kayla tausche is with us this morning. becky has the day off. big news, at&t officially in active talks to acquire directv, telecom giant reportedly closing in on a deal valued at close to $50 billion, $48 billion is the number. could be announced in the next couple of weeks. at&t could offer as much as $95 a share for the satellite tv provider which would put the value of that deal at 48 billion. there were other reports saying at&t would go as high as $100 a share. directv is working with advisers to evaluate a possible combination following a recent takeover approach from at&t. take a look at shares of at&t right now this morning, looking at 36.53, down slightly in the premarket. this can have huge implications, this deal, for the come cast time warner cable deal, one of the reasons at&t and directv are going forward is to put it on

the same table in front of regulators. it may make it harder for the time warner/comcast deal to go forward. >> it will be interesting to see if the comcast/time warner deal does fall apart if the at&t/directv deal would go through. if they're both announced in tandem, a lot of consolidation in that sector. >> the at&t/directv is a harder deal to go through. if you put it on the table with the comcast/time warner deal, it makes the whole thing dicey for everybody, which is what i think they're trying to do. new york state banking regulator is reportedly seeking hundreds of millions of dollars from credit suisse. the new york state department of financial services made an opening bid of $1 billion but negotiations are expected to drive down the final penalty amount. the settlement with that agency would be in addition to the fine that credit suisse is discussing

with the justice department. of course the d.o.j. seeking as much as $1.6 billion from the bank. the journal calls this potentially eric holder's final push to get banks to actually plead guilty in some of these cases. that could come, that guilty plea as soon as this week. it's interesting to see a case like this is not related to the financial crisis yet it's one of the only times we've seen a bank plead guilty. >> they have to do something, right? joe, you would say they don't have to do anything? >> credit suisse, what does it have to do with? >> u.s. citizens storing their investments abroad. >> iran, sudan -- that's illegal. that's illegal. >> this appears to be more than just the tax evasion. pnb paribas has some issues. we'll see what happens at the

end of the week. >> will this satisfy the blood lust mr. clinton likes to talk about? >> do you think people care about foreign banks? >> not really. >> they'll be back in two days as the president likes to say. >> let's talk pfizer. there's stuff going on this morning, the ceo ian read is making his case to british lawmakers about why the deal with astrazeneca is a win/win for the company and the country. we are following this developing story. consolidation has defined the pharmaceutical industry. i don't think we always thought of it in terms of tax implications before. we have had cross-continent mergers before, haven't we? >> absolutely. just a couple years ago. we had a big one. >> it used to be smith klein and then there was a beckham, a glaxo smithkline. i think some were cross borders. i don't remember thinkingen some

was trying to lower their tax rate at the time. this is a new twist. >> this characterized the discussions this morning in the uk. this panel really given ian read, the ceo of pfizer, a tough time here. just as i left it, they were talking about taxes and the tax rate in the uk and whether this was driven primarily by that tax idea. >> he said l says no. >> he says there are other considerations like r&d and the pipeline. they were challenging him on the commitments they were making to the uk and potentially cutting that r&d spend there. we have a clip of him talking about keeping some of the r&d force in the uk. >> we've made a commitment to include, globally, i say globally we'd probably reduce the combined budget. i haven't said in which countries and where we reduce that. a lot of programs are duplicated. what i have said is 20% of our global r & d head count will be in the uk.

has any other company made that promise of our size. >> now, of course, the commitments that pfizer made were for five years. that's what they laid out. they said they could keep the promises for five years. earlier this morning, some labor unions, they would like to see it for 10 or 20 years. not a lot of reassurances that the brits are happy about this. >> for all those people that say this is political grand standing in the uk, our memories are not short. just a few years ago when kraft bought cadbury, they made a similar promise to keep a uk plant open. people are saying you just made a promise, now you're going back on it after some of the uk regulators got on board with the deal. i have to side with them and say they're probably in the right for saying they want to see real commitment from fizer to actually keep some of the jobs and keep its commitment for a longer period of time. >> absolutely. there was discussion about an acquisition pfizer made in

sweden, saying they didn't keep promises there. it was circumstances, that's why they had to close pass illfacil. pfizer is unpopular because they closed a facility that eliminated 1,700 jobs. >> joe, you didn't read my column? >> do you write a column? >> i put forward a socialist idea. i decided basically -- this week i went really socialist for you. i decided we actually should have ian come have -- there should be a congressional hearing here about what's going on and more importantly, joe, we should have a moratorium for the next two years on all inversions. >> yes. >> so i talked to some bankers yesterday, like maybe half a dozen. 17 different fortune 500 companies have called them in the past three weeks since this deal was announced to say,

please do an analysis of what inversions are possible for us because we would like to go through this. >> in the two years we do this, are you saying we should fix our tax code? >> 100%. i'm convinced, sadly, that over the next two years we will not entertain tax reform. you need to put up the gate, though. if you don't put up the gate now, it will be -- >> all our problems are bipartisan with you. you don't think the president's insistence on a tax deal for corporations that needs to raise revenue, you think that's a stumbling block? >> i think there are stumbling blocks on all sides. >> you don't think republicans would go along with lowering corporate taxes? >> i do in certain cases. >> andrew, they would. not only is he insisting it be revenue neutral, if we're not on an even playing field worldwide, you need to lower the total tax

rate. he doesn't want to make it neutral. he wants to raise revenue. >> i can't even have this conversation. >> carried interest is how much? >> how much is carried interest at that point? >> it's like a nothing. >> it's like your minimum wage -- it affects 2% of the population. >> if you can't get over 2% of the population, then it gets very difficult. >> you talk about something that carl levin is trying to do that would be a band-aid for these type of deals. >> yes. >> how would that be structured. >> senator levin, what he wants to do is what president obama wants to do potentially and take it more extreme, which is to say the only way to do an inversion forever, this is not a temporary thing, structure it so you have to have 50% to 60% of your investors be abroad. it's a different threshold. >> why don't you see this as protectionism?

>> total protectionism. >> this is a completely and utterly socialist idea. >> is protectionism socialist? >> i don't know. >> i think it's interesting that the only people complaining about this are the ones that will get the tax windfall. we're over here with our thumbs up our nose somewhere. >> it's fun to hear tim cook talking about apple being the biggest taxpayer in the country. >> if there is a moratorium on the inversions, the companies that have inverted have such an advantage in doing deals. >> that's true. >> i was talking to one person who said it could be possible any pharma companies that are making money will no longer be based in the united states. the ones that have the leverage and tax rates will gobble them all up. jobs, andrew. >> jobs, here.

>> if you look at the stats, over time, jobs get lost, too. >> that's what i'm talking about. >> right. >> that's not a socialist idea. >> no. you're trying to stop it instead of doing the corporate tax -- >> i would love to do the corporate tax reform. >> why do you think toyota is leaving california? if they can't leave a state -- >> it's just an unrealistic thing to do. >> we're too high right now. we're too high. >> i don't disagree. >> we need to repatriate. >> you don't think we need to do a territorial system? >> we need to get like the rest of the world. >> that's a territorial system. >> from the way we're doing it right now. >> kumbaya. >> ping-pong match already this morning. it's only 6:10. come on, guys. >> you do happy camper. >> what are my other ones?

>> i know. they're annoying you. >> kumbaya, happy camper. you have another one. barbara ryan, managing director at fdi consulting and a cnbc contributor. she joins us. her earnings from cnbc are taxable. which is good. barbara, i was just going back on all the mergers that have been done in the pharmaceutical industry over the years. we didn't used to think about it in terms of taxation as much, did we? >> no. absolutely. i think we did have global mergers. this whole conversation is a scathing indictment of our tax policy and our inability to address it. and literally, there's just capital streaming out of the united states, legally, with these kinds of transactions. not just in the pharmaceutical

industry. i think one of the things for the pharmaceutical industry is that we have enormous amounts of cash that has been accumulated outside the united states. and the tax consequence of bringing that back would make it prohibitively expensive. in addition, i think meg made some great points about companies not being able to maintain their competitive edge relative to other players in their industry. we see this strikingly in the specialty pharma business where this redomicile, if you will, is occurring. and now, pfizer clearly has paved the way in many regards to consolidation in this industry and was also the first company to do a hostile. certainly i think they'll get this deal done. one of the things they're arguing is that astrazeneca will be compromised in prosecuting its new drug portfolio, as a

result, jen arng competition that they will face. therefore, the combination pfizer/astrazeneca is much stronger and will be able to support that pipeline to a greater degree. this combined structure will actually be much stronger and will commit more resources "a" to r&d and "b" to the uk. >> barbara, we've -- it's been a bright spot, the pharmaceutical and biotech industry in this country and other countries that have price controls, innovation has been hurt. i mean should we be pessimistic about the future of dart suit c -- pharmaceutical innovation? >> i think there's two different things.

