think about the stocks right now? >> i agree with gerard. i know the stocks are attractive. loan growth is clear picking up. economy is okay. the think about banks, their natural state they generate huge amounts of capital. so for all the worries, and legitimately so, what do we do with all the capital the next several years. >> they have been keeping it at the federal levels. >> they are generating so much of that it's going to be tough to do. for an investors -- i love

citibank. >> city being told they wasn't buyback the chairs. >> as an investor, the capital is there. if you own the stock. they will get that squared away. gp had an issue. goldman had an issue. they will get them resolved. sheila behr may be praising michael corbett. it's a temporary phenomenon. >> a critical point is the excess capital the industry has. if you look the next three years, the amount of capital the industry will return, jpmorgan, citigroup is going to be dramatic. and i think what you're going to find is this industry is so well capitalized you have to go back to the 1930s. the industry is in much better shape than people realize. >> which are your favorite?

>> we like citigroup. it was a major disappointment they didn't get approved. longer term there's great value here. trading at a big discount. jpmorgan, wells fargo. >> did i hear you say 30% is in financials? is that correct? >> correct. >> citi is another one. >> we own citi, bank of mesh. i think citi will be like bank of america. it will get re-rated. also comes like mgic, mortgage insurer. spring leaf financial. subprime, which was a disaster before, is growth now. >> regulators, are they doing things with spring leaf that they have done with some of the

big banks. >> the whole side. nation star mortgage, for example, which we own, they are big beneficiaries from a capital standpoint. the banks want to get rid of their mortgage servicing regs. so nation star, aqua and walter, that's a huge growth area for them. spring leaf -- i hope spring leaf buys the subprime from city leaf. that would be good for both companies. >> just in terps of what you tell people, citigroup, jpmorgan, do you have ratings on other ratings as well. >> bank of mesh, we like that. the regional banks are also a place to be. they tend to have a little better growth. pnc financial is a regional bank people could buy. >> the clearinghouse association has a study on too big to fail. they come out and suggest there's no evidence that too big to fail banks the affect on large bank funding costs, do you

think that's real? it's right? it's wrong? what's your take? this is a larger policy debate than d.c. >> i think d.c., the numbers they used was up until the crisis. this is post crisis. but i would say this. when it comes to deposit funding costs, which is a major cost for banks, the big banks have no advantage over the smaller banks because it's a very competitive market. when you factor in that part of the funding equation. >> so the big banks are not being subsidized. >> at the debt level it will be ongoing debate depending who does the study. >> thank you for coming in today. >> you're welcome. >> bill miller will be with us the rest of the program. >> the platform portfolio. >> can't afford to miss it. >> no.

susan byrne. here's air hint. tylenol, stage coach and snap dragons. i'm just reading. susan will be with us and will reveal her picks. and then -- i don't know, what's snapdragon? and then poaching pact in silicon valley. more than 60,000 high-tech workers have a bone to pick with apple, google and intel. is there a single pact not to poach each other? that's andrew's story from tuesday and the "times." y and t" gunderman group.

gunderman group is growing. getting in a groove. growth is gratifying. goal is to grow. gotta get greater growth. growth? growth. i just talked to ups. they've got a lot of great ideas. like smart pick ups. they'll only show up when you print a label and it's automatic. we save time and money. time? money? time and money. awesome. awesome! awesome! awesome! awesome! awesome! awesome! awesome! (all) awesome! i love logistics.

welcome back to "squawk box". the first bond sale since bailout 2010 raised 3 billion euros, just about $4 billion at a yield of 4.75%. high demand from foreigners helped push the yield lower than expected by officials mid fives originally. we're adding another member to

the squawk platinum portfolio. susan byrne. she looks for high quality companies able to grow their dividends at a compound of 10% or more per year. she joins us now. good morning to you. >> good morning. >> so let's sort of go through some of these picks. we teased a little bit at the top before the break. joe said the word tylenol. and i think that's a tease for j and j. what do you like about j and j? >> well, we're going to look at three names this morning. one of them has already been mentioned. one is qualcomm. and that's the snapdragon. tylenol of course is j and j. and wells fargo would be our third. what each of these companies has in common is the ability to grow their dividend the next three to five years in excess of 10%. we're old school.

