i'm becky quick along with joe kernen. andrew is off this week. we have another big show this morning with a huge newsmaker coming our way at 7:30 a.m. eastern time. bill ackman will be our special guest. he's making waves as he teams up with valeant in a bid for allergan. we'll talk about this more coming up, including comments from carl icahn. he was on the opposite side on herbalife. there's a lot of enimity. >> at one point he said i have nothing at bill ackman. he made me $400 million. i like him. >> there's been a lot of bad blood there. >> he was saying in a way he took advantage of him.

dow chemical, procter & gamble, boeing, apple and facebook all being released today. a lot coming up. at 7:30 eastern time, the dow chemical ceo will be joining us and we'll be hearing from at&t ceo john stevens. the company says it had a higher than expect ed amount of customers switching to a new plan. if you take a look at what's been happening with at&t shares, you'll see at least it was down by 2% after hours, i think. 35.50 was the last trade. >> yum brands getting a boost from stronger sales. where it's most important, china, the parent of kfc, taco bell and pizza hut says that first quarter sales in china rose 9%. customer in china are buying more chicken following an avian flu outbreak and food safety

scare which impacted demand. the fast food operator gets more than half of its overall sales from china. most of its more than 6,300 restaurants. >> how many? >> 6,300 are kfcs. that stock traded higher. in after hours trading. >> speaking of china, china's factory activity slowed for the fourth straight month. the hsbc purchasing manager'sen devil for april rose to 48.3 for march's final reading of 48. that's still below the 50 line. that 50 line separates expansion from contraction. this signals more economic weakness. the first quarter gdp slowed to 7.4%, its slowest pace in 18 months. >> back to u.s. markets. stocks rally once again to get closer to record territory after the recent little bit of whatever you want to call it, medium, intermediate, short term pull back. it was like all the other ones we've seen.

shallow but steep. investors rushed in the health care and pharmaceutical stocks. the dow is now 0.7% away from an all-time high. the index added 65 points, up more than 100 for a lot of the session. it closed at 16,514. the s&p 500 gained just over 7 points. it closed at 1879. it's about 1% from a new high. that's up like 30 points from its december 31st close. the s&p 500 along with the nasdaq are on a six-session winning streak. the nasdaq added nearly 40 points, which is bigger on a relative basis. look at the futures at this hour, you can see -- they're not really saying anything. a lot could happen between now and the open of trading. >> i'm sure it will with all the earnings we have coming out, too. one of the biggest winners on tuesday, allergan, the botoxmaker soaring after valeant pharmaceuticals.

activist investor bill ackman made an offer to buy the company. allergan says it will carefully consider the proposal and pursue the course of action that it believes is in the best interest of the company's stockholders. the company also adopted a poison pill that's effective april 22nd. that will trigger if a person or group acquires 10% or more of its shears. ackman's pershing square capital management has a 9.7% stock. valeant offered to pay $48.30 a share in cash and 0.83 of its common share for each allergan share, valuing it at $152.88 a share. michael pierson will jone us on cnbc, coming up at 7:30 a.m. eastern time. >> at the time of the show we have bill ackman. >> we have michael pearson as well. we have both on to explain this. >> i've coume to different

conclusions. i finally realized i don't think david soakle did anything wrong at all. he says this is an undervalued company. i want to buy a lot of it. he says you know, you should take a look at this company. it's really cheap. they noticed it's cheap, too. they decided to buy the whole thing. he happens to make money. then i thought the difference with ackman, both of these companies are able to decide that allergan is cheap but for a minute i thought maybe it's front running because ackman agreed with the company. he knew beforehand they were going to make an acquisition. >> my question is do other people know that valeant had been trying for more than a year to try and buy this. >> allergan was in play. if ackman is going to remain an owner of this company and help run it like he's been doing, like an activist investor,

what's the difference between two companies deciding that they want to make an acquisition together? why isn't ackman's company just considered if it was a private equity firm? a private equity firm could share with the publicly traded company. >> that's a distinction. if you promise you'll stick around for at least a year? >> i don't see a problem with it. if they decide -- >> you spent a lot of time thinking about this. >> i did. >> you had to think it through and try to come to some conclusion. there's something different and something that feels weird. >> i came to this conclusion. a public company decides it's going to make an acquisition, it slowly buys shares and doesn't tell anyone all the way up to 10%. it was able to buy shares from shareholders at $40 and it's going to make a $70 acquisition. but it was able to buy the first 10% at $40. are they front running because they know they're going to buy their own -- >> not if they know what they're going to do.

if you find out what somebody else is going to do. >> ackman and valeant are a team together bidding for allergan. you know, i've decided, i can't figure it out. >> how much time did you spend thinking about this? >> i thought about it. i was going it tell you you were wrong. then i was thinking you might be right. because i was thinking, wait a minute. >> i might be wrong. i admitted it yesterday. >> harvey pitt said if it's front running, then that's the issue. but he's just -- he's not just a -- >> i don't know what i think. >> he couldn't flip it like the day the acquisition was announced probably. >> right, right. >> probably could though. >> he didn't seal it yesterday. this wasn't a go into it, get out of it type of pot. >> right. >> that makes it different if you're looking at this as a longer term investor. >> the story, it's a template, it totally changes the playing field. >> i think ceos would say 2013 was the year they got concerned about activist investors and

blue chip companies for the first time had to sit around and start thinking what happens if the activist investor comes after me? you might have thought that was going to die down. it's not. this ups the game. >> the other quote ackman said was, we want companies to do the right thing for shareholders and we have ways of making them do that. i'm not here to, oh, the ceos are scared about their jobs. i don't care about them. >> i just want the company run well. >> i want the shareholders to do well. i don't want them to keep their stupid job as a crappy ceo. for years entrench management should be afraid. >> there is something about shareholder rights and the rise of shareholder rights. >> is this you or me? >> this is a continuation. >> you're reading? >> yes. >> you go ahead. you're good at this. who's this david faber guy? is he related to mark. >> no. this is our good friend and colleague. >> oh, that guy. handsome guy. >> that's right.

david faber caught up with carl icahn yesterday and asked the billionaire investor about ackman's latest move. >> with all the stuff i've said with ackman back and forth, back and forth, i think he's dead wrong about herbalife. >> right. >> and we have our differences but i never said he's not a smart guy. >> right. >> i think the concept of this is good. i hope it works out belter for him than herbalife did. >> david also got icahn to comment on ackman's new activist approach to this deal. >> i would like to see more of this done. and done by the real good guys. i think it's very hard to break into the business of activism. you have to have staying power. you have to have -- >> right. >> -- a fairly good bank roll and i think it's very important to do it. >> as we mentioned, bill ackman and michael pearson will join us in less than 90 minutes. carl icahn likes what they've

done, would like to see more people doing something like this. >> i'm not ready to say ackman is not going to win on herbalife, either. i told you, i wish i had -- i had some of their candy bars. i was just going to open one and eating one on set when ackman was here. >> not mention it. >> no, but i don't have one. they're pretty good. >> you ate them all? >> now the mainstream media with the fbi and -- >> there are investigations taking place on this. >> globally there's investigates going on. >> china. >> there's employee whistle blowing stuff going on. carl may have won because he's out. i don't know, ackman has stayed in some of his positions for years and years and years. we know what finally happened. they don't always -- who knows what jcpenney or target. wasn't he an mbia? was -- >> no, einhorn was mbia.

>> are they different people? they are, right? >> yes. famed hedge fund manager david einhorn has a clear warning for technology investors. he thinks we're in a bubble. so wrong on gold, though. in a letter to green light investors he says there's a clear consensus we're witnessing our second tech bubble in 15 years. it's uncertain how much further the bubble can expand. including the rejection of conventional valuation methods, short sellers forced to cover their positions and a huge first day stock appreciation of initial public offering. einhorn says, we have to make sure that the exuberance doesn't outlast your ability to stay short. >> there are people that said even if you look beyond technology, looked at what happened with the markets with this m & a, that does indicate the bull market is getting long,

too. >> right. >> it doesn't mean the end but it signals the next stage. that means more maturity. >> i like the notion that the cool kids are starting to get their compensation looked at a little bit. that's in the ft today, talking about eric schmidt, they're talking about jamie dimon getting $13 million or something. eric's pay package, 2011 was 100 million and no one questions it. and the tech companies are masters of separating the classes of stock. google might not do any evil but they certainly know how to keep control of the company through financial methods. so now einhorn is weighing in there, saying, look, at this point because they're in silicon alley or whatever you want to call it, they don't get the same scrutiny about even compensation because they're the cool kids, the cool companies. >> that's where some of the biggest investigations took place and things that kicked off the pricing of options, repricing of options and what

you were handing out. >> steve jobs never got in trouble for repricing. he was untouchable. he was steve jobs. apple will be reporting its fiscal second quarter results after the close today. chris caso is with susquehanna. he joins us. what are the moving parts. >> the space between the iphone 5s and the iphone 6. typically the old phone tends to ramp down a bit as people anticipate the new phone. our view right now is the street estimates are too high for the calendar's second quarter. i think they're too low for the second half when the iphone 6 comes out. >> does that mean volatility between now and then? >> it could possibly be. apple has been a lacquerquelacq.

we're constructive on that is ba is. >> as a result you think that the stock has been punished too severely? even though you could have rough numbers still to come. >> it hasn't reacted as much as the rest of the market in this rally. apple lost its mojo. the iphone 5s was a successful product but it wasn't revolut n revolutiona revolutionary. i think what apple needs to show its stockholders is a revolutionary thing. >> is that true or not? what is their total global penetration in smartphones right now? isn't it in the teens? 12%? >> i'm not sure the number off the top of my head. >> if they increase market share in smartphones, that's the question. i hear people want bigger screens or something.

