good morning and welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen. michelle caruso-cabrera is here today, sitting in for becky quick. we have a lot of news to talk about. traders have four more sessions left in the month. that means plenty of talk this week about the so-called sell in may or go away theory or predictions of a june swoon. on friday, the s&p closed at 1900 for the very first time. take a look at equity futures at this hour. the dow looks like it will open up higher, nasdaq up as well. close to 17 points higher. the s&p 500 looking up with a green arrow close to 7 points higher. a couple of economic reports coming this morning. you should be paying attention to. at 8:30 a.m. eastern time, durable goods. also on the docket, the s&p case-schiller index. we have a lot to look forward to. in the meantime, i send it over

to michelle. she has today's corporate stories. >> pfizer abandoned its bid to buy astrazeneca after being rejected by its british rival. the move had been widely expected. pfizer can return with another offer in six months or three months if astrazeneca invites it back in. we'll talk more about this story with a pharma analyst in about ten minutes on "squawk box." top executives from general electric and siemens had set to appear from the french parliament today. francois hollande will meet with ge ceo jeff immelt. reuters reports that siemens is preparing a formal offer for alstom. that would mean a slightly higher volume on alstom's energy activities than the ge bid. but only a little more than half

of ge's cash component. >> all those deals. >> was it astrazeneca that was resisting or was it political -- >> i think it was astrazeneca's board. the other deal we didn't talk about, the deal that wouldn't be or hasn't happened yet. apple and beats, the head phones. how upset apparently apple was about the video with tyrese and dr. dre with the heinekins. i need not say more. does that deal not happen? culturally this is so weird that we can't do business? >> who is upset. >> apparently the apple people. >> tim cook? >> potentially. at minimum, the lawyers are. it's more of a cultural issue. one of the reasons they're hiring these people, they want to hire them and work there. it's not just dr. dre. it's ivine -- is that his name?

now there's anxiety about how -- >> a little bit? >> how they'll all mesh. >> a company that is so siloed and controlled in its media message at all times before with steve jobs and now, and then suddenly this? >> i would find it unbelievable that this deal happens. >> let me say, there's also the possibility, there's a conference that apple does in a week or two, maybe there's speculation that they're waiting to announce it at that big event. >> jimmy. >> ivine? >> are you up to speed on the elections around europe? >> yes, the anti-establishment parties did extremely well except in italy. >> but nutty anti-establishment. they are drawn together by anti-european union? >> yes, absolutely. not all of them are fringe and

nutty, right? in greece there was the left wing. >> this anti-establishment. >> pretty much anti-eu. nigel farage was a guest here. he was great. >> you can extrapolate to our elections necessarily at this point? >> no, i don't think so. >> i was thinking in reference to the alstom bid, whether hollande is recognizes that you better eventually try to create jobs through the private segment. >> he advocated lowering taxes on businesses, lowering taxes on individuals. >> they're coming around before us. which is typical. bank of america faces a deadline to resubmit its capital plan. the firm discovered an accounting error in preparing its 10q and found that it made a $4 billion miscalculation. as a result, b of a's plans for

a stock buy back and dividend increase are in question. >> this was -- over the weekend this was explain for the first time. people hadn't appreciated exactly that it was a typo. >> and it says here, you know who george jettisson is? >> i heard of him. >> you did watch it? >> i used to watch. >> apple. >> stanley sprockets, i think. jane his wife. >> his wife judy, his daughter jane. >> his boy elroy. >> i loved how she could change the format of the apartment with just pressing a button. today it was blue, tomorrow it's green. >> it's going to happen. ♪ >> at least come together on your pronunciation. >> you know what you just said

is what we were talking about here. i'm getting blinded by that diamond again. is that a ge industrial diamond? >> no. >> that's a natural diamond? >> it is a natural diamond. >> did you see that thing. >> it's hard to miss. >> she's leaning like this, almost out of the shot. >> with the lighting in here it makes it even more -- >> that's why they turned these off. >> i'll just hold it up again. >> these heights are off. they are supposed to highlight the bags under my eyes. >> you're breaking hearts all over. >> i didn't say she was -- maybe there's still a chance. >> no, there's no chance. >> 50%. she could be back on the market and -- how do we know? >> no. >> they all say that. no. this is a good one.

this is what you were talking about. apple is ready to follow in the footsteps of george jetson. they are preparing a new software platform that would turn the iphone into a remote control for lights, security systems, and other household appliances. we're currently -- >> that's when they might announce beats, too, at that conference. >> we're working with new alarm stuff when we move. >> are you working with nest? >> no. adt people at this point. we'll see. you don't use -- nobody uses the key pad. you say the key pad in your house, that's all iphone now? >> really? this sounds like google brought this company, nest, which does exactly this kind of thing. you can control your thermostat. >> it's not clear they're going to manufacture any of the devices. what they are going to do is effectively license or brand other devices that will interact with your phone.

they will effect ofly give you the apple seal of approval and they'll say this is a refrigerator that has this technology. this is a lighting set that has this technology. >> there are many products in the apple store that are not manufactured by apple. >> it says on it designed by apple. >> if it's being sold in the store, clearly -- >> that's what this is all about. are you going to get that? you're not going to get that. >> so 31,000 scientists -- this is in the "journal." the myth of climate change, 97%. i knew what it was. >> 97% -- >> 79 climatologists have published research and they went in and 79 of the 3146 responded said they believed humans were causing climate change. this other figure, 31,000

signatures, 9,000 ph.d.s, they're scientists, physicists and chemists, the quote is there's no significant scientific evidence that this will cause or will in the foreseeable future cause catastrophic -- >> can i ask a question? >> i'm just reading the journal. >> this is a great -- we have seen this over and over again. >> there's freedom of religion in the country. i'm not going to -- whatever anyone wants to believe is okay. i can't change people's minds. >> this article is a great debunking of the head lane. one time "new york times" in the, drink eight glasses of water a day. you start to dig into where did that number come from? it turns out to be bs. >> i'm going to save this for posterity. yes. >> is this the reinhart rogoff?

>> yes. >> there's the religion, equality, inequality religious. >> piketty added it up wrong. he got his sums wrong. they redid all the math. >> somebody wrote to me about zandi writing in over the weekend, needing higher inheritance taxes. >>. >> there's no upside in doing climate change. >> on piketty, however, clearly he made mistakes. i looked through the stuff. it's pretty amazing. you can see where he made errors and certain assumptions. >> the excel spreadssheets. >> if you want to play at home, you can do it online. the question, though, is whether it financedmentally undermines his assertions that inequality exist at all. you can argue in the uk based on his numbers that actually inequality is not as bad as some

have suggested. however, you would also argue, even using the ft numbers that directionally it is not good either. >> there's no one that is -- there's no deniers. you use denier -- there are deniers that there's income inequality? >> there are. the original article said it debunkd his entire thesis. i would argue that assertion went slightly too far. >> it's not that people are denying there's income inequality -- >> the agree. >> the degree and it's a tradeoff you accept for freedom and growth. absolutely. you can go back and say. >> for ameritocracy. and ameritocracy by definition, the people who are lucky or working hard, whatever it is, you know there will be some people that will not be equal. >> in places where they tried to achieve no income inequality,

you know what would happen? everyone was poor. everyone was equal. equally poor but equal. >> this is a religious conversation. >> no, no, no. >> we'll continue our sermon in the 7:00 hour. >> it's about whether or not you believe in economic freedom as well as democratic freedom. >> look, there's two issues. economic freedom. there's equal opportunities. equal outcomes. i'm not sure anybody is suggesting you need equal outcomes. what you are suggesting is that you want everybody to have that equal opportunity. it's unclear whether that exists. some of the data and conversation, not from piketty but from others is about the opportunity. >> since the beginning of time we've been trying to make it -- >> you'd want the tune opportunity to be as equal as possible. >> yes. there are plenty of people on the left who want equality of outcome for zblur there are people who want that. i think when zandi or, frankly, others talk about equal

opportunity and talk about the estate tax, that is not -- that's more actually about equal opportunity than it is about equal outcomes. >> these are the people that don't necessarily think that ameritocracy, earned success, profit incentive, they don't think that helps everyone. >> there's a far direction on the other side. remember we had the gentleman that he was one of our top 25. he built the billion dollar business in india. he even explained, he goes, i have grudgingly come to accept that's the only way to lift the most people even though it's not perfect. sometimes it seems cut throat or whatever you want to call it. or darwinian. that's the way that lifts the most people. it has done so. >> for 300 or 400 years. before that there wasn't a lot happening. >> you want to take us to --