pharmaceutical industry, the essence is to develop new drugs. i think this will continue. i in fact think these kinds of transactions are aimed at being able to continue to pursue that endeavor. obviously it's extremely expensive. it's risky. it takes a bigger base to uter that storm. that's one the things we're saying. >> i can't believe that -- i look at what's happening in europe and i know that there's an english channel and everything. i can't believe the policies in great britain are preferable to a drug developer to ours here. it will be easier to innovate and develop new drugs in the uk than in this country. >> well, i think the issue is, you have to spend money in r&d, right? if you're paying less taxes to the government, you're effectively in a better position to do that. i don't think it's about that the uk is more -- can create

this environment. there will be more money because less will be paid out to the government. >> if companies are doing better, they can hire more people and return more cash to shareholders? so if we were to prohibitively tax corporations in this country, that could be a negative for both -- >> innovation. >> really? that's a new concept for me. >> right. >> i have wax in my ears. i can't hear. >> these nasty -- wow, that's so weird to think -- anyway, barbara, we thank you. let's talk about this. >> talk about this on the break. >> i heard that for the first time. >> the more we tax corporations, the more we can pay the deficit. >> i think that would make the economy better. social programs. they use all the roads. they're enjoying all the

benefits of our system of life here. >> this is like an education. >> it might make sense to go easy. >> i'm enjoying taking this all in. >> it's a master class every morning. >> this is quite different than watching tv. >> if we have someone that's surfing, john oliver, for example -- >> who was at robinhood last night. >> for the first time hears that the private sector is the job creator and may be responsible for some wealth creation and prosperity is a novel concept to a lot of people. >> he's from the uk. he's already got the lesson. >> which we now know is a more bids friendly place for pharmaceuticals than we are here. >> who would have thunk it. >> next it will be france. let's check out the markets. are you leaving? you'll be back. >> i'll be back. this is a big story. the dow closing climbing 112 points to finish at 16,695, a

new record high. it also hit a new intraday high. the s&p rallied to an all-time high of 1896 and the nasdaq added nearly 2% to close at 4143. that was a big snap-back from last week. that's almost 2%. the futures this morning, up 38 points. just seems we're in this benign period right now. i don't know what i'm worried about except the big glacier in antarctica. i don't know what i'm worried about right now. >> we'd like it to come up a little. we're the best house, in not even a bad neighborhood. >> you can tell the mark set jittery because of volume. blame it thin on the way up and heavy on the way down. >> how long have you been saying that? >> for three, four years. >> a long time. >> if that kept you out, you'd feel pretty stupid right now.

>> right. >> i don't know. what's your biggest black swan coming? ukraine seems like -- do they want to join? >> it never went above 18 even when ukraine was the big story. >> are you anxious about anything in the market right now? the interest rates are behaving really well. >> i'm anxious that i'm not anxious enough. >> it's too quiet. >> too quiet. >> julia chatterley? we have to get over bastian of capitalism. >> i like being the queen. good morning. we are evenly weighted reds to greens as far as the european stocks 600 mark set concerned.

we saw a pull back earlier in the session. thises is a survey came in at the lowest level since january of 2013. a bit of caution there as far as russian ukraine feeding into these numbers. the indication is this may mean we've seen the peak. ftse 100, just holding in the green there, a similar story as far as the french and german markets are concerned. we have a watch on the earnings today. i want to give you a quick look at airbus, up over 6%. better than expected earnings, upbeat reports, too, as far as the a350 jet is concerned. still on track for delivery, dodging some of the costs that investors were anticipating. you can see now no longer underperforming their arch rival boeing in particular. another story we're watching

here. it's what's going on in ireland. we saw the yields dip below uk ten-year yields earlier last week. now a lot of the talk is about whether or not we'll continue to see them push below u.s. ten-year yields and whether or not with the periphery in europe, that's the benchmark. we saw france go below but what about ireland, guys? >> lady chatterley, thank you for that report. >> thank you. >> i'm going to stick with lady chatterley. >> i don't know if you can say lady chatterley. >> i'll go with both. >> yes, yes. she's okay with either. >> i'm good with either. >> i learned that term on game of thrones. hyborn. i wonder in the uk if they care about this next story. the nba responding to donald sterling's latest attack on magic johnson.

that was so weird what he had to say. i did not understand that at all. plus, the matter of the financial universe attending last night's robinhood foundation event. i stayed out there a little bit too late. >> masters. >> we'll have some of the details. >> his hair looks great there. >> including an amazon drone sighting. >> and ibm ceo ginni rometty will be making an appearance on "squawk on the street." she'll be joining mr. faber at 10:00 a.m. eastern time. "squawk" returns in a moment.

welcome back. l.a. clippers owner donald sterling broke his silence in an interview with cnn's anderson cooper. he took a few shots at magic johnson, too. take a listen. >> what kind of guy goes to every city and has sex with every girl and then catches i.v. i think he should be ashamed of himself. i think he should go into the background. what does he do for the black people? he didn't doesn't do anything. >> adam silver released the following statement after sterling's interview saying i read a transcript of donald sterling's interview with

anderson cooper. i feel compelled to apologize to magic johnson th. >> it was like anderson cooper gave that man a shovel. >> i'm digging, i'm digging. >> he's gone double secret banned for life at this point. that may have been worst than the first stuff. >> to apologize and isay i made one mistake. >> to conflate hiv with some type of -- >> i'm going to ask something i may get in trouble for. >> i don't think you should hold up someone who got hiv as a model. he has a tin ear? >> this will be an ageous comment. do you think he's completely

with the program? >> maybe not. i'm raising the question without knowing the answer. >> he's like missing in action. >> he's only two years older than donald. maybe you're right, an dru. that sounded like -- >> i just don't know. >> here's the thing. even to, number one, to even have that in the back of your mind, maybe someone should be in trouble. to not even be smart enough to say this is not probably something i should say. >> this is not the time to share this. >> there's no time to share that. what he also said, remember the president at the white house, you were there. anyone who starts a conversation with the negro. who was that other guy, the crazy guy, the other nut case. said when you start a conversation by saying -- didn't he just say he hasn't helped the black -- >> the black people. >> i don't even think he said

people. he's 80, though. >> shouldn't someone then who cannot handle themselves better be in the public light? should they be in an ownership position? >> it's different when you own a sports team in the nba than owning a lay company or something like that. >> what about the wife? >> she says she's been trying to divorce him for the last 20 years. >> the girlfriend is still in with him. >> i don't think she can, probably. i think the nba -- >> we have to go quick. the robinhood foundation holding its annual benefit last night. the stars came out. here's who was there. bill ackman, david einhorn, jeff bezos.

congressman eric k cantor. the event raised, get this, 5 $.8 million and counting in one night. can you believe that? the tally was delivered by an amazon drone that flew through the room and arrived on stage carrying the results on a piece of paper. last year the event generated more than $80 million. >> who are you talking to? >> sara eisen. we were chitchatting away. >> that was a voyeuristic shot. >> there's a vision in white and orange. >> did you stay long enough for -- where you have the electronic pledge thing? >> i did not stay that long. also i missed bruno mars. >> you got out of there unscathed. >> i write my checks to them. >> bruno mars was there. sting played last night.

>> i sat next to you a couple weeks ago. you were working the room. >> penelope came, too. >> john oliver performed. >> they raised $59 million, $80 million last year. do you think they'll donate enough overnight? >> there will be some people -- >> the 11th hour. >> did you see jones speak? >> i did not. >> i think i left before you did. >> i did see the open of the show. mr. sternly. >> great event, fun night by all, even with an early alarm clock. another record high for the dow and more economic data on the way this morning. we'll open up that discussion, next. and the yellow pages have been helping local businesses for decades. the ceo of yp.com tells us about the company's digital transformation. that's coming up in the next half hour. true business-grade internet comes

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin. and kayla tausche. becky is off today. she's not coming back this week. >> i was wrong about that. >> i know you were. she's out friday, too. >> i shouldn't think. thinking is really overly rated situation. >> see that thing? that does the thinking for you. >> i was told this was an unscripted program. >> watch this, it's not. in the headlines this morning,

pfizer ceo ian read -- >> you're giving away state secrets here. >> read appearing before the british parliament at this hour -- >> hard to read when the words are moving. >> trying to win -- i can't read it. it's gone now. >> everyone can play along at home now. >> we should do it with andrew when the names come up. lawmakers want assurances that jobs would remain in britain if a deal took place. whatever you want to do be, we're losing a billion dollars a year in taxes. pfizer has hinted its $106 billion offer could go higher if astrazeneca does agree to talk. we're about two hours away from the latest read on u.s. sales. we're also getting new data this morning on import and export

prices as well as business inventories. we're watching the shares of directv this morning. reports say that at&t is indeed in talks to buy the satellite tv provider for $50 billion or 95 cents a share. that deal could be completed within a few weeks. is the rationale triple play, andrew? is that the whole idea? is it triple play? >> two things. brian roberts, comcast runs our parent company, said you have to have a national footprint. if you want to buy the nfl ticket for real and be able to do it, on the similar side, if you're directv or at&t, you want to have that platform too. you have comcast/time warner cable there. the regehrs are trying to look at that. the question is, do you jam in the at&t/directv deal at the same time? that's what this is all about. >> we are sometimes at the at&t tournament and if randall is there, not there. >> something is going on.