we do research here at westwood. we do actual research with actual analysts. we really go old school. these are names that our analysts indicate have the ability to grow the dividend, which we believe is the way to really prepare for things like retirement or funding your kid's college education. >> let's go through some of the ones you like and the rationale behind them. >> well, qualcomm is a chip manufacturer. >> right. >> it's very well positioned within the mobile move that we talk about. you're getting two and a half% yield up front. the management has become much more attuned to better capital allegatiocatio allocation. and the new snapdragon chip allows for less use of power

which people are trying to get more power into a mobile device. so that would be number one. number two, johnson & johnson, an old favorite. in excess of 2% yield, have grown their dividend in the mid-teens the last 15 years. well positioned around the world in all things health care. and we think that that is an important component for being able to grow that dividend. >> j&j has had a move. >> and so has the market. we think the market is moving into what we consider our sweet spot as research analysts. and that is stock picking. the overall market has had a move up. but we have a commitment for nearly 2,000 stocks in our country. we think it is time for the

stock picker. these are three we would think of. >> do you want to do these? >> we have a big position in qualcomm. we don't own j and j. >> why? >> it is fine. we just don't own it. >> you own the banks but you don't own wells. why not? >> we own the cheaper banks. wells is too good. the valuation is higher than the others. and i think there's more total return for jpmorgan or citi. >> what i'm looking for in return -- hi, bill. >> hi, susan. >> what i'm looking for and our analysts are geared toward, the returns here are just the dividends. we're not even counting on the capital appreciation of the stocks. obviously we think they will over the next three to five years. but the overall market has risen. it's not cheap. these are very high quality

companies. and we think the runway for a wells from a dividend viewpoint will be very, very clear. and that's what we're looking for. because when you're investing. say you're even getting a 10% move on your difficult deposited, your money that you're receiving will double in seven years. and i know that sounds modest. and i know people want to have all different types of people. obviously you want it. bill miller, who is going to be up like he was last year, brilliant job. but you also want to have a portfolio of well researched names whose dividends will grow every year. they will allow you to have a very happy retirement instead of a modest retirement. >> susan, thank you for joining us this morning.

thank you very much. >> thank you. >> when we come back, $9 billion at stake over poaching pacts in silicon valley. could apple and google have an employ korea revolt on their hands? that story is next. great rates for great rides. geico motorcycle, see how much you could save.

seeking $9 billion from employees like apple and google for an anti-poaching pact. i read it in the "new york

times" earlier this week. joining us now with his perspective is the senior editor at recode. we have a content sharing partnership with them. good morning to you. >> good morning. >> how big a deal is this in the valley? >> it seems like a big deal. especially if you're one of those people in the middle who works in the roughly $100,000 engineering jocbs right now. people are beginning to look at the inflated pays of the ceos. looking at wage disparity and so forth. it is all part and parcel of this moment in silicon valley. >> so here's the question. this seemed to be a widespread agreement. but let's just say you're recode. you work with recode. they have a partnership with nbc. there could be reasons why you wouldn't want to poach somebody

at nbc because it might upset the apple cart. is that illegal? >> well, the department of justice didn't think so. actually. >> the department of justice did think so. let me say that correctly. a lot of companies are under a settlement agreement they struck in 2010 to stop this. there was no reason. it wasn't just limited to specific problems. it wasn't just limited so geography. the department of justice took a dim view of this practice. >> what do you think of noncompetes broadly? you should know there's news in boston today. the governor said he will try to get rid of some of the noncompetes, especially in the technology industry. >> right. we should be operating in as free a market as possible. these jobs are generally at will. noncompetes have been found to be unenforceable in california.

their workers should have the same opportunity to move around and compete for the best wages. >> how much money do you think was lost? they suggest $3 billion. we're talking about this big $9 billion figure. does ma make sense to you? when you think of the cost of living, which is higher than anywhere else in the country, maybe they didn't ask for enough. >> thank you very much. coming up from bill miller, and the ceo of al kelmy. check out the futures ahead of the jobless claims. . ms. . ♪

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the next 12 months. >> where bill miller is putting his money to work. >> and the ceo talks about the latest schizophrenia drug. >> kicking up our platinum portfolio. looking for value names that can make you money. martin sass will tell us why retransmission fees can take broadcasting to the next level. the final hour of "squawk box" begins right now. welcome back to "squawk box" here at cnbc. in studio is legendary bill miller. trust fund manager. the futures are getting back

after a great session yesterday from the fed based on worries about low inflation. it was kind of the inverse or converse of what we have been seeing. we're trying to figure out where short-term rates started going up. we're still worried about low inflation globally. it might mean they are more dove-ish. >> and puts pressure on the 10-year yield too. >> is that why? >> maybe. >> these are small ticks. it is interesting. we took another wrong turn on 3.5%. >> i would have never guessed. >> 2.20 is -- i know. that won't happen. i'm sure. i don't think. >> we don't think so. >> family dollar posting quarterly results. 80 cents a share. analysts looking for 90 cents a share. the company says adverse winter weather was a factor. it shaved 5 cents off its