are there android phones more popular than the iphone? >> it's still the largest selling phone. apple only plays in the higher end of the market right now. >> would that hurt if they played in the lower end? >> it was a question about a year ago. especially as they were looking into getting into china as well. the available market in china for $650 phone is not tremendous. >> it was the most valuable company in the world and it was on its way to a trillion dollar valuation. no matter how good it is, they still sell gadgets and phones, don't they? i don't know. when is a company like $700 billion instead of 500 billion? >> i look at a cyclical around product cycles. the stock is being valued on what people see today. the iphone 5, the iphone 5s. i think iphone 6 is a bigger cycle. i think the stock will get rewarded for that. >> why do you think is a bigger cycle? what's new and different and

cool? >> the biggest thing is a bigger screen. >> that will be a real selling point? >> right. what we've seen in the supply chain is two different screen sizes, both of them bigger than the existing iphone 5s right now. but there's other things as well. and a lot of people talked about a watch product and we've seen that rumblings in that in the production supply chain for the second half as well. >> apple tv, too. >> i haven't seen that. certainly that's been a rumor there. i think they've been working on things. that they haven't come out with a brand new thing in a while. i think we need to see what it is, how innovative it is. i think the stock reacts to that. >> what is your price target right now for the stock? >> 650. i think there's significant upside for it. >> okay. chris, i want to thank you very much for joining us today. >> thank you. right now, let's get a check on the market as morning. we've been talking about the futures. hard to say where things will

trade today. yesterday, you saw the markets up for six days in a row. dow ended up 60 points, off the highs of the session. six days in a row of gains. that's the first time that happened since last year. oil prices this morning, yesterday, i'll provisions dropped by i believe their second biggest decline of the year. down another 43 cents today. well above $100. wti at 101.32. >> you saw big moves yesterday. the yield is sitting right at 2.706%, pushed up even higher yesterday. the dollar this morning, you'll see that it is up against the pound but down against the euro and the yen. euro is trading at 1.3838. gold prices had a huge decline yesterday, up about $4.80 this morning but gold trading right now at $1,285.90 an ounce. >> i'll do this tease. going into twitter here. did you see this? show your best side, new profile

photo. you can spruce up your thing. >> i don't really want a profile. >> i don't know. >> that takes work. >> people put weird pictures in, movie pictures. anyway, coming up, today's executive edge. we'll talk about a union vote at jet blue that had a direct impact, plus this hot sauce, roll i rolling srachi. >> i defer to the in-house expert. what is this? we'll have a story about it. ♪ ...who work with regional experts... ♪

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time now for the executive pej the pilots of jetblue a airways voted to join the pilots' union. jetblue has 2,600 pilots, 96% were eligible to vote. this vote marks the first successful union drive by a group of workers at jetblue. could lead to higher paying benefits and it's likely to encourage other workers to organize at jetblue and other airliners as well. the news sent shares of jetblue

lower yesterday. although you can see this morning up by about 8 cents. >> i don't see how this work out. it was the same day that -- not the same day but in the last week or so we've seen the situation down in tennessee take care of itself. the uaw abandoned efforts to -- they were talking about corker and whether it was everything happened. there was a reason they did it. it looked like if they were to try it again they couldn't lose. >> is this me? >> this is you. congressman from l.a. community is seeking to lure the factory that makes that stuff i showed you, the best selling sriracha brand hot pepper sauce. he's trying to get it to his district after residents in its current location complained about the smell.

tony cardnes, he wants to convince david tron, the owner of huy fong foods to relocate rather than fight with the residents of the city of irwindale. i used to live next to irwindale. i can't believe they'd be complaining about anything in terms of smell. cardnes says the company grows 60 million in sales from that branned with little marketing and hailed tron, an ethnic chinese immigrant from vietnam who founded this company in 1980. they hire full-time and produces over 20 million bottles of the hot sauce every year. >> try some. >> i don't want to try it. my stomach in the morning is -- potato chips? >> i'm not a big hot sauce fan.

i feel like we saw like it. >> i like salsa. >> i like mild-hot salsa. >> let me have a chip. >> you touched all of them. i hate that. >> you know how quickly i have to -- okay. >> all right. ready, wait? on the count of three. >> one, two -- ♪ the heat is on >> it's not that hot. oh, it is hot. hold on, hold on. it's hot. >> where is it? i'm taking it home. >> you can have it. >> i'm serious. whoo! i'm serious about irwindale. they have a lot of nerve. >> ever been to irwindale? >> no, i haven't. >> i lived in monrovia, which is right near there. >> there's a kick on the end of it. it's sweet in the beginning, hot in the end. >> i like it. i like the guy that made it. you know what, i like the congressman. you don't like this great business that's employing people, come to us, irwindale.

you can be irwindale, the industry of industry. >> that's not bad. i don't like hot sauce but there's something strangely -- ooh. >> take us to break. we put the markets front and center after yesterday's rally. taking another bite? >> i am. >> this wasn't bad. it's not just hot for the sake of hot. it has flavor. >> oh, my god. >> starting at 7:00 a.m. eastern time, we have big earnings lineup kicking off. dow chemicals andrew liveris will be joining us. we also have jon moelle and and john stephens. the performance review.

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they changed it too late. i need more notice to prepare. >> okay, diva. >> i know. good morning. i don't. i'm just kidding.

welcome back to "squawk box" on cnbc, i'm joe kernen along with becomes. andrew is off this week. a lot of housing indicators. the mortgage bankers association will be out with its weekly look at mortgage politics at 7:00 eastern. at 10:00, the government will report on new home sales. boeing earnings will be out in about an hour. also p & g, another dow component. that will come at about 8:00 eastern. you know, in other news, toyota took the number one spot in global sales. global vehicle sales during the first quarter. the automaker sold 2.58 million cars and trucks, beating out general motors which sold a respectable 2.42 million. volkswagen was a third at 2.4 million. >> let's get a check on the broader markets. the futures at least at this

point, it's hard to figure out which direction they're going to go. they barely budged. if you'veland looking at those futures again barely budging. if you look at what happened yesterday, it was a big deal. stocks were up across the board. the dow, 0.7% from a record high. the s&p 500 is less then a percent from a new historic high, only off by 0.9%. you could see just about anything happen today. you have a lot of earnings coming out. if you take a look at what's been happening in europe, at least in the early trading, things are trading weaker. the biggest losses are coming from france, the cac, down 0.4%. asia overnight, the nikkei was up by about 1% but the hang seng was off by about 1%. first we'll take a look at oil. oil prices were down by 2%, the second biggest drop of the year. the biggest drop we've seen since january 2nd. they're down 40 cents.

the ten-year note yesterday, that yield ticked above 2.726%, the highest level in three weeks. the yields are lower as prices rise this morning. the yield is at 2.706%. the dollar looks like it's been weaker against both the euro and the yen. the euro is trading at 1.3838. the yen at 1.0222. this morning, it's rebounding to $5 to $1,286.10 an ounce. >> the nasdaq jumped about 1%. are we in a frothy sort of a tech bubble? hedge fund manager david einhorn of green light capital is starting to see unications of that. he had this to say yesterday in his fund's quarterly investment letter. now there's a clear consensus that we are witnessing our second tech bubble in 15 years. what is uncertain is how much

further the bubble can inflate or expand and what might eventually pop it. here with us now is mark, global head of investment at ubs wealth management. he oversees $2 trillion. 2 trillion? seriously? >> that's big. >> is it true? you swear? 2 trillion? you have proof of that in $2 trillion. >> that sounds right. >> it's true. yes. >> it's you? >> he said it's true. he's backing you up. >> merrill lynch we had 2.3 trillion in private klein the assets. >> you only have 2 trillion? all right. chris wolf, chief investment officer at portfolio solutions for merrill lynch private banking and investment. do either one of you gentlemen think we're in a full-pledged tech bubble? >> i think if you separate it into old and new tech, you can look at new tech and think the valuations have gotten way ahead

of themselves. some of the older tech is lots of cash, interesting ideas and opportunities. if you look at it as a big blob, you miss some things. >> are you mark or chris. >> i'm mark. >> so history rhymes, it doesn't repeat. there's no pets.com around. >> exactly. >> we were talking before. you remember what it was like back then. >> i do. >> it's not like that at all. einhorn is one of the smartest guys in the business, as you know, he's one of the nicest guys in the business but he's focused on valuation. if you look at the tech sector, cut it into the s&p 500 tech names, they're tried traading w% free cash flow. they are trading 10 below p/e average. if you look at some of the names

that are ipo'ing, sure. >> david could be right, the valuations could be out of whack but you can't necessarily tell what human behavior will do. >> look, market volume is different now versus late 1990s. 1990s saw a narrow set of the market, you had qualcomm and others driving higher. you had the whole internet and the digital elements driving the markets. i really think the market in technology is separated these days. there may be elements but it's not clear. >> you couldn't have two situations in 15 years without learning something. as long as we're all talking about it at this point, too, it's unlikely that we're calling on these things, when they're going to burst in 1999. >> you have health care, that's a moniker. the biotech valuation is

extended, certain type of investors driving those stocks higher. the other part of the market, health care broadly, hanging in there. good free cash flow. >> the infamous henry, he talked about it back then. these were pieces of crap that we were selling at infinity times revenues. >> yes. >> back in the mid-'90s. we weren't talking earnings. you didn't know if they were going to make any, or even revenue. i remember some of them. can you point to anything like that at this point? >> sure. there's people who are looking at eye balls again and total addressable market, all those things that david mentioned. >> some of that like the whassap? >> yes. anything goes, because they're referred to as cool kids in american business right now. >> as you know, there's always new tricks on the block. we've been talking about focus on the free cash flow yield.

there's a lot of tech, the guys that survived from the last tech bubble. those names are still out there, which offer still some value. >> yes. it's a much more nuanced idea. you're right. i think david is smart. i don't know what he was talking about with gold. i really don't. everybody is allowed to mack a mistake once in a while. to finally load up on gold as the fed had done what it was going to do basically, people were loading up on gold five years ago knowing that the fed was likely to do what it did. load up on it then didn't seem like smart timing. everybody is allowed to -- >> a lot of people think of its is a political hedge. >> timing wise. >> yes. >> where do you buy? >> do you buy a year or two ago? i don't know. the bottom line here is there are some sectors that are probably overvalue. we may have cured some of that in the last month. >> we're still long equities.

we like developed market equities, u.s. and europe, we're seeing a global growth improve and we want to be leveraged into that. >> there's a weird game we've been playing, up and down, up and down. are we going to set new highs or not? will there be market gains or double digits? >> i think there's more games ahead. a lot of it will be driven off business vending. we've erased mortgage debt, credit card debt over last couple of years. you have a consumer that's in much better shape. they hang in there. it's about the increment of capital expend touitures that w think will drive things higher. it's sensitive to capital spending. companies picking up their spending is a self-fulfilling prophecy. they're talking about an uptick in capex going through the balance of this year. that gives us confidence that

that kind of industrial material that -- energy, which has been weak recently, is part of the place we want to be focused on. >> is that something the broader markets could see a gain of 10% or more? >> from current levels it's probably single digits, given that a lot of it is built in. i think to mark's point about free cash flow yields, companies need to maintain them at high levels. >> we think it will be a bumpy ride. the s&p can go up in line with earnings. we think about 8% this year. which is not bad. >> do you have individual -- i assume you like some of the more established players, both of you? what's your three biggest holdings? >> we don't comment on individual names. 2 trillion, what? >> you don't either? >> we talk about sectors and things broadly that work. you had apple on earlier. >> together you have 4.3 trillion. will you let us know when you think it's a bubble?

