all right. >> very quickly, let's get to today's watch list. american express is holding an investor day. ceo ken schenn national will be telling analysts to go from 12% to 15%. >> great show, everybody. we'll will see you tomorrow. "squawk on the street" begins right now. ♪ >> good morning. welcome to "squawk on the street." i'm david faber along with jim cramer live from the new york stock exchange. carl quintanilla has the day off. let's give you a look at futures now. as you can see, headed for what looks to be an up open i think, yeah. but you never know that could change, and often does. crude oil, how's that looking this morning? yes, sir, it is still well below 50 bucks. but up on the morning than all-important ten-year note

yield, no, we don't have negative rates the way they do in some places in this world, which still is an amazing thing but you don't get a lot when you loan your money to the u.s. government for ten years 1.863. the road map, megamerger kraft and heinz agreeing to merge with the help of warren buffett and most importantly 3g capital creating what will be the world's fifth largest food and beverage company. i think third largest they're saying in terms of food services or food products. plus, dow futures pointing to a flat open this morning after an unexpected drop in durable goods for the sixth month in a row. shares of merck, up in the premarket. drugmaker announced it will increase its share of buyback by a significant amount this after good results yesterday on a potential melanoma treatment had the stock up. start off with of course the heinz/kraft deal. unexpected deal structure, perhaps, for a name that has been rumored a bit.

that is that heinz 3g warren buffett, are essentially taking control of kraft in a very large deal which kraft holders will get $16.50 a share in a special dividend that coming in the form of $10 billion being contributed by both 3g and warren buffett. i'm told more or less equally. assume roughly $5 billion each that will go directly to graft shareholders and then a new company in which buffett and 3g or heinz if you will they control heinz will own 51% of the combination, while kraft shareholders continue to own 49%. so if you're kraft shareholder you get 16.50, a new share of the new company, a combination of what you're looking at there, all of the different brands jim, that come together as i said, to create the third largest food and beverage company in north america. as we said the fifth largest in the world.

philadelphia, all of the things of course, not to mention kraft, not that long ago, split off from mondelez. in this case heinz gets or kraft gets international again. >> right. >> which is something apparently it wanted which it had with mondelez. but a very interesting deal in which kraft has made a decision to effectively give up control of the company, change in control, as we say in m&a parlance you get a premium for that. they are getting $16.50 a share dividend for shareholders which represents nice percentage 27% of the overall stock price, higher margins, synergies of $1.5 billion realized at the end of 2017. and we are going to now be run by the 3g guys jim, who are lotted for their ability to take costs out of businesses while at

the same time seemingly maintaining or increasing their growth trajectory. i sometimes wonder when you hear so often about these companies, these operators being lauded but in conversations i've had with the kraft team so to speak, they spent most of their time doing due diligence whether 3g delivers what they say they do. >> that's why i think when the stock united stateswas up 15 i thought it was ridiculously too low. first of all, these are brand that carry much better internationally than domestic. domestic, these are pantry brands. you're not going to see these brands in whole foods. developing countries are well behind us in terms of natural and organic. these will well. i've been recommending kraft as takeover candidate, kraft-heinz reinvents itself maybe buying whitewave, maybe buying hane, becoming more natural organic, less pantry. kraft was being eviscerated at every level, whether white wave

coming in with horizon lunchables or plant-based foods taking the place of their beverage business. hanes stacks taking the place of snacks. whether hampton creek and mayonnaise, this was simply one of those dying companies rei invigorated going to where many countries, frankly, are not as interested in health. the same countries that still drink coca-cola. it's a brilliant move by all involved. >> interesting you bring that up. warren buffett was earlier on "squawk box" on the phone. he joined them of course. he will remain on the board. he's now one of the group that will control the combination of kraft and heinz. remember, it was the heinz deal that was done back in february of 2013 when he contributed a great deal of money, along with 3g, to take heinz private. >> brilliant. >> interesting part of this -- i

don't have at answer -- what is the value of their investment in heinz because of course you have to make an assumption about what heinz is worth to figure out what your deal is going to be. i think it could be a multiple two or three time. >> moving target. >> heinz's ebitda from 2 billion to 3 billion over the last three years, that's a 50% increase. >> heinz did not have real growth. they had that growth that some would say manufactured which is that you buy back a lot of stock, you don't have organic growth. >> now apparently they are taking market share and seeing a bit of top line growth. >> right. heinz had a much more unassailable brand. there is no the going to be another company that has ketchup on the table with heinz. you're not going to see chinese ketchup, no real rivals. that's not the case with kraft where there are kraft salad dressing under attack from bold house, owned by campbell's. you can tick down everything. remember you take a brand like velveeta, other than if you go to gino's in philadelphia.

i think honestly soil and green is greener than velveeta. >> on that subject, we did ask mr. buffett about this whole idea of kraft versus organic. >> the taste of -- that kraft and heinz, for that matter, have appealed over many many decadeser heinz go back to 1869. i think those tastes are pretty enduring. there will be plenty of people that want to eat other things but there will be plenty of people that want to eat the products that kraft heinz churns out. and new products come out all of the time. at heinz we have four new products that will be hitting the shelves with this year. so it not a static operation at all. and we've got a management that i'm moving to bet a lot of money on. >> yes he has been betting a lot of money. on this idea of buying another company, certainly they want to own businesses in perpetuity. >> right. >> that is expected to be the case. not just mr. buffett for

berkshire but more importantly 3g people who run these companies. but they will do another deal although i'm told it's going to be a while. >> a very large corporation that they are merging with. and it will take quite a while to realize all of the synergies and deal with all of the cost cuts apparently that they're going to. the zero base analysis that they do every year at 3g with their company. some say we're zero basing. hp's doing that as they do the split. mondelez with reid rosenfeld, they do it once costs rise again. they do it every single year. >> when i recommended it as a breakup play i thought was well in excess where it was a year ago and that's because you can sell off a lot of the brands. let's go over some of the brands. general mills bought annie's. why? in order to attack craft mac and cheese. why did horizon decide to brand its own version of lunchables that looks like oscar meyer? people want natural and organic. look at the assault this company

was under and then you look at the heinz management and they can say, we don't want to be in the cheese whiz and jell-o business we can sell them. we don't need to be in the coffee business, we can sell that. assets are worth to other companies that want further place in the supermarket. these guys are in the center of the store, center of the store is losing a lot of share. go to kroger to see what it's like to understand the assault that kraft was under. and i think this is a brilliant move if you're kraft because i didn't see growth. >> they did put a new ceo in who i think was devoting himself to exactly what we're talking about here. now my understanding is when he was approached by 3g and mr. buffett, warren said it took four weeks, i'm told it was early in the year when the first approach was made mr. cahill, i'm talking about, just appointed ceo a few months ago, he took to 3g guys alex bearing whose runs heinz, he took to him