>> ukraine? >> yes. >> yes. steve sedgwick joins us with the headlines and also a guest, i believe. steve? >> thanks very much indeed. we have come a long way. we've had an election which a lot of people didn't think we'd get to. someone who has been guiding us through the story, jeffrey piatt, the u.s. ambassador for ukraine. how significant has getting to the election been, and the president has a clear mandate, mr. poroshenko. how important is that? >> hugely important turning point. victory for the ukrainian people. president-elect poroshenko will come with a clear mandate. he was very public during the election. he wants to move this democracy forward. >> we were in st. petersburg friday, it appeared that jeffrey got out of mr. putin, he will

respect the will of the people and will work with the new president. is that the understanding, that they can work together? >> we hope so. we know mr. poroshenko wants to have a strong relationship with russia. he speaks for all the ukrainian people. we hope very much moscow will get down to business. >> you say that, i spoke to politicians who believe we need a third round of sanctions in order to get the russians to the table. what's your impression, sir? do we need a third round of sanctions? >> first of all, there are still russian behaviors question are deeply concerned about. this violence in donetsk, terrible violence seems to be fuelled in part by people coming across the russian border. we believe the pressure needs to be maintained. we're trying to do that jointly with our european partners. we'll have to wait and see what

russiany concludes. >> there have been dozens of deaths in the last 24 hours. dozens of death in and around donetsk airport as the ukrainian military tried to clear separatists as well. mr. lavrov is saying the government should resist. mr. poroshenko is saying against terrorists. how do you see it? >> to begin with, we certainly acknowledge the requirement and the ride of the ukrainian government to restore law and order in donetsk. this latest violence began when you had armed separatists, some of whom appear to have come from across the border in russia who tried to take control of the airport, a hugely symbolic play no doubt. we believe that the ukrainian government is acting within its rights. i would note also very importantly, this government has made clear that amnesty is made

available. that's obviously the preferred outcome at this point. >> when do you think the u.s. military equipment will start ending here in ukraine, defensive weaponry, $100 million i think has been talked about on slil as well. is that something that is needed immediately? >> right now our assistance envelope was $20 million. that was announced when vice president biden was here. we've deliveries of nonlethal equipment. so things like binoculars, radios and heavy equipment to help them build up border defenses. >> sure. >> congress, we were delighted to have large numbers of members in ukraine over the next couple of days. >> senator portman said no boots on ground. but this country, you know better than i do, but this country desperately needs retraining of its military as

well. do you think that thrill be military trainers from the united states? >> i don't see that at this stage. we certainly are willing to work with this government in terms of helping to accommodate their military to the dramatically changed security environment they operate in. >> when mr. putin was interviewed on friday about the situation and the withdrawal of russian troops or interests in the country, he turned around and mr. putin said where's my money as well? where's my $3.5 billion? the truth is, ukrainians do need to pay their bills as well. >> they acknowledge that. prime minister yatsenyuk said that in a public message last week. their are engagements going on between the european union, ukraine and russia. it has to be based on a

marketable price. >> i'll push you one more time on sanctions. do you think we need an immediate round of sanctions? >> we have to wait seen see what happens. >> mr. piatt, thanks so much indeed, jeffrey piatt, the u.s. ambassador for ukraine. >> we appreciate that. watching carefully what's going on over there. i don't know what this means. is putin going to be nice? i thought of something, andrew, really quickly. michelle, i agree with you that just a couple of mistakes don't necessarily refutiate with the entire thesis but it's the reaction of the left to what they're saying. >> yes. >> all they were saying is if the debt to gdp gets too high, it can hurt growth. >> right. >> they came up with 090%.

the huffington post said discredit it. no amount of debt is too much. discredit it. >> yes. >> in this case -- >> piketty is discredited. >> i haven't heard from your friend krugman. >> paul wrote about it. >> is the v.a. still held up by him? >> given the scandal that's taken place? >> yes. is that something we can look forward to? the many times before he wrote that the internet -- >> i'll ask him over lunch today. >> for your indoctrination session? pfizer confirming its dropped its contentious bid for astrazeneca. i had a lot of different thoughts here. it's bad when a ceo spends about three months doing this and then it doesn't work. how is ian read's position at the company at this point?

was it worth a shot? >> i think it was certainly worth a shot. there were a lot of benefits if he was going to pull it off. they actually got close. >> would he have been able to figure out it wasn't doable? >> i don't think it's not doable. i think there's a good chance in a few months they'll be back at the table. >> how would it happen? would astrazeneca welcome them back in? >> faster in astrazeneca invites them back in. they got close to the astrazeneca asking price. there's a good chance to the astrazeneca shareholders might push astrazeneca management to come back to the table. right now there's a six-month break. >> for pfizer to approach. >> i think it's a formal approach to pfizer. pfizer has a lot going to keep the bankers happy with their

restructuring plan anyway. >> because in the uk they have stricter rules about m&a, et cetera. you talked about the astrazeneca shareholders. the stock is falling as a result of pfizer backing off. would that be the pressure that brings astrazeneca back to the table? >> they almost achieved the value they wanted. now it's stipulating back. >> doesn't it give them negotiating power? right now if astrazeneca two months from now calls up pfizer and says, let's go, what price are we talking about any more? >> i think we're back to 58.5 pounds. >> if i'm pfizer i think i'd say, look, you people are screwed. >> unless astrazeneca stock gets hammered in the meantime. >> you're back to parliament and

the jobs and you're back to -- >> aren't you back to that anyway? aren't you always going to be back to that? >> don't you have to come back with a higher bid? >> with pfizer? >> yes. >> they set a bid. they raised the bid. they didn't go all the way. that's where i think they will go, back to -- >> they won't do all the way again? >> i think they would go all the way again. >> when we first started talking about this and we realized it was an inversion, cross-border pharmaceutical merger seemed out of the question but we've seen how many. >> they were more to take advantage of r & d or new markets. >> everybody looked at this with a question, raising an eyebrow.

a lot of that, the way the deal was met on both sides of the atlantic sort of scuttled the deal. i wonder if you could have anticipated that in the current environment? >> well, i think the tax issue raised a lot of eyebrows back here. >> job losses and closing facilities. >> that's what happens in a drug company acquisition anyway. >> right. they are already a combination of two different domiciled companies. >> right. >> that's a mess. we'll see what happens. i can't say i'll be counting the days to three months or whatever it is. if something happens, we'll talk about it when it finally happens. >> did you see over the weekend, intercontinental, a british company had a $10 billion takeover bid from a u.s. hotel company. to do an inversion.

>> we don't know which one. we can talk during the break. >> have you seen what the stanley cup final might be? it might be new york/l.a. >> wow, two biggest markets in the country. >> nbc, hockey, kings. >> i watched that rangers game. i didn't remember that. >> they're ahead 3-1 and the king are ahead 3-1. i'm not counseling the rangers aol tonight they could do it. the goalie. this new goalie is hot. >> he is hot. you know who's hot? >> lundqvist is so hot for everybody involved. do you know lundqvist? >> yeah, yeah, yeah. >> i've watched hockey recently. >> you've never seen him without

his mask? >> we'll see you in a couple months. why candymakers are taking issue with egret business.

it's time for today's executive edge. they are using names like thin mint, cinnamon toast crunch.

now they're fighting back. they want to make sure their brands aren't being used to make an addictive drug, as they call it. are you an ecigarette, anti-ecigarette? >> why would i be anti-ecigarette. >> they believe it's a gateway drug. >> you're talking to somebody who believes anybody should be able to do to their body what they want. bottom line. i would legalize heroin. >> would you? >> absolutely. yes. all drugs. you'd remove the violence and you could tax it and everything else. >> i disagree with you 100%. that's okay. >> i know. >> what would you legalize marijuana? >> i probably would. i was in just in denver. >> the heroin thing -- >> if cocaine were legal? i'm not so sure you want a bunch

of stoners driving and walking around. >> you're not allowed to drive while you're intoxicated. >> the thing with pot, it's basically been legal. you might as well tax it. if incan get their hands on -- >> everyone can get their hands on heroin and everything else. they can. >> you don't want to walk into a store and buy it off the rack. >> at least it would be clean. >> i don't know. did you see this? into the eighth inning, perfect game. against them. l.a. they almost came back and won, 4-3. chin a's government wants t take 5 million older vehicles off the roads this year. the government didn't give details on how that will happen. that could lead to higher car sales. 5 million cars in china being removed, would that cut smog? i'm not so sure.

>> if they're old. >> we've come a long way in terms of -- >> for sure. >> pollution, we're talking about particulate sulfur dioxide. leave co2 alone and do something that would make a difference. but i'm not in charge. that was my own opinion. don't call me a denier. i don't want people mad at me again. you saw what happened to poor pat sajak. why the ceo of bitcoin exchange is in court today. four trading days left in the month. we'll talk strategy. before we head to break, here's a look at last week's gainers and losers. ♪ it's a beautiful day if i told you that a free ten-second test

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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 michelle caruso-cabrera. becky will be back tomorrow. making headlines, sony says it want tos step up sales of its play station 4 game console. the company's ceo calls the

unithe a key growth driver for the company as a whole. we have our netflix through play station. >> through your play station? >> yes. >> you can get netflix through anything now. >> i guess you can. i don't know how this happened in the first place. someone did something. >> they're hoping to become the central box. >> they are for our netflix. >> what about for other things? >> to play games. what else can it do? anything? >> you can get amazon on it. i don't think you can get amazon. >> can you get hulu? >> microsoft does some, they need to be all on one. >> i don't like deviating from xfinity. because it's easy. i use that. >> hey, brian. >> there are times where we decided, for example, kids love ferris bueller. you're old enough now, i'm going

to show you risky business. we fast forwarded through a couple of scenes, all right? but that is like the teenagers sort of ferris bueller. you go to get it on netflix and all it gives you is stuff similar to it. anything you're searching for, it doesn't have it, why? >> that was a big complaint, they don't have a lot of content. that's why i scodropped it. >> they have the new xfinity, xfinity 2, the newest one. mind blowing. >> i've never seen you sell out before. >> it is the most amazing interface i've seen. i've seen demos of it but i have never done it myself. when you're actually using the remote. it's unbelievable. >> because? >> it's just so much -- the ease of use, you can search for everything, find it in ten

seconds. it's like nothing you've ever seen. >> i think your testimony is worth more than mine. i do it all the time. >> this is meaningful. >> i was so excited to actually use the remote control over the weekend. >> we have to get the deal approved so i can have comcast. i have time warner. >> sometimes you have to say what the heck. >> go ahead. >> okay. it's my turn now. the chief executive of japan's mt. gox is due in court in the united states today. a legal case was filed against what what was the world's leading bitcoin exchange after it lost $400 million of digital currency. we'll bring you whatever happens from that. let's discuss economy, numbers, where the markets are going. mark travis, president and portfolio manager at intrepid

capital funds in florida. with us on the set, co-director of the johns hopkins center for economics. are we finally going to have growth in the second half of the year. >> i think the first quarter was largely weather. growth, a big pickup in this quarter. probably something a lit over three second half. >> what do you think about the ten-year yield, the 30-year yield? >> the best news is 3% on the ten-year because the economy is doing a lot better. >> i guess my question is when we see it hover at 2.5%, does that lead you to question your mind whether you're accurate about future gdp numbers or is the bond market telling you something? >> we're in the business of trying to guess when the markets will go in a different direction. i would suggest the economy will do better. if we get that rate rise we'll end the year unchanged.