? if you start selling it would be good for us to know. 2 or 2.3. >> merrill lynch has 2.3. >> anyway -- do you know mccann? he used to be with you. >> that's correct. >> now he's running your shop, isn't he? >> bob mccann, yes, he is a wonderful man. >> i do the same thing. that was smart. >> i learned it from you, joe. >> you have been watching since harvard boy. where is harvard boy? i think he's a big-time lawyer now. >> i think so. chris, mark, thank you both for coming in. we appreciate it. >> thank you. within we come back, a real housewife of new york with a booming business. heather thompson, the founder of the shapewear company yummy will be joining us later this morning. and bill ackman and mike the pearson will join us at 7:30 eastern time. "squawk box" will be right back.

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welcome back. u.s. equity futures haven't been doing much this morning. they're up a little bit, up 3 points. the s&p is called down.

coming up -- nasdaq also called down. who's coming up first? dow chemical at some point. we have boeing and -- >> they're both at 7:00, both dow chemical and procter & gamble. >> that's 15 minutes away. coming up, she's on bravo's "real housewives of new york city" which is a comcast and nbc show. really? heather thomson will be joining us. she's the founder of yummy. we'll talk shapewear and reality tv. that's coming up next.

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♪ i'm back back in the new york groove ♪ ♪ i'm back back in the new york groove ♪ welcome back, everybody. the shapewear industry is a booming one, thanks in large part to celebrity endorsements and pop culture. our next guest has dressed the likes of jessica simpson, beyon beyon beyon beyonce, just to name a few. heather thomson, founder and chief creative officer of yummy by thomson.

heather, great to have you here. >> so great to be here. >> let's talk first of all about shapewear itself. this used to be something i remember even ten years ago thinking i would never wear any of this stuff. but women have changed and this industry is booming. i was and this industry is booming. it says it is now an $812 billion industry. >> i think that we modernize the idea of shape wear, it's not your grandma's girdle anymore. it is a proper foundation. you need the right canvass to build on for any outfit and that's what shaping really is. yummy is redefenning the shape wear category. because it's not a dirty little secret. it's not embarrassing. it's something you can show off and be proud of. i call it intimate apparel on steroids. >> why did you come up with this, after you had your children? >> it was a selfish initiative. i did what any good designer would do. i took off my consumer hat when i wasn't finding in the market

what i needed. i put on my designer hat and made it myself. so 12 patents later the original yummy three panel tank is the core of my business today. >> your thought is you need a good foundation, but it has to be comfortable, too? >> it has to be comfortable. i don't think anything that squeezes you for a long period of time is good. so it's a spoother. i call it tight and right. it keeps everything in check. i want people to embrace their curves and rock what you got. do it if a way that leaves everything looking clean as a perfect foundation rocking an outfit. like i said. >> we had sarah blakely on the show the founder of spain, there is a lot of competition here. have you all kind of players getting involved, ruby ribbon and others, so how do you differentiate yourself from others out will? >> i think there is room in the market for eb, but as long as you have a difference of opinion. what i found when i went to the shave wear as a consumer, it was

a sea of the sameness, it wasn't attractive. it wasn't a feel good. it wasn't a confidence booster. yummy by heather thompson is about confidence, it's about looking and feeling yourself. if you will have sausage casing around the mid-section or an ace bandage garment, you won't feel sexy. yummy is about every day shaping. so it's literally an essential, your bra, your panties, your yummy, it's how i get dressed every day. >> i don't wear a bra, my panty, any men's stuff yet? >> yes, i have done men's. >> what have you done? can i buy them? >> well, joke licensed my technology, it's an amazing men's wear company. >> for my tummy or my abs? >> for your tummy. >> i like a booty. i want to keep it popping. i'm all about the waist. >> what if i need some help for my booty to pop? >> i think that, you know, i'm

not sure about a man. i can certainly say this for a woman, your boobs and butt can be whatever you want. if you cinch in the waist, you are 100%. >> if i need something for my booty, can i wear squats? >> i'm about smoothing, shaping, rocking what you got. not about pumpings things up. >> i can stuff like you the. >> all right. no, no, no. i can eat some of this maybe. >> i think bethanie frankel's line has some booty book. can you check her out. >> okay. so for even like, i have someone gave me one of these tee shirts and like getting it on. getting it on, it gets stuck here. i start panicing, i think i'm claustrophobic. i get it down, but it does kind of if you got any like. >> jiggly mess. >> not cellulite.

>> it reminds you, your pos cure is albert. i can't get it off i feel like i'm in a straight jacket. >> yummy is about not doing that. it's about feel good. you put it on. you definitely feel compressed and hucked, but you are not feeling like this. that's not good and feeling claustrophobic is not good or putting something on that's difficult every morning is not good. this is every day solutions for women and for men. >> so i can rock what i got without being fake. because i already got it. i'm rocking what i got. >> you know people hug you, what you got under there? it's really supposed to be like what you use for a bra, it's supposed to enhance who you are, not take away from it. >> you are not wearing it? >> yes, i am. i have both my bra and yummy on. it's perfect. it's moved in bras, pant years our active collection is

launching, i have denim. >> yoga gear? >> it's about versatility for women. we see women in active aparm, going to parent-teacher conferences not being in the gym? why is that? there is something feeling about feeling good and feeling together and you can move around and be versatile in. the active apparel takes us from the gym to the conference room with a quick change. you can still feel together, not like you are if your gym clothes. >> can you give us any hints on what we can expect in the new season? >> buckle your seatbelts. we launched with unfortunately a ton of drama we are built on. there is a lot of feels good stuff in the season. season six is a good one and a great platform for a lot of good reasons. definitely tune in. a little drama and feel good stuff. >> now i know you, i will tune in. i see it on my dvr, i'm going to stop feeling embefore a rased. >> it's a fun show. you can watch it. >> i know someone who watches

it. i do. i won't mention any names. okay. i will. i'll page hear. thank you. >> thank you so much you guys. >> we appreciate it. >> coming up, i get something out of every interview, i am going to rock what i got all the time from now on. but a flurry of poor results are about to hit the street. png, boeing, dow chemical. do you want to see what i got? >> a, no. >> you know, not a lot. andrew liveris join us to talk about the global economy and thenous-makers of the morning. activist envestor bill ackman, ceo michael pearson on the set together join us 7:30 eastern. we'll be right back. be right ba. .

good morning, everybody, welcome to "squawk box" here on cnbc. i'm becky quebec, andrew is off this week. we have been watching the futures. after sex days of gains for the fax the markets are mixed. yesterday the dow also finished

higher. it was up five out of the last six sessions. you can see dow futures are up five first half points. s&p and fax futures are slightly lower. we are watching the markets closely. we are continuing to keep an eye on the ten year note. this morning, you will see the ten year at 2.756%. >> proctor and gamble looks like it's bid high on the dollar versus expectations of a dollar one on sales. i like sales numbers from procter & gamble. 20.56 billion, which is actually a -- >> a little light. >> -- a little below the 21.2 billion wall street was expecting. the fet number they managed to earn a nice tidy $2.61 billion in the quarter and in the core earnings per share was up 5% and organic sales increase of 3%, which i think is about where

muller has been guiding us we'll have him on the cfo. he probably knows more about the result, themself, he comes prepared. so we will talk to him about organic and water happening around the globe. it's an info saitor of invasion and everything else. i don't think there is a corner of the world people aren't using some procter & gamble product. is dow out? >> dow is out i'm looking through that. dow chemical is out. they came in with earnings at 17 cents a share if you take a look at what's happening with revenue, you will see revenue coming in below expectation, that number is $14.5 billion.

the street had been looking for $17.2 billion. andrew liveris says various measures have been put in to stream lean the company. >> that has helped expand profit margins, andrew, good morning, thank you so much for being with us this morning. >> good morning, becky. >> okay. so explain a little bit. your earnings per share were quite a bit better than the street had been anticipating. revenue was light. so what happened? >> it's what we call self help. a year-and-a-half of streamlining as you indicated, cost and cash controls. we've lowered the good sold line by 3% and boosted cash flow by managing working capital and inventories. it's sort of an economy, becky, i will say in this quarter, they were transporting weather issues in north america. we overcame those. we overcame those and we overcame actually $300 million

in increased from the spain disturbs. with head wind, we did do quite a good beat here. i would say there is also tail wind in some parts of our world economy that especially came through in asia. >> so what happens now, if we were dealing first of all with the united states economy, you mentioned weather was an issue, you think things fire on all cylinders at this point? >> i wouldn't say all cylinders, if we're talking about an 8 cylinder car. it's a sustained recovery. we saw the other day. it's a slow and sputty recovery. the consumer side of it is starting to feel better. i could say we are showing decent signs of growth especially in construction and

things that feed housing and things that feed automotive. >> we have been talking to analysts and smashing peckers looking over things the last quarter or some they say they do think that companies will start spending more on capital expenditures. is that rue for dow capital? >> definitely true for us. we got a $5 billion capex program where we have been improving the last year or so, the last lot of which got approved at our last board meeting. our capex was hugely increased from a year ago. so even our operations was up, free cash flow was down because of capex. we are spending for the future. in particular, we're spending against the changed shell gas we have in the united states. these factories are all going down in texas and louisiana. we announced a new r & d center down there as well. when you expand the r & d, that's good for sustained long-term employment. >> i was going to say, that

creates jobs, what kind of jobs is that going to create and when can we see those coming online? >> clearly the construction jobs are in the thousand, 3 to 4,000 for that particular type of plan, remember, dallas revenue is roughly $60 become that revenue base proliferates for every job we have, there is five in our supply chains. that's 250,000 around us, the supply in the u.s. gulf coast is seeing skilled shortage and labor shortage and we skilling the work force is the major issue we are dealing with. we need state of the art people that understand auto makes. that's the issue. the u.s. recovery won't get there until we reskill the work force and many of us are working on this and at company level and business round table level. >> andrew, you mentioned china and asia i should say and water happening there, is coin doing better than we think? >> you know, i must say, i have

been trying a few times in the first quarter and in march, i wouldn't have come out of there bullish at all. i think water going this time around is stimulus of a different kind. it's targeted sim lus they don't want the hot commodity bridges to no. where they want targeted investments. they're stimulating i think chinas r7x 7.2k3wr50e9, we had 9% growth in the quarter on china, it's actually exceeded our expectations is coming because we're targeting the new needs, value-ad packaging, value-ad agriculture. coating materials of higher standard than some of the stuff we saw in the west. these sorts of high end products cloud computing. i would tell you some of the materials we provide for cloud computing is showing growth in

places like china. >> does that say something about dow capital or china's economy? is it growing better than people expect? >> so i'm not going to declare that yet. i water fairly bearish last year. i don't want to turn to bullish overnight. i would say i'm not certain,ly give you this. top down economies like china, they will get there to the 7, 7.5%. i think it will what you said, targeted growth. i think have you as to pick your places. >> you mentioned something in passing that really struck me you said one of the things you face this quarter was a $300 million increase in hydrocarbon cost because of what's happening in ukraine and russia. explain to me how, what that mean, how closely you are watching that situation and what it could mean for the rest of the current quarter.