and liked what he was saying because he was going to be following a similar plan. cahill will stay at the company in the sort of chairman operational -- i want to put the right name on it -- i forget what exactly it is -- overseeing some of the stuff. they were going down a road he said he was willing to go down as well, namely we need to cut, we need to focus on getting our margins up. >> sure. >> when i hear these guys talk about how these companies have so much to cut, and that heinz, though nelson peltz was on the board for years had more to cut, you have to zero base every year and only 3g guys could get the cuts out of the companies that apparently have been well run, what does it same? >> the companies are trying to make it so brand extensions work. maybe chipotle mayo. they have research and development. you know what this is? this is valeant, just wants you

to use a completely different model, it's valeant coming in and saying we can slice r&d, make more money, we know how to do it you're spending a fortune trying to reinvent lunchables forget about. in the meantime heinz funnel heinz was the most international of the domestic-based companies. we forget how much of the business was overseas. look how you can run these things through the pipe. you know what? brands that may mean to our parents something or warren buffett something, maxwell house, it may resonate in other places. kraft singles may resonate. much more than they do here. you've got the heinz international pipeline you've got all of this r&d and working for kraft, these are companies -- not like goldman sachs. you do not go and expect if your division is down to get fired. i'm sure people who work at the, well, let's go there, the oscar meyer and mir kaacle whip i bet

you those are life time jobs. >> they are very comfortable owning large, controlled stakes in large, public companies, for example, anheuser-busch of course, a significant ownership stake and don't forget burger king which they told to sim horton. >> fabulous successes. >> they own a great deal of that company as well. now, another one. sara eisen, she's been listening on the conference call. what are we hearing so far. >> an investor call going on with management. q and a from analysts getting into accounting. i would say two points emphasized by management of kraft and heinz from 3g. number one on the international front, emphasizing kraft does have appeal. already it's thought of as a north american penetrated brand but there is some international exposure. management says 80% brand awareness. obviously leverage the heinz international platform to take kraft more international. the other within on the subject

of cost cuts, talking about how they've been successful with expanding margins on cost cuts for heinz and that they do expect to bring this combined company back to long-term historical revenue growth able to move faster together. between play for you sound from alex bearing, the chairman of heinz and managing partner at 3g capital, will be the chairman of the board of the combined company. have a listen. >> combining our two businesses we create the third largest food and beverage company in north america and the fifth largest food and beverage company in the world. the company will enjoy significantly enhanced scales in its key north american market not only at retail but also in the food service channel. in addition, this combination will generate substantial synergies which we currently expect to be $1.5 billion as well as many revenue expansion

opportunities, both domestically and abroad. so there's the revenue expansion, the other side of the cost cutting on on the combined company. ceo laying out for analysts and investors some of the innovation opportunities. he mentioned jalapeno ketchup for heinz. obviously looking at new products and looking how they can create more billion dollar brands. we've just got video, never seen before from john cahill who is the ceo of kraft, only been on the job so far this year, announcing the deal. let's take a look. >> as we focused on strengthening the business, we were approached about this deal. we immediately saw a great opportunity to execute a clear-cut strategy and build on greater scale and complementary business models that lay a strong foundation for growth. we believe this transaction will acusllow us make changes to become a stronger business faster than

we would be able to do on our own. like most winning teams make it's the right move at the right time. >> again that was john cahill the current ceo of kraft. he'll become the vice chairman of the board of the combined company. what investors are asking themselves, what is the long-term growth plan? i would say, based on this investor call, they are emphasizing innovation and international reach, no question about it. jpmorgan, by the way, put out the first one i've seen what the value per share would be of the combined company. $84 per share. >> i'm looking at different numbers coming in from the various research firms. you've got to make that assumption including $1.5 billion in synergies, what that's worth. people have a great deal of confidence in 3g's ability to deliver on synergies or come above them. they went in to heinz with $600 million run rate synergy number. they're at a billion right now. >> when i hear what these guys have been able to do almost seems like a miracle. but then i start thinking maybe

the other people were not generating the growth and not generating the markets. this is like unilever versus proctor. proctor kind of didn't -- didn't really take over the emerging markets the way they should. they're fighting back now. unileaver owned those emerging markets. who knows emerging markets better than 3g? we don't have that mind-set. >> i know. >> one thing i would say, they were -- mondelez and kraft were one company not long ago. what was the point if they're getting back together with another company to get international exposure. >> how about warren buffett, he talked about these breakup to makeup to breakup. he didn't like these things. he voted with his feet remember. he did some dissing of this. at the same time look at kraft brands and i say, geez i could sell this thing in -- right now, i could go down to argentina and brazil and i could say, listen miracle whip that's the whip of kings!

>> all right. coming up dish network chairman and ceo charlie ergen. >> how do you get these people. >> looking to capitalize on cord cutting with its streaming service. my guest on the 10:00, live from the new york stock exchange. charles william ergen, yes. a look at futures this morning there it is. we are looking for an up open more "squawk on the street." more on this huge deal. and a lot of other things to cover when we return. you can find a new frontier. there's nothing stopping you and a lot helping you. technology that's with you always. this is our promise. it's never been better to wander because wherever you go, you'll find us doing everything we can, so you can.

less than an hour from now, we'll be gin joined here by charles ergen, the chairman founder of dish incoming ceo as well with joe clayton leaving that job at the company. so many different things to talk to mr. ergen about, jim, whether it's the enormous spectrum portfolio the company has acquired and what it will do with it which continues to be one of the key questions, perhaps the one he gets most often these days. no shortage of other things in the old business mature business, whether it's over the top or the sling tv offering they now have first out of the box. something we were talking about yesterday. >> look, i think that when you look at what the biggest disruptive force is in america today, it's how we get our entertainment, whether it's over the top, are the cable companies dinosaurs? are the networks being footballed? is facebook coming? the most challenged company you could argue is dish but the one

with the most opportunity because all of these require spectrum, bandwidth, speed, and this man's a deal maker. he's sat on the sidelines. someone said he's smarter than malone. >> someone asked you that. >> i know one thing, catbird seat seat. he's made you a ton of money. >> that's a great point. 20% average annual return since it went public in '9. i don't know if we have the chart. >> same way i like to listen to warren buffett. certain people who make money every day. >> yep. >> it used to be the banks. now it's charlie ergen from we will be speaking to him, 45 minutes from now. up next -- cramer's "mad dash." we'll talk amex. a look at futures. more "squawk on the street" after this. take a deeeeep breath in. . . and . . . exhale. . . aflac! and a gentle wavelike motion... ahhh- ahhhhhh.

liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim before i knew it. ahh! so he had your back? yep. in just one day, we approve and pay. one day pay, only from aflac. [duck snoring] can it make a dentist appointment when my teeth are ready? ♪ ♪ can it track my crew's performance,

and protect their heads? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪ at cognizant, we see opportunities for every company. to meet the new digital demands of their customers. can it process my insurance claim? like, right now? can it download a track while i'm sampling it? can my keys find me? with the power of digital, analytics and automation now every little "thing" can provide even greater value. ok, so can it tell the doctor how long you have to wear this thing? the answer is yes, it can. so, the question your customers are really asking is can your business deliver?