>> directv. why now? >> this is a regulatory game. you either get both deals in under the tent. >> they need it to offer triple play. >> directv has been speculated to be either an acquirer or a buyout target. there was always the talk of dish/directv. >> at&t can't do national tv right now. they'd have to build the pipes for everybody. >> they have u-verse. >> there's not enough of it although it's a very good product. >> at my house there was no place where directv would work. >> same with my apartment building. they wouldn't install at my apartment building. you can't have a satellite. >> i would actually, i think be for both of these transactions. >> moving on -- >> all four companies are breathing a huge sigh of relief

right now. >> i know. >> we'll debate this deal later on. we have to get to the markets, because we do have guests with us. the dow and s&p 500 closing at record levels, fuelled in part by optimism about the global economy. what market risks lie ahead? here on set, maury harris, chief u.s. economist. we were talking earlier about how there's nothing to be anxious about in the market. should that in turn make us more anxious? what sort of flash points are you watching and where do we go from here? >> good morning to maury. we haven't seen each other in a while but we used to see each other quite a bit. we're due for at least a bump or construction or something like that.

i don't think it should scare off investors but it is long overdue .valuations, again, are creeping up. p/e of seven times makes one a bit nervous. we get carried away with all these mergers. my sense of the at&t/directv issue may be it will scare the regulators into not doing either deal. >> you may very well be absolutely correct. i think defensively that's how at&t and directv might be thinking about it. >> they may want to kill the comcast deal and this might be a clever way to do it. the other thing i think is a long shot but could happen, some congressman may get incensed about the fact that pfizer is going to everybodylangland and government will have to wave good-bye to a billion dollars or something like that. it may be companies will leave town and they'll find out they've canceled the corporate

income tax. those hidden things could spook the market over the summer. >> when we get to this type of level in m & a activity, it's reminiscent of 2007 and the rip roaring start we got off to that year. that was the beginning of the end. it does seem like companies are looking for growth wherever they can find it. do you think that time around that's a good thing or do you think that will eventually turn out badly? >> if you look at the 2007 period you mentioned, you had a lot of things happening that aren't happening now. namely, you had a huge amount of broad-based real estate speculation that you don't have now. you had a banking system that was going wild that was uncontrolled. you don't have that now. this is much more moderated pace of the economy and the financial markets. i wouldn't want to draw an apology from those other periods. you have to look at the economy. we have a very different economy than we've had seven or eight years ago. >> where growth is concerned more, you upped your forecast to

4.6% annually for the second quarter. do you think the snap back will actually be that strong? >> i think we will have a strong snap back, partly because the weather really did a lot of damage to us in the first quarter. think about how we're starting so far. we've had very good job numbers for april, both the manufacturing and the nonmanufacturing will look pretty good. we should get a decent retail sales number this morning. >> if data keep getting better throughout the course of the next three quarters, even though we're talking about p/es north of 17 times being expensive, how high do you think the markets will have to get before we see the correction we've been talking about for several years at this point? >> the honest answer is there's no way to go. we've had p/es far north of 17. we could do it again. there is a lot of optimism out there. the longer it goes on, the more people forget what could happen and so on. but i think it doesn't go on forever. there was a quote from herb

stein years ago, if something can't go on forever, sooner or later the market will stop. the important thing is when it stops, it's not going to go down 50% as it did in 2007, 2009. 10% is probably a lot. so i don't think this is something to get scared about. i think this is something to watch it go through. >> the million dollar question is figuring out exactly when that will happen because we've been discussing this for quite some time. we'll leave it there. we'll keep catching up with you, david blitzer from s&p, dow jones indices. thanks for being with us. >> thank you. >> david, you ever had a mustache? >> no. >> never. >> it doesn't come out very strong. >> is that what the thinking is? i just wondered, because you've always had the beard, looks good, it's thick. never want with the stache.

>> never. >> i'll probabl -- i probably h wore a tie like you're wearing in 25 years. coming up, an exclusive interview with the ceo of hill shire brands. hillshire brands. say it loud and proud. >> that's what geithner should do. the company striking a deal to buy pinnacle foods, bringing together iconic names under one roof. as we head to break, here's a quick chick of what's happening in the european markets right at this moment. i had to do something. i saw my doctor. a blood test showed it was low testosterone, not age.

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welcome back to "squawk box" this morning. back in the days from angie's list and yelp, you would pick up

your yellow pages to find what you wanted. now it is going by yp. the ceo joins us on their digital and mobile strategy. before we get to the mobile piece, you still make the books? >> we do. we print books in 22 states. >> how big is that? >> our business is half print and half digital revenue. >> if you told me i needed a book to sit on because i was too low in the chair in there are better uses for the book. i think the book has a long tail on it. it's going to be how the consumers choose. plenty of markets around the country where consumers are choosing to use the book and we will continue to print it as long as they do. >> you are competing at some level not just against local sites. you're competing against social. >> sure.

>> how do you play against google? >> we're very focused on local. we to have the best data. we have 20 million business listings in our database. and how we present it to the users on yp.com and yp mobile apps. >> how much traffic is driven by search engines as opposed to people coming directly to you. >> we're one of the top players. we invested early. at the same time, we have a large direct user base. if you look at our app store rankings, those are people choosing to download your app, we're like number 26 in itunes and number 11 on google play. >> what do you make around the controversy of online reviews of local businesses. it is clear some of the reviews are real and some are not. they can have a huge impact on a business. i look through them and decide

i'm not using this, i'm using this. >> we think there is a big opportunity to create better data about businesses to help consumers choose a business they want to use. that's what a review is about. somebody like me has a similar needs. some we have launched a feature called my book, an ability for you to get on the app and create collections of your favorite businesses. people choose those. we have had over a million in a month. we start to get data about what are the real favorite businesses that people are choosing and calling and doing with. >> what's the brand recognition among younger consumers? i remember having a yellow pages printed. when i think of yp.com. i know, this is what a yellow page book was and this is what i can expect to find online. but a whole generation won't have that institutional memory. i wonder how you are getting

them to your site. >> there's pros and cons of having an iconic brand much you have to transform it to something new. it starts with great product. if we build great mobile apps, build a great consumer online experience, people know us and love us for that experience. i'm starting to meet young people who use those applications. they love what we do. they tell their friends about it. >> feet on the ground. you have to be very local. >> absolutely. >> how many people do you employ locally. how do you compete against the groupons of the world? >> it's one of your absolute advantages of 4,000 people we have in our local sales organization in communities all across the country. it is almost impossible to replicate that. came from decades of experience with those relationships. >> it's a huge cost, though. >> it is. when you have a multidollar business, we have the scale to afford it.

that's the difference between people starting up in the local space. it's a much different proposition when you're large, transitioning to a new business model, which is what we're already doing. we're not playing catch up. we have multiples of revenues of what yelp is doing today. >> you're talking about a multibillion dollar business and how you're the number one in this space. but so many local businesses really invested in their yelp presence. i was getting shoes repaired and they said, hey, are you on yelp? will you review us. angie's list is the same thing. i wonder how you get them to invest in doing that. >> we help them manage their

entire presence, starting with their website. we just launched a new product called listings pro. it allows a small business to make sure all their data is correct anywhere on the internet, including facebook, yelp and others. we will scan the internet, check the data, help them make the corrections, help drive their campaigns. we are a full service partner that helps them deal with all the complexity that exists on the internet today. >> have you ever ripped a phone book in half? >> i don't think i'm that strong. it is too valuable to be ripped. >> good answer. coming up, pfizer's pitch to british lawmakers ceo ian reed on why the u.s. drugmaker should buy astrazeneca when we return.

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pfizer making its case for astrazeneca. we have a rundown of what ian reed is telling british lawmakers. >> defense 25 years from now. the unmanned trend will dominate the battle fields in 2039. jane wells gives us a look into the future from drones to robots. hillshire brands striking a multibillion dollar deal to acquire pinnacle foods. the ceo talks to us first about the new menu. the second hour of "squawk box" starts right now. ♪

>> is that jimmy dean? big john. good morning. welcome to "squawk box" on cnbc. i'm bad joe with big andrew ross sorkin and perfectly sized kayla. becky is also just right. she is somewhere very politically correct right now. i'm not sure where. a lot of them wrote that down. now they need to erase it. >> immediately everyone else has gone on vacation. they're coming back monday. >> the futures right now are looking for further gains after they were set yesterday in the s&p and dow jones. the 10-year back up to 60. about 2.65 right now. draw a line through the middle of that all the way back almost

a year. 2.6 would be right in the mid point of the range. shares are jumping in premarket trading. a deal would be completed within the next few weeks. the offer being discussed would value directv at 90, $95 a share. >> vantiv is buying mercury payment solutions. mercury had been planning to go public. it is perfectly owned by silver lake. i guess it will come out this way. they don't even have to do that. they took vantiv's -- the fed's tapering of the bond buying program will remain on its current course unless they would have to change drastically. dennis lockhart speak anything

riyadh, which is tell. they care whether we taper. once tapering ends, the federal funds may be less important. >> also, astrazeneca speaking to british lawmakers about the pfizer bid. this developing story we will call it. >> earlier today we heard the ceo of pfizer talking with the uk panel. they were e pretty tough on him. it got tense at point. we got to hear from french born pascal talking on behalf of the british company. his point was really about the reason they don't like the deal is the distraction that it would bring. >> the person who has died from lung cancer because one of the

medicines was delayed because in the meantime, the two were involved in selling costs. so we want to focus on bringing those products as quickly as possible. and we believe if we can do this selfly we will create for our shareholders any distraction from what we are doing now would run the risk of a pipe lynn. >> a lot of commitments on a lot of questions on its keeping its commitments to jobs and science in the uk. ian reed saying it takes it very seriously. >> let's be very, very firm on this issue. we don't make decisions lightly about changing assets or closing assets or asking people to leave the company. we understand the impact both on the company and the people leaving. what we do is we try and create a company that can be successful

and succeed and get products to patients. >> they came out with a statement this morning calling the offer from pfizer opportunistic. saying it reflect the old astrazeneca and not the new one. >> you want to ask a question, don't you? >> my question to you is how do you feel the difference between paying a premium versus the deal that glaxo/novartis did. they got each other's business that they each wanted without paying a premium. >> that was seen as an al gant orchestration. this one is seen as pfizer coming in, doing a huge deal. probably getting things it doesn't want to keep. that is one of the reasons you have seen them trading like

glaxo and novartis did. >> bring oscar in. it's terrell, right? >> yes. >> when did you join? >> what is it? >> it's terrell. >> i can tell you even when he knows how to pronounce it, he will choose not to. >> no. that's just with you. >> i was just going to say for those of us that want to know, you've been here a couple months. >> oscar schaeffer. r rivulet capital. they're all up so far. >> i certainly am. >> we will touch on that later. thank you. the voice of god in my ear.