>> well, you know, russia, ukraine is our now most region version of geopolitical intervention in the economy. as the economy in terms of construction, that's not the issue. the issue is the effect they have on on xhotdity price, we had one geopolitical event in the arab spring, the middle east, syria, you name it. here we go, here's russia, which in essence is huge in the world area of gas markets, you know the threats the non-threats, what's going on causes oil prices to go up. luckily enough, it doesn't cause the gas price in the u.s. to go up. in fact, that's actually beneficial for companies like ours. north american business should be possibly benefiting and it is from lower class gas vs. oil. oil goes up, nap that goes up means our margins around the world go down. >> so you think it's specifically those tensions, the

geopolitical tensions that is definitely above $100? >> i think it's a huge factor. i think it's this uncertainty an volatility combination that frankly the world economy has been in since '08/'09. oil went down if late '08/early '09. it stayed high independent of the world economic recovery. now consumption is coming being, it's bored by demand. it's driven the last 10 to 15 $20 in essence by this volatility. >> you think this volatility dow chemical now considering that oil will be above $100 potentially the rest of the 84? >> these assumptions we have made to build these plants in louisiana has an oil and gas arbitrage back in a minute into them. we have those shrinking in time. right now the availability of gas in the u.s. and oil in the

world markets is a factor of 24-to-one. our assumptions have it 10 to 1512-to-one. that means gas would have to go up to $8. gas is $4.50 in the u.s. oil is $110 bucks. you can see there is room for that arbitrage to come down before we worry. we are putting in place self-help measures to overcome these issues. we believe this is the new normal. this is the way the world will tick from here on in. companies have as to help themselves through cost and cash management. >> you have been, andrew the focus of an activist investor dan loeb. we saw bill ackman most recently. we will be talking with him in a bit. i wonder from the ceo suite, what you think about activist investors and what they're doing these days? >> well, i think it was over a year ago within i was first asked this question and i was asked, what do you think if they

enter your company? i said i will say right now, look we work with all investors. the activist kind have a point of view. we engage that point of view, whether you are an activist investor or number and engaging third point is being what we have done. i will tell you it's been a positive interaction to date. we have learned some things. they've learned some things. i think if you approach it as an investor, they have a reason for that, they have a belief. you have to listen to it. you have to deal with it. think all the rhetoric that goes around it, quite frankly, becky, comes from the media play. i think when you go back to most of these investorings, that irlo irthey're looking for a dialogue. we share that interest in common. >> wow, smooth that was. andrew, i. your ozzie to come out. some die i want you to say, thoseedon't know anything about my company. i'll crush them.

has any ceo ever said that? they never do, that was so tactful what you said but true and well said. we do in the media, see we want to you say what i just said. we try to get you to, but you don't. >> he's like, not happening. >> joe, i always enjoy talking to both of you. you guys do a great job. but whether it's ozzie or not, here at dow, we're on a march to improve our earnings and they have been improving six consecutive quarters in a row year on year improvement. >> as long as an activist says, i want to increase shareholder value. the ceo that comes out against that, it's a losing game, you can't. you got to say, hey, i listened. they got good ideas, blah blah blah. that's exactly what you need to do. thanks for coming on, andrew. >> my pleasure. >> check out the shares of procter & gamble t. dow component just rolling out some results. cfo john muller talks with us piers. they have some activists in

there. and we're going to have come about the flex buhl razor. >> i don't believe this is real. >> it's a weird looking thing, scares me. >> all kind of man scapeing questions that every chief financial officer better know if you are a procter & gamble. the news makers of the morning, bill ackman and vamiant pharmaceutical michael pearson will both join us on set at 7:30 a.m. eastern. more "squawk box" in just a moment. moment.

project tore gamble quarterly ceo joining us. he is a member of the global cfo council, god, almighty, billy hamilton, i'm excited. i don't know if he is able to hit. the other night i watched him go from 1st to 3rd and score into home on a ground baum. at least there is some excitement at the reds, right? >> there is definitely some excitement. i wouldn't count them out. >> hamilton is the most exciting player in the leak right now. >> i would think, to watch. i'm rejuvenated. anyway, your stocks called

higher, 80, 90, to 81.25. the 5% number on the earnings per share growth is at the high end. isn't the 3% organic sales, western you saying that's the low end? >> we actually gone give quarterly guidance, we are on track to deliver that. the 5%. >> but you did 3, you got to do better to hit the 4? >> it was over 3. we are right on track. the 5% core per share, that's 17%. reflecting a whole bunch of cost takeout. so on both the top and bottom lean, we are pretty happy with where we are. >> as we go around the world, any changes sense the last time you were on? has china weakened with some of these numbers we have seen? >> market growth rates on a

global basis are down probably a point sense we last talked, which would have been in october. that's true in developing market. still global growth and our product category is about 3%. we basically maintain market share in the quarter we just had, consumers around the world remain very responsive to value creative innovation like our laundry and products like the new aizor products, et cetera. >> so ag is how far along in doing what he set out to do when he came back, would you say? >> well, highs got, focus just like the rest of us are in continuing this march and i don't think there is a day he thinks about the march being over. this is a countaroun -- 175 yea.

>> he's a young guy, he looks young. it's a different world than we are living in right now. it's successional on the mind of the board and the company day in day out or should we assume he will go for it as long as helps to have it go? >> well, it's certainly in the on my mind day in and day out. he has been very clear saying the company will be time driven, i think the board shares that view. >> you don't. you are in cincinnati. will you not have one of those, you know, one of those adamle 59 type beards, are you? is that what that fall thing is for? is that for real, that thing? what is that? >> we will be revealing that in more detail at a big event in new york on april 29th and so i'm not at liberty to disclose more details. what i will tell you is men are telling us, which is they prefer that product two-to-one versus

the best selling razor currently. we are excited to build our franchise, to build the razor market. it's all good innovation should do. wale hear more on the 29th. >> have you used it, john? >> i have been using it for about aer 82. i absolutely love it. >> it looks like a crazy contraption. >> are you using that body razor? i'm afraid, i don't want to know, whether you are using that, don't tell me. >> that other one, i can hurt myself. what is -- i'm afraid of that, couldn't i hurt myself with that? >> wait until we get it in your hands, i think you will love it. >> are you also developing, seriously, things for these guys that don't grow full beards. they have the generation x sort of, you know, you get past the velvet ropes at studio 54 with it. you can see i'm dating myself. that's been close for years. do you make stuff for that? >> absolutely. absolutely.

we want a gillette product available for every man, regardless of what his shaveing choices are. >> you know, as far as input costs go, john, i mean, is it just food where we've seen a big spike? are post-things pretty well behaved in terms of commodity costs for you? >> things are reasonably well behaved with a bias up. so year on year, we have about $350 million of additional commodity costs. >> that compares to some years, where it's been close to 2 billion. it's with a bias op. >> currency continent to be a negative, suspect you are managing? >> yeah. >> that goes part in parcel with our cost savings program. we are also able to price in in market to help to phrase some of that hit. >> all right. we got to go. so you're debuting this inc. this. are you volunteering to come up

here and demonstrate that body razor, john? have you, would you agree to do that? >> i'll parks joe. >> you will pass on that? ask ag. if we haven't seen ag in a long time, i'm not thinking our prospects are good for that, either. anyway the rangers, i have an adopted hockey team. maybe you can watch. they won last night. all right. >> i'm hoping to get up above 500 in the next week or two. i would appreciate it, john. thanks. >> of procter & gamble. which has now indicated up about 40 cents or so on the day. >> for more on our global cfo count sim, check out cfo council.ynbc. we have another guy coming, at&t's cfo. >> joining us later this morning. also, results are a few minutes away. plus the move to take over allergan, valiant ceo michael pearson will be joining us,

coming up at 7:30 a.m. eastern time, joe mentioned at&t out with results last night. cfo john stephenson will be joining us with the competition at 8:00 a.m. eastern. :00 a.m. e. .