♪ we've got six minutes until the opening bell. time for "mad dash." today is the annual investor day for american express. stock's down 12% this year. >> troubled dow stock. >> mr. chenault has explaining to do. >> we thought don't leave home without it thank you karl malden for putting it that nur brainour brains many years ago. american express lost the contract with costco that many who followed did not know was important for international

growth. charlie scharf mastercard and visa, he has to defend himself against some of the greatest companies on earth, express may not be up to the challenge. >> really. >> you believe that they may not -- >> mastercard and visa. visa four for one split. that's your chance. costco deal my head is still -- my charitable trust owned american express. >> that threw you for a loop didn't it? you didn't understand how significant it was. >> i didn't realize that costco as they go overseas carries american express with it. i would love to hear what the heck happened. how did that most material contract seem immaterial to those of white house followed american express closely. >> there's a lot to answer to here. >> another name we'll be watching is merck, after the bell announcing increase in buyback by $10 billion. >> they had a key drug they

stopped the trial, it's going so well. no one cared. >> that was yesterday morning. >> no one cares. merck is not biogen. merck is not amgen, merck is not celgene, located next to each other. merck is like -- it should be st. merck. we always thought of merck as the gold standard. i think merck could be making a comeback. they obviously think, they're buying back tock. but it's been a total dog. >> it has been. >> yeah, moved up but -- >> everybody believes the best opportunity for use some of their cash is buying back stock. >> we don't want tuna with good taste. we want good-tasting tuna. give us the alzheimer's drug we thought we'd get. give us something from the schering-plough deal we thought we'd get. we need results. re we need results. >> opening bell after this.

hey, girl. is it crazy that your soccer trophy is talking to you right now? it kinda is. it's as crazy as you not rolling over your old 401k. cue the horns... just harness the confidence it took you to win me and call td ameritrade's rollover consultants. they'll help with the hassle by guiding you through the whole process step by step. and they'll even call your old provider. it's easy. even she could do it. whatever, janet. for all the confidence you need td ameritrade. you got this.

[ male announcer ] your love for trading never stops. so open an account with schwab. and when a market move affects, say a cloud computing stock you're holding, we can help you decide what to do. with tools that help you see how market activity is affecting your positions. so when the time comes to decide whether to scale in or scale out... you can make your move wherever you are. and start working on your next big idea. ♪ ♪ you're watching cnbc's "squawk on the street." we are live from the financial capital of the world. you can hear the applause of course, which precedes the opening bell which will be ringing in about 20 seconds.

big day here of course. although it's funny, kraft and mondelez both trade at the nasdaq. >> that's all right. [ bell ringing ] >> there it is. opening bell for this wednesday. by the way, doing honors here at the big board, american red cross of greater new york and over at the nasdaq celectis a gene editing company focused on developing immunotherapies celebrating its ipo. >> immunotherapy, companies you see bluebird halo go underneath the tape go up they speak, immunotherapy personalized medicine which is where we're going. keep track of those. tend to be very speculative. >> kraft up 33%. >> and it's not done. >> come on jim. it's 80 bucks. i mean -- >> we get the dividend. >> you get 16.50 and then -- >> you know you get a share of new co.

it's all about the synergies. >> it's buffetco. >> buffett and 3g the number now in terms of their original investment to take heinz private -- >> the investment banking business they spin off businesses that they don't want that they rationalize the company, david, this will be a core holding for people who want a food stock and are worried about the depantrying of america. >> the key, remember you're not a control -- you're not a shareholder in control. you're buying into a controlled company when you do that. in this case, that may actually viewed as a positive because 3g guys are viewed as great operators. >> fantastic. >> you hear it over and over again. i've heard nothing to dismiss it. and wonder whether it's real. it does appear certainly in the kraft, that's their key judgment, when they go into a deal like this it's not what do you value heinz at? what do you value us at?

it's are you really going to run this combined company better and deliver on these synergies. they clearly believe these guys are capable of that. >> the way of the future john mackey, whole foods, right when you go to whole foods you not see a lot of kraft products. i'm like in my mind other than maybe cottage double peach i don't see a lot. whole foods is not on the same page as kraft. remember that there have been studies which said velveeta could survive thermonuclear war. >> along with spam. >> new book about the h-bomb. i want to look at the index. does it mention that spam cockroaches and velveeta have been known to be completely cape only of handling the h-bomb? >> it will be. >> did you have a fallout shelter when you were younger? >> i did not. >> stocked with it velveeta.

we learned you had to put your head between your legs. i don't think that did the trick. >> but you were too young. cuban missile crisis '62, '61. >> i know it's far afield but when you look at kraft's brands you realize, built to last. >> built to last. however to your point, one you mentioned many times, not built for this age. you keep bringing this up. that is a problem in their product pfrt. >> right. people want farm-to-table. >> do i want -- now my oscar meyer hot dog. >> go read the history of cheese whiz, break through they took a lot of cleese outheese out of it. >> what did they put into it. >> some of the things that go into process food. >> endless. >> monster, go back to the monster, there's a stock i like monster, they took out a lot of juice. once they took out the natural juice, sales flew. >> right. >> that was for the grim reaper

what is it? jack the ripper product, monster's got great names for products. grim reaper that sells well. >> punched up campbell soup and kellogg, both control as well kellogg family sort -- either one is up at all. >> back and forth with campbell's people. i like bolt house. had a salad last night using bolt house. and you go to the bolt house, campbell's soup site they don't mention bolt house. people don't want to be like associated. >> you're not making your own salad dressing? >> no i -- how about pinnacle foods? are they left out of the equation? what's go on there? mr. i don't know. >> is green giant for sale. >> i believe so. >> combine green giant and bird's eye you have products set up -- >> you're trying to sell whitewave every day. i don't know if you get a fee for that. >> plant-bazsed food.