okay. okay. m&a, good or bad for sentiment for the market? >> first of all, there's a trillion eight cash on balance sheets. so i think with low growth -- think about it. it is 11% gdp. i think by definition it's very good. i started out as an investment banker. and i look at companies with private values. in last june i recommended directv. one of the reasons i did it was a hookup with at&t. but more importantly, mike white, ceo, was a great market value. >> it's not frothy. the only thing you can say negative was that it reinforces this is a slow growth environment that we're in and

likely to be in for a while. >> i don't know if that's necessarily negative. because every time the cpi was less than 3% for the last 47 years, multiples averaged 18%, 18 times. i don't think a low growth economy necessarily means a bad stock market. a study was done in 1990. no, 2000. as i mentioned a while ago, greece had a terrible last year and the market was up. china has been growing fast. the market has been terrible. >> this is part of the problem with main street versus wall street. we have had discussions where we have had a person say do we want a tight labor market. i said absolutely not. people make more money. wages go up. but it's bad for financial assets. >> it's more political than

economic. >> that's right. which seems to override everything in many cases i think. but in this case that makes no sense, does it, that we want a slow growth to continue? and then i have thought recently, andrew, if there was one group something really for the in equality, how much of savers moved over to -- of their capital have been moved over to people who use the assets. how much money is that do you think? it's a huge amount of money that savers have not accrued on cds because rates have been kept low by the fed. that's one of the reasons for income disparity. >> it is. inflation is low. it's basically helped everybody buy food and other things. it's a double-edged sword. >> it wasn't the fed keeping rates low that kept rates low.

>> no. it's imports from china and other things, and a loose labor market. >> are there bigger negative consequences from the fed being so accomodative? or did the wealth effect of rising prices does that counteract savers not making any money? >> i don't know. >> joe, no one is forcing savers to put their money into cds. it's not right that the fed would push people into riskier assets. that's what the fed was hoping for. i'm not saying it's the right thing to do. if they were watching how this played out, they would have watched it play out and come back when the tide comes in. >> if the upper 30% are the people that own the assets and you've doubled or tripled the asset values that people in the bottom 50%, 75% are being left behind, right?

>> yes. >> are you mad at the fed, andrew, for this? who do you blame for this? for you it's tax policy. >> i'm not mad at the fed. i think it is unfortunately in a deleveraging who takes it chin. that's how it happens. i hate to say that's how it is. but that's a little bit how it and. >> is 80% the number over 500,000, is that too low or too high? >> you know, i'm moving to venezuela. >> what is it down there? >> i don't know. i don't agree with that part of the argument. i think the number is right. the prescription is probably wrong. >> i'm getting a neck workout here. it's like ping pong. >> meg, thank you. >> i'll be back next hour. this is not ending. >> terrell.

>> oscar will stick with us the rest of the show. at least he agreed to before. >> so far. >> we talked about how stocks are up but we didn't mention them. we will talk about platinum portfolio. >> we got a squawk exclusive. are you in on this deal? >> i'm familiar with the old company. >> hillshire brands buying pinnacle foods. they will talk about adding birds eyes, duncan hines and wishbone. e

financial noise financial noise financial noise financial noise

futures up 35 minutes. this year's leading percentage gainer, keurig green mountain. the option as part of a february deal in which coke first bought a stake in that company. speaking of which -- >> we're talking food. hillshire brands is going to be acquiring -- it has announced they are planning to acquire pinnacle foods for $4.3 billion. joining us exclusively to talk about the deal is the president and ceo of of the hillshire

brands company. good morning to you. >> good morning. >> congratulations on the deal. you can't see it. on this side we have a massive thing. can you take a look at this so we can see the brands up on the screen. it's amazing actually when you put them all together. how long have you wanted to do? >> we've been wanting to do it for a while. what we love is when you put the two together, you unlock significant cost synergies and revenue opportunities that wouldn't be available to either company separately. >> talk about the revenue part. >> these two portfolios are incredibly complimentary. we have to of the best performing brands in the frozen section between jimmy dean and birds eye. you could co-brand, cross-merchandising. the combination is a big idea. on top of that, we think we

could take pinnacle into the refridre tpreupb refridge section. you unlock significant i incremental. >> what is going to take so long to see those come through? >> that's quite typical. $140 million of cost synergies. it hits one, two, three kadens. you never see them all hit on day one. they will come about as we execute them. the key point, this is a good combination in terms of eps. >> shawn, i remember when twinkies was having problems. no one understood that the guys drove the trucks, other guys unloaded, other guys brought it into the supermarket.

they couldn't get into agreement with the unions to move things smoothly. can you get all of this stuff on the same truck no problem and get the synergies from that move, move it into supermarkets, or do you have the same kind of issues? >> that's actually a benefit of this combination. we have scale and refrigerated where pinnacle does not. so it would be costly for them to take trademarks like birds eye and wishbone into the refrigerated. we can get that done. they have things they can put together. when you put them together, it's a powerful combination. >> given blackstone bought this business seven years ago for $2.2 billion, where were you then? >> i wasn't involved in this deal then. >> no, i know that. had you thought about buying it then? people thought they had overpaid for that. people thought the price was crazy back then.

>> i've been in the food business over 20 years. i was at a different company then. i wasn't looking at it. >> shawn, this is oscar. i know your old company sara lee. i suggested that he buy haines. i believe next month is the two-year anniversary of the spin-off. i'm sure people looked at your company when you were part of sara lee to buy it. next month they won't have any tax consequences if they buy you. does that have anything to do with your recent acquisition splurge. >> that thought process never entered my mind. the only thing that's been on my mind is creating value for shareholders. we have returned a lot of value to shareholders. we continue to think about how can we continue to do more of it. building a great company with iconic brands, significant cost takeout opportunities is going to create a lot of value. >> shawn, seen them rushing to

the exits, taking advantage of the markets, conditions to exit a lot of these legacy investments. they still had a 51% stake. i wonder what their interest in selling was. how recently they entered discussions with you and what their intention was here. >> you should talk to the other side about what their motives are. clearly we have been at this a while, looking at the company for a while. we like what we got. we think it will be a great combination with the brands we already have. the other side feels good. i think it's a win for both sides. >> are you talking to any tiffin vestors? >> we have a diverse slate of investors. they like the returns we have given them. as we talk more about this deal, we think they will like this a lot too we will leave it there. appreciate it. good luck with the deal. >> thanks a lot. >> when we come back, what will the nation's defense look like? will it be all drones?

companies in the sector. and ibmginni momett will be on at 10:00 a.m. eastern time. "squawk box" comes back in just a moment. she keeps you on your toes. you wouldn't have it any other way. but your erectile dysfunction -

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welcome back. lawsuits are mounting against general motors. a new lawsuit causes g.m. of fraud and concealing evidence relating to the faulty ignition switches linked to 13 deaths. it is believed to be the first suit dialed since documents surfaced showing an engineer signing off on changing the switches but not the part number. that would have alerted others that the switch had been altered. the meltons settled for an undisclosed fund. but now they are using the automaker of fraud. >> facebook says it may consider opening a sales off in mainland china to provide support to local advertisers to reach customers overseas. the company was exploring ways

to provide even more support locally but would not say how soon it plans to be in china. they currently have a hong kong sales office with a staff of 30 or 40 that deal with advertisers locally in mainland china. >> all right. i feel bad for that family. if you settle with the company, doesn't the company -- doesn't it settle any and all claims. apparently it doesn't. if they're foggy to fraud. >> the company would have to think defensively about could we uncover any other issues relating to this incident. at the time maybe they thought this was an unfortunate situation. we have identified very in a finite way what our risk is in moving forward. these new documents uncovered, maybe they couldn't anticipate

what the risk would be. >> you don't own a car. and i want you to buy a tesla. and then if something goes wrong, i'm still not convinced it's just lobbying for the dealer network. would five states insist on just for lobbying money. >> money, money, money. that's all it is. . >> if i buy it online. what some my brakes go out? well, the brakes are guaranteed. how do you get anything fixed? >> when you need your car fixed, you get multiple quotes. >> i would shop around different dealers. >> you never go to an independent body shop? >> they make you do that for windshields and other things to make sure you're not getting gouged. >> just because one is called a

dealership and the other is called a sales office. >> i want to have somebody accountable for this kind of junk. anyway, coming up, it is national small business week. much more with oscar schaeffer and the future of defense when we return. [ male announcer ] there is no substitute for experience.