. welcome back, everybody. when we come back, a lay for botox maker allergan, ceo michael pearson, here in studio and ready to talk about the offer, how they met, what they plan to do. we'll have all of that right here right after this. ht after . .

welcome back. let's check out the futures and i'm told that boeing was like an alarm clock. it hit exactly at 7 and phil le beau, that's his boat. how did they do? >> better than expected on the top and bottom lean. in the first quarter, they earned a dollar 76 vs. the street estimate of a buck 56. whether you take the number last year that included a tax benefit or not.

they had better than expected earnings by 2% better or 14% better, revenues stronger at 25 billion. the street was expecting 22 billion. three important things that came out in the earnings report. 11.4% in the first quarter last year. part of that is do you to a higher delivery rate. operating cash flow, that's higher than many on wall street. boeing raised its full year earnings guidance, this is did you to a tax benefit it expects receive. boeing now says it expecting to earn between $7.15 an $7.35. water interesting, guys the estimate on the street right now is $7.38. they're not coming up to where the street is betting. being to you. >> phil, topping very much. phil joining us with those

footballs. that stock is up by close to $2345 is going to help. bill ackman and pharmaceutical company valiant teaming up for rival drug maker allergaf. they outlined the presentation yesterday if new york. joining us right now in their first interview, bill ackman the founder and ceo of the $13 billion capital management and michael pearson on set with us our very own kate kelly to joannous this interview, bill, michael, thank you for being here. i have a couple questions, michael, i want to know, why teaming up with bill ackman in perching square, bill, i want to know why valiant and why allergan. so why don't we start off with that? >> so i admired what these guys accomplished. i never took a look at the company. the reason, most pharmaceutical

companies are difficult to understand. they're a black box, they rely on pipelines where they spend enormous amounts of money, you weak up one day the stock doesn't get introduced. they collapse. we spend time together. i liked the bts model and the business, itself, reminds me of businesses we invest in. it's like a good company like procter & gamble much less tan a company like merck. when you understand the operating philosophy and their approach to capital allocation discipline, cost discipline the way they compensate tear team, it fit into a pershing mold of an investment. that's why we got interested in valiant. >> when did they meet? >> february conference. >> and it was a business school colleague who introduced the two of you? >> yes, a guy bill doyle joined pershing, halftime, about nine months ago, introduced us. he worked for mike back at mackenzie after our business

quote. >> mike, let's talk about allergan. you have been interested in 18 months. >> probably longer than that. >> what attracted you to begin with? why do you like the company? >> they have a great set the of assets. we look for durable assets. these are assets, they're pharmaceuticals, sometimes they're over the counter trucks, it's what's plagued the industry. so these assets, if you take care of them will last a long, long time, more like a consumer product. botox is the primary asset people think about when they think about, they also have with these and other proublts, they're branded products, not patent. close. >> let's talk about your philosophy in terms of running a pharmaceutical company, being revolutionary. you have an interesting slide talking about how the cost of developing few drugs in r & d skyrocketed in 1975 to 1.3

billion on average, how do you see them emphasizing new sales? >> they have to come from somewhere? >> there is a misperception. this year, we are launching 19 products in the united states, there is no other pharmaceutical company launching in the united states and hundreds around the world. what we don't think is a good bet is early stage science. most trucks get discovered by universities and entrepreneurs, not by large truck companies. so we want to invest in the early stage the high risk technologies, instead, what we do is acquire late stage products and/or do high probability on development work and so it's just a different approach to r & d. it's not that we don't raise r & d. >> you have been hugely successful. you had more than 100 acquisitions if 2008 t. stock is up about 800% since then, i wonder, is that something that can continue. can you keep doing skwegss likes

that when stock prices have come up so rapidly since 28? >> we believe. so again, we are very disciplined in terms of the prices we pay. that's been a key part of our success i believe. most of our acquisitions have been private companies and private companies just sit down with the other side and come up with a el do you. there is no, they're not publicly traded. >> you keep saying you are cheap. i know bill is cheap. you know, we've had lunch, that's a true story about was that when you met with them, you didn't like the salad they were serving? >> i happened to like chipotle. >> you were monita with his people? >> i didn't say send us. they very nicely offered to get me a burrito. >> and they charged you $20. >> is it a joke? >> you hit a road show, it was fancy, you said this was pe. >> a part of our partnership the last time they held a conference

they did it in the new york stock exchange, they give you the right to do it free. i wanted to do it a little more place that made sense. >> you foot the bill. >> i present that. >> when it comes to r & d, allergann has invested in r & d. this is a way for you to capitalize on. most of us again, it happens in universities. you look at the top hundred drugs. the vast majorities are not discovered. >> it's not just that, can't you combine all the contact businos lomb has? >> in terms of ophthalmology, we are significant players in all those markets. >> we were contacted. >> i hope bosch & lomb contacts. >> an $8 water. that's what i like for the pay forum don't add anything, it's

$8. >> i have no qualms about that. >> it's the cleanest water. >> it costs more than oil. >> you want a branded product you will put in your eye. >> an $8 water. >> that's cheap. >> can i ask you about the news from overnight about all sper gan adopting this poison pill defense strategy. how will you respond to that? as of yesterday, your impression was you hasn't heard from them directly. you heard through the analyst community they were going to blow you off. what's happening now? >> i'm no expert in frozen pills. we are disappointed. on the other hand, i think the deal will get done based on the creation for both sets the of shareholders. i think the fact we are offering allergaf shareholders almost $50 per share plus almost half our company, so they can enjoy the benefits going forward. >> that in the end is what will

matter. >> are you making a play on avoiding therapeutics more, you are also a cosmetic player here. botox, it works great for people, but it involves like elective surgery i will probably never do it. these aren't life saving therapeutics, these are things that make people look better, la tis, botox, breast inplants almost seem like elective feeling good about yourself type medicine. >> you are right. a lot of our products are more consumer driven than they, are but the consumers want to look good and they also want to do things. they want to engage their doctor. >> if you saw a therapeutic, you would use it as well. >> it has a lot of therapeutic uses. >> indications, they're not aprovidence for a lot of them.

>> half is an aesthetic product. half is -- >> depression is when you move your wrinkments, you get rid of your depression. is that how it works? >> it could work that way. >> bill, what do you think the poison pill move? is that complicated? >> it depends why the poison pill is put in place. if it's an entrenchment device, it's a way for the board to have a chance to explore other alternatives, i think it gives the board a chance to look at other alternatives, i wouldn't immediately accept, valiant, i would want to know what my alternatives are. i'm sure the banks will reach out to the big pharma companies and look at alternatives. the argue, though, is we're not excited about the company sold at a higher price for cash. we think the opportunity. right now we think valiant is cheap at a stand alone company, it's at 15% earnings, that's been the synergies from the deal. once the deal becomes perceived

to be more probable, we think valiant stock will go up a lot. the deal value will go up a lot. right now they're trading 1.5% above the deal. >> could you offer more? you can make it work bet you. >> you put a fair offer on the table. you are disappointed. >> you are able to beat anyone up. they don't have the same possibilities of making it work. >> i think our operateing model is what separates us from the pack, if terms of our different model, decentralized model. i think we run a lower cost model. >> you aren't referring to tax savings. in the united states, you have a lot of debt. >> we have a lot of debt. a lot of other companies in the industry have tax rates. >> the allergan synergys, the bosch & lomb, the tax rate. you saw all this stuff. >> actually, it was, mike gave a list of companies to us and

asked us for our opinion on who we thought was the most interested targets. he wasn't doing that. we looked at the list, it's clear allergan is not clear for the company. i think significantly, they're a strategic overlap in the business. >> is valiant a company you eventually want to own, there is a risk this deal doesn't get done, then you own allergan instead. >> the reason mike is going to share with us the opportunity for allergan, he doesn't need our help buying stock in valiant. he needs our help in geting this transaction done. >> did you meet him before you had a target? >> yes. >> really? >> yes. >> you met him. you liked how he did business, allergaf was the one that foot the bill? >> what happened was, they have been very public about the fact they're looking for large targets. there was a merge equal with a

$10, $20 billion market cap. he said what is your thoughts? he said sign a confidentiality agreement. he said, actually, that's the one we're looking at. we talked about how we could help them effectuate a deal. >> this is almost kind of creating your own destiny if you will, is this a new paradigm for you? and do you see others in the hedge fund industry following suit? >> we are always looking for a way to create shareholder value. it's a great way to create it in a short period of time and hold it over a much longer period of time. >> we will take a break and return to this. we will create cnbc value. >> we also had some admirers in the activism industry. we were watching this, thinking this was a way to do it. >> and detractors and people questioning the front unarer, which we'll talk about when we come back. >> we will continue right after this break. by the way later the cfo of at&t

john stephens will be joining us to talk about media, telecom and quarterly results of his company. >> that company beating expectation, revenue coming in at $25.6 billion. >> that stock is up by about 35 krevents, "squawk box" will be right back. right back. they're why we make life less complicated. cent

let's get back to our special guest, bill ackman pershing senior management. j. michael pearson. here's what we have been talking about off camera. the nerves that i am, i was thinking about this yesterday at like 5:00 or 6:00 at night arguing with you. >> i know. >> there are people that say here you are, you get a company to agree to an acquisition in the future. nobody would be, the idea to buy the company is not our hour. the idea is valiant. >> either way, you are able, after knowing this is going to happen. are you able buy the stock before anyone else has any idea there is a takeover coming. >> that's correct. so you buy up to just under 10%, now you are in, you are buying from people that don't tow what you are. they are probably kicking

themselves now obviously that they sold to you, but have you this knowledge that eventually valiant was going to make an acquisition. why is that not front money? >> sure. the way the rules work, you are permitted the trade on pence information as long as you didn't receive it from someone who has breached the fiduciary duty or confidentiality, et cetera. we teamed up with valiant, they basically came to us and said, look, you can help us acquire allergan. we said great, we formed a partnership. it has strarls. it gives us the right to buy a stake in allergan. >> we also have our money in this partnership. you have a partnership. >> does it matter how often? could you, would you be able to sell right now? >> no. >> actually, would you be allowed? >> sure, legally, not under the terms of our partnership. >> you don't have to agree to hold it a year an help the company. >> that's our deal with valiant.