we started the year at 3. yes. >> you got this thing? >> no, i don't know anything. >> your voice sounds a little different. >> it's early. >> i left at 4:30. >> you came up on the train or something. >> no, no, i drove down here from the poconos. >> from the poconos? >> yes. >> how was that? >> great, great. i have a new mouse trap i invented. you put peanut butter on a beer can sideways. they go up a plank, hit it, they fall in and they drown. i put it on my porch. i caught a bear. there was a bear on the porch. >> in the poconos. >> and it didn't drown. >> i wondered what the hell you were talking about. >> i thought -- at first i thought the mouse was going for you. it was going to be alive. then he said, it's even a worse, more painful death than the snapping of the neck.

it's actually a drowning. >> you can drown many. they can walk up the plank -- >> he said poconos and i thought of the beautiful mt. airy lodge. >> was "dirty dancing" in the poconos. >> no, that's the catskills. >> did you go to the catskills nccatskills? >> with my dad when i was 6 years old. >> i was shark fishing and i came in. >> did you catch anything? >> i had a 14-foot hammerhead but i thought i'd come talk to you guys. >> is that true? >> yes, you should see it. i'll send you a picture, joe. >> it was that big? we catch bonnet heads. honest to god, 14 feet? >> the world record hammer head was caught off of jacksonville beach, 15 feet, 700 plus pounds. it's been a while, though. >> that would be something. >> absolutely. >> should i ask him about the

markets? >> go ahead. >> mark, you heard from we heard about expectations for growth. do you agree "a" and "b," based on what you're expecting what are you doing in terms of managing capital? >> well, michelle, i read with interest stephanie's article in barron's this weekend. the equivalent of the fed taking their foot off the pedal and gradually slowing to a stop. i think this economy has underwhelmed most of us. usually you get a higher bounce and recovery. we haven't seen that. i think we've put some sea anchors to use an analogy on our economy and dodd frank and the affordable care act. that's a whole other matter. >> does that mean the market can't move higher from here? we keep hitting the new highs but barely, right? the breadth of the market gets smaller and smaller and smaller and the bond market acts like

it's afraid of its shadow. >> yes. so you know, i think for us at intrepid capital funds we're trying to find a disconnect between price and value. and then it's annualized somewhere in the high teens. that's a bit of a challenge. we're driven by valuations and when we can find them, that's what we'll invest in. otherwise we wait until we can find appropriate discounts. >> where are you finding them? hello? >> have we lost you. >> i'm back. momentary lapse. >> where are you finding the disconnects in value. >> i think there's an interesting one in oaktree capital run by howard marks. they help fund jeff gunlock at double line capital. if you look today, they carried that investment they helped fund in late '09. they carry that value at 2 million. for a firm his size at this

point, the fund is over $50 billion, i believe. >> you're saying they've undermarked it versus the value. jeff is a trek guest on cnbc. when he comes on, he moves the markets definitively. he's called the top and the bottom in apple a couple times when i've seen him. he's recently made news about his belief where the ten-year could go, as low as 2%. >> i would think it's a factor of 10-1 actually from where they carry it or better. >> wow. okay. >> i think that's interesting. you get to invest with howard marks and you get the proceeds from realizations in a dividend that's irregular. the negative is it's a k1. it's not a regular equity as far as tax reporting. >> all right. ticker symbol oak.

mr. barb aera, you get the lost words. >> i think the market is underappreciated. >> we keep hitting new highs. >> we talk about all the reasons it shouldn't. >> we have a list of people in the last month who have called for corrections. >> that's been true not only for last five weeks but the last five years. >> they said 20%. now if it gets 20% lower, it's above where they set it anyway. why should we listen to them in the first place? >> i think if the economy is doing better and the interest rates are not particularly interesting, it goes up. >> mark and bob, thanks for getting up early. congratulations on the 14-footer almost. >> my bear was bigger than his sha shark. >> your bear was bigger than his

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welcome back. it's time for today's "squawk" planner. on the calendar today, durable goods at 8:30 a.m. eastern time. the s&p case-shiller index comes out. may confidence is out as well. bank of america discovered an counting error when preparing its 10q. and in washington, president obama will host the 014 science fair. he'll announce steps for his

innovate to ed cates campaign. and coming up, "squawk box" will be right back.

welcome back to "squawk box". a look at the utility sector

this morning and why it is actually a winner so far. dominic? >> andrew, these companies literally power the american economy. utility companies are the conduits for electricity, natural gas. all that stuff that powers the american economy. they are less economically sensitive to the ups and downs of the overall systems. these companies make stuff no matter what the economy is like. 30 companies are in the s&p 500 utilities sector. which has the most potential up side is the question? wall street analysts have taken their best stab? according to analyst surveys, here are the top five. number two, centerpoint energy. it focuses on energy and natural gas distribution. it's trading at 24 bucks. that's a potential 9% upside. the ohio based electricity

provider predicted $35 or 10% potential upside, firstenergy. and edison, 11% more, $54. target price of $59. close to $60 a share. or, again, 11% up side. number two is nrg. 16% potential upside for this stock. aes has 17% potential up side. analyst targets have not changed even though this is one of the few utility stocks that's down on the year. it's down 6%. but overall, investors invested in these types of companies because they think they are bond-like stocks. they have this big dividend yield against current income. guys, that's the reason why a lot of utilities companies do well like utilities. >> the lead story for the

journal in the epa, unveiling all the new proposals for the power companies, dominic? >> joe, it's a happy coincidence. we had this in the works for a while. we have been reporting this for a while. >> but you're bullish. >> i'm not bullish on utilities. what i will say is the reason why everybody else is bullish on utilities is because they get income out of this. >> the chamber of commerce is going to release a report estimating how much jobs it's going to cost and everything else. some of the names you mention have plants that are the biggest emitters. it is timely just in terms of -- it's an industry that everybody uses utilities. and it seems -- i don't know. whatever. >> all right. coming up, pfizer drops a bid for astrazeneca. what tax issues could put another british company in play. squawk will be right back. we needed 30 new hires for our call center.

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deal or no deal? pfizer gives up on a bid for astrazeneca. meantime, global powerhouse g.e. and siemens are in france fighting for stock. capital in the 21st century. a new debate on thomas piketty's much talked about economic tone is flawed. and deep. with only a few days left in may, we'll talk to value investors. finding success with stocks others are shunning. the second hour of "squawk box" begins right now.

good morning. welcome back to "squawk box" on cnbc after this long weekend. tuesday morning. i'm andrew ross sorkin. michelle caruso-cabrera is here. becky has the day off. she'll be back tomorrow. this tuesday morning, the beginning of our four-day week. dow jones opening higher. we'll call it 68 points higher. nasdaq up as well close to 18 points higher. and the s&p close to 7 points higher. the 10-year, $2.537 that's the number to beat. let's talk about some of the headlines coming out over the weekend. pfizer dropped plans officially to formally bid for astrazeneca after as extra rejected the latest $120 billion offer saying it undervalued the company. under british takeover rules, they can only make another bid after a six-month waiting period.

that time would be shortened to three months if astrazeneca were to invite pfizer to make another offer is and astrazeneca shares tumbled in recent days as question marks circled about whether a deal is on or off the table. let's talk about another british company. intercontinental hotels group is the one in play. according to pwrebritish media,y rejected an offer from an unnamed bird. it doesn't comment on speculation. that report suggested that the motivation for the u.s. buyer, again unnamed, was an inversion. so, again, we talk about a pfizer/astrazeneca trying to domicile in the uk and what all that means. >> in order to get the better tax rate. >> exactly. we will do a little sleuthing to figure out who that buyer may

be. a busy day for economic reports. here's what's going on. we're going to get april durable goods at 8:30 eastern time. expecting a slight decline. an hour later at 10:00, the conference boards may consumer confidence index. >> another debay over the data. and tomas piketty, capital in the 21st century. what is the book? today's guest, senior fellow at the american enterprise institute. and jared bernstein, former chief exist and economic policy to vice president biden. and budget and policy priorities and cnbc contributor. articlier i said, jared, the left was quick to call row goff

and reinhart discredited for the 90% debt to gdp. i don't see anyone questioning piketty. >> you should have read my blog this weekend. >> you're not on the left. >> good point. >> i was critical of the mistakes very much in the spirit that you mentioned. by the way, i thought they were e wrong. before there were any sprae sheet errors about a precise point. 90% threshold above which growth begins to slow. i think that's a much more complex causal relationship. i think it's tomas without the "s" if you want to sound more cultured. >> i wish i didn't know his

name. >> if you look at the mistakes that the ft, financial times, found, i think they did thorough probing, they're only on the wealth data, not the income data. the income data still looks solid. and they are actually -- where they make a difference looks to me like it's only one country, the uk. the other wealth trends are only slightly different when you make the alleged corrections that the ft claims need to be made. >> yeah. i think the book is really a big mess. i discussed piketty's book in washington with him there. i don't think he did a very good job defending his book. on the in equality side the one thing i will say is i think it has been overstated. he has been talking about increased income in equality for a long time. there's not a large amount of news there. maybe it's not the top 5%. it's the top 1%. but i think the stuff he has been saying for a decade is probably still true.