earnings. they expect it could decline and earnings to be in the 85 to 95 cents a share range excluding some restructuring charge. you can see the stock is down 3.5%. cost co's total same store sales rose 5% that ended on april 6th. growth strongest in the u.s. that's where sales came in at 6%. international sales rose by 4%. price deflation and foreign exchange. for march, picked up by 7%. >> let's get back to our guest host bill miller. trust fund manager. also chairman and cio of holding company lmn. we talked about something. i know you're not an expert. it was at least interesting to talk about off camera. . it was my litany of things to talk about. especially in the news business. we heard about the fed, the

balance sheet. in historical terms it looked big. it started with a low number before the crisis. it. >> was 800 billion. that was relatively low. so it is back in the normal range right now. again, i think that's -- one can argue whether it is good, better or indifferent. >> in terms of the fed exiting or extra indicating itself, it apparently has been going in and out with some repos and seeing what happens if they drain 100 billion. >> they put out a piece today where they said the fed had been testing exit mechanisms. they will do it several different ways. apparently they have been going in and draining 50 billion or 100 billion and letting it come

back in to see how it's impacting the overall market. haven't seen any effect at all. >> you're talking about draining at most a couple trillion. >> there's 2.5 trillion. >> that's only -- >> it's not much. you go back to what the taper is and people getting excited if it's 10 billion one side or the other. they can go in 100 billion and it doesn't seem to make a difference. >> you also noted that the market seems to get a little bit nervous. maybe not the taper. maybe not the end of qe but the final day of reckoning after how many years. when is the last time we had a rate increase? >> not offhand, no. >> it went up. >> it has to be longer than six years. they cut it '07. >> so seven years. >> call it eight years. >> when yellen something

something, the market does have to digest that. that will be the big thing in the future. >> market hates uncertainty. and the uncertainty surrounding the fed's ability or in ability to reign in this excess liquidity is huge. you look back at previous episodes of tightening, it causes it to flip out. they don't know how long it's going to go. the impact of it i think is foggy to be large. we have seen a huge move in the market. bernanke talked about going from 1.6 to over 3 in fairly short order. there will be a fair amount of volatility around that first tightening. >> when did you first start managing money? what year? >> 1982 professionally. >> you remember the 70s? >> oh, yeah. >> i remember the 60s. i don't remember the 1930s. >> okay. my point is we're still -- you

made the point there's a risk aversion. i don't know where you put it. historically i remember 1974 when the nifty 50. things happened that you couldn't believe happened. $50 stocks went to two. i became a broker in 1981. those seven years, between '74 and '81, people thought they would never go back in the stock market. finally we had a 20-year bull start anything '82. it took that long before people really embraced it again. are we in a similar position here? where are are we on a scale of 1 to 10. people are still very much risk averse. >> that's one of the most bullish things. asset allocations are still way off kilter with what you would expect. we're just getting back to having some of the money out of equity funds start to flow back in. they lost 25% of total assets by withdrawals. so if you look at a trend line, regression line versus equity

outflows, you're just barely at the beginning. >> if you were going to write a script so you get a market that foes from 780 to basically to 15,000 or something, how do you cure people of a buy and hold mentality that i can never lose? that was a i pretty good way of doing it in '07 and '08. >> yeah, absolutely. >> it broke the back of nip who thought they had it figured out. >> i'm agriculture not particular about this. we may be in the best bull market coming off the 660 level. if we could maintain low inflation. if growth can continue globally at a slow pace, evaluations get a lot higher. it wouldn't necessarily be healthy. in '85 or '86 people were claiming inflation must come back. it is complete garbage. it's going to inflate. >> i remember every 1,000 points from 800 all the way to 15,000 was the top.

>> yeah. >> alan able son. god rest his soul. his was every 100 points. i'm amazed that we were able to ring the complacency at 15,000. but we were. people are scared, right? we could make another sustained advance that could go on i don't know how many thousands of points before everyone comes back in and feels complacent again. >> it all depends. from my standpoint -- 16 times earnings on the market right now. so that's a little above the historic average. my concern about this market. we're in a classic market where we start under valuation. 660 it is cheap earnings. low multiples on low levels of earnings. now fair multiples on good levels of earnings. but the next stage could be high multiples on peak earnings. that leads you to the next

decline. >> so you're convinced that this is not just a sicyclical. this is between '82 and 2000. >> i'm not convinced of that. it is certainly cyclical. >> you wouldn't venture a guess what inning we're in, whether it's a doubleheader or softball. could we go into extra innings? >> we could. >> what signs would make you think we are getting to the overvalued levels. >> it puts the circumstance couple substantial back drop. the last time we had this was in the late 1990s. you had earnings growing rapidly in the 20% range and the market going up 20 plus% a year towards that time. and valuations getting to levels only exceeded maybe in '72 at