>> but, here's how it works, they share with us their interest in allergan and taking over the company on the basis we work with them to assist them in doing so. part of that working with them involves a stake in becoming a long-term shareholder in the combined company, electing to take stock in the deal. we put almost $4 billion into the deal. we agree we have to elect stock. we like the future of the combined business. it actually gives more cash to other shareholders. >> you didn't give perching square more money to acquire the stock? >> they invested in a partnership with us. a small amount of money. they are only allowed to buy a certain amount of stock as a player. we boy a stake in the company. if we are unsuccessful because someone comes in and pays a much higher price, hopefully the shareholders prefer that. the val yavent deal, it gives them 15% of the profits, almost like a break fee.

we get the benefit of the merger by getting stock in the combined company. >> you see why this makes people fer vous in the ceo suites, hold on, i don't know which ofpy competitors is going to be trying to come after me and boy me in a hostile takeover or what they might be teaming up. they don't know it's him. you can see why people nervous thinking this is a whole new breed of activist investing. >> mike could have done this himself. >> why didn't you? >> i think having 10% share is a lot. i think doing due diligence and talking about our future is very helpful. and i think having bill out there in the public he doesn't give up. we don't give up either. i think that helps. i think it makes it more likely. in terms of other ceos, our job is to create shareholder value. so the people shouldn't be

afraid of anything that happens that creates them shareholder value. that's our job. >> that's the conclusion i came to last night. let say if you weren't an activist investor, if you were a private equity fund and they decide with anotherenty that stock is undervalued and they'd like to acquire it an run it better, why can't both people team up? >> i can't see it happening in the past. >> the old days, actually, it was much more common for a company to buy a stake an watch them take it over. every time you create value, i assume the person you sold to us after the fact would have rather owned the stock. the person selling is a short-term value. we sell most in the above market prices in the six days right before we filed. the person that sold because it went up 5 or 10% is not a long-term investor. people that hold 90% of the shares get the benefit of the merger with valiant, the deal

that happened. the person that dropped out. they saw it pop. i'd rather the people be the long-term beneficiaries. >> companies that launch, they can boy, before they disclose, they are buying knowing they will eventually. >> when warren buffet boys a stake in the company. i'm sure everyone that sold to him, he knows what he is doing. you are allowed to have the benefit of your own inside information if you will. >> so anyone, i don't think harvey knew the situation. >> i have been thinking about this since yesterday, we have been talking about it. could you buy all of allergan by yourself? i don't know why that seems different to me. i don't know why i keep getting stuck on this. i many es is the sec will eventually look at this. obviously, you have thought a lot more about it tan we have

but again, if an individual knows about a dem and knows mike is planning to buy. >> actually, as long as they didn't get the information from someone breaching the duty. i'm a friend of mike. i go buy $100,000 of stock, i will -- there is no benefit to leak to some guy to buy $100,000 of stock in this case the board concluded by teaming up with us would increase the opportunity to get happened. if they increase the probability of the deal that fik economically offered synergy, if that's great for valiant shareholders and allergan shareholders. >> i think if we put that sound byte. we can hear it. let's take a look. >> i don't think there is enough of a basis to suggest that what happened is illegal. one would have to know when ackman started negotiating with

valiant. but what is clear is that prior to his cons mateing an actual deal with valiant, he was in the marketplace and my suspicion is the sec will look at that and try to determine the facts to see whether he was front running valiant's bid, that itself the real issue. >> martin, before your dinner, that itself the difference. >> if they look at our agreement, once we send the confidentiality agreement, we couldn't do anything. >> we had to give bill permission to go forward. that was a board decision. we made the decision to go forward with the company. we told bill he could start buying. in fact the first shares he bought were for us. >> this interview was the focus on a miss. but, you know, there arant a million things i can ask you about. >> can i add on to this? >> he's so good. >> go ahead. >> there are many deals that should be happening on wall street or on corporate america

where one company should be merging with another to create synergy to make it a more effective business it doesn't happen because of more social issues. >> either the ceo doesn't want to move the office from one state to another. i think it's very important for capitalism for these kind of transactions. the sense is kind of teaming up, facilitates efficiency, better run companies, that's good for the company, good for -- >> did you have a way of, whatever it takes to increase your shareholder value, if they're not going to play, you have the way of seeing the light of play? >> you make an offer they can't refuse. >> i wasn't going to ask them about herballife. i was going to open up a candy bar start eating, what would you say if i said, god, i love the stuff. >> id be concerned about the quality. >> back to i think much your

paper losses have been what cut in half and cut in half. it's come down and there is a lot going on the terms of people looking into the main stream media, abc will do that. >> i got the sent it will come soon. would you say at this point that you are heardened by the change in circumstances over the last month? >> i think the important thing is our goal is to shine a spotlight. after a preliminary investigation, i think the preliminary investigation is more than the typical one. they didn't want to hom out looking like they were helping the short seller. there is a investigation by the sec, a criminal investigation by the department of justice and by the fbi, to state attorney generals, this is unfortunately a bad company causing a lot of

harm. >> how long were you in the nba. >> seven years. >> to mike's point, some people accused me of being the most persistent guy in america. we think this transaction is a great transaction for shareholders of valiant and allergan. >> you think it's okay to talk your book at conferences and seminars and things like that as well? you have been criticized for that as well. >> i think capital marks benefit by transparency, in the old day, people spread rumors. right? today, our view is full transparency, if you attended the presentation yesterday, which we watched online, it's three-hour education in a pharmaceutical business. it's a good education about pike's companies, allergan. i think that transparency is healthy for investor, not just institutions. that was opened to the general

public. you can download it. you can watch it. >> one of your buddy, einhorn is the high frequency. is the market rigged, where do you come down on that? >> i think michael lewis is right. we were one of the original backers for the imf exchange t. quality of execution, it's better than any exchange. there is a couple pennies that don't need to be spent on useless. >> it's not a couple pennies. >> it adds up. >> we are a beneficiary, if you look at our investment in allergan. that's sending constant signals to get in, the volume being many times normal. high traders buy a share in front of under the circumstances an sell it to us. buy a share in front of us.

>> we have no choice because of the way the restrictions work. >> if anyone is front running, not you? >> yes. >> mike, i want to ask you really quickly, we have been talking about how you are very thrifty, how you are cheap, how you won't pay higher prices. >> we put in place a very fair offer and we have to sit down with the board of directors and if they want to get this deal done, we will sit down and try to make sure we get it done. >> then there will be more after if you are successful at this, you might be involved with that. with this company, all of a sudden running a pharmaceutical? >> i got a call from another ceo of a public company saying, we have a company, right now, i'm saving my capital. >> we have to wrap, thanks, guys. >> thanks both very much. we appreciate it. >> when we come back, another first cnbc interview the ceo and the company's quarterly results.

then investors will be focusing on facebook. a lot of questions about recent acquisition and ad formats. we will ask analysts what investors can expect. the ceo of pnc financial services the cfo, you got several other people coming includes stephens from gm and caterpillar, "squawk box" will be right back. be right back. you probably know xerox

as the company that's all about printing. but did you know we also support hospitals using electronic health records for more than 30 million patients? or that our software helps over 20 million smartphone users remotely configure e-mail every month? or how about processing nearly $5 billion in electronic toll payments a year? in fact, today's xerox is working in surprising ways to help companies simplify the way work gets done and life gets lived. with xerox, you're ready for real business.

. welcome back to "squawk box," everybody, let's run through some of the high profile earnings report, procter & gamble, a dow component, that was three cents better than the street was expecting. the company's results were helped by a drop if overhead costs. even though it cut its earnings for the year. >> that stock is up about 13 cents, boeing beat estimates by 20 cents. it came in at $1.76 a share. it raised its earnings forecast for the year. >> that is good for a pop of two and a quarter percent. delta airlines, four cents better than expected. they did have to can sell more than 17,000 flights because of

severe weather to make 90 million off its revenue. at&t coming in with earnings a penny better than expectation. revenue is strong. they added 1 million wireless subscribers. john stephens is a member of cnbc's global cfo council. john, thank you very much for being here. >> thank you very much, becky. >> let's talk about the wireless subskreebers you added. what happened? >> a great quarter. over a million total wireless net ads. over 600,000 post-payment ads. positive smartphone net ads in increasing the quality of our already very strong examiner base. >> so that shift, were you stealing from other competitors out will? >> well, we feel like our customers are choosing to stay with us and few customers are choosing to come to us because of our great choice and value, quite frankly, our great service

and network. we believe our network is helping distinguish us. >> john, that has been such a battleground. we seen so much intents competition and i just wonder, is it still profitable to be bringing people in and offering lower prices? it seems like the consumer seems to when all the time. >> we are grateful the consumer wins. we will continue to stay with us. quite frankly, with the choices we have been giving customers, we were able to balance it with a quality service. for us, as you can see in our earnings, which were up nearly 11% year over year, it is not impacting our ability to provide good service while making a good return for shareholders is there what is that the result of? >> a lot of hard work from our sales team, manly a move to our shift. high speed internet, virtual

private services used to put efficiency into their networks, to put security and quality into their new yorkers. it's the result of our three year investment program project vip or velocity vip. we have been envesting. ness starting to show in the transformation of our customer base. >> i know when it comes to capital expenditures, at&t has been the biggest corporate sperpd in spender in america, for several years running, that's because you are spending so much to build up that network. i wonder what you think from reed hasteings of netflix and others purposeing back saying companies like his soon have to be paying to run a lot of traffic over the internet. >> i think it's simple economics. everybody wants things for free. quite frankly, you should expect a reasonable return for your share olders. we like to do business for

customers of all sorts so we look forward to doing business with netflix and everyone else on a reasonable basis. >> what's a reasonable basis? >> actually getting paid for provide tack iner connection. >> you said everybody wants something for free. this economy has strong results. is that a result of a strong economy? >> we are seeing a fairly weak economy. you mentioned we are one of the largest investors, quite frankly, not many customers are following suit. business fixed investment is at a very low level specifically our chairman is leading an effort to change some policies in washington to increase business investment in the united states because that's the way it will increase jobs. the best way to do that is tax reform. we have been a big proponent of

lowering rates and closing tax loopholes. even though it applies to us, it will increase everyone's investment in the united states and really generate jobs quite frankly, becky, everyone having there is tax reform bills out there we need people to sit down, put their visual view points aside. the visual community is ready to be acceptable and negotiate a settlement or a joint effort. we look forward to that. certainly, we would be ready to put our support behind it. we certainly believe it can get done. we think it's a matter of choice. >> congratulations on the

quarter. >> coming up, when it comes to social stocks, there is facebook and everyone else. the stocks have been battered over the past month. but many analysts rank it a buy. so what should you do with shares of the social media giant after reports of the night. we will preview and talk with analysts next. check out the "squawk box" market e financial noise

financial noise financial noise financial noise can you start tomorrow? yes sir. alright. let's share the news tomorrow. today we failrly busy. tomorrow we're booked solid. we close on the house tomorrow. i want one of these opened up. because tomorow we go live... it's a day full of promise. and often, that day arrives by train. big day today? even bigger one tomorrow. when csx trains move forward, so does the rest of the economy. csx. how tomorrow moves.