the whole second half where he talked about the demise of capitalism is fundamentally thaw flawed. he has this theory of capital. there's a machine. it's a factory. it's a blast furnace. he has this theory that capital is going to replace labor. over time labor's income share will go to zero. so we need massive tax rates. he builds up this whole theory about that. the capital trends, however, are totally driven by housing. so he doesn't notice his theory that we're going to substitute capital for labor falls apart in his own data because it's all housing. and you can't substitute a house for a worker. in equality point will probably survive the ft attack. as jared said, it's about health. >> where do you stand on -- we talked about denires. >> terrible phrase. >> in equality has become almost a religious subject. you believe in equality exists.

you believe the second half of the book, the prescription piece of it, is what's wrong. >> right. >> but there's another thing, pretransfer in equality a has gone up in the u.s. anybody who says it hasn't is wrong. since 1970, transfers relative to gdp have expanded by more of the sherry of income that the top has. before government steps in, we are more unequal. if we're going to judge whether society is just or not, we should look at the whole picturement not just pretax, pretransfer income. and i think jared would have to agree with that. >> i agree with kevin you to look at both. the market income that piketty looks at is important. if you just say let the market income in equality grow and we will fix it with transfers, you will have to ratchet up

distribution year after year. a, i don't think it's a good idea or, b, that it's a good idea. if you look at in equality after taxes and transfer, it's gone up a lot. not as much as pretax and transfer, but it's gone up as well. one other thing i want to challenge kevin on because i take his point about the book. put piketty aside for a second. it is the case that in fact, if you look at the share of national income going to capital, however you want to defiant, and lash, the capital sherry has grown considerably say in the last 10 years. and the labor shares have gone down a lot. that is to me anyway a concern, somewhat worrisome, from the perspective of people who fend on their paychecks. that's in the books. >> jared, i will show this. i will put it up on the web site after the show. if you take housing out of his

data, it got a slight down trend. when you think about the capital income share, you think about people who own factories and facebook. that's not what is going on. >> let's break in real quick. we have a little bit of merger news this morning. this is pilgrim's pride, hillshire. $45 per share. the important piece in all of this of course is there was another transaction on the table with pinnacle foods. this now making it a bit of a competitive situation. >> a bidding war. >> it represents 25% premium of the volume weighted average price. >> hill shire closed at 37. >> we had pinnacle on. >> we did. >> he made his case for -- remember, we were frustrated. he didn't answer a lot of our questions. >> that's true. >> you can see it's a lot more

money than pinnacle. >> $8 on this news. >> they are claiming $25 premium to the pinnacle offer. the premium to the 10-days trading. >> 25% where it traded after the pinnacle announcement. exactly. >> so just to be clear, the pinnacle deal was $18 in cash for each share held along with .50 shares. the reason it suffered is because of the shares of pinnacle. you can see huge moves there. >> are done with bernstein? >> jared thinks the economy is still falling apart, right? you're looking 4% second quarter. he's still out there. >> what do you expect, jared?

>> something north of three. i don't think the economy -- >> why do you expect the -- with the policies in place, what do you expect? >> the reason i expect the economy to do better this year versus last year has a lot to do with the fact that there is less fiscal drag. >> you're further away from george bush. >> who ruined the va. jared, you at least agree with kevin that there is a curve that works for corporate taxation and it's moved in the past 10 years or so? what was it, 0 years ago it was 36%, wasn't it? >> the average was 39%. now, the rest of the world has moved. and here we are. >> any kind of realizes are nonsense. that said, i agree with kevin

and everybody else that the corporate tax code is an absolute mess. we have the worst of every possible world. i'm all for broadening the base. everyone wants to do that. it is much harder than it sounds. >> work on minimum wage. >> go up to 80% and make piketty happy. and jared, too, i guess. >> i was at the white house when there was a plan to take the corporate tax rate down to 28%. yet no one ever seems to acknowledge that this plan is on the table. >> there are so many other stupid ideas in that plan, jared. my goodness. >> kevin, my friend, you've got to start somewhere. look at dave camp. he comes out with a plan. i suspect kevinen thought it was a better idea. gets nowhere. instead of just trying to say we have to make, you know, a perfect tax plan that appeals to aei at all, why don't we sit down and start trying to hammer

something out. i think the white house is a good place to start. we can start someplace else. >> it is perfection. >> thank you, jared. >> you're sticking around? >> yes. >> meat is hot. we had the chinese buying smithfield. now pork. >> there is a lot more to this. >> i finally printed it out. >> they would gone to hillshire earlier and were rejected. this is before the other deal was made. these guys are clearly ready to pay a lot more. >> they brought in pinnacle to save them and now pilgrim's pride has come back? >> on friday, there was a whole pork problem. i made the argument it was ch a china. but i wassed to i couldn't make that argument. >> becky and brian.

it told me it wasn't the chinese cooperate make that argument. >> brian sullivan. he's big. he's a large man, right? he will drown you out talking too. >> about himself. >> whoa! >> we're all like that on tv. coming up, why top executives from g.e. and siemens are appearing before french parliament. and live results from kiev on the weekend elections in ukraine. ukraine. oh my god! look. you need to see this.

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welcome back to "squawk box". pilgrim's pried is offering to acquire hillshire for $45 a share in cash, calling its bid to the deal to buy pinnacle foods. a huge premium. the other deal was made. more importantly, pilgrim's pride said we want to buy you back in february 2014. they said talk to the hand for whatever reason. let me provide, perhaps, a speculative reason. guess who is supposed to run pinnacle and hillshire brands? >> the ceo of -- >> hill share brands, which would explain a lot. here we are. we will see where all of this depose. >> social issues is what we call

them in the business. >> you're supposed to be focused on delivering the rest of the shareholders. >> there is $163 million breakup fee. i think it's going to be hard for them to come back and top it. we will see what happened. >> hillshire said talk to the hand. >> talk to the hand. >> now pinnacle are not happy camper. they aren't singing kumbaya but there was bad news bears. >> every cliche that i use ultimately around this table. >> was it a hail mary? >> happy campers, talk to the hand, kumbaya. >> you mix metaphor. >> i am a walking cliche.

>> there was a seinfeld where he said, happy camper. that is a phrase i don't think is used very much. that was 20 years ago. >> of course. every thursday night. >> must see tv. >> i could leave it on as music. because there's something that is true in life in every episode. i'm living in the past. anyway. >> living with mr. costanza. top executives from general electric and siemens are set to appear before a committee in the lower house of the french parliament today. tomorrow, french president hollande will be meeting with the ceo. they are competing to acquire the energy business of france's

alstom. >> they would rather have a german company. >> i don't think they would. we employ -- g.e. employs more people in france than alstom. >> but they are americans. you know how the french are. >> i'm not going to go back to world war ii. i might like the americans at least as much. wouldn't you? isn't there some history? there's some history. >> i want to go back on the hillshire thing. i apologize. i don't think we made it clear enough. jim cramer just came out and he's right. hillshire is buying pinnacle. it's not the other way around. it's important when you look at it in that context it may very well be that hill shire was making that transaction defensively. >> you just said that. if they heard about pilgrim's pride, they went and got

pinnacle. >> i just wanted to make it -- >> they need to buy a european company to get a better tax rate. >> we already said that. >> i wanted to make it crystal clear. >> even though pinnacle announced it was really hillshire. >> coming up, a live report from kiev. what weekend elections mean for the future of ukraine and global relations. ♪

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welcome back to "squawk box". a chocolate maker has declared victory in the ukraine. good to see you. >> nice to see you. >> so we have a definitive outcome in the ukrainian election. it's widely believed that the reason -- one of the reasons that putin stepped back from being as aggressive as he was is you saw this guy rising in the polls. back channel between the two of them. putin thinks he can do business with this guy. is that your assessment as well? >> i think that is a little bit of russian disinformation. >> really? >> i think the main reason why

mr. putin has stepped back, he does not want sanctions. the united states and germany attracted his attention when merkel and obama said four weeks ago they would be sanctions on the economy if he disrupted the ukrainian elections. so he put out the store that he would do business with poroshenko. that's a good thing. he's looking for a reason not to be sanctioned. >> when he did this, was that thursday where the russian market rallied like 6% in a nano second when he made it clear he wasn't going to be oppressive. >> that's right. >> he's backed down for now but not forever. what do you think of that assessment? >> i agree completely. he is making sure ukraine does not develop as a western democracy. because he does not want sectoral sanctions he has been running a covert operation in

ukraine. it has not been mr. covert. a major official in the donetsk peoples republic is a russian political consultant. colonel igor yurkin is a russian colonel. still, he has a figure leaf of deniability. mr. poroshenko's job is to restore order in the east. we saw an operation at the donetsk airport yesterday where ukrainian forces seized control from the separatists. >> heavy amounts of violence. 100 dead, it was reported. >> that's unfortunate. it is being led and supplied by the kremlin. >> do you have a question? >> don't you think putin ultimately is going to have to resin himself to losing part of western ukraine or even most of ukraine? he wants to make sure if ukraine goes to the eu or europe that it fails. he wants to take the industrial hotter land in the east and glom

on to russia. >> i agree with you. that's what he would like to see. but he's not really able to do it without overt aggression. that's why you see almost no demonstrators out there for joining russia. >> got it. mr. ambassador, thank you so much. >> my pleasure. thank you. >> coming up, food fight. frenzy of m&a activity. f m&a ac.