the peak of the nifty 50. and in the late 1990s, we talked about qualcomm. from 1999 to the spring of 2,000 went from three 3 to 100. nasdaq went up 100% from march of 1999 to march of 2000. i think the dow was flat over that period of time. those kind of imbalances where valuations and particular segments get completely crazy, that's definitely something worrisome. if you had overall evaluations on the market, 19, 20, 21 times, you're valuable to anything that can go wrong. >> so warren buffett was -- so he's 83. if it went from 40 to 16,000. and let's just use -- he was 20 when he started? >> he was like 7 when he started.

if you multiply. we shouldn't hear 20,000 on the dow or 25,000. we have to get used to numbers like 50 and 100,000. >> the long-term real rate of return equities has been 6%. it's very stationary. >> it compounded. >> yeah. if you look at 50 or 100-year period, it will deliver a lot of numbers. >> so it was june of 2006 was the last time rates were raised. what is that? almost eight years. >> you were worried about peak earnings. in terms of how you see the potential for peak earnings soon given where we are -- or not soon. >> let me ask you a slightly different way.

i mentioned earlier the conditions what a bull market rest on. bear markets, anything greater than 15%, 20% decline, they are always a combination of three things. oil price spike, fed raising interest rates, or recession. we have no oil spike. no fed raising interest rates. and estimates going up. so that's what you're looking for if you're looking for a problem. australia hasn't had a recession in 25 years. >> the next move is raising rates, bill. >> it is. >> and usually, usually what happened is you get a significant decline in the market when the fed starts to raise rates. they're moving from kaopl tkaeufb to neutral. that's almost a a buying opportunity. that's when they are trying to either burst bubbles, slow things down. if you remember in 1999 when the fed said it doesn't matter, it

doesn't matter, all these tech companies have excess fact, it turned out it wasn't too bullish for tech. >> given everything we hear and read in the "new york times" and everything and the president, what would we give for a title labor market right now? that would be the greatest thing that ever happened on the planet. again, if we could get a tight labor market. but it really wouldn't be great. it's bad. it's counterintuitive. what seems to be good isn't always necessarily good. hold o. you don't ever think a tight labor market is coming again, do you? >> why would a tight labor market be a bad thing? >> it brings back a wage price spiral. >> potentially. >> bad for the markets. >> bad for the markets. >> that's the question. >> well, but then again it's -- sooner or later. >> this goes back to who owns the assets, right? >> do you see what i'm dealing with? >> he told you it's good for the

people, good the for the markets as if they are diametrically opposed. you want a tight labor market? >> no. >> you want under 6%, though? >> i would like a labor market where you have real wages rising across the economy without inflationary pressures. >> and without a law that raises them across the board. >> i'm with bill. if i can get real wage increases, unemployment may be 6%. >> i think you can go to five. >> so we get to five increased wages that's good for everybody. and no inflation? >> when you get to five, the economy would have to slow dramatically to keep you from going to four and have the wage price spiral. >> a lot of things on face

value. just be careful what you wish for. a really tight labor market. anything for financial assets and wage price spiral? there isn't. >> recession is pretty bad. assets. >> when they come in and ask them to break the back of it. it takes just horrible things. >> that was the only double dip recession. >> and that was so much pain. i know you don't want to bring the pain. >> guys, i want to tell you about breaking news just hitting. we have been following this g.m. story with the story of the recall of now $2.6 million. g.m. just announcing it placed two engineers on leave related to the ignition switch recall. this is what mary barra was under pressure for last week under both houses of congress. the question had been there are still employees who had been involved in the last decade, employees who had been involved still working at general motors. she answered they she thought

there were. now the company is declining to tphaeuplt engineers but they say they are placing the engineers on leave as an interim step. they are starting an employee program to reward those who help make vehicles safer. the ceo at this point saying that the decision was difficult but believes it was the best step to make it this point. the two engineers place on leave as an interim step. >> and they can't figure out what's going on? >> because of their involvement related to the ignition switch recall. her answer last week was there was an internal investigation. didn't want to get involved. >> did they tell them to sell the stock at the right time? >> no. >> this is a question we talked about. someone was there. what happened. call the 350e78 in at that point. up don't want to mess up an internal investigation. but at the same time you want to get to the bottom of things