. >> facebook first quarter earnings after the bell. joining us from new york. the securities of senior analysts and facebook is one of your favorites, isn't it, antony? >> our top pick for the year. i cover pedia as well, basically within i talk to ad buyers and ad agencies and marketing firms, you continue to see this tech on theic shift of the marketing budget going to digital from traditional media. we think facebook is the best way too play that shift. >> i don't understand how it works. i should go on facebook. going to ongoing pricing uplift at facebook.

tell pe, what is that? >> basically, we think on the news feed on your phone, the price of those ads is $4,000. >> that compares for tv cpns. so the idea is over time facebook could close the gap. now some would say in the history of the internet, it's a price deflator. one thing facebook has at its back is a mid-shift from desktop to mobile, their pricing is higher than on desk top, between that and core pricing believe we have and other ads having pricing upside. we think pricing will continue to grow rapidly for its ads. >> so ipads are mobile, right? >> yeah. >> so people are they're like friending people and watching what they're doing on the ipad? they care what other people are doing and look at their

pictures? that's what's happening here? is that what's happening? >> what's happening is people are checking with each other online and mobile is definitely the way that people are doing that. they're posting photos, you know, your kids, your family, gentleman, you should put them on your facebook page and share all that. that's the type of content. i covered content. there is user generated content. facebook is clearly the leader because people care about the content that their friends are posting on their facebook site. >> on the phone, i don't think i can see it. unless i put onpy reading glasses number one. on an ipad i can see how you make money that's what we're talking about mobile advertising? >> you can see all the ads. >> maximize the fund.

>> another thing, too, you bring up a point about ads, are they intrusive? we think increasingly, they're more targeted, customized to what you, joe, care about in your news feed. you may not boy that. the fact that ad buyers think that facebook is doing a good job. >> that's the holy grail. they will show me what i need. that's really going to happen? >> yeah, it's happening, targetability, your income bracket, where you live. i know what you care about in terms of commerce, that is something that ad buyers will pay a price for. they say you are wasting half your assets, you don't know which half we know which viewers are viewing the ad one other

thing is the ad format facebook launched. we think we had $11 to $14 this terms of price per viewer. so our checks have been that. feel free to contang us for a transcript of one of our quarterly check calls. our checks are that spend it sequentially fat. >> that bodes well for facebook to add revenue. >> if i were to lock at one or two or three things tonight, because expectations i imagine have been going up. so how could they miss? how could they be that would cause the stock to go up? >> a shorter-term investor might say the setup is questionable because analysts like us have raised the expectation for the quarter, right? so it could be as simple as some more seasonality tan we and

other folks are expecting leads to ad ref few coming in modestly below. i think the modern trend, we are actually bullish on trends in the quarter. i think people are also wondering about acquisition strategies. >> yeah. right. so that's another factor investors want to talk about. >> those drones are pretty cool. then it gives us an opportunity to play some sound i think. >> what's up? >> what's up? >> you know, you guys do this to me maybe one out of five times i come out here with the sound bytes. you know, like -- >> what's up? >> you talk about facebook, you don't think the audio guy is going to press, it's on a putton, anthony. he's liable to do anything at any time, jesse. >> i like the jessie eisenberg better than mark zuckerberg.

i like him better. so i prefer him. >> it comes down to this. zuckerberg has a vision of connecting the globe online. is the future xaun indication going to be a real time over the top messageing platform like what's that? perhaps, right. i think your model, investors of facebook filled in some tlugs to shares for acquisitions mark will make each year that are strategic that may not have any discernible revenue impact in the near term. but that kind of help him achieve his vision of connecting. >> something could hit. something could definitely hit. i know. he's, you know. there is no way to second guess this guy at this point is he 30 yet? >> look at instagram. >> no way. how much is he worth?

25? >> i'd have to check. rig right. >> anthony, thank you. you didn't really answer, what's up, anything? is that you? >> xats up. >> you are on cnbc. that's it. that's what's up. >> that's good. >> all right, guy, take care. >> all right, coming up, a shareholder showdown in atlanta. it seems will is a starbucks in america. why are some worried about whether duncan is overbuilding? "squawk box" has more on that when we come back. ♪

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welcome back to "squawk box," toyota keeping its position at the top, in total global vehicle sales, selling 2.vague million in january through march. first quarter sales rose by more than 6% over last year. gm sales were up 2%.

they were in the number two spot. the 2.4 million vehicles sold. china and europe were big drivers. they love their buicks over there. they were up 14%, cadillac sales grew by 9%. gm chuck stephens will be joining us tomorrow. that should be interesting, too, given that there is a lot to talk about with xm. >> that's right. when we return today, coca-cola holding its annual shareholder meeting in atlanta. the big issue there, executive pay. we will be speaking about compensation, find out how he will be voting. and a related programing note for you, warren buffet coca-cola's biggest shareholder for berkshire hathaway. his lunch with the winning bidder paid just over a million dollars. as soon as that lunch is over, he will be coming joining us first on cnbc sometime between 2:00 and 3:30.

watch before the 2:00 p.m. hour. stick around, "squawk box" will be right back. cars are dri

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welcome book to "squawk box," dow capital out with its earnings. it came in at 79 cents per share, eight cents better than the street was expecting. revenue fell short of consensus. the ceo told cnbc self help programs have stream lined and increased profit margins. the consensus, the biotech company in terms of enbro were a little week weaker tan expected. and a secondary offering today, planning to raise as much as $100 million. they will have an option to buy 15 million more in shares. >> that is down by 4.25%. sales of allergaf soared yesterday on word valiant pharmaceuticals were teaming up

for the whole company. earlier,ing aman explained why this dell does not coops substitute front running. >> the way the rules work is you are permitted to trade on "inside information" as long as you didn't receive the information from someone who has breached the duty of, a fiduciary or confidentiality. what's happened here is we teamed up with valiant. they basically came to us and said, look, you can help us acquire allergan. we'd like to work with you. we said, great, we formed a partnership. it has various terms. it gives us the right and permission to buy a stake in all sper gan. >> of course, there have been people buzzing about whether or not this is legal, whether or not the sec will look into it. ackman told us as he was walking out of here, yeah, he had his lawyers look at this carefully. guess who his lawyer is. the former director of enforcement at sec. he said if anybody has

questions. they can call dr. robert kuzami. >> if two companies, three companies, five companies decide that they're going to make a bid, they is the company different? >> you have private equity. >> you get a private equity guy, why is that? >> you got a public company in the pharmaceutical business but you will also going to, in this case, she an activist that can help with board decisions and maybe as you heard, he thinks michael pearson thinks it's more likely withing a mavp as a partner that the deal finally goes through for whatever reason because he's so relentless. when a formal company decides, if they buy shares in a company, when warren will buy shares and no one knows about it and down the road, he might end up buying

the whole company and he bought those first shares. >> in fact, sometimes he asks for dispensation from the sec. he has to tell people. >> that alone will make people come in and buy the stock. >> he is buying when no one knows it's in. >> it's interesting. it's a brand new breed of activist investing. i was scratching my ade about it. i am still mulling through everything i think about this. by the way, we also asked ackman if this is a play b.c. for what he will be doing down the road. he said yesterday he received a call from another public company that was offering up a target that it would like him to go after. he says he's not doing it yet. but, yeah, you can bet that's going to be happening, especially what we heard from carl icon yesterday, he said, hey, this looks like a really good way of doing things. you can bet he'll be checking out these things, too. >> having been in this business for a while, i remember when

millikin, people used to park stock so people would foe who really owns, so a public company, you didn't know if there were, it doesn't look that different. >> having the stock owned by someone other than the acquiring company. >> i don't know. there is a lot to think through on this. i do have to say, they had a very convincing argument and the idea that khuzami signed up on this, that should make you think about it, too. there is a shareholder brewing atco ka cola. the company's equity compensation plan will be near the top of the agenda, it has been under attack by david winters. his firm has about $101 million of coca-cola shares. we learned he sent a second letter to warren buffet.

berkshire hathaway, that letter says the proposed equity plan would could dilute all shareholders by taking up to 16.6% of the value of each share. joining us right now, jason zobotney. thank you very much for joining us today. we really appreciate your time. what do you think about this particular situation, is this a case where you come down with winters or do you think they're right? >> executive compensation is always a big challenge. i think where we end up coming down actually is this is not a make or brick poefl for makers of coca-cola. we think there is merit in both sets of arguments. we don't disclose exactly how we vote on the proxy issues. we think this is not a make or

break item oncoka cola. >> on that issue of the dissolution of coca cola shares, winters has been hypercritical. we had him on the show last week. this was his response to what winters has been doing. >> the delusion is much most closer to 1% levels than the 14, 15, 16 numbers floated out there and our new equity program that we have proposed to our share owners in this coming month in april is completely inline with previous equity programs we have implemented in the company. >> jason, what do you think? is this dissolution of 16%? what does it tell you? >> it is much closer to what management says, i think the challenges is they're complicated and a lot of the details aren't fully flushed out. it's much closer to what manage. says. the amount of change

compensation is not really that significant. >> so it sound like you are not all that concerned. how did you vote your shares? >> we done disclose how we vote our shares in cases like this. but it's not a really big concern for us. i mean, the exciting part of the coca-cola investment is this is one of the few stocks that significantly lacks the market over the last 12 to 24 hour month was. it's a great business. it's very consistent and at a very attractive valuation. >> you have ten times the shares of winters and you are obviously the seventh largest? >> that's right. it's a big company. this is one of the dominant companies in the world. that's the best thing about it is in good times and bad, they will continue to sell beverages around the world. >> it remind me, what was her name? it's outrageous. remember here? >> come on, you can still be able to own one share. >> you can own one share and go to the annual meeting and get up on the -- i don't, dam close.

when you are talking about coca-cola. you get a big. >> it's outrageous. >> you get a big megaphone and he's not a player in the stock. >> what i think is interesting is the math. jason, i'd like to know your math with the number a lot closer to the di lucian to manage. 's numbers than winter's footballs. >> sure, basically, they're looking for you to improve a half a billion shares and from that, every share that gets issued of actual stock removes five shares from that half a billion count. so what you are looking at is potentially 100 become shares or up to 500 million options. so a lot of the calculation differences run from how you view the option and how many options they'll grant. >> okay. you have said, a part of the reason you like the investment thesis in coca-cola is thing to is under valued. what do you think of the management? particularly with muhtar kent?