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welcome back to "squawk box" this morning. we have a lot of headlines for you. we're an hour later from retail sales. economists looking for an increase of 0.4 for april. also this morning, the latest on import and export and business inventories. the headline, pfizer hinting that it could increase $106 billion offer for astrazeneca if its british rival would just agree to talk to us about this bid. they're having all this testimony. they're not even talking to the each other. it's almost laughable. pfizer ceo ian reed is appearing

before the british parliament trying to win support for the drug maker's takeover bid. >> at this price they won't. >> we're talking price. >> thank you. >> lawyers for failed brokerage mf global jon corzine. they say he and others are piling up exorbitant costs. they face a lawsuits stemming from the mf global's 2011 collapse. do you know where he is? is he in the hamptons? hoboken? >> keeping a very low profile these days. >> for him you wouldn't grow a beard. you would shave the beard. >> that's true.

>> then you're in cognito when you shave your beard. every once in a while in the new york post you see him. >> he is still at some social events. i've seen him on the upper east side. >> how much is missing? >> none. >> 100% was returned for customers. but there are still lawsuits because people were without the money for some time. half of americans own or work for a small business. it is small business week. steve joins us. >> we have the small business optimism report which has bumped above 95 for the first time since october 2007. seven of the ten components on the up side. two unchanged. better business. let's see if we have that full screen. i can read you the numbers here. creating new jobs. increasing inventories up.

all the good components are up. the only ones unchanged, higher retail sales are down. there's the full screen right there. you can see those are the big ones. he put the survey together. he has been here month after month, year after year with an unchanged with a dower, sour, horrible report. now, bill, what are we to make of this? is this the break swrout we have been having you on month after month in anticipation of? >> it could be, steve. it's not much of a breakout. as we pointed out. the average of the eup decks going into the recession, and that's over 40 years, is 100. we're still five points below that mark. but progress is progress. let's be happy with that. we're above 95. we need to keep pushing it up. i'm just not sure what it will take to get the small business

owners more optimistic and more willing to spend. >> you are four points above the recession average, which was 91. >> right. >> tell me, bill, what this means for economic growth. what does it say about the winter weather snap back. and tell us what it means for employment. >> well, the winter weather of course was tough for the states that had it. keep in mind that california and florida where i am at the moment and texas didn't really have winter. so that was -- that made the first quarter gdp numbers a little surprising if they are that weak. some states did well. some didn't. and we have noticed new england was certainly badly affected by that. when we look at the optimism on a regional basis. the economy is moving ahead. we'll see much of a snap back in april. but things that really are important to small business owners when we ask them of course are the health care costs, the uncertainty about the

direction of the economy, and the uncertainty of the first quarter gdp is not going to help much. not much economic policy happening in washington. and of course the cost of regulation and red tape. hey, four of the worst years in the congressional record were the last four years. none of them will make them happy going forward. but you have the appreciation continue to go build. we have to keep replacing stuff. and 3 million more people every year. so you get at least 1% growth in the small business sector for services. hair cuts and so on. so that's going to keep a little growth in the sector. but 1% or so for the small business sector and 4% for the big booming sector average is 2.5. that's kind of our view. >> so you see the disparity. >> yeah. >> the small business cylinder

not firing. you think it is regulatory, related to aca. the job numbers are better. and i'm just wondering, billing if you could jump from the levels of -- there's two interest things. one is plans to create new jobs are up. but also difficulty in finding skilled workers. this is something that -- your survey is the one that everybody uses when they talk about this issue, the skills gap in america. give us an idea what kind of hiring levels you expect based on this report. tell us about this skills gap here. >> well, i think we're probably looking above 200,000. one reason is of course we underhired in the first few months of the year. so we didn't really have enough people because of the winter problems. so we're going to catch up for that. that ought to boost it. plus, growth is crawling along.

it is certainly consistent with our data. now, we have had seven months in a row where firms actually increased employment on balance. and that hasn't happened since 2006. so we are moving ahead. on the skill side, there are two issues. one is a true skill problem that is finding teams to build house right now. it is a problem because we send everybody away. now we try to get them back together again. the firms are becoming more dependent on technology. finding people that can handle the technologies. but there's still the simple silly things. people don't dress well, don't speak well, don't present themselves well, have drug problems. >> we hear that as an issue. we have to wrap this. i'm not calling this the breakout month. it is the 95 i think. >> all right.

i'm going to do my best. we're in the field. we'll cheer them all. >> thanks very much. chief economist for the fib. the first big gdp number for the second quarter. we have a bunch of data we will be watching on this idea of a snap back. >> busy morning. >> steve, one of our favorites. thank you. >> coming up, the future of warfare. what defense contractors will look like in 25 years. from drones to robot armies. we'll have names that you should be watching. the futures at this hour indicating another high.

in honor of cnbc's 25th anniversary, what will industries look like in 25 years, today it's the defense

industry. jane wells joins us from association for unmanned vehicle systems international show in orlando. take it away, jane. >> hey, kayla. this is the escape by aurora. you can get two of these and a controller for 50 grand. every major defense contractor is here. you have lockheed, boeing, northrop. it isn't far from where a commuter jet said he almost ran into one in florida. >> my biggest concern right now is the overall erosion of our technological superiority. >> he is the man with the checkbook at the pentagon. these days it's a smaller checkbook. but the checks he's writing now will shape the defense force in

25 years. the f-35 will work as planned but worries there isn't much else new in the pipeline. defense companies will upgrade a line of what we already have. but there will be one noticeable change. more unmanned systems which will increasingly think for themselves and bring challenges. >> one of the things the military has wrestled with is people go in and operate a drone during the the day and conduct engagements. when their shift is over they go home to the families. that's hard. but that's where technology is taking us. it is about protecting the people that are engaged in warfare. as the technology lead us in that direction, we have to come to grips with all those issues. >> imagine cyber warfare. what about cyber as an offensive

weapon? kendall is not sure that would be legal under the current rules of war. >> people have talked about a cyber pearl harbor. i'm not sure that's a valid concept but it is a valid possibility. it could happen. if we did bring down an economy, for example, if people lost their assets on a large scale. you just saw the bitcoin thing. that would lead to fundamental changes. but the motivation isn't there to do it. >> later on "street signs", the greatest vulnerability and it's not cyber. next on skaubg on the street, how does the army plan to use robots the next 25 years. guys? >> i have a few ideas how they plan to do that. i have seen the movies. hunter killers. hks. they are lulling us into this false accepts of security.

we don't know at this point, jane. the next machine age, do they like us? are they ambivalent? >> it's interesting this sort of relationship the lead general in the army who is researching weaponizing robots sees between soldiers and robots in the future. the soldier will always take the lead. it is potential they will be thinking more and more for itself. whether it decides to shoot to kill, nobody wants to make that call yet. >> open the pod bay doors. we all remember that. >> i'm sorry, dave. >> hal! >> thanks, jane. let's talk more about the future of the defense industry. joining us from atlanta is peter with drexel hamilton defense analyst. i can't imagine trying to handicap with different administrations and different hot spots around the world. i think it is always a good

business, isn't it? pause it's never going to be safe. >> it's not a bad business. there is an alphabet soup of programs out there that a lot of different contractors are involved in. the pentagon has 30-year road map for things. how they evolve is tough to handicap, like they said. >> what at this point does our future defense look like? it's going to be a targeted force. it's going to be mostly not manpower. it's going to be machines? >> i think if you look at the budget details in terms of retiree health care costs, other costs. the latest numbers are a little scary, frankly. 2019 and the interest of national debt will be equivalent to u.s. d.o.d. spending. that's a huge change. when you talk about increase in people costs and potentially lowering costs for robots, drones, we will probably more of

towards more drones essentially. that's where the budgets and the economics are taking us at this point i think. >> it's moving fast. i don't know whether we are still in a war on terror. i get conflicting signals from time to time. it's over. it's not over. but we have basically -- the that's become a drone-based initiative for the last -- since the president was elected, no? >> yeah. i think iraq and afghanistan were a huge sort of accelerator of the trends towards using more drones. you know, they talk about enabling the soldier in afghanistan. you have scores of uabs that they could launch out of their own hands to see over the next hill just for surveillance missions. one of the great examples i think with improvised explosive devices and how do you resupply trucks. the marine corps. had a great idea to basically use unmanned

helicopters. they turned a manned helicopter into unmanned. so you took the manned out of the loop toebgs on convoys and decreased that. you can see that mission going to dronesen masse, i think. >> do we still make and order the equipment used in shock and awe? remember the laser guided bombs? do we still build, buy and supply them? >> i think so. i think so. you're getting towards the idea of warfare, a less kinetic die tphaeupblg going forward. i think those are all things to think about whether or not you completely eliminate some of the kinetic destructive aspect of

warfare i don't know. but certainly the other side of the equation i think with cyber has raised its value in importance. we have seen russia use it. china has been very active. i'm sure we are involved. >> as we morph to this it reminds me of so many different industries are trying to go into the future. uncertain daunting future. will it be the same guys, lockheed, boeing, northrop or new companies coming up almost entrepreneurial? >> we have seen new companies get involved. they are very good at seeing where budgets are going. they are good at seeing what's new on the horizon that they don't have. that's where m and a comes in. they are willing to go out and buy a company like this. northrop bought a company 10 or 15 years ago to help them in the unmanned vehicle space.