because these are issues more than a decade old. >> right. >> g.m. mary berra has known this for two months. this is new information she said she just learned about -- >> how could she just learn it, though, right now? >> not just now. at the end of february. when she testified last week she said she just learned about this two months ago. there's been an internal investigation thats that taken place. they are placing the two engineers on leave as an interim step. >> scapegoat. we have a lot of breaking news. breaking news on ebay. after a long proxy battle carl icahn is ending that battle, if you will. he reached an agreement with the company before the company's upcoming meeting of annual shareholders. he is drawing his proposal to separate the pay pal business and two nominees to the board of directors. thief they are agreed to his

suggestion to appoint david dorman. it will expand the number to 10 -- or rather two 10 in a statement, this is important, i said i continue to believe ebay would benefit from the separation of pay pal at some point in the near future and intend to continue to press my case with confidential discussions with the company. there's a county agreement as well. he and i have agreed to meet regularly when he is in new york to discuss strategic alternatives. effectively uncle carl i would argue has pulled the plug on this little situation. >> tim cook can come too. doesn't he have to meet regularly with tim about the buyback? >> he does. >> just get it out of the way. >> for the last couple of months

he pushed. he used to be to be with at&t. he was the chair of motorola. carl had called the company clueless about corporate governance. he called them either in competent of governance. by the way, he hasn't won this. there is a little bit -- >> seems like a step back. >> there is a little bit of a suggestion that it seals like a huge step back. but there is a suggestion he is going to continue to think about this. i wonder whether in a year or two you will see a separation of pay pal. >> david is a friend of the show. need to go to pebble to talk to

him. >> john will join us at 8:30 to talk about this so we can try to understand what happened. >> when we come back, the seeking approval of an experimental schizophrenia drug. the ceo will join us after the break. break. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price, maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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the biopharmaceuticals top innovators and researchers are gathering in washington for phrma's annual meeting. ceo of a company that focuses on neurophysiological treatment i guess for things like depression and schizophrenia. chairman and ceo of alkermes. thank you for being here. >> that you can. >> the latest positive trials has wall street and analysts making positive comments, richard, about your stock. and that is for the schizophrenia treatment. and i'm fascinated by it. it's atypical. does that lower the side effect profile than some of the others

in weight gain. and it's a once a month injection which means it's not nearly as hard to get people to get people to do what they need to do to stay on their medication. >> that's exactly right. it's a devastating, progressive long-term december. this class of drugs you refer to are the modern generation. so our drug is a once a month version of one of the critical kphoepbly known as abilify. it is a new molecule designed specifically for injection and long-term use. they test once a month of this drug in patients with schizophrenia. >> you built a great company obviously. is it more of a novel drug

delivery technology company, more therapeutics? you make things last longer or be delivered more accurately to the site where it has action? or are you doing both now? >> you have followed the company over the years. we started out as a drug company. it allowed us to develop drugs, interact with fda and other regulatory parties, build factories to make our medicines. about the last several years we have been intensely focused on making our own molecules. now we have become a true drug innovator. we have more in the pipeline. we have one in phase two for skits tpraeupbier and novel pain clinic this year. >> we will need to talk when we

have more time. both are useful. maybe it's even a little bit more interesting. join us again at some point. good luck. >> be happy to. thank you. >> coming up, the markets will be watching jobless claims data. we will get you those in just a couple of minutes. we return right after this. t af.

coming up, ebay ceo john don

ho has news out this morning. carl icahn and the company ended their proxy fight. he will join us right after the break. and our guest host bill miller owns ebay. we have jobless claims coming up. stick around. we'll be right back. latte or au lait? cozy or cool? "meow" or "woof"? exactly the way you want it ... until boom, it's bedtime! your mattress is a battleground of thwarted desire. enter the all-new sleep number classic series. designed to let couples sleep together in individualized comfort. starting at just $699.99 for a queen mattress.

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welcome back, everybody. we are just a few seconds away from jobless claims. rick santelli is standing by. rick, take it away. let's get the numbers. >> initial jobless claims for the most recent week moved down 32,000. from 332,000 to 300,000. right on the nose. who named that initial claims number? continuing claims also see a trend lower from 2.83 million to 2.77. if we look at march prices month over month, up 0.6. that's three times hotter than expectations. and if we look in the rear-view mirror, coming off an unrevised up 0.9. year after year, a bit of a different story in a way. it was down 0.6. but we are expecting down 1%.

our last look was down 1.1. it is now down 1.2. depending on your time frame, various pressures. we all know pressures were there. obviously the market is going to like this news. but i'm still not sure of the tenuous correlations between dropping initially claims. how that gets impacted by various programs that are going to be or not going to be continued. does it really lead to job creation. is there enough in the real world? i don't know. the fed tossed it out the window. you have to decide, right, andrew ross sorkin? >> we will try to decide. in the meantime, we have breaking news on ebay. carl icahn's proxy battle just ended. ebay announcing it reached an agreement with investor carl icahn before the annual meeting of invest ofrs.