welcome back to "squawk box". let's get you to some of the headlines. food industry takeover just got a whole lot more interesting. pilgrim's pride announcing a $45 a share cash offer. it comes two weeks after they announced 4.3 cash and stocks to buy pinnacle foods. also, apple iphone may soon

be able to do more than just phone home. it may be able to control your home. it is reporting the software to control home appliances is likely to develop at the conference on june 2nd. and "x-men" days of futures past tops the box office with $90.7 million. last week's winner "godzilla" dropped to second place. $31.4 million in sale. let's get a check on the oil and currency markets. we had someone again last week saying why isn't the euro at par with the dollar. i don't know. what should we really think at this point? >> the interesting thing i read from emma god free, $200 million of russian money has gone to euros in the last month. it makes sense. we think of risk aversion,

everything going to the dollar. but all the money is going to russia. that's why the euro has been strong given everything that's been going on. >> we always come up with something. prior to all of this happening, it's stronger than it should have been. >> it isn't why is the euro strong. it is why the dollar is weak. she can take everything i say with a grain of salt. i was watching the daily show, the full 30 minutes. the general conventional view is we're not japan. we may well be the japanese experience. if you think of what japan did, they had a financial sector that was essentially bankrupt. they reliquefied it but at the cost of having deflation ear situation for a generation and very low growth. it seems to me that was exactly the situation we have seen in

the u.s. we had deflationary growth. before you start screaming that prices are through the roof. i define it not as price levels but wage growth. that he the key thing. when you hear janet yellen talk when she is talking about employment and everything else, it's a code word for wage growth. it's really going to be the growth and wages that will determine whether the dollar will get stronger or not. >> the euro was almost 1.40 when mario draghi start talking the last ecb meeting. now the next ecb meeting june 5th. it is largely expected he's got to do something. what's he going to do? is he going to finally move the euro lower? >> i don't think it's going to get too weak. everybody expects a rate cut. it looks like they are going to reach the barrier. they will go through negative deposit rates. it's only if they go to this quasi program of abs.

basically buying asset backed securities, trying to stimulate lending in the eurozone. i think it pushed it down. >> they have enough of them, boris. >> that's the criticism. but they are basically trying to create. they are trying to create a centralized market for bank loans. in europe, much more of a bank loan economy. >> we are talking about movies. isn't the fundamental problem the german central bank is still kind of running the european central bank. we have arnold schwarzenegger running the bank in europe and peewee herman running them here. >> i think janet yellen would be really upset when you called her peewee herman. and schwarzenegger is austrian not german. but, yeah, they are kicking and screaming. obviously the situation is far

better than the rest of europe. this pressure really to do something and do something much more than interest rates. they need to jump start the economy there. i think they will take control. >> carl is with us, president of oil outlooks and opinion. it has a lot to do with currency. i know the summer driving is blah, blah, blah. memorial day. >> yeah, yeah, yeah. >> we say the same thing every year. >> it's going to be friday. unemployment numbers are big. when you talk about participation rate, job creation, that's what matters. the whole fuel efficiency myth is gone. auto sales are through the roof the last couple of couples. this month should be high already. it's not about fuel efficient cars on the road. there's a lot more cars on the road. i think that's what we will be watching. auto sales and unemployment. more people work. more people driving. >> are you watching libya at

all? the oil production there used to be a million barrels a day. it is less than 200,000. in the last week this rogue general once backed by the cia has taken the over a huge swath of the country and mysterious managed to get the air force to back him. does it matter? if you can get the production up again it would be meaningful to oil prices. >> yeah. it matters a little bit. we don't import as much as we used to. we're down to half what we used to import back in 2007. we can start with libya. elections in egypt. the issues in russia. the problems in nigeria. the list goes on. there's plenty of things geo politically affecting it all. >> boris, do you call him timmy on purpose? what is that? what does that mean when people say that? >> timmy geithner. >> people have done that in the

past. >> a european official said he was insulted one time when tim geithner showed up at a meeting. >> it was an honest mistake. >> a freudian slip. cheeky, cheeky. >> he was in a tough spot. i'm not a judge. >> secretary geithner to you. didn't ben white -- >> the left hates him. the interview, by the way, if you have an opportunity, 40 minutes online. it's unbelievable. >> it is. >> it's just about favoring bankers over people? >> yeah. and more importantly, the home owner issue and how they approached homeowners relative to his thinking. i thought the interview on both sides it was a nice little sparring match. i don't know how boris would describe it. >> i totally get it. you walk away from there. basically there were no

approximate good choices. it's not that i'm criticizing the policy response the alternative would have been double digit. but the net result is what we are seeing here in america as well. which is a slow, deflation ear environment. we see bonds at 2.5. europe continues to be strong. that's why we are stuck in this. >> we shouldn't bail out the bankers and the homeowners. we shouldn't bail out anyone. >> but the counterargument, we would have had double digit inflation and great depression. >> no. if you guarantee the paper market -- it would have been taken six months. >> secretary geithner loves metaphors. rip the band-aid off quickly or slowly. we ripped it off slowly. i'm not sure the outcome over time is all that different.

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welcome back to "squawk box". s&p closed friday at a record high above 1,900 for the first time. for the year, are we over 2%? maybe. futures this morning, looking pretty good. it will be nice to open strongly and just add to it because of all the people looking for corrections there. they have gotten louder. they always do. can we wait around? then it gets flat. they think now is a good time. making headlines into it is

buying privately paid bill service check for 300 million. the smartphone app is used by 10 million people. it lets users track and pay bills and sends reminders when bills are due or when funds are low. in this gentleman's case, it never happens, does it? >> never, never. >> you couldn't possibly spend -- >> you can never spend enough. >> you have so many irons in the fire. >> i forget about check. >> you have books, movies, tv series, column, cnbc co-anchor. >> mehmet oz. >> healthy living. all the apps and stuff. >> meditate? >> a.r.k. -- a.r.s.

>> we will talk value investing not magazine -- >> you're thinking about it. you're totally distracted. >> the gears are working, so it's very difficult. no matter what kind of market we're in, our next guest likes to go against the grain. joining us on set is senior portfolio manager of the five-star $12 million invesco comstock funds. before we even get into names, where do you think the market is? i always preface it by saying i like to buy good companies when they're inexpensive. it's hard to tell where the market will to in a short period of time. it's my belief we are in this slow grinding environment, which i think the market kind of likes. we're not really having these parabolic shifts in the economy. i think we're fine at this point. >> generally speaking, you like banks. you like the big banks?

>> yes. >> big banks being citi. >> citi huge. >> jpmorgan. >> i like jpmorgan. it's one of our top holders. >> just last week we asked where he would go on banks. he said regionals. would you do the regionals? >> i love dick, but i think he's wrong in this case. the credit is back to normalized levels at this point. valuations of regional banks, which are pure lending banks, there's no controversy there. the big guys are cheap because of dodd/frank, a lot of the legislation, a lot of the, you know, regulatory stuff that's been put in place. that's where the controversy is. >> would you take a whack at bank of america? there's been a lot of controversy. >> we own bank of america too. a lot of things -- where is the excess capital? these are almost regulated utilities now.

they have so much excess built up within the business and the business models are so much more conservative, they could buy back half of the company once they can get through this process and kind of get this fixed. >> but you're effectively betting against washington? >> i don't know if i'm betting against washington. we use 11. we try to be ultra conservative. we project out earning $20 billion a year. $75 billion by 2017 or 18, and most of my peers say you're probably right but it's going to take two or three years for citi to get the buybacks going. my average holding is 45. >> how do you feel about the flattening yield curve? are you word about it? >> short-term, yes. but with rates as low as they are, sometimes in the next three or four years, rates are going up. and when they do, these banks will do very, very well.

>> you like oil and gas. can, royal dutch shell. >> yes. >> do you put them in the same regulated category and just messy. >> it is fascinating with large oils. oil is still not $100 a barrel. they went out when oil went up in 2008. they started investing in the projects. this is still a deeply cyclical business. what's kind of happened now with shareholders and the stock market, you're starting to see -- we don't know about exxon. royal dutch, bp, sell off assets, bring in capital expenditures. price to book ratios, these are the cheapest in 25 years. no one realizes it. >> and natural gas is so cheap because of fracking. all energy companies will be facing a big increase of supply in the u.s.

they will be shipping it everywhere. we will substitute natural gas for everything. >> i would argue i think the decline curves. i'm based in houston. i think the decline curves will be much greater than we expect. that's coming from the knowledge base they have. two, when you're paying for valuations at 25-year lows that's a good risk/reward. >> before we go, do you like carnival cruise? >> i love carnival cruise. >> have you been on one? >> i would not go on one. i have not been on the boat. >> peter says you have to go on the boat before you buy the stock. >> i've been on a cruise, just not a carnival cruise. pricing is down 11 points because of the incidents in italy and the caribbean last year. earnings goes from $2 to $4 once we get the pricing back. >> that's an understatement, a

couple of incidents. >> we'll leave it there. we'll try to get you a deal on carnival cruise trip soon. have you ever been on a cruise? >> my parents took me when i was a child. >> i've never been. you, joe? >> yeah. i went with my parents long ago. you get to take your hotel room from port to port. that's the best thing. >> the dollar per day cost is cheaper than anything else you could ever do. >> i think i went to hawaii, got to see all four islands, stopped on both sides, the leeward and win ward. i know hawaii pretty well. santorini, all those places. it's a way to do that. >> alaska. >> do you like to eat? >> you can eat like crazy on a

cruise. and shows. the "new york times" is going to do a cruise. and you're stuck on the boat with them. there's nowhere to go. >> anything you would rather do? >> i can't think of anything i would rather do less. >> i'm going to bring you on the "new york times" cruise. >> i would rather have a colonoscopy. a root canal. >> you're going to slather yourself in the "new york times". >> who is the julie mccoy on the "new york times"? >> i don't. who is julie mccoy. >> oh, god. coming up the next hour, an angel investor who sold to yahoo!. why technology will spend big bucks on mobile. and deal making and inversions. the complications specific to food companies next. od companie. come with me, his wife said.