his horizon brand. >> let's talk market the large m&a transaction which gives people a sense of confidence. this is not a debt-driven deal. it's $10 billion. basically $5 billion from warren buffett and $5 billion from 3g guys comprise the payment of 16.50 a share dividend to kraft holders. >> free money -- >> it's not about that. it's not about a free money deal. however, let -- i forgot to mention this -- next year they will redeem his 8 billion in preferred, that will save them a boatload of money. 600 million. and they have high-cost debt at heinz, as a result of the initial leverage buyout where they did take on a lot of debt they also will be able to refinance because this improves their credit rating a lot more ebitda no increase in debt. hence refinance that maybe it's by '17. that's also -- that's maybe reflected in the stock price

but that's a real help. interest payments are going to be coming way down. >> the beginning of a new process food colossus that can do a lot of things to become less processed food. you have to look at it like that. processed food not selling mere. minus one growth plus two growth, that's not what the millennials and gen-x people eat. trader joe's, no. trader joe, trader crab no. sprouts, no. >> changing tacts entirely look at technology largely down. facebook, hit a new high yesterday. >> it did. >> developers conference going on. >> facebook wants to your banker and give you the nfl and wants to be your tv. i want to know what charlie ergen has to say about facebook. >> okay. i'll ask him. >> why not? >> sure. i'll ask him. >> that comes up 10:07? >> i think 10:10, u think so. i'll ask about google also.

whether its ambitions in wireless, real or not real. >> ask what happened with google with ruth porat if they should make money on youtube. >> the porat rally looks to have been one day long. still wasn't bad. >> the market's still not that great. >> why not? >> well because i think that people are trying to figure out the dollar every day. every time the dollar goes up people sell the market. trying to figure out which oil companies you're going to make it or not. the whiting deal's sloshing around. you've got this grexit thing, april 20th, is greece going to get kicked out? these are sideshows that become the man attraction because we have so many macro funds. >> "the journal" decided to with biotech bubble question mark story. >> friday, deflating the bubble rapidly. >> right. i notice celgene is flat gilead is up. >> we didn't talk about sandy koufax. >> what about him? >> a bid from lexmark.

>> yes, kofax -- i don't think they spell it the same way. he's k-o-u. >> one is a hall of famer. the other is a first mile touch company. >> what does ta mean. >> get the video to load on their website i would have more knowledge about the other kofax. >> that was a deal overshadowed by this heinz kraft merger. let's get to bob pisani. are you on the floor? more on what's moving this morning, of course. >> very choppy open today. i think traders are trying to figure out the strange economic data. take a look. not a lot of clear leadership. energy and consumer staples lead, health care materials. an odd grouping here. the problem is the weird economic date tap look at how much disappointment we've happened the february durable goods number just now joins housing starts retail sales, regional manufacturing numbers. the only thing good nonfarm

payrolls numbers. chen traders are confused they watch the ten-year yield. they figure bond guys will understand. all this morning the ten-year bob, look at 1.86. we were down. business seeps to be saying fed's not raising soon. if the march data comes in stronger, this stuff reverses quickly. the stock guys are watching the ten-year yield. for europe the euro keeps marching and march, last seven, eight sessions near 1.10 on the euro. great numbers out of germany's business confidence france's business confidence. germany the highest level since july last year. we're down because the euro's strengthing and that's a headwind for europe and a little bit of head wind for the united states. u.s., take a look at kraft, 51%, the shareholders -- the deal goes to heinz shareholders 49% to kraft. that's a straight line. impressive as it gets. they get a special dividend,

16.50. a lot of analysts notes on the merger. all say the same thing, we view this as overdue process in consolidation of the u.s. food industry. the street betting more consolidation here mondelez on the upside. campbell and kellogg started up but now to the downside. that's interesting. they did start to the upside. you can do all of the cost cutting, all of the talk with organic as long as you don't mess with the seven major food groups i grew up with plantar's, maxwell house, kool-aid kool-aid, philadelphia cream cheese, oscar meyer, velveeta and jell-o. do all of the cost cutting you want, don't mess with jell-o or kool-aid, that's all i'm asking. tax deadline is coming. everyier the same things happens. a droop in the two weeks or so before april 125th, and then the

market recovers. there seems to be something behind this factually. we asked our friends and partners, ten days before april 15th, the s&p up 30% of the time. average return is flat. in other words, the market flounders around. in the ten days after april 15th, i'm talking ten trading days after april 15th, exact opposite happens. the s&p 500 is up 90% of the time, sud will i, and the average return goes from nothing to up 2%. this is a famous bit of folk methodology, it really has some real basis, in fact. back to you. >> thank you. to the bond pits. rick santelli joins us from the cme group in chicago. rick? >> good morning, david. one and two-day chart of tens tells you the momentum is to the downside, it's a glide path. it's not a gresive.

as you see on the two-day chart, doing work at and slightly below yesterday's low yields. open the chart up to february 2nd, you get a good glimpse of what's going on in treasuries. looks ike an anvil, hanging midair. most technicians, whether armchair or sophisticated, it not hard to build a case for low yields staifringring at that chart. 1.86 back to mid-october of last year you will not see it. intraday low followed by a 28-basis point run to settle a 2.16 that day. if we look at same february 2nd, we're seven, eight sessions into a stabilization. granted it isn't huge considering the downfall it had prior, but the 1.10 handle and slightly above is what the markets perceived as resistance. that euro's up equities have a hard time as evidenced by the chart of the dax. definitely isn't getting slaughtered but pattern similar to the pattern in many global

equities markets of large, developed economies. if you look at february 2nd start of the bund kind of a different look than all of the other charts. it keeps hovering and moving lower, not in an aggressive fashion, but not many yield bounces. haven't seen 40 basis points in a while. last two charts risk barometers. first one is etf that tracks munies and the second is the investments on the corporate securities. of course, the good ones not high yield. you can see both are toying with levels we haven't seen either in early february or mid-january, as low yields prompt a higher level of risk taking by investors. back to you. >> thank you very much rick santelli. eia oil inventory data due out in less than an hour from now. >> good morning to you. that's right, watching price as head of the data the weak dollar now propping us up at 47.98, staying under the key

psychological level of 50 and a key technical level of 48. we've got brent crude trading at 55.84. what's interesting here we did get a build from api, 4.8 million, forecasting a 4.6 million barrel build from the doe, that could be supported for prices because at the end of the day it's a less bigger build than we've seen over the last few weeks. comments out from opec delegate saying that stronger than expected demand should support these brent prices at 55 to 60 for the next two or three months. running contrary bsof course to what analysts think, they think we'll see strong u.s. supply pushed up uti to the $20 or $30 range. it's interesting to see this push and pull continues between opec and the united states where we think these prices are going to ing toing to go. we'll have the numbers d.o.e. numbers at 10:30, we'll see how the market takes it.