he separates the company's pay pal business and two nominees. he said i continue to believe ebay would benefit from the separation of pay pal at some point in the future and continue the continue to impress my case. there is a confidentiality agreement. we will talk about that in a second. while john made no commitments regarding such a separation, he and i agreed to meet regularly when he is in new york to discuss strategic alternatives. joining us first to talk about all this and more, john don ho. good morning to you. >> good morning, andrew. >> so it appears that mr. icahn has capitulated. >> i wouldn't put it that way at all. we had a chance to talk more about pay pal, ebay, and more on the opportunity of the company. they see the potential of the company. it is becoming a long term.

>> this is the man who pulled you clueless and either in competent or negligent. and now everybody is singing kumbaya. how did that happen? >> i haven't been paying a lot of attention to the last several weeks. what really has changed is our conversation got to the fundamentals of the business. and the fundamentals of the opportunity in front of us. both for ebay and pay pal. that's what we're aligned on. that's where we found common ground. that's our focus going forward. >> so he's withdrawing. i had an experience with carl icahn at motorola. how did that happen? >> well, we were searching for a mutually agreeable independent director. and i've known dave for numerous years. he's a world class executive, world class leader. somebody whose integrity is

unquestionable. i'm delighted to add him to your board. our board is delighted. carl thinks that's a good move as well. again, this has a nice win-win characteristics. >> if you haven't done this, do you think you would lose or win? >> we thought we were going to win the vote. carl himself said, look, let's make peace, not war. it was not something helping ebay shareholder or helping us innovate. now it's behind us. we can focus on competing in the market, driving strong growth which is the only way to drive sustainable shareholder value. >> you signed a confidentiality agreement with him, which will give him access to you and others at the company for him to continue to press this case around surrounding pay pal from ebay. what are the chances that happens not tomorrow but in the next 12 or 18 months? >> you know, what i said all along is the board and i look at

it regularly. we have done it in the past and will continue to do it. right now we think ebay and pay pal are great together. how does pay pal grow and how does ebay grow? ebay makes pay pal more successful because of the strong synergies. and vice versa. when it changes, we will act rationally. we will continue to execute in that direction. >> john, one of your large shareholders is here, bill miller. he picked up some of your stock before carl icahn. what's your take on this? >> we have been in and out of he bail over the years. i have a high regard for john and the team. we thought it was overvalued. we think it's worth the mid-70s. john has done a great job. if you go pack and look, this was a really close call in the

sense that you have musk on one side and peter on the other side. when ebay bought pay pal it was paid 15% of their market cap. it is probably worth 40% to 50% of their market cap. clearly there's been a lot of value creation under meg and john's leadership. i would tend to go along with what john said. i think it's something that should be studied over time. it is not clear it should be split off. >> john, can you just explain this to us in terms of personal dynamics. when you have carl attack you personally or others on the board and just about the entire company, you've now signed a confidentiality agreement where you are going to be seeing and talking to him regularly. how is that supposed to happen? >> it's relatively straightforward. there have been a lot of dynamics out of the press.

i have had conversations all along with carl, confidential considerations. the vice chair of jpmorgan called me and said he had been meeting with carl on something unrelated. he saw an opportunity for some sort of compromise. he encouraged both of us to spend more time together, which is what we did over the weekend. we had multiple conversations based on not separation, not theatrics but really understanding pay pal, understanding ebay and understanding the enormous opportunity we had. and once we had those kinds of conversations around the substance of the business, we found common ground. we were aligned. it was clear i believe carl believes in the future of our business, as do i and we found a way to make this a win-win instead of zero sum game. >> other ceos who may be attacked by carl icahn publicly,

are those real? how are you supposed to think about some of these things? he said very difficult things about you personally and members of your board and the executive team. >> you know, one of the things when i reached out to ceos that dealt with carl early on, they encouraged me to reach out to him directly, which i did. throughout all this process we had direct conversation. in those direct conversations carl was always respectful, always thoughtful. >> but then when he comes out with a press release 12 hours after he talks to you on the phone, aren't you like, what gives? >> it's business. >> in in world today there's a lot of opinions and different styles. what i focused on. you know, andrew, it's just staying focused on the fundamentals, the facts and how we can achieve the potential of our company. the job of the ceo is to keep

focused on executing. >> i'm trying to stir the soup spoon. >> did you ever talk to elon? >> sure. he is one of the pay pal founders. very thoughtful guy. he's got great perspective around how pay pal continued to enhance his growth. >> his perspective was you have to separate it or the company will turn. >> i think once we had dialogue around we're doing many of the things he believes we should be doing. >> we're going to thank john this morning. the soap opera is over. thank you for coming here on cnbc. >> calm and conciliatory. it's business.