lockheed have brought small companies. >> you know, i remember in the second debate i think romney said our biggest threat was rush shafplt he lost the debate because of that. but not only did it depend who is sitting in the white house here, how you would invest in this industry but it depends on what the rest of the world does. we have sort of a new view of what russia is capable of now. that had to be bullish for defense, no? >> we heard a lot frankly on the most recent earnings call. we need to spend more on defense. poland was mentioned in terms of a heightened interest in missile defense systems. i know there's things going on in the cyber world in those nations. emerging threat all of a sudden gets people very, very focused.

you hear constantly about the threat of iran from middle east nations. so absolutely emerging threats. they drive what the opportunities are. >> maybe we want to just take a step back. >> pfizer ian reed telling lawmakers in london that the research could fall if the deal goes through. back in a second. cnbc is joining forces with sing later university to bring the future of finance to the financial capital of the world. learn how artificial intelligence will transform the speier investment equation. >> we will dig into emerging threats that will affect banking, traders, money managers

and investors. (man speaking chinese)

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take a look at the stocks to watch. coca-cola is involved in the story. they are exercising an option to raise their stake in keurig

green mountain. do you use that, sorkin? >> i do not. >> we have not either. >> nespresso family. >> so you have a nespresso machine. >> the little cups. >> oh, nespresso? >> is it a cheocolate thing? >> no. it is these little nespresso cups. >> it is interesting coke is doing that, exercise it so early. after bad earnings, you wonder if they are trying to be defensive after that. >> a business point. we need her to keep us on track. >> i felt bad even making it, though. >> that will be the end.

and rackspace hosting. 6%. and elizabeth arden lost 84 cents a share. far worse than analysts expected. >> she did. don't know where it is. sales substantially short of forecast. the cosmetic maker said it is implementing a program. >> it is something we know of. coming up, pfizer hinting it can make a larger offer to astrazeneca. we discuss the promise of jobs in the uk. more on this story just after the break. tune in to "squawk on the street" this morning. chairman and ceoibm will be

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bid for astrazeneca. the latest on what could possibly be one of the biggest drug deals in history. breaking economic moves that could move markets. the numbers and market reaction coming your way. and we are expanding the squawk platinum portfolio. find out way salesforce.com is a name you should be looking at right now. the final hour of "squawk box" begins right now. thoet ♪ ♪ welcome back to "squawk box" here on cnbc. the first in business worldwide. i'm joe kernen along with andrew ross sorkin and kayla pausche. she never asked the question what kind of tree would you be?

katherine hepburn said she had been a tree. barbara walters said what kind it would have been then? barbara walters's last day is on friday. >> i was at snl -- >> what do you mean? you had tickets to snl? >> i did. i have one friend who works on the show. i registered every single august for the lottery. she just brought the house down. with that question, you have to ask the tough questions, if you were a tree, which tree would you be? fantastic cameo. >> what would you be? >> isn't mahogany the hardest wood? >> i'd an a dogwood. isn't that nice? >> oscar schaeffer of rivulet

capital. we'll talk about each of the three picks at some point. those were your three best for the platinum portfolio. >> not the three best. >> why not give us your three best. >> ask me in three months what the three best were. i don't know what the three best will be. >> first we have these headlines. we're 30 minutes away from the latest data on retail sayles. an april increase of 0.4 when auto sales are factored out the rise is expected to be 0.6. new york state regulators are seeking $1 billion from psychiatric swiss to settle probes into whether the bank helped americans evade taxes in swisser land. it could push the numbers over the $2 billion mark when you factor in all the federal authorities that are looking at this situation. the bank is negotiating the same matter over at the justice

department as well. and small business confidence jumped to 6.5 year high. the latest index from the national tpeld federation to the highest reading since 2007. small business confident doing well. >> we have been talking all morning about pfizer. meg joins us now. >> it is getting grilled on its commitment to taxes and jobs and science. is sorry. it's looking at the tax rate in the uk and commitment to jobs and science in the uk. with one asking whether the combined r&d would remain the same after the deal. >> it's not the percentage of sales we spend on research. it is how productive it is. so i do not expect that the combined total will remain the same. i expect it will be lower.

as to how much lower? at this stage, i cannot give i a figure on that. >> that is really what the panel is concerned about here. astrazeneca for its part say the execution risk here is two-fold. >> there is the rate that relates to a merger of this magnitude and the distraction it brings to our employees and the distraction it brings to r&d organization. but also it relates to controversy and potentially delay this merger and impact the reputation of our company. >> now, the panel just wrapped up its questioning of both companies. pretty amicably on the pfizer side given some of the tenseness you are seeing out of the

questions. one thanking ian reed for being more forthcoming than the ceo of kraft during their interaction. does pfizer come back with a third offer. >> it is interesting to draw the kraft example. we talked about this pair lessen. in 2010 kraft basically said we're committed to leaving this factory open in rural england. and just four or five months later they shut erred it. lawmakers really want to assurance this time around. >> how much is left to the lawmakers? >> that's a good point. >> if they come in with a higher bid. >> can he actually hold pfizer to any of the commitments.

they can commit to keeping 20% of r&d for five years. some say they want 10 to 20 years. calling back to other deals he has done, pointing out the job cuts see. they didn't withhold some promises or keep up with some promises. there's a lot of suspicion here. >> shareholders may eventually win out. >> three times. three times is a charm. >> a hat trick. >> will it be for pfizer? >> good one. brian singer, head of allocation strategies. william blair in chicago. and our guest host continues with us. car schaeffer. he will be with us for the rest of the day. that's a fancy name, brian. can you tell us -- how do you do things? it's a dynamic allocation strategy.

it includes fixed income, commodities. does it include noncorrelated assets as well? >> we thought we actually might make the name longer than that. after a while, the debate held it down to just a few large words. basically what we focus on are equity market sectors, bond markets, credit categories. about 70, 75 of those and about 30 to 40 currencies around the world. that's our investment universe. we don't pick stocks or individual bonds. >> and it is global as well. you go as far as you have to go for an opportunity. so what do you see right now in a nutshell? >> in a nutshell, there are a couple of things we're looking at as opportunity. but the primary thing we see in the currency markets, we are long a number of asian currency, short some of the commodity currencies. that's the biggest opportunity. that's where our largest amount

of risk exposure exists. those two areas are where most of the risk comes from. >> when you say the asian currency against the dollar is long or just long basket currency. >> way we position the dollar is neutral. we are slightly short of the u.s. dollar. so it is positions kaos across every single cross rate. we are long. the rupia, the korean wan. at the same time, the kiwi, the euro, those are the types of offsets we have. >> why -- are you bullish on those countries?

i can understand in india. does it have to do with the election? the election is something we have analyzed quite significantly. those markets or exchange rates are cheap relative to fundamental value. the market got its nickers in a bind. they tried to lump them all up into one unit. the reality is they are not one unit. they might be the terrible two of south africa and turkey. but indonesia and india do not fall in that camp. when those currencies got hit, that was the opportunity to step in later last year. >> oscar, do currency fluctuations ever come into your thinking? >> no. the way we look at it actually is people hedge themselves against currency. usually get them wrong. cost a lot of money. the stocks will go up. the currencies will go down.

>> just before i let you go. you only are in stock markets that probably none of us are in at this point. and probably hard to get into some of these unless it's etfs. >> thank you for avoiding the currencies. that makes my life much more profitable. but when we look at the peripheral markets we're looking at the peripheral markets in europe. we have them in italy, spain, in the financials across europe. those are the equity markets. we don't have any significant positions in the bond market. >> what about here in the bond market? >> here in the bond market. in an aggregate basis, we are short bonds. i suspect we will be short for the foreseeable future. >> oscar, you don't think of currency? >> when we think about bonds, only comparisons of multiples.

everybody got it wrong this year. we never played it. >> other than we get to your three stocks eventually. any other themes that you see at this point? individual issues. you're really not a tops down guy. >> change in management, change in capital structure, some kind of change. that's basically our theme almost in every case. and also stocks that kind of fall between the cracks. three of which i'll talk about near the top of the hour. >> okay. good. but you never -- even though you like the situation where management is changing or needs to be changed, you're not -- you never decided to go that route? >> which route? >> the activist route. >> we did once or twice. it hasn't been successful. our view is it's a waste of time. hopefully there will be other people who do that. >> yeah, they do. they do. why do you think oscar hasn't done that? why didn't it work.

if you have enough money. >> in one case we lost the board. >> what was wrong with the board members? >> it wasn't the board's fault. >> we're going to talk about the battles for the boardroom and eihorn and ackman. blackberry launched a low touch screen. it is the first in a line of devices being made with fih unit. the z3 will hit store shelves may 15th in jakarta. just take a closer look. it works how you want to work.