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welcome back. breaking news on bank of america. the deadline to resubmit their capital plan. they say that additional adjustments had less than one basis point reduction on the reported regulatory capital ratios for the period ending september 30th. the requested capital actions and analysis and review scheduled have been submitted to the board of governors. no effect on capital ratios for

the period ending march 31st. >> no insurances. >> right. >> as to the timing or the outcome of the fed's review to allow them to do what they want to. >> and up to 75 days to review the resubmitted statements, the federal reserve does. all right. back to our host kevin hassett. why don't they go by a european company to have a lower tax base. >> it doesn't work. >> why not? >> in a lot of inversion deals, we talked about pfizer. you need to have intellectual property abroad. everybody who makes a sale anywhere on earth has to make a royalty to. with meat, basically they have a cow. they are lining it up in the slaughterhouse, turning it into something that goes on your plate here in the u.s. there isn't plausibly anything you could do to pay royalty to

ireland. >> pink slime. >> you're saying all the inversions are based on the fact that what you can do is even if the intellectual property was created here, you're claiming that it was -- >> add code to the software. >> somewhere else. >> and all your profits are attributable to the smart ideas in ireland. >> larger issues, what do you do about it? >> cut the corporate rate in the u.s. >> assuming that we are in limbo for the next two years, i don't know if that's a fair thing to say or not. >> yeah. >> any other steps that should be taken in the meantime given we will have, it seems like, just based on conversations i have had with bankers and frankly the headlines that there are going to be a number of transactions that look like inversions. >> look, we're the last couple to increase our corporate rate. when we did all the other countries were at 39. now they are 24.

if you add state and local taxes, it is humongouhumongous. anything else will be in effective. >> i'm going to accepted you this. >> what's that? >> how about 30 couples, sailboat, one of those tom perkins sailboats. >> nice. >> huge state room. only 29 other couples. 1/10 of 1%. not all peruses are created equal. they have a sorkin cruise here. i know some of your lesser colleagues are going on the big boat. why don't you do the too big to fail thing on on the sailboat? >> how does it work? >> lear jet liberals. i just want to make sure. coming up, a look inside the fed. a special report on the policy options the central bank has at its disposal. its disposal. ♪

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for the board over the red lobster sale. companies shelling out big bucks for mobile tech. an angel investor will explain why they sold their last company to yahoo! for $50 billion. and a look inside the fed's toolbox. a special report on the central bank's remaining policy options. >> i was going to get to that. >> the theird hour of "squawk box" starts right now. ♪ >> talking cruises and stuff. just today. hi. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen. alongside andrew ross sorkin. michelle caruso-cabrera is here.

kevin haslett as well. you basically enable rich people to feel good about themselves. >> david, this is the opposite of the "new york times" cruise. i can't imagine that people go on that. is it like -- just bare bones? are you on like a row boat or something? >> it's very lovely. >> david lee roth. money can't buy you happiness but it can buy you a yacht to pull right up beside it. that's a good quote. >> another quote i saw this morning. money can't buy you happiness, but, boy, does it beat poverty. let's get you through some of the morning headlines this morning. a couple of mergers to talk about. actually just this morning. pilgrim's pride offering to acquire hillshire brands for $45 a share. 24% premium to the closing price

on friday. hillshire announced a plan earlier this month to buy pinnacle foods for $4.2 billion. pilgrim's pride said its deal is a better offering. a little bit of speculation on our part that that original deal was done defensively knowing that they were interested in a deal which apparently they never really talked about before. also this morning, shares at bank america. resubmitted its capital plan. the new capital request is smaller and previously asked for a 5% dividend. the bank adds no assurance as to the time thing or outcome of the fed review. and apple may be joining the battle to be remote control for our home. ft reporting that the new platform would give ipad users the ability to control their

lights, appliances. samsung offers a range of appliances that can be controlled by the smartphone. automation expected to come next week at the worldwide development conference in san francisco. and i think that's going to be pretty cool. we'll see. >> usually they are. we're all waiting on the product. let's check on the market so far. u.s. equity futures suggested the dow jones industrial average would open higher by 53 points. s&p also opens higher. asia mixed. nikkei up a quarter percent. hang seng and shanghai essentially flight. as you can see, you have flat to mixed. big reactions yesterday to what was happening as a result of the european parliament elections. >> let's get more on the markets as we approach the beginning of the short trading week. the chief investment strategy at

a mopped james. jeff, you, i don't think -- it's not your business necessarily to be as macro as some people. you have never been in the correction camp. i don't recall you ever coming on and trying to call the top. where are you right now? >> according to dow theory, you're in a secular bull market. i just did a national market with my first rick bernstein. a two-hour breakout session. a lot of people don't believe this is the secular bull market. >> with that theory, you are watching the transports? they have been stronger than the industrials. i guess the industrials need to catch up to confirm it or what? >> two weeks ago you had a new all time high on the dow and the transports. you had a confirmation of a week or two to notch a new high like transportation did last week. >> when did it start?

what's the average age? >> that's a really good question. >> people say this is long in tooth with the average move lasting 50 months. they are measuring from '89. nobody measures the 2000 secular bull market of december '74. they measure from the valuation low. we made the nominal low in march '09. we're about 32 or 33 months into this. >> i like that low a lot more. and how much are we up off of that low? we're not even up that much, right? >> we're up from 10.75. we're up pretty about. >> but much shorter in terms of average length of a secular bull. >> exactly. >> good. that's not cooking the books really? is it? >> no.

>> let's use that, allison. >> that makes me feel great. so much mixed data to get a sense whether economic growth will reaccelerate. we are starting to see at the margin more positive news. one thing has been all this merger activity. just so far this year, we're record levels of m&a which gives a sense that corporations are starting to feel confident and spend money. they are feeling better about the overall economics and earnings outlook. >> is all created equal? what about plant investment? or fixed investment. it takes much longer. what about hiring? things like that. i wonder -- >> just spacing everything else. >> exactly. they don't want to make the hard decisions about expanding. they do the merger stuff to sort

of -- >> sometimes it might be the easier option. i think that's a good point. i think the thing about hiring is if you've ever been in a situation in which i have been where you run a department and you have had to let people go, it takes a long time to hire again because you don't want to overhire. so i think that tends to be the later stages of confidence rather than the early stages of confidence. merger activity is the easier stuff. i agree with you it is the easier stuff. it is the beginning of increase in confidence. >> the investment data has been heading straight up. we will see it with advanced durables. capital spending is looking pretty wealthy as well. >> m&a does nothing for jobs. in fact, it does the opposite. >> that's right. >> there's no other way to think about it. >> right. >> again, we're in this real economy, market economy conundrum. >> there is capital investment

and hiring. those trends aparen't as robusts m&a but they are trepbnding in e right direction. >> the market can continue to go up. that's the problem. part of the problem. people that own assets are worth more. maybe we're all in the piketty edge of the pendulum. a guy comes out. no one has heard of him. he's 42 years old. it takes the world by storm. it's weird. that shows you the zeitgeist we're in right now. maybe we are finally recognizing it. if every cab knows how about tomas piketty's book, maybe it goes the other way. can you feel good about being on wall street? >> yeah. i think you can. we have the c can eo of planet hollywood a month, month and a half ago. he thinks the economy is

stronger than official figures suggest. his data point is because the first time in five years, other companies are coming in and hiring his middle managers. he thinks that's a pretty good data point. >> we have peewee herman. what does the fed do? >> in a secular bull market, all surprise tend to come on the upside. the surprise will continue to come on the upside. the most surprising thing is to have this market continue to go up to 2,000. >> if we come in 5% growth, it might not be that great to be in the bond market. >> i would agree with that. >> whenever we take allison's mike i hear a cruise ship's horn. >> there's drilling going on in the floor above me. that's what you're hearing.

>> i thought somebody was playing love boat. >> there is somebody drilling. >> that's not a drill. can i hear that again. [ ship horn blowing] >> the different islands it goes to. did you say the within star thing? did you see what i sent you? >> yes, i did see that. >> is that more up your alley? more cavia? >> there are other people on board. >> we're still on. >> i don't know. >> you really shouldn't be showing people. >> activists launch on darden's

door. all you can eat shrimp is something i enjoy. we'll talk about that. and this year's other big activist deals with m&a. and a closer look at what options the fed has left in its arsenal if it hosni. steve liesman has the inside story on that. check out the squawk pox market indicator. indicator. are we still on for tomorrow? tomorrow. quick look at the weather. nice day, beautiful tomorrow. tomorrow is full of promise. we can come back tomorrrow. and we promise to keep it that way. driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. what a day. can't wait til tomorrow.