>> it is always business. >> just coming in right now. carl icahn is going to be appearing on ""fast money"" at 12:00 p.m. eastern time. we'll get his take on what all of this is about. you know what he says publicly, it's even better than privately. he uses more colorful words and everything else. anyway, up next, our newest member of our platinum portfolio. one of the oldest health care services company in the nation. martin sass joins us after the break with a few picks. three to be exact. we'll be right back. right back. >> get a leg up on the trading day with the morning squawk newsletter. going to squawk.cnbc.com and sign up now. morning squawk is a snapshot of the day's top stories, guests, and some fun water cooler stories that we'll be squawking about all morning long.

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call or click to open your fidelity account today. the average hrefpgt to hold a stock is one to five years. good morning, marty.

some of these we have talked about before. we're going to keep it somewhat short today. but let's do the three. it's nice that you have recommended them again and again. that means they are going up again. you have mentioned this before, haven't you? >> yes. i think briefly, joe. this is a company that is going through a massive transformation. they're going to close on the acquisition of a company which is a division of aig called international lease finance corp. it is a real "game change"er in the aircraft leasing business. it will tans form air cap leasing into the largest global leasing company in the world. aircraft leasing company in the world. number one will be air cap. number two close behind is ge. the two of them 50% of this market, which is growing rapidly as the airlines are cutting costs and upgrading to more modernized fleets. it trades 8 and a half times the

estimate in 2015. >> you have made the case for next star broadcasting based on all the changes going on with local tv. can you explain that in a nutshell for us? >> yes. this is probably the most hated groupon wall street until the last two days when they rallied sharply. investors are concerned about two things. new fcc regulations which were promulgated on march 31st, just last week. now that's out of the way. investor uncertainty is behind us. the concerns were overstated to begin with. undue concerns about a supreme court hearing april 22nd. that will shortly be behind us. what is being overlooked is tremendous growth for the local tv broadcasters like next star who can substantially increase their u.s. household

penetration. they had 16% that can go to the fcc cap of 39. it's trading at 16% free cash flow yield, which is extraordinarily cheap. >> and mckesson, you have owned that for a while. they have never missed a quarter. >> i have owned them three years. they have beaten and raised every quarter in the three years we have owned them. we feel they will do it again. it's the world's largest health care company. it will have 180, $190 billion in sales after the acquisition that was just completed. and along with cardinal health and amerisource. had an agolopy. had 90% of the market. they will benefit from the generic wave we have talked about in the past which will increase the profitability significantly. >> well, you're talking -- bill miller was taking notes.

i don't know what that means. i think that might be a good sign. >> bill knows a little bit about stocks. we have been around the block a few times. hi, bill. >> he was doodling. >> crossword. >> yeah. doing a crossword. i have pheuf money on you, marty. >> thank you. >> thank you for joining us today. we'll have you back soon. we will follow the companies and see how they do. >> when we come back, more from bill miller, including his bet on bit cans coin. bit coin. >> tomorrow on "squawk box", we talk housing with the chairman and ceo of lending tree. plus, pro golfer lexy thompson on the first round of the masters. it's right here on "squawk box" at 6:00 a.m. eastern time only on cnbc. on cnbc.

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we've got some big stories we're following this morning. gm placing two engineers on leave related to its ignition switch recall. the ceo mary barra saying that the decision was difficult, but she believes it was the best for the company. gm also announcing that it will be starting an employee program rewarding those who help make its vehicles safer. and e-bay has reached an agreement with investor carl

icahn to end the proxy contest before the annual meeting with stockholders. mr. icahn is withdrawing both of his proposals, and his two nominees to the company's board of directors. when we return, warren buffett just a few weeks ago blasting bitcoin. right here, he called it a mirage. bill miller has a different take. we'll find out why he is buying the currency for his portfolio. financial services companies in the country? hey. yours? not anymore. come on in. [ male announcer ] by meeting you more than halfway. it's how edward jones makes sense of investing. come on in. [ male announcer ] by meeting you more than halfway. at your ford dealer think? they think about tires. and what they've been through lately. polar vortexes, road construction, and gaping potholes. so with all that behind you, you might want to make sure you're safe and in control. ford technicians are ready to find the right tires for your vehicle.