coming up exclusive with dish network chairman charlie ergen on the future of television, where sling tv streaming service is headed. speaking of tvs, live interview with the legendary ken burns, set to debut a new dockumentary on pbs.

sometimes the present looked bright. sometimes romantic. there were tears in my eyes. and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan. and someone who listened and helped us along the way. because we always knew that someday the future would be the present. every someday needs a plan. talk with us about your retirement today. over 20 million kids everyday in our country lack access to healthy food. for the first time american kids are slated to live a shorter life span than their parents. it's a problem that we can turn around and change. revolution foods is a company we started

to provide access to healthy affordable, kid-inspired chef-crafted food. we looked at what are the aspects of food that will help set up kids for success? making sure foods are made with high quality ingredients and prepared fresh everyday. our collaboration with citi has helped us really accelerate the expansion of our business in terms of how many communities we can serve. working with citi has also helped to fuel our innovation process and the speed at which we can bring new products into the grocery stores. we are employing 1,000 people across 27 urban areas and today, serve over 1 million meals a week. until every kid has built those life-long eating habits, we'll keep working.

all right. there it is you don't see that kind of a move up in a large cap stock very often. about -- it's funny, i was checking yesterday there were rumors, $38 billion yesterday. a lot more today. 32.3% rise 16.50 dividend 49% of the combined heinz and kraft but it will be a controlled company by 3g and warren buffett who, by the way, their stake in heinz which they took public over two years ago must be enormous, jim. but it's you say it's got higher to go. >> it's going to churn because everybody's flipping. there's a lot of people flipping. i'm saying you've got a food colossus that has a lot of room

and growth and this is going to be year one that you're going to own, if you're -- this is the must-own food stock if you're a large cap, you're a fidelity tia tia creft. >> buffett says i want to own it forever. it's not clear they'll go higher. they'll do more deals. not anytime soon will they do a large deal again. but they will eventually because that's the plan. >> look, the companies, kellogg's a challenged company, general mills is a challenged company. all need to get together. there's been tremendous consolidation in that group. mer, that we her the hillshire brands people like protein. oscar meyer in china would be massive, okay? >> yep. real quickly, i notice amazon one of the few stocks up today, amongst the leaders in technology. it's blasting the faa, don't know if people have seen this,

when it cops to drones. federal regulators so slow in approval for testing the devices the aircrafts that have been approved are already obsolete. amazon's vice president telling a senate panel yesterday the faa's current proposaling for testing do not go far enough and the u.s. is falling behind. >> drone race. >> our military drones i don't think are falling behind. >> last i looked we got a lead there. kind of defense department drones. >> most likely the case. maybe we're lacking behind in the package delivery drone part of the business. >> i know when you attack the bureaucrats they tend not to be thrilled about it. >> no. >> i suggest amazon say, listen we -- we want to -- let's be open minded by drones not attack them. >> right. all right. last drone, give then a new drone. give them a drone you're planning now to be approved. i'm kidding. >> go meet with northrop grumman

and lockheed develop a drone of a lifetime. >> stock's up 21% year-to-date. >> netflix, you have charlie ergen. winning stocks. i've got to tell you, these are what you buy when you think growth is slowing. we did have some data that we didn't talk about, showing the economy slowing. listening -- >> what is it with this time of the year? it seems every year we run into -- when we run into april we talk about a slowdown. >> oil and gas that was a big driver of our growth and it's slows down dramatically. the strong dollar has played it so that our manufacturing is very handicapped, we don't talk about that enough. but the american worker is a bit of a loser here and our country's slowing because of these things. it does matter. it's going to shave some gdp off. i have paychecks on tonight, small and medium sized businesses. >> good barometer on that. >> next "stop trading" with

jim. more on "squawk on the street." the road. it can bring out the worst in people. but the m-class scans for danger... ...corrects for lane drifting... ...and if necessary, it will even brake all by itself. it is a luxury suv engineered to get you there and back safely. for tomorrow is another fight.

the 2015 m-class. see your authorized dealer for exceptional offers through mercedes-benz financial services.

now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. >> "stop trading." where are we headed. >> clsa does an interesting piece, goes from buy to sell underperforming. it's not trying to make a sell. but he does cut his numbers

tesla, 70% for 2016. >> 7-0. >> goes down 116 down to 42. why? because of gross margin problems. i have continued to have a consistent fuel with tesla i love the car, i don't like the stock. this piece is saying there will be a shortfall in the next quarter reported. don't lose heart. not a big number cut in 2016. has to do with the gross margins on model x cars. i urge people to recognize that this is a cold stock, people who own it tend to love tesla, it's very difficult for me to value. using 340 number for next year. i don't know if that number's doable. the company has a lot of cap x requirements and the last confencecon conference call turned me against this company. >> you said that at the time. >> the stock's been going down since then. >> refresh for people what the key reason was that you came away from that call disappointed. >> no rigor to the call. there was no demonstration of

how they're going to make money. the china situation, where a couple of quarters ago elon musk saying they have the cracker jack chinese people and slamming the people. the few number of cars sold these are things that worry me. if cap x, need to spend -- there are motes around car companies. you can't build a factory without spending a lot of money. stay close to tesla. the quarter's amounting to a big dis disappointment. >> "mad money"? >> paychecks very important. many chirico, can they turn it around? a one-way ticket to nowhere of late, big brands, tommy hilfiger calvin klein. marty -- >> these guys get hurt by the dollar or sourcing in asia? >> no they sell so much overseas. marty mucci, domestic.

stock's been fantastic. analysts don't like it because it's supposed to be a float play. short interest rates are wrong. marty has been able to grow with the small and medium sized business which larry kudlow taught me is where the real growth. fun show. charlie ergen interview. i hope he has something about apple, netflix. >> we'll try as we company as long as our producer gives us the time. >> do people know he's a nice guy? >> fascinating guy. really rich too. >> oh hey, it's okay. >> that's all right also. >> from i'm joe kernen school -- >> i don't know if he's martyrsmarter than malone.