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welcome back. take a look at shares of valeant. down 1% in the premarket today. it will hold a webcast may 28th to talk about why it believes

its bid for allergan is significant to the strategy to be a stand-alone company. it says after feedback with investors "we plan to improve our offer for the company to demonstrate our commitment to getting this deal done." allergan up 2%. the company yesterday coming out and formally rejecting the previous bid. its board unanimously rejecting that. >> we may have a view on this actually. maybe i should ask you about this. we have seen a lot of activist moves. he represents many of the biggest names. what goes through the minds. paul rotting is partner and founder of schulte rotting llp. oscar schaeffer. >> good morning. >> just because we were talking about valeant and you have done

some work, are you on this transaction? >> no. >> what do you make of this deal? >> well, i think it's an interesting juxtaposition of two different philosophies with respect how to develop a drug company. valeant is spend 2g% to 3% of its earnings on r&d. >> i guess i'm asking you about the front running, legal front running. the structural question -- >> he's not foggy to tell you. >> i imagine other of your clients may look at this as a model and say, look, the way to do this, i'm going to sign one a company looking to do something. i'm going to buy the shares approximate advance. what would you tell your client about this? >> from the standpoint -- if a client came to me and says is it legal to do this, yes, it's legal to do it. from a policy perspective, as a citizen, good or bad.

>> wait a second. when you come and pay me a fee, you're asking for my position on whether the legality is. if we want to go out for drinks, we can talk about the policy. >> we're out for drinks. is it fair? there are so many things that aren't fair. >> this is his business. what do you think of that type of model? >> i think if you put together two groups, each of whom have something to add to how you provide, you have a model that works. it's a synergistic thing. it works. why not? >> and valeant says having someone else do due diligence will confirm its suspicions that this is a good deal. it's a little bit of confirmation bias. you're just asking them to consider. >> does that sway you?

>> i think it's totally legal. i worry more about the credibility of the markets. i think that people look at a transaction like that and it just seems in conceivable to money. >> i think if you own more than $15 million with security in a company which may be competitive to you, you have a file. so ackman accumulated over valeant and allergan. >> so like pulling stock in the old days. >> yes in no. there are an awful lot of terps being thrown around. parking. >> we were out in home that a week or two ago. both came out. activism may be bad for the

markets and economy. it may be a bad thing. what do you say to that? >> i disagree. it's probably a good thing. it's very h very beneficial eupl act already. >> staggered boards. a lot of them gone away. you have seen pluarality. i think corporate governance is better now since activism has come into play. i think you need to have somebody out there who has got an economic interest in trench management. not every management is doing a good job. as a matter of fact, most companies, when an activist shows up, the management is not doing a good job. >> but when you have the market priced where it is right now a lot of people are saying, well, how can you get stocks to go even higher? how do you identify the value targets where you can make money off of them. >> the answer is you have to evaluate that. nothing is true at every price.

>> right. >> so you have to determine which price you're doing good at. it's interesting. in march, two professors at the harvard business school came out with a study which basic live said activists have been accused of creating short-termism in corporate management. is it true or is it not true -- and certainly we know that's the -- >> what are we talking about lucian? >> no. clayton at the business school. they did an analysis. they said, look, it's not true as far as we can determine based upon this. the companies can manage for the shorpl-term and articulate and attract shareholder interest in that long-term plan. >> democracy is messy. when you look at the jc penney situation. you can say there's an example

of activism not working. how do you put that in context? >> nobody is right 100% of the time. so use your analogy, democracy can be messy. >> do you go out to drinks with marty? >> we were at a conference together last friday. >> thanks for being here. >> a possible big day for former usc stars not being drafted by an nfl team. we have those details next.

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welcome back to "squawk box". a fascinating story. after going undrafted, morgan breslin took out a loss of value insurance policy in 2012 after finishing third in the nation in sacks. he missed 75 percent of the past two years due to injury. he was eventually drafted. he ended up signing as a free agent with the 49ers this past weekend. but that $2 million loss of value insurance policy which he

basically took out to say if my injury hurts my draft chances i could collect this. he could collect $1 million and become the first collegiate football player to receive a payout on such an insurance policy. to boot, he has a position with the 49ers for the time being. he's a free agent. >> was he drafted or free agent. >> he was a free agent. >> he was not eventually drafted? >> no. >> can i buy that insurance? >> we thought about that. >> if you got into some face disfiguring accident. >> what skill that you're really good at could you convince people that you can be insured for? broadcasting? >> i start mispronouncing names. it would be a payoff every day. every hour. every half hour. coming up, personal sales

data. as we head to break, take a look at how things are setting themselves up on this tuesday morning. dow opens up higher. 28.5 points here. we're back in just a second. all stations come over to mission a for a final go. this is for real this time. step seven point two one two. verify and lock. command is locked.

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welcome back to "squawk box". we are seconds away from some important data. april retail sales. april retail sales are up 0.1. that's the headline number. let's go through the litany of xs. x autos and gas down 0.1. that control group is down 0.1. so, you know, riding high in april. shot down in may. this was supposed to be the leap frog. april devoid of any weather implications. doesn't seem to be doing as robustly as many anticipated. we're looking for 0.4 on the

headline. last month replaced at 1.1. actually benefited. stands at 1.5. which makes this move a bit more interesting on that control number. the last time it was upgraded to 1.3. stands down 0.1. let's look at import prices from the ma of april. month over month, down 0.4. year over year, down 0.3. kind of what we were expecting if you took away the minus sign. this is a very fascinating number, especially on import price. you know, maybe it's due to issues regarding our economy. let's put a face on it here. april, may, june. these are supposed to be the months whether you have a horrible winter or not, people consume more in the spring. i know out shopping more in the spring. you would like to hear how all this reacts. even fixed income market.

the federal reserve basically and the treasury combined to have ownership of 20 year and older securities to the tune of 40%. it pushed down yields. 2.5 basis points. >> geithner is taking credit for spawning the tea party. you were merely a conduit. did you see that your name actually came across its lips at some point, rick. >> no. and it's very funny you bring that up because i wouldn't have mentioned it. nobody is going to say, gee, i was part of that bank robbery. or i was part of that somebody throwing a brick through the window. i think deep down inside he's envious of the movement. what do you think? >> it was on a bunch of web sites. it was my picture because i was talking to you.

but i am the forrest gump. i'm in the background. i'm never part of the stories. i'm there watching. anyway, liesman, what are you looking at? you look so -- >> very serious. >> i think doing these things monthly is a problem. retail sales last month got raised 0.4. this is off 0.4. so what good is it? >> i'm trying to calculate what could happen to this snapback. and without putting you to sleep, the way gdp is calculated -- >> that could be a first. >> here's the deal. the revision upwards to march. and off of that you calculate gdp and the average change in the prior three months. you go up to this level. you were still up 1.1%

originally reported. now it's 1.5%. my guess is you're still on track for a good gdp in the second quarter. rick, did you see the revisions of the control group? >> yeah. they moved from originally released at 0.8. now it stands 1.3. they increased -- >> 5.5. that factors into gdp. i'll come back at 10:00 or 11:00. >> well, it means maybe first quarter gdp doesn't quite go negative. but it certainly isn't going to help you in your second quarter. >> that's true, rick. depending upon how weak january and february were, the fact that april continued the level almost unchanged from march means that the growth numbers should still be relatively strong. we'll have to come back. calculating gdp on the fly is impossible. >> steve, we'll be doing this

the next three years. deep down inside you get that sense too. we'll have lots of fits and starts. >> we're going to go, rick. >> got to go. >> going back to geithner for one second. i'm going to get yelled at. it shows the state of the country where we can't even decide -- he doesn't know who to take the more stinging criticism from. he's more worried about getting it from the left that he didn't do enough. >> i believe sheila par's book out of all of them. >> he's getting attacked from the right and the left. we can't even decide which side has the -- >> maybe he did it about right, joe, if he's getting that kind of jump. >> i'm on the country's side. we don't need the likes of geithner, paulson to do or save the groups they love or don't love or take over what they have written about. what we need is the rule book. over all the rules.

they through the rule book out the window. >> no, they didn't. >> never let a good crisis go to waste. they can write all the books they want. >> the government comes in and intervenes when the market seizes up. >> i forgot liesman was -- >> i'm not talking to myself. >> rick, i was just making point where if you have a country where the opinion is so divided the criticism from the far left is just as scathing as the criticism from the far right, i don't know how we agree on anything. >> that's the beauty of the free markets. you don't need to agree. it takes care of itself. there's no lie about say this about the economy and say this about the embassy. it it all seems to work out. >> all right. we've got to run. >> visit a walmart.