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welcome back. warren buffett was on "squawk box" last month talking about bitcoin. he is very skeptical of the new currency. here's what he had to say. >> it's a mirage, basically. it's a method of transmitting money. it's a very effective way of transmitting money and you can do it anonymously and all that. a check is a way of transmitting money, too. are checks worth a lot of money just because they can transmit money? you can transmit money by money orders. people do it. i don't think bitcoin is a better way of doing it, but you replicate it a bunch of different ways. the idea that it has some huge intrinsic value is just a joke in my view. >> guest host bill miller is here. you said you own what warren buffett calls to be a joke. you own some bitcoin.

>> i do own bitcoin. >> it's apparently a mirage. >> well, as you know, i have enormous regard for warren. i think there's a logical flaw in his thinking here. it may very well be the case that bitcoin is worth nothing. i think it's a really interesting intellectual and technological experiment. and i think he had it exactly right that its maybe value potentially is the payment system. so potentially disruptive, you can send it without paying the interchange fees and that kind of thing. but where he uses the analog to checks or money orders, that's where the mistake is. the reason that checks are worth nothing or money orders is you create them -- you can create gazillions of them. so they have no value because they're infinitely creatable. there's 12 million bitcoins out there. there will be 21 million bitcoins. if there were 21 million checks in the world and that was all they were, checks would be very, very valuable.

so i think that's where he's got the analog incorrect there. >> so you don't think it's really about the actual money part? >> it could be. it's possible. i think bitcoin also -- when he talked about replication, that's another very important issue. the querty keyboard is not the most efficient way to type. but as brian arthur has shown in his work on locking in path dependence and technology, once you reach a certain state, it becomes very difficult to dislodge that. >> where did you buy in at? >> i'm down about 20%. i did it after the mount gox when it fell into the 500s. it was around 400 this morning. i think australia shut down a bunch of bitcoin companies. >> it's weird to think of it the way you just described it. i understand why gold is valuable because there's a fixed amount of gold. but it was valuable before you realized there was a fixed

amount for its color and for its use in jewelry. just because something has a fixed amount but has no inherent value anyway, just because it's fixed, does it suddenly accrue some type of inherent value? >> no, not at all. but the question is with gold. the inherent value -- gold has no earnings. it has no dividends. it never will. but the amount of gold in jewelry versus the investment demand is trivial. so there's a perceived value of gold because it's nobleody's liability. >> it had this inherent value. what does this have? an algorithm. >> this thing actually has an amount of value in the sense it's captured the attention of very smart technology people who are investing in it. so i think when you look at a new technology like this that has the potential, susan at stanford wrote she thinks it has the potential to be a reserve

currency. i wouldn't be dogmatic about saying it is a zero. >> are you doing it because you're just kind of playing around? interested in it and you want to be part of the experiment? >> well, it's a risk-reward thing. gold's market value is about $8 trillion. you can buy things with bitcoin. you can't go buy anything with gold today in the united states. so i think what's interesting is that if it becomes only 10% as popular as gold, then it's an $800 billion market value, and it's what the market value is about 5 billion? so you can lose 100% of your money or you can make 120 times your money. the risk-reward is okay. >> in the 21 million, it's in the charter. but they can vote to change that, too, right? >> well, you're getting out of my technological league here. >> can't create too many dollars. there's a finite amount of those. >> don't have to worry about that. >> that's the currency of the world. there's no limit on that.

every day we test. i don't know. >> it's very hard to understand for mere mortals, the whole bitcoin thing. >> i think the trick is -- now that you own them, have you ever tried to use them? >> no. >> so you've never actually tried to use it or pay -- because i think it would change the way we think about it. everybody that i know that has it and has tried to use it, it changes their -- >> they like it or they don't? >> they like it. but it makes it real. >> on silk road? >> it's illegal. it was perfect for that. a company you can't pin down that's selling drugs and a currency you can't track that's buying drugs. they were perfect, a match made in heaven. >> bill, very quickly, we know you're optimistic. we know you look at this as a bull market. if you had to put a number on one to ten in terms of how good you feel about the stock market, what would it be? >> over what time period? >> now since six years ago.

>> i would say if you're looking at the next year or two, i would put it way up, eight, nine ten. once you again beyond that, it becomes murkier. >> that's good. >> thank you so much for joining us, bill. >> thanks for having me on. >> make sure you join us tomorrow. right now it's time for "squawk on the street." ♪ >> good thursday morning. i'm karl quintanilla with jim cramer. what a news day. futures got a bounce when jobless claims hit 300,000, lowest in three years. we've got you covered. ten years down to 268 after those fed minutes yesterday, and then europe. greece returns to the bond market. bank of england also left rates unchanged. the best bull market of