♪ [upbeat music] ♪ defiance is in our bones. defiance never grows old. citracal maximum. easily absorbed calcium plus d. now in a new look. say you're a finance guy. a farmer. a researcher. you used to depend on experience. the internet. your gut. today you can use ibm watson analytics. it can make sense of all kinds of data. uncover hidden correlations and new opportunities. and give recommendations with more confidence on who will buy. what to make. where to plant. which helps you make smarter decisions. there's a new way to work and it's made with ibm. opportunities aren't always obvious. sometimes they just drop in.

cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. when the moment's spontaneous, why pause to take a pill? or stop to find a bathroom? cialis for daily use is approved to treat both erectile dysfunction and the urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision or any symptoms of an allergic reaction

stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial. ♪ >> good morning, welcome to "squawk on the street" i'm sara eisen with david faber and kayla tausche. live at post 9. carl and simon are both off today. let's take a look at the markets. looking at our third day in a row of declines for u.s. stock. the dow is down along with the s&p and nasdaq. crude oil is higher as the dollar continues to correct

lower. >> our road map starts with the big deal of the day with kraft and heinz. warren buffett and 3g capital, historic merger of american food companies. >> on that merger, warren buffett speaking to cnbc, hear his take on 3g heinz, and kraft. >> facebook holding its developers conference mark zuckerberg keynote and the stock at all-time highs. some leaks on what to expect. coming up on the show later, charlie ergen, chairman and ceo of dish network, rare and exclusive interview with mr. faber. his first interview, by the way, in over a decade. that will be coming live in a few moments. excited about that. first, we've got to talk about kraft shares. they are absolutely surging. opened up more than 30% after announcing plans to merge with heinz in a deal orchestrated by warren buffett's berkshire hathaway and 3g capital. the deal could top $40 billion, creating one of the world's largest food and beverage companies, number five in the world, number three in north america.

here's kraft ceo john cahill who just stepped off an investor conference call about the deal. have a listen. i would encourage you not to underestimate the opportunity we have, what the fabulous brands in these territories where we can just leverage the heck out of heinz's infrastructure. it is a magical combination. and so i think -- i think this company has a tremendous future. i think scale works when you operate it well. that's my view. >> david that was in response to a question he got from an analyst as to, yes, we get the scale argument but it didn't work with mondelez. why will it work with heinz? as you remember the origin of kraft as independent company came two year ago when it split off from answer international of heinz. >> it's a fair question. two companies, mondelez and kraft were together. now looking for international

exposure. when heinz went private people say it was thinking about doing a deal with kraft as opposed to going private at that time it's no stranger the idea of putting kraft and heinz together. they will make an argument i think, their product portfolio meshes better than the product portfolio of mondelez and kraft. i'll leave it it to the consume perhaps to decide than but a lot 0 this does come back to 3g to their ability to cut costs and potentially actually ignite the top line and see growth where it doesn't do that. heinz, not talking double-digit growth but return to growth. growth in market share and cost cutting. >> which is something kraft desperately needs. revenues were flat. this is a challenges industry. that was discussed on the call. question is can this combination of scale and international, which is going to be key.

>> that won't change the commodity cost one of the main reasons why its profits were falling. talk about this as a merger between two companies that are on par with each other but in some respects it's an exit for 3g because they took heinz private. kraft will remain a publicly traded company. they're bolting on that company to a publicly traded kraft. though plugging additional $10 billion of capital into it it's something of a backdoor ipo. >> i don't know. think think they're going to own this in perpetuity. they seem to like the model of owning control positions or large positions, maybe not controlled in public companies, abm, anheuser-busch being a keeshg nowkey and now burger king with tim horton. an ipo, you're a seller but in this kay they publicly equitize ownership but they're not selling it. >> they're in it for the long

hall. 3g and warren buffett told "squawk box." ken goldman, he was on the call. you managed to ask the most boring question when it came to accounting metrics of the new deal. our question is there long-term growth potential for revenue growth in a very challenged packaged food industry by combining heinz and kraft? >> one word no. i don't believe that people should be looking at the deal from a revenue synergies perspective. people should look at it from a cost perspective. i think john cahill's answer is correct you get scale benefits as long as it's executed correctly. from a synergy top line per perspective perspective, we never model those in and we won't start now. >> the new company worth $84 a share. how did you get at that? what happens now considering kraft shares are just about at that point in the surge? >> in all fairness we amened that a little bit later. we wanted to add a bit of clarity on the preferred debt.

we think it's worth around 80 depending on what multiple you're going to use. we're not sure it's worth more than what it's trading at right now, to be honest. >> have you been able to determine -- i don't know if you've done the numbers and i haven't had a chance to nail it down -- what heinz marked itself up to 3 billion in ebitda but a valuation i'm curious to back into how much money buffett and 3g made in the lb of of heinz two years later. >> we haven't been able to figure that out either. buffett address dressed that on sbs. cnbc. it's not relevant to my investor. i ignore it until i have to. >> everyone's calling it transform tive deal number five in the world in food and beverage three in north america. what happens to cap bell's soup general mills kellogg, other challenged food companies in this environment that are not seeing the kind of growth? do they have to combine now? >> i think one way or another, they all have to accelerate

their cost savings, whether self-induced or forced from the outside. general mills did a modest one. kellogg did a little bit more. mondelez doing a significant one and campbell's moving asset around in their portfolio. i believe what 3g is proving with the ebitda on heinz, what they're going to prove with eventual ebitda on kraft-heinz the food companies need to win on costs. talking big food companies, not whitewave that still have growth, they've got to figure out a way to accelerate cost savings. do they have the right teams in place do that? in some cases yes, in some cases it will help a company like 3g to light the fire behind them. >> 3g adopted the zero cost budgeting, scrap existing cost estimates and start from the ground up. that's what led people to think 3g was eyeing campbell earlier

on. but i'm wondering if you think this puts pressure on any of the companies to merge and alleviate some of the pressure that way. >> i think it may. i think it certainly is up to each company. a campbell soup level, we continue to believe, we could be wrong, the board, controlled by the doron family and the stock controlled by the doron family they are unlikely to sell. but one never knows. could be a structure set up that would make it attractive to them. i never thought wrigley would go. these companies need to change whether internal or externally forced it's going to happen over the next few years. >> thank you for joining us ken goldman, analyst of the food companies at jpmorgan. warren buffett himself on "squawk box" -- we'll have him later. we'll have becky come back with sound from warren buffett. obviously he spoke to us. he's a long-term believer. >> he said forever. >> forever. >> how long he will hold on to the asset. >> are you going to add to your

stake? he said i'm certainly not going to subtract. >> we'll hear more from warren buffett later on. a volatile start to the year for equities. the strengthening dollar cratering oil prices a big part of the story. will the trend continue? joining us here at post 9, head of global developed credit group, and lead portfolio manager at double line capital. risk magazine's asset manager of the year. good to see you. let's start talking currencies. the volatility that we saw in the last week was largely unexpected, to see such dramatic moves especially in the dollar and the euro on the back of the fed statement. does that change what you're doing in your portfolio? >> you know kayla, it really doesn't. we have a view at double line there is a long-term, pervasive trend with strength of the u.s. dollar. certainly up to the fed meeting last week when mrs. yellen came out. it was interesting in the statement, everyone was so fixated on "patient," what i found interesting is that the fed is now looking towards international developments in