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welcome back to "squawk box". futures right now indicated up about 55 points or so after some new highs in the s&p last week. check out the shares of biocryst. a big mover this morning. the company says its experimental drug for a rare immune disorder was effective in reducing the attacks of the disease. it was in a mid-stage trial. stocks up 24%. >> activists and investors coming out in full force. the future of red lobster. chris davis, head of deals and

shareholder activism. good morning to you. >> good morning. >> first of all, the pilgripilg deal is not generated by an activist. but there was a deal on the table. or at least they approached them. they said no. how much is about socialism. do you think an activist gets involved. >> well, the question will be whether an activist wants to get involved to try to push the price. when it comes to m&a, the pattern in the last year or so has been someone jumping in and saying, no, that is in adequate and trying to drive a higher price. >> my beloved red lobster and darden, and i do love red lobster. what's going to happen? >> right now you have clear lines drawn. i don't see those being blurred any time soon. really when you have the board saying we're not going to hold a special meeting. we're just going to go ahead with a deal that's been

criticized fairly clearly. it's going to really matter. they have drawn a line in the sand. the activist is coming forward with something unusual, a full board replacement. >> we have been talking astrazeneca all weekend. in that particular substance, now that astrazeneca said no, pfizer now has six months to come back. three months if astrazeneca invites them back. >> correct. >> does an activist come back? how much pressure can an activist put to bear to say this is a mess. you have to do a deal now? >> you wind up disclosing your positions much earlier. don't think of it as activists. think of it as shareholders. they can influence math. it is not what it does. it's what happens when the other shareholders pick up the phone and say hello. what the activist is pushing we like. >> i don't want to talk about the bill ackman buys into

allergan before anybody else knows it as a team with valeant. do you have a problem with that fundamentally? >> separate it out. all they are doing is making an unsolicited bid. the thing that is different, they hooked up with an activist. it comes down to the 10-day rule, which i don't have a problem with with. >> being it's not disclosed for 10 days. during that period he was able to accumulate a lot. >> and you hear people pushing back, including some law firms on the basis of it's not fair to the market. it's a disclosure issue. it's being pushed back because they can make money. they are trying to shut that window. it is making it harder for the hedge fund activist make money. you shut down the activist. where do you wind up with the

money that activists have made for shareholders and forest lab and things like hess. that is important for the average shareholder. >> you have talking about tomas piketty's book. the mechanism that controls against that, right? some ceos not delivering and paying themselves way too much money, somebody is soefd to buy the company and fire the guy. has it gotten worse in the u.s.? is piketty right? is there not enough activism? >> it's a case-by-case basis. if the executive is making money hand over fist, they are fine with that executive making a lot of money. it's the pay for nonperformance that really irks. that's the problem. an activist will pressure. >> is there more? i don't know if there was more than 10 years ago. there's more focus on it. the push is about accountability. >> have you ever seen an

activist go after a company solely for comp? i would argue the comp issue is almost off the table. warren buffett said the disclosure of comp the past 30 years, which you normally think is a good thing. >> is a negative. >> cost shareholders billions upon billions upon billions. what's happened over 30 years, it's gone up. it hasn't gone down. >> exact comp has gone way up compared to difficult deposition over time. they are repurchasing and so on. but there is a big relative increase in the share going to executives. >> they need to say i need to be in the top two quartile. will the firms get rehired if they say, no, should be in the bottom? it's a little bit of a fixed system. >> activists don't necessarily go after comp. they go after underperforming stock because they are not maximizing value in certain ways. >> i think you're right. most of it is.

it will become an issue in certain cases where you have a highly compensated but underperforming executive. >> thanks for joining us this morning. appreciate it. i'm not buying this remember lobster tale you're telling me. when was the last time you were at red lobster. >> six months ago. >> i don't believe you. do you save your receipts? >> i can try to get you a receipt. last week i ate a biscuit from red lobster. i think on wednesday. >> did you find it on the street? >> airlifted in? >> red lobster happens to be literally next door to the "new york times" building. on 41st and 7th avenue. just right around the corner there. >> and. where did the biscuit come from? >> the great m and a reporter, in honor of the red lobster went there for lunch and brought back a biscuit. >> you were really at red

lobster in the last six months? >> yeah. >> and you love it? >> if it's going to be seafood, it's going to be boo. >> i was there, too last week. >> see, i knew that. i can read your mind. coming up, good news for canadian frequent flyers >> a brand-name battle over e cigarette flavors. if you're not addicted to nicotine yet, why not get started right away. and the latest durable goods numbers coming up at the bottom of the hour. of the hour. latte or au lait?

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welcome back to "squawk box" this morning. one of the stories we're following, the white house accidentally released the name of top cia official in afghanistan. it was e-mailed to reporters. it included the name of the chief of station in kabul. the white house issued a revised list, deleting the official's name after the mistaken was questioned by the "washington post" bureau chief. it is not clear if the cia would be forced to remove the officer from afghanistan. i would say, thank you, i'm

leaving now. there is a crime for that. >> yeah. >> this is in competent. >> air travelers in canada, they can rejoice now. soon going to be able to use electronic devices during the flight just like the rest of us here in the u.s., following similar decision by the u.s. european union did the same. passengers will be able to use smartphones, tablets throughout the duration of the flight as in the u.s., the device to be in airplane or nontransmit mode. i don't think anyone is monitoring that the way they used to, wink, wink. he have always had bad experiences on air canada. >> getting stuck? >> every bad thing has happened with me with air canada. >> customs is horrendous.

>> the canadian people are very nice. i love canada. airline, not so much. >> porter, however, gets you to toronto, that is a great airline. >> that's all business class? >> no porter. >> never heard of it. >> it has a panda. >> you can go teterboro. >> what does that mean? that's a city in new jersey. >> air lean. >> cease and desist letters sent to e cigarette makers with names like cinnamon toast crunch, tootsie rolls. they don't want to make it addicting to children. if they want to pay a fee, if they're going to use the name. >> andrew, you made a good

point. for pot, this would make sense. i could at least see it. you know what i mean? why eup still an addiction to nicotine? if you don't want any tar? then this delivery system might be better if you're intent on getting. but for nicotine, what good is nicotine? >> people like it. speaking of nicotine -- >> there's steve lies man. after the break, durable goods numbers are out. numbers are out. there's a new way to buy a car.

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out right now better than expected. up 0.8 on headline. mirror image of the down 0.8 we were looking for. let's take out transportation. up 0.1. that's a clue right off the bat. this is down 1.2. that isn't good. if we look at shipments. instead of orders, shipments down 0.4. negative prognosis on the business side. the headline number was good. most of that seems to be

obviously transportation because 0.7 of that 0.8 disappears when you exit out. we see one basis point higher. let them have a chance to digest. it is tuesday after a three-day weekend. surprise in the parliamentary elections in europe. but the establishment still has the overwhelming number of seats even though it is less than in '09. euro still holding above 1.36. most are in positive territory. nikkei 14,600. >> the market slightly higher, steve. durable goods up 0.8%. consensus was negative 0.7. so big outperformance compared to expectations. >> that's the number i'm interested in. this nondefense aircraft, the

thing that everybody thinks is supposed to pop this year or help get to that plus 3% growth, i'll have a 4.7 revision here for march. >> yes. it was 1.2 counter. they doubled up up to 4.7. so that is a mitigating issue there. so is the actual order side. so that's orders. shipments also saw a bit of a positive revision in that regard. >> so what happens, guys, we care about you get to a level in march. where are you relative to that level. if it is higher than the whole quarter, then zero is okay. because it's the average of the quarter. kevin, do i have my gdp path correct? >> correct. they had such amazing end of the first quarter, if you do anything at all in the second quarter, you're going to have a big second quarter. big, positive us news. >> i'm sure you have seen this. cash flows have been running well ahead of investments in

ways we have almost never seen before. capacity seems to be soaked up or shut down or otherwise being used. there's a sense we get a cap ex rebound. whether or not that means it is good and healthy is different from saying there is a rebound. >> do we care that durable goods was down 0.8%? >> no. >> it went up so much in the couple previous months. >> this is one of the most volatile. >> it is the most volatile. >> the chance of it being on the same side of a zero line month to month is less than half. >> right. >> you almost never get two months where it is positive-positive, negative-negative. >> the orders go into gdp three, four months from now. so when they are both going up, not only do you have good gdp but you have momentum. >> does this affect your view of what happens in gdp? >> it would be a couple of tenths you would have to raise it. i would expect it to be a bigger

negative all the way across the board. we had such big positives coming into this month. >> yeah. it's a bigger positive -- >> hold on one second. >> the march numbers are big. the april numbers are small, which is convoluted. less of a negative for the first quarter. it isn't putting april in any high momentum mode. >> got it. rick, we will talk with steve -- >> rick is staying. >> i don't know if you have a monitor here. you have tools. >> i have actual tools here. >> i don't know what the list is. >> what is going on on? >> these are the fed tools, folks. here we go. >> you have a single camera right there. >> do you want to do it that way? >> the fed has a whole bunch of things. >> there's the the camera. >> i went over there. now they are over there. good job, guys. try to keep excess reserves in check. this is a sledgehammer.

this is reverse repo. >> how heavy is that? >> it is really heavy. because it is potentially unlimited. kevin, do you want to weigh in on that? >> basically you can sell a treasury to somebody or you could give them a treasury and borrow money from them. or borrow money and use the treasury. >> you sell securities to the market and you soak up cash. at least overnight. >> right. >> you do a bunch of that. you take that cash, put it on the sideline. that's not all the fed has. they always have -- where is the camera now? a term deposit facility. this is like a big cd. joe, do you want to hold this? >> no. is this your idea of -- >> no, definitely not. >> whose was it? >> i'm not saying, joe. don't undermine in the middle. undermine after. >> making economic jokes.