>> at&t in talks to buy directv for $50 million now. media and tech analyst rich greenfield. thank you both for being here this morning. i'm going to start with you, walter. you cover at&t. does this make accepts to you? >> what makes sense as far as at&t and trying to find cash to pay its dividend. with a competitive market and their need to actually buy more spectrum it helps to pay the dividend. however, they're giving up the opportunity to go after dish, which would be much more attractive acquisition. these companies are going to need more for offering wireless broadband. >> this deal seems to be as driven as much as about the regulatory concerns and trying to put this transaction on the table at the same time as this

comcast time warn deal as just about anything else. do you agree or disagree with that assessment? >> i think this is about one thing. directv is a fundamentally challenged business long term. you are where the cable pipe has really evolved. it was they were the market leader. they had a better product. not only more content like the sunday ticket, if you walked down and talked to people left and right, they would think they had the best technology in the industry. that's not the case anymore. look at what comcast is showing with the x 1 cloud based dvrs. what you can do with two band is superior to directv. they are a long, challenged position. this is an admission how well positioned cable company is. >> you're saying directv is a dog. then why is at&t buying it? >> they are probably buying it

for the free cash flow that directv can create. think bit. if you stopped growing subscribers and just generate the cash, they have a ton of crash. >> they had 30% market share in many of the countries. >> you mentioned dish. it's interesting. some bankers will say because this is all a ploy to get charlie out of the woodwork to do a deal with either of the companies. he said the last earnings call he thought directv at this level was too frothy. do you think anything rules them out at this point? >> nothing ever rules charlie out. i really don't think he wants to buy into a dying business. the business will be attacked by over the top services. if they want to pay $100 a share, charlie is basically said, sold to you. sfs the latin american business, a lot will get divested. at&t had two board seats on

american mobile board. i'm sorry. go ahead. >> you take on just the regulatory issue, though. do you see -- i talked to lawyers on all sides. some lawyers say you go in now you have a better chance putting it up against why the time warner comcast deal is around. others say let that deal clear to the extent you think it will. and then try to come in after it. >> listen, the industry is changing dramatically. so everyone is talking to everybody. the board gets together and says, are we positioned properly. everyone starts throwing the deals on the table. if anything, we're probably going to see more of these supervisions in front of regulators. in ts of which they prove you to have a pie that said where is

the industry foggy to be five year from now and how do i want to merge. a lot are thought out. a lot more deals announced as a result. >> it seems like we have a realignment of the speier chess board of the tmt industry as you look into 2014. everyone is trying to get scale. i think the big question, you see all of this distribution landscape change. do we see the content players try to get bigger as you step up both sides of the equation. >> what is the percentage that time warner and comcast goes through now in your view, rich? >> i mean, look, the odds that that transaction gets approved is still a high percentage. they're not competing. 90% plus. the calf yet here is unrelated to the directv/at&t story, we

have this bubbling up of net neutrality. a lot of pressure on the fcc. the question is do they use the comcast/time warner deal that it can't do legally through regulations but impose it in a consent decree. that is the only thing i can imagine would drive brian roberts to walk away. i don't think it will be that onerous. but that is the fear given how much noise there is in the system describing net neutrality. >> we'll add another name to our platinum portfolio. co-founder hum erwinbald.

>> welcome back. we're continuing "squawk box" platinum portfolio series. co-founder on the hummer. her fund has more than a million dollars. good to see you this morning. >> good morning. >> give us your picks in the software space. >> my picks are google, amazon and sales force. >> they all pretty much operate in the backyard, though. why would they emerge as top picks at this point? >> my backyard is a pretty big backyard here in san francisco.

i look at the same qualities as i look for in private investing. the size of the markets ahead. the agility of the company. all three meet those criteria. >> give us the background on sales force. two of your investments are partners with sales force. what insight does that give you? how exactly is that company run something what sort of things does it have in the pipeline? >> it's a great example building around the company. the company is bigger than its balance sheet or income statement. it's as big as its partnerships are. this company is a great company to partner with. dream force, which is held here every year, is a huge show. we always find some great new private company investment attaching itself as a brand-new innovator. and lots of opportunity ahead. the market cloud is one example where they have created the market itself and marketing automation.

>> amazon in the cloud. google in the cloud. they are trying to get into very important business. which do you think they will win out? >> i think they will both win. the stability to run in the cloud to support applications and developers. consumers and businesses is a huge market. and they are both poised to be in battle for a long time in a very significant market. >> and there are so many big companies in the tech sector right now. you are an investor in small startups. i wonder when you look at companies that are just getting their start today, is the name of the game to basically create a company that could eventually latch on to one of these business models in. >> well, the ability to be part of a larger eco system is key. you don't want an island company where they're a stand-alone fad. a company, for example, like real soft. they are a company here in the bay area in san francisco. and their job is to integrate

all the other young innovators and establish companies. that's part of the partnership with sales force. >> all right. our thank to ann. thanks so much. sales force, amazon and google. >> coming up, we'll talk to jim cramer from the new york stock exchange. "squawk box" coming right back with mr. "mad money" himself. >> tomorrow on "squawk", the state of the art market. what will tone's big string art auction by christie's tell us about the state of the economy. "squawk box" on cnbc. profit from it. that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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. let us get down to the new york stock exchange where jim cramer joins us now. jim, both of us, we don't really free associate but get this, when i was a broker we sold cable systems and they had like a four to one rightoff and i remember selling them in 1984 and people bought them because they weren't going to be around forever because they were going to be put out of business by satellite technology eventually. cable tv. and we just had rich greenfield on. that never happened. in fact, his thesis is that what you can do now with cable, has really made satellite a dying business. i'm wondering what your thoughts

are on this at&t/directv deal and did you have any idea cable was going to be forever? >> cable turned out to be far more versatile, faster, turned out that the internet came on -- >> the internet, yeah. >> satellite technology, it just turned out to be very limited for tones. i've listened to oscar because he mentioned over and over again, i see the theme, because i know you're the best, management, management, management. mike white, you are so right. he is a creator of value and what he's doing in latin america, despite the punitive government downs there is incredible. this could be a way for at&t to get back away from just being domestic. so i feel like the ac kwigs, only because the toehold provided the governments there become a little more open minded so to speak. >> it's not going to be the technology that replaces cable at this point eater? >> no. but there's still growth. someone was on earlier saying

listen, who knows if it grows. it's amazing it does grow. they keep signing people up. i keep thinking doesn't everybody already have cable or satellite? it's not a bad acquisition if you're at&t and stymied. notice how the stock has gone 34 to 36 the whole time they've been talking. david faber has been talking about this deal three weeks. it amazes me when the journal reports it and the guy next to me has been saying that. where have you been is this that's okay. i don't think it's bad and mike white wouldn't do it if he didn't think there was more value to be brought out. >> we'll see if you think that deal and time warner/comcast past muster. >> look, the government, rubber stamp, rubber stamp. >> i don't know, andrew -- you said you weren't anxious earlier. you're anxious about both. >> anxious? >> i think both deals should go through but think that it would -- if it actually happens f it's consummated, it would make it much more complicated for both deals to happen. >> i don't know.

>> jim, see you in a couple minutes. >> thank you. >> oscar's picks. we'll get back to oscar. greenline do for you? just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today. tap into the full power of your fidelity greenline. call or come in today for a free one-on-one review. today is tuesday today, we greet you. treat you. care for you. today, you can come to cleveland clinic for anything, everything or just to get that "thing" checked out. big, small, and yes, the best heart care in the nation. it's here everyday, for everyone. that's the power the power, that's the power of today. cleveland clinic.

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host, kayla, some tips on just men. >> just some general life adprice. >> men and boys. no guarantee boys turn into men. i don't think. you agree with me, oscar? >> difference -- >> time doesn't do it? >> the price of the toys. >> price of the toys. anyway, let's talk about your toys here. bios is that one you talked about last time. >> right. >> and you hang on to that and why? >> hanging on all three. one of the thesis i said, was the infusion therapy business was doing well and they reported a quarter where it grew 15%. >> biosite? >> bioscript. >> okay. >> hopefully we'll take a quick look. recommended at 680 and it's now at $7, buy bioscript. inxm, that is still one -- intergs.

>> excuse me, interaction. >> inter. >> it's a very strange way of spelling it but that's the way you pronounce it. it's not as hard as the ibm ceo but it's hard nevertheless. in any case, reported a quarter where the sales grew about high single digits and i think toward the end of the year, next year, they'll start growing at low double digits. >> you recommended that at 23. now at almost 27. and then finally and this is another one, you got to be smart, this is real d. >> real d. >> real d. >> and that you recommend at 10.49 i think. >> okay. >> it's almost 12 now? >> yes. >> what is it? why do you like it? >> one of the things i talked about that was their expansion in the 3d about this china. since i recommended it they signed a deal with wanda, which owns -- controls amc in the united states. >> was this the company that made the hall low gram of tupac? >> yes. >> they crashed after that.

>> yes. >> why do you think it -- >> real d you're talking ability? >> yes. >> basically the business that real d business is flat in the united states three big movies in the next three years and making movies in china. in addition to which, speaking of activists, last week starboard value filed 7% and now there are two activists there. i think this company is going to realize share shareholder value cutting r and d and a good acquisition for somebody. >> you weren't going to give us a new one? >> i wasn't going to give you one. thinking about hillshire and a company we like is maple leaf foods, which owns 50% of the branded food market in canada. if you look at it now they don't have much ebitda and a lot of debt but about to sell their bread business for $1.6 billion and they're consolidating their meat business so 2015 you're buying the companies eight times

ebitda. >> i think eventually it will be a takeover. the chinese like pork, they make pork. it's a perfect ac sigs for china. if hillshire made the huge multiple this is cheap. >> thanks, oscar. >> thanks for having us. >> kayla? >> join us tomorrow. "squawk on the street" comes up next. good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange and david faber at ibm in midtown manhattan where he will have a very rare and exclusive interview with ginni rometty. futures trying to hold on to yesterday's record highs. watch the ten-year as well. a miss on both retail sales here in the u.s. and in china. small business optimism at the highest levels since the