the rate decisions. typically, if you've been a fed watcher you would know they've been insular, they have two mandates price stability and employment and rarely looked outside the u.s. in making those decisions. however, the fact that the strength in the dollar and the maybe not so good impact that could have on corporate profits caught their eye. they told the market basically they got the message. >> why make that decision or why communicate that message if this is a short-term phenomenon? this morning, raymond james said corporate profits will be hit by the stronger dollar but it's a two-quarter phenomenon. >> i'm not sure that i believe that. according to deutsche bank something like 40% of the profits in the s&p 500 are basically overseas. currency trends tend to be very long and very pervasive. this is not a one or two quarter thing. i think what could be worrying to be concerned about in the future the longer this goes on

is intermat markets. the amount of debt denominated in u.s. dollars issued by emerging market companies, for example, has more than doubled over last three years. look at china. china corporates is an area that our em group the doubleline has been avoiding. here's a good reason, 25% of chinese corporate debt is denominated in u.s. dollars, onlys are. >> the european data looking better. it looks like qe is having an impact certainly in germany and negative interest rates. is this a game changer? has europe turned the corner in terms of its economy. >> i wish i had a dollar every time we turned the corner in the u.s. economy over the last couple of years. >> true. >> i'm happy to see signs of improvement. but again, i'm not sure that it's a sustainable glide path a lot of bumps in the road. markets rarely move in straight lines. what about the straight line of

the yield curve? so it looks -- >> it's flatlining. >> exactly. a lot of people are worried about whether investing at the wrong point, especially where equities are yeelgd now. why don't you put moneys in stocks, you need a diversed portfolio but what's the safest point of the curve right now. >> the safist point of the curve is the middle. if you've been paying attention. the short end of the curve has been rising. that's been a phenomenon creeping up slowly over the last three years or so. the long end of the curve is basically i tell you, they don't see any inflation, it's not moving. if anything it's been moving down. we're in a flattening scenario. again, i know the absolute yield levels aren't attractive compared to what people are used to historically. but fixed income is still the best way to cushion equity volatility in your portfolio. >> everybody's focused on the first fed move lift-off. last time i talked to jeffrey he said it will happen this year because it's so obvious that

they are itching to do something, itching to get off of the zero interest rate policy. do you guys at doubleline feel that will happen this year given what you said fact they're focused internationally? >> i wouldn't discount that entirely. however, what mrs. yellen is communicating is that they will be data dependent. i'm sure they feel like they have to make a move. should they make a move under the current circumstances? looks iffy. they're going in the wrong direction. we've been at qe for six years in this country. japan's been at it for two decades and europe started. when you see the ten-year bund look at the spread between the ten-year treasury and the ten-year bund it's 165 basis points. germany was able to issue ten-year debt at a quarter of a percent. you know in terms of raising rates here it almost becomes a self-fulfilling prophecy. we raise rates, more dollars flow in dollar strengthens and

the cycle starts all over again. we've seen the fed is attuned to that. >> we have a lot to work with bonnie. come back soon. bonnie baha. breaking news. lumber liquidators, scott cohn with that. scott? >> hi sara. outside the courthouse in san francisco where the ellen pao/kleiner perkins call. we've been listening to a call confirming that agency is investigating the chinese laminate flooring sold by lumber liquidators that was the subject of that scathing "60 minutes" report a few weeks ago. the agency says that the company is cooperating as ominous as the headlines sound for lumber liquidators, a couple of important points. cpse is not using the same standard that the california air resources board uses. that's a controversial standard a controversial method of testing that lumber liquidators has said does not replicate the

way this flooring is used in the home. instead, they will be doing something apparently similar to what lumber liquidators is looking for, but again, consumer product safety commission joining with the epa and the justice department in looking into this flooring by lumber liquidators. again, the company is cooperating. back to you. >> thank you very much for that news. the stock up 5%. when we come back on "squawk on the street" everybody the marriage of ketchup and mac and cheese. more on this historic merger between kraft and heinz. kraft shares up more than 30%. dish chairman charlie ergen and david faber, exclusive interview. there they are, getting ready, on the other side of this break.

[ female announcer ] who are we? we are the thinkers. the job jugglers. the up all-nighters. and the ones who turn ideas into action. we've made our passions our life's work. we strive for the moments where we can say, "i did it!" ♪ ♪ we are entrepreneurs who started it all... with a signature. legalzoom has helped start over 1 million businesses, turning dreamers into business owners. and we're here to help start yours.

chairman incoming ceo at dish network, a provider that 14 million subscribers dish stock pound compounding 20% a year. since 2008 the company spent more than $15 billion to amass a large portfolio of wireless spectrum. one key question of course is what is it going to do with all of that wireless spectrum? joining us break it down charlie ergen, incoming ceo, right? still -- it's going to be you ceo again. >> that's my second time around. >> better than the first? >> i hope so. i think, you know it's fortunate to work with joe clayton, who was with us for

3 1/2 years as ceo. i learned a lot from him. i, dis like being a grand parent. hopefully i'll be a better ceo this time. >> it's not as though you have not been helping to guide the company strategically. a key decision start buying wireless spectrum and keep buying it, having spent at least $10 billion along with your partners in the aws auctions. you get it all the time what are you going to do with all of this wireless spectrum that no one believes you are going to spend the $40 billion,50 billion to build your network. >> five years ago we went on a quest, we're probably five years into a ten-year plan that was to transform the company from a distribution company of video through satellite television to a connectivity company. so if you think where the world has gone with everything in the cloud, you're going to have to be connected to the cloud.

one of the ways that you can be connected to that cloud is through -- only two ways -- one through wire wirelessly. you do it wirelessly you need spectrum. first step in the quest is to acquire spectrum, which we've obviously done quite a bit over the last five years and take that spectrum and work with -- we don't have the scale of some of the incumbents. >> right. >> we'll work with those people who want to work with us. >> who is that? i mean you have almost as much spectrum ace t-mobile, to put it in perspective up it's not an insignificant spectrum position you have. >> i think there's two big guys with scale. it really is an oligopoly. people who aren't named at&t and verizon interested in scale. i think there's people who perhaps not in the industry but not in the united states, and i think there's people who need connectivity, they need it they use it every day, but they want

to make sure that that continues to be available to them. i think any number of people goont play want to play in in market. >> i think google. are you talking to google? >> we have done business with google. remember, when google tv first came out, we were the original partners of than now they've got the nexus product that's coming out. we've worked with google in the past. they also are potentially competitors. obviously with youtube and so forth, they are in the video business as well. i think there's going to be a lot of moving parts. it's a very competitive industry, we hope to be part of the -- part of the equation part of the talk. >> when we've talked in the past -- i can share -- you have talked to me about optionality but ticking off all of the different things. has the hand shrunk at all or do you think you have all of these different roads to go down? granted, you have time to bill out the spectrum.