>> that was bruno eight years ago. >> it was a good idea. isn't this ancillary? >> it is just a way of showing -- >> how many do you have? >> the longer you interrupt the worse it gets. the longer it goes on. >> i won't undermine. >> here's the axe. >> this is dangerous. >> now we know that they won't steal richard fisher's car when he uses those cars. >> interest on excess reference. moving along here. >> sharp tool. >> finally, there's the pal sheet. they could actually sell assets. >> they said they wouldn't do that. >> here's what's funny. they don't really have a plan. use figure a using wrench d. there's no plan for using all of this stuff and trying to figure out how to keep rates. there is this last bit. fed funds. it's the least important at all. it should be a little tiny

thing. it may be actually the policy tool. and all of these other things they will use to keep the fed funds rate where they want it to be. why do we bring this up, joe? joe, why do we bring this up? >> steve, you're still here. >> every day i come to work i do my best, folks. >> are you done? >> you were asking a question? >> no. i was going to shift gears. >> i want to point out why we bring this up. these are things in testing right now. you'll be hearing about these things. and the fed said recently in its recent minutes it needs to explain what the exit plan is, what the mix of goods is. we want all our viewers to know, reverse repos, interest on reference, balance sheet side and with the thing you already know, fed funds rate. >> are you there, rick? >> yeah, i'm here. >> all i was going to say was, just so you know, in case you

were worried about this whole piketty thing, steve and andrew, i have gotten the lowdown on this, they both told me some of the numbers might have been wrong. but the basic thrust of the book that capitalism has allowed rich people and ceos to steal all the money from the middle class and poor, that holds true. just so you know. okay? >> 97% of most incarcerated economists do agree with that, joe. >> rick, we said nothing of the kind. nothing of the kind. that's what joe was thinking about. >> basically the thrust of -- his numbers might be a little off. >> the thrust of the book is correct. >> i didn't say it. kevin said it. >> income in equality exists. are you going to vote kevin off the island? is he now a rhino? >> no. >> the whining. all the whining a little starts in france.

wah. >> why even do a study? >> that's a good point. they had one error in three separate calculations. piketty has an error here. >> capitalism is at fault for hurting -- >> i don't think so. >> that's not the issue. >> i think the government is involved. >> thank you. >> you're going to have to fight it out. >> look, it's cronyism. >> friends are what they are. the book has its own prescription. you can agree or disagree with it. >> now you're coming around. >> the funniest part of the segment, we have never actually worked with any tools, have you? >> that is not true. >> rick, you saw the 97% climate change piece in the journal? that's a good one. >> yeah, yeah, yeah. piketty doo-dahs research is the

same i think. you know what, people need to question everything. people, question everything. >> we're going to go. by the way, michelle, i have used a screwdriver. there. enough said. when we come back, the former coo of qwiki. unrelated to becky quick. that company acquired by yahoo!. and one of his new investments has been approached by microsoft. we'll talk to an angel investor making waves in the tech industry when we return. ry wheng 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.

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welcome back to "squawk box". take a look at the futures. see how things are setting up on this tuesday morning after a three-day weekend. the dow opens higher, 69 points higher. s&p up were points higher. aeropostale closed a deal with sycamore. giving the right to buy up to a 5% stake at $7.25 a share. it is naming two new members to its board, including a sycamore representative >> our next guest sold his company for $50 million to yahoo!. it was the largest mobile deal to date.

tumbler is much bigger. but anyway. former qwiki coo is the angel investor. can i just tell you what they did to me? they put it in the phone ethics. i was set up and ready to go. >> you saw it. it was like a mobile coming up. >> now you know how the guests feel. >> nice to see you. sky kick has been approached by for a partnership. let's just talk about what's going on in the tech space. first of all, i was trying to ask you this during the break. you're not at yahoo!. but your whole team is at yahoo! >> i'm an angel investor. >> what's going on now. >> the pink el fact is the alibaba ipo. we need to let the dust settle

before people analyze too much. after that deal is done, they're going to have a lot more cash on their balance sheet. >> right. >> what do you make of valuations broadly? this morning, i don't know if you saw it. we were talking about a company called check, sold to intoit. i don't know how much revenue is associated with check, but i can't imagine it would necessarily justify the $100 million. >> when you talk about the smaller deals, those companies are primarily for the team, technology or product. in the case case of qwiki, we had a robust ip portfolio and patents. that was the rationale for that deal. >> when we hear people talk about what's happening now, a lot of these companies are prerevenue. for people in 1998 it was like counting eyeballs.

it was signal of some kind of talk. >> when you talk larger high profile deals, those are acquired for a strong user base and long-term potential. when facebook bought instagram in 2012, people said why would a company with 13 employees $13 e acquired for a million. they had a strong base. long-term revenue potential. fast forward two years, instagram will contribute half a billion dollars of facebook profit. they did a good deal and realized that revenue pretty quickly. >> where are you on twitter, by the way? >> i'm not a stock picker. but having twitter, is only good for the start-up space. >> explain what it does. >> the cloud sector is something

growing rapidly right now. only 20% of businesses have e-mail on the cloud. we all use e-mail. over time, all those businesses need the cloud. which is why the sector over all will be 3x to become a $200 billion sector. >> isn't there a negative with the cloud? the processing power con trains what he can do. with the cloud, you have the super computer talking to you wherever you go. so the people who make the device are no longer relevant because you have the super computer in the cloud doing all the work. do you think people processed how negative this can be for apple? >> i don't see it as negative. people will go from having physical onsite hardware to the cloud. >> from my perspective, for my company sky kick, it is a very good thing. right now for 20-person business it's a 40-hour consulting project that's can complex to get to the cloud.

you have the risk of, you know, e-mail down time, data loss. with our technology, we have automated much of that process. it is like a virtual i.t. consultant. >> what is going on with microsoft? >> in terms of? >> this potential partnership. >> oh, so -- yeah. it has teamed up with microsoft to basically help them migrate with a lot of office users in the crowd. the old version of microsoft was has 750 million users. the new version is in the cloud. you need i.t. consultants that sell office need help. and we are there to help. >> i know there's a partner. it is probably hard to say. when you think about in the cloud and its potential relative to everyone else that has shown up on the door stop. >> microsoft has a massive installed user base in the

cloud. they are one of the largest cloud runners. companies like google will have to wedge into that base. most p also has hundreds of thousands of partners around the world in their distribution network selling their products. >> right. >> are you buying wearables or doing anything like that? >> i like it pause it is so nacent. smart watches were sold. that should be a 10x growth. no condition has been able to turn an exciting device into an essential device. when one competitor does, that's when the sector will explode. >> it has fallen off a bit. >> you saw the report about apple? all these appliances, home appliances. >> that's very exciting. >> are you doing any of that? >> not yet but maybe later. >> who wrote the code for qwiki. >> we had our own in-house team.

>> you did not do it? >> i did not do it. i can't take credit for that. >> who are these people, these coders. do they ever make $50 million or just grunts. >> the team is one thing when investing in start-ups. >> it is? >> i hope they get a lot of equity. >> didn't say they make $50 million. >> all right. >> thanks for having me. >> appreciate it. >> thank you. >> thank you. i'm spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast? go to ziprecruiter.com and post your job to over 30 of the web's leading job boards with a single click; then simply select the best candidates from one easy to review list. you put up one post and the next day you have all these candidates. makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter.com/offer2.

let's get down now to the new york stock exchange where jim cramer joins us now. i know you appreciate -- you're a flyer fan think about it, l.a./new york that's big for stanley cup. remember when nbc scooped up -- i think we paid zero for it at the time for hockey for the rights and now i don't know what happened. i'm losing -- >> looking good. >> looking good. >> yeah. >> this series has been -- this game, the ranger game, overtime game, i haven't seen this many people watching hockey at bars, watching hockey at home, in many years. this was a great pick-up and the sport has come on strong again. >> it's weird, you know, i feel bad for marty st. louis, but it all -- it's amazing, it's an inspired team. and i thought pittsburgh was

better. i was sure montreal was better. i'm sorry to say all that. but now i don't know. anything is possible. so i forget, jim, you're right, i thought pinnacle was buying hillshire. who did we have? the ceo of which -- >> hillshire, he made us feel terrible about the deal, the stock got hammered and it was initially up. always an undercurrent. gm presented a deal that hill shire was attractive, a poison pill mr. gam gourd was told to hit the road. their bird's eye seemed like a good deal, hillshire some think overpaid and people want this deal, the sfok is going crazy. >> what else do you have? i saw faber doing work on valeant and other stuff today. >> there's a real -- dave pith, a good businessman put out a release about how valeant is really just kind of a reckless, rollup, allergan is a real drug

company. there are a lot of people who feel like this, obviously valeant is going to say come on, take our deal. you can make a lot of money. don't let us walk away. don't astrazeneca us. and i think that's what this is about. >> got it. >> jim, see you in a couple minutes. >> thank you, guys. >> coming up, much more from our guest host kevin hassette and he was the founder and gee ceo of jetblue and azul airlines. david kneelman weighs in on travel structure ahead of the world cup. world cup. latte or au lait?

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the least you can do. let's get back. >> if only you knew. >> get back to our guest host kevin hassette who has no idea how to write code. >> i can write code. >> and yeah. >> no way. >> we were talking about -- someone wrote -- high performance. >> that an dresen was a coder and he made it big. most of the time it's the big thinker thinks i want to be able to get a car service anywhere, any time and they get someone to write code. most economics write code but that's why you see mistake because we're not writing code.

there are economists writing code. >> the spread sheet is writing code? >> usually done something without excel. >> the laborer and inventor. >> being from -- this is the last thing i'm going to ask you. the pendulum, we go through this every 50 years, questioning capitalism on what the best way forward is and we start considering socialist ideas. will it swing back. >> a circle of life with this and we had this terrible crisis. natural to question the system. capitalism has developed pretty well over the last century better than the marxist thought because capitalism works. delivers prosperity to everybody. we have to make sure that works. >> doesn't deliver prosperity. >> because they ignore taxes and transfers. put those in people are doing okay. i have a consumption in inequality paper we can talk about. consumption of people at the bottom has been doing fine even though their income hasn't. >> the bottom yeah, the cbo report was at the bottom, even

the bottom up 49%. >> the argument is health care and education cost so much more. while you can live better in poverty if you will it's harder. >> case-shiller, we have to go. you get the last word. join us tomorrow. "squawk on the street" is next. ♪ good tuesday morning. welcome to "squawk on the street." hope you had a great, long weekend. i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. we kick off this last week of may, the beginning of summer, with s&p case-shiller home prices at the bottom of your screen. we'll talk to robert shiller in a few minutes. meantime futures playing catch-up as europe had a nice day yesterday. plenty of m&a news. ten yield yielding 2.54, durable goods above consensus, march revised up as well. the dax hit the