>> i think he is doing a good job. on a global bafts, they excut well. the spec challenges, they are investing very heavily to continue to create more demand for their product we like what they are doing. we think the management skill and the brand is really attractive here. >> what do you think about the thee sis overall, do you agree with any of the points he's brought up? >> we think shareholders being passionate about compensation is an exciting thing. i think shareholders having an important voice making sure it's fair. we think it's important to reward management for their execution. we applaud shareholders when they speak out about something they're passionate about. >> we should be glad at shareholders. i aghee with you completely.

let hope that shareholders get as involved as they need to be with forward governance so these clowns that would like to pass laws based on this, so they don't get involved. because it's the shareholders that should be the pun u ones to make the final decision. >> that's why we need to urge them oranges embrace that so the alternatives don't happen where the lawmakers take it into their own hands on compensation issues. they're ready. >> i completely agree, executive compensation in getting it right is one of the most difficult tasks. we think coca-cola is working hard to get a proposal that works. we agree with you, shareholders having a voice is the most important thing. >> jason, i know you don't comment. i will characterize it that you agree with management and you voted? you request correct me if i'm wrong on that.

i want to thank you very much for joining us today. >> thank you very much. >> it will be a matter of public record? >> it will be. >> ye. >> by the way, evelynn davis. >> that sound strange. >> outrageous. >> is she still with us? >> i love her up next, we will run lou the morning, is duncan brand getting too big? some say the company may have an overbuilding problem. ding probl. in a world that's changing faster than ever, we believe outshining the competition tomorrow . we help forward-looking companies run better and run different - .

. >> welcome back to "squawk box," the futures right now, are they up a little bit? >> the dow. you had dow components. >> they're not up much. >> boeing should have been up. >> procter & gamble up a little bit. >> hold on a second, they earned a dollar four, they beat us by 3 cents, that is down a little. it was up boeing earned $1.76, improved forecast margins up almost $3. dow chemical posted first quarter profits of 79 cents. it's not helping, it's not in the average. it's helping the s&p by 8 cents t. company says its program to improve efficiency. >> that has helped to increase

its profit mar jen. so we got six days in a row of s&p going up. so. >> six days in a row for the nasdaq going up. >> so, we'll see whether this is enough stuff coming out at 10:00. coming upping jim cramer from the new york stock exchange, his stuff on bill ackman and valiant, "squawk box" will be right back right back e

financial noise financial noise financial noise financial noise

. down on the new york stock exchange, jim cramer joins us now. we frame the question like this. i am convinced the way current law is that this is not front running with ackman, people are now saying it's a loophole and the law united to be changed. where are you on this? >> i agree, it's completely, you

got policed by the former enforcement director. it's obviously going through. whether we think it's right or not doesn't matter, it's clear the sec can look into it. all they can look into is if someone leaked it. it was obviously a big wale buying, now, perfectly legal, maybe legal isn't right. >> i could even see kramer berkeley. i don't think you could have bought allergaf probably. if someone, a smaller company you thought was under valued, you could go with somebody else and say, look, this thing is so cheap, why done you buy it? you could present it to them. you could have been involved in the operations, isn't that possible to do that? is that front running? >> no, i think that, look, you guys had a fabulous interview, basically, value incentive was fine. they did buy a lot of stock in

that period that, window that shouldn't exist. sec shouldn't probably change the law, i don't know what the sec is doing. i do tow that they did nothing wrong it's just if you sold allergaf like you said to these guys, you i think feel you are owed something. but the government can not find for you given the way the law is set up. >> but when buffet starts buying something, i don't know about it. let's say two years down the road, he acquires it, berkshire hath a way, didn't he boy those first shares? he may have known what they were going too do, they know. >> i think we are getting to the pointch even the, there is a story about pete ferrara, guys knew stuff and acted on it. it seems like people have kind

of decided maybe these pencer trading rules don't apply. i listened to actman,ingackman. he says the sec isn't going to redo the rules, congress will dedo thing a to stop this. it's obviously not going to be an se controversy enforcement case. they're not going against it. >> i finally came around to your way of thinking. i don't always, i did on the high frequency stuff. if you are making that much money, it's a tax. it's a tax like going into thin air. it's not helping anything. it makes the cost of doing business for someone more than it needs to be. that doesn't make us efficient and low cost providers of things. >> right, at the same time, you look at an sec not focused. the sec is not focused on how to

protect the little guy or level the playing feel as much as it is trying to figure out what it is going to do. they don't really know what they should be doing. >> something happened december 31st to herballife. you see, i will show you a year-to-date chart. we did talk to actman, it was up at 85 inter-day at one point. so we're down there. it's been going his way. he says more than half of his losses have gone his way and anyone over all the investigations going on, now abc will do something, talking to a whistleblower and i mean there are a lot of investigations. do you know how this will finally pan out? >> i think in the end, ackman wants to destroy the company. he can destroy it. you can continue with pressure, look, every company makes mistakes. i am sure we can go after

coca-cola. ackman, look, he went through all the different investigations that he has going. of course i think some of these could destroy these companies. listen, i don't want this destroying my company. herballife has been defense free here. they haven't been able to make a strong case which is worrisome but i mean ackman told you he has another bunch of attorneys general that will come after it. the authorities love the case because he gives it to them. the authorities love it when you give them a case on a silver platter. ackman probably i don't know has the best justice money can buy. >> yeah. it's not the multilevel marketing can be done in a legit way. you can run a business like that. >> ackman doesn't think so. what does it matter? >> yeah. >> you know, honestly. you can -- look, you can get a lot of mind share. normally in the old days i would have said you can buy anybody you want. i think when you watch what happens to herballife ackman will not stop until it goes to

zero. that's a powerful opponent. the government seems to be going his way. herbal life has nothing. what does herbal life have? like a supplement business? >> candy bars are pretty good. >> it doesn't matter. a guy wants destroy a company you can destroy a company if the company can't defend itself because it's squishy. ackman is a powerful opponent and he's making his case and i'm sure there are many more investigations to come. the fbi seems to know all the investigations before they happen. that's terrific. i mean, seems to know everything before it happens but it's legal. you're allowed to know -- allowed to have the paper before it comes out and until someone says that's illegal he's got 100 lawyers checking off on everything. >> yeah. >> he's legal. >> yeah. >> what can i say? i guess legal is different from what we may think is right. >> you got a lot -- >> sounds like everything he's doing is legal. >> you have a lot of gray. >> i do. but that's -- justice is -- justice is fudgeble. >> you're a recovering lawyer, aren't you? >> i know that -- 12 step.

>> look, it's up to the government to decide what's legal and illegal. you can get a lawyer to say it's legal. if the government decides it's not pete ferrara decides it's not he has prosecutorial protection. >> the other angle forget about the sec. >> tons of exposure. he has the right lawyers. >> thank you. we will see you in a few minutes. >> when we come back, something may be brewing at dunkin' brands. jane wells joins us with a preview. good morning. >> good morning, becky. are californians ready to have their coffee premixed before they get it? >> dunkin' returning to the state after a dozen years away. one analyst is concerned. should you be? we'll mull that over a cup of joe i don't have in front of me when we come back. but the m-class sees in your blind spot... pulls you back into your lane...

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should investors be concerned about an overexpansion at dunk nk brand. jane wells knows her way around a good doughnut joins us with more. >> thanks, joe. >> you're welcome. >> california has barely gotten over the notion of the waffle taco for breakfast from taco bell. taco bell home grown company. i've had one of those. we await the full return of d k

dunkin' doughnuts that left the state because things didn't go well here at the time. there are currently three dunkin's in california including this one at the camp pendleton marine base. 150 planned over the next few years including 20 just announced this morning in orange county in the san fernando valley. dunkin' believes it could have 1,000 stores in the golden state, california, runs on dunkin', well, a shocking report earlier this quarter longbow initiated und perform. and channel checks indicated the rollout in california is running behind. andy berrish isn't buying it. >> i don't agree with those reports at all. i think the pent up demand for the brand and the ability to get real estate is there. california is not an easy place to secure sites but the company doesn't expect openings until 2015 anyway and it will kind of ramp from there. >> barrish says most of the

money is coming from franchisees not the company and he's spoken to a few, they're well established, well financed and currently securing real estate. he predicts dunkin' will reports 20% earnings growth despite the harsh winter and will be interested in the new rewards program that dunkin' finally launched. starbucks program has really done well in driving sales. starbucks also reports tomorrow. but there has been at least one hiccup in california. a franchisee reportedly moving into this long beach doughnut shop famous for its pink doughnut sign, was planning to take that doughnut down. well, a facebook campaign to save it and pleas with city hall changed his mind. the doughnut is staying after dunkin' moves in. >> doesn't you cover krispy kreme at one point? you know about doughnuts. >> more than one. >> i know. >> that's what i mean. what did you think i was saying? >> no. any food -- well, i have -- i don't know. maybe i'm getting a little big around the middle, i don't know.

maybe a little p 90 x. i'm just saying. >> can i ask you about sir ranch cha chili sauce. >> i will put on doughnuts. i put that on everything. >> this is going home with me. i loved it. i really did. >> not as hot as i thought it was going to be. >> oh. >> wow. becky. >> i don't like hot sauce but i have to say there's a sweetness to this. >> it's good. >> it doesn't burn for a few seconds. >> no. >> it's the new salsa. >> jane, you know, we -- dove did a -- dove got in trouble for calling new jersey like an arm pit or something. you know, that arm pits are pretty nice. if there is an arm pit in southern california you tell me irwindale is not the arm pit of -- it's in between el monte and azusa za and there's all -- they're too good for this sauce? they don't want the business there because of -- >> here's the thing. here's how poorly david tran has

managed his pr. that irwindale is giving him a bad time because irwindale never gives anybody -- irwindale gave al davis $10 million which he pocketed and walked away and said thank you very much. >> i know. i know the place. we were going to show a picture. it's -- it's an industrial area. it's not near the ocean. it's not really up close enough to the san gabriels. kind of there. but i thought they had a lot of nerve to say we don't want you, we don't want you here. >> well, you know, they do say that a couple months a year it really is a problem but again, irwindale never says no to anybody so you have to wonder how poorly tran is managing. >> like you too sort of, isn't it? >> like meat? is that what you're saying? >> never said no to anyone. i was kidding. you know how we go back and forth. >> kidding. >> gosh, joe, doughnuts. i don't know. >> come back and get him, jane. >> i need some coffee. >> you know what -- >> i got up early for this show. >> come prepared.

come ready to play. >> more coffee next time. >> so to speak. >> you look beautiful. >> you do. you're definitely as hot as we thought. >> thank you, becky. >> as hot as we thought. >> i was thinking she was glowing, beautiful necklace, hair looks perfect. thank you, jane. >> join us tomorrow. right now it's time for "squawk on the street." good wednesday morningp. welcome to "squawk on the street." i'm carl kinquintanilla with ji cramer and david faber. can the s&p go higher seven days in a row? futures suggest it might be a contest. awash in earnings. apple and facebook tonight. watch housing today. new home sales after existing home sales fell to the lowest in 2012p. europe in the red despite the strongest flash