but time go business fast, 2017, 2020, '21. it will be here. you've got to make some decisions it would seem. >> we do. let's look at short term. short term the auction was important to us. with our partners right, we own 85% of a couple of small businesses that want a fair amount of spectrum one, we're able to have the option to go all downling with our existing spectrum. downlink is more valuable than uplink. we have as much down link as verizon does. so that gets us something. there's interoperate ability. you antcan't enter the spectrum without handset. at we're going to be able -- that gives us a lot of flexibility than we've had before. short-term focus now is to go through the regulatory process

with -- to make sure licenses are issued and go through the world standard 3-gp process make sure the spectrum is in licenses bands to go into handsets and that's going it take a bit of time. we'll see where it goes from there as you do that you know we have a key component to where people -- eempeople wanted to connected and be in the business, we're going to be part of the equation. >> the stock has done quite well because people value spectrum based on the recent sale and auction saying it's worth a great deal. others wonder one day when they have to put this stuff to use, perhaps we'll see the returns are not what we expect. obviously, ultimately our spectrum value is going to be based on discounted cash flows you generate from that. >> but it's not right now. what people are willing to pay for it -- >> i think what the auction did -- this was the first of the fcc, congratulations to the fcc, they set up the rules with blind

bidding, things that verizon supported in the past and small businesses participation, it was going to maximize at amount of money to take in. the auction in the post data era. in auctions previously it was ral u valued on voice calls and texting. option values not only in the united states but recent auction in canada, all coming to greater value which we talked about and predicted that people were underestimating the value of spectrum. that's come to pass you've got to make a business out of it. >> well would you consider just selling all of it? i mean no stranger to you, verizon, you competed against them in some markets and won the markets in the auction, nonetheless people believe they would buy you. would you sell? >> your dream is to enter the market place and compete. we competed in the auction. we competed for the first time

at&t and verizon didn't win all of the spectrum. they won most of it but didn't win all of it. we hope we can compete. two big mergers in front of the telecommunications mergers, we have to see what happens, how we're competitive. we have a lot of competitors coming into our space, sony, apple. >> start on a couple of questions. i don't want to -- you didn't give me any answers on spectrum. you say you're talking to everybody but you never say what you're planning to do. do you not know? >> we don't know for sure what we're going to do. i think as an entrepreneur when you build a business we started out in 1980 with one big dish you know we didn't know what we were going to do. i think you gain confidence as a management team and that no matter what happens, there's paradigm shifts in technology and a lot going on in the wireless industry in technology and we'll be able to craft a business plan, right that will maximize the value of our

spectrum. again we think as a result of that that's how the spectrum will have value. that's how our company will have value. how it will be relevant in a competitive marketplace. >> with the hope being you will enter the marketplace in partner partnership partnership, one has to assume, but as a competitor to at&t and verizon, not just getting bought by verizon. >> that would certainly be our dream that we could do that. there's, you know things will happen -- things outside of your control. the government will look at mergers, there will be other business transactions that will take place. you get moved in one direction or another. we're not -- we're not suicidal. we're going to run the company for the benefit of our employees and our shareholders right? but we think whatever we do with our spectrum, it will be for the long-temple long-term value creation we think we can get. we're long-term players, one of the great advantages we have we started buying spectrum six or seven years ago the market didn't like that and our stock

went down. six or seven years later people realize the value of the spectrum and stock goes up. had we not done that we would have not no option but to sell our company. obviously, you know it's directv's credit as they got in that situation they sold out at a pretty good premium, you know really the height of the marketplace, and they really had nowhere to go in the u.s. >> right. as you've said many times on the call, you're in a mature business. i want to talk about that business. first, we're owned by comcast. do you think the deal will be block by antitrust regulators? >> my crystal ball's not better than anybody else's i think it should be blocked. you can't take that connectivity, you can't give one company majority of the homes in the united states for that high speed broadband access. when you try to compete with things like dish network or now sling tv, you -- sling tv still needs can testonnectivity they need the high speed connection.

the merger over 50% controlled by comcast. >> you've been outspoken to the opposition of the deal. are you getting feedback from regulators concerns are being heeded and might move down the road in terms they might block it. >> having gone through our own mergers -- >> and blocked years ago with direct. >> i can say i have a great deal of respect for regulators. they do their homework. they'll make the right decision. whatever that decision is they'll do that with consumers in mind. i think they'll make the right decision. i don't know what the decision will be. i don't have the information they have. i have a big picture view. >> giving them information everybody i assume from your perspective why it's anti-competitive. >> certainly we respond to their request request. there's no conditions you can put on that massive of merger for the -- >> in terms of broadband connectivity. >> in terms of sling tv it's been rolled out. how it's going.

certainly we're in our sixth week. the results are encouraging. it's certainly -- we're in a marketplace up until a few years ago everything was a big bunle, paying almost $100 a month as a consumer buying a lot channels you don't necessarily want. we have a whole generation that hasn't become paid tv subscribers and millions have cut the cord and are going into other segments, like youtube, netflix, so forth. so with our programming partners we've said why don't we get some of the people that haven't been in the business before in some cases give choice to some people who might be ready to cut the cord. take a college kid, loves sports, right, he has a high-speed internet access in his dorm but le doesn't have $100 a month to pay for tv. he's happy with $20 and getting espn and channels to watch the games. >> is it reaching a different market?

>> it will cannibalize our business. there's no question about that. it's innovators dilemma. did you not take new technology to protect old technology? we view it that we have to do that. we have to reinvent ourselves, transform the company. the vast majority of customers are people who are not in the paid tv universe today. it's incremental business to our partners and a better advertising model. it's a one to one relationship with the consumer. we can introduce ads that are one to one. >> you're going to be joined by different potential competitors, sony you brought up in the most recent conference call as having a robust offering. dow you you think that will be the case? apple tv? is that a competitive? >> as long as the internet is open, that's a caveat i think there's -- i think what's -- it's a very similar generic

business was now mature with the big bundle there's a continue of competitors coming right? there's different segments. sony's going after a different segment. a nice product. it's out now, i think in a few cities. it's a bigger bundle but a nice product, very good user interface. obviously apple, you know that's going to be a good product. >> you do? you know? >> it's apple. a betting man would say that's a good product. you have hbo, going direct, nickelodeon has gone -- viacom one of the two of the channels direct to consumers. that's one model. the other model is a hybrid model where you might go direct but go through your current distribution. the way we've done it with sling, going with programming partners to the consumer, it's very similar to how we do business today. >> we are at the beginning of a new era to choose how i want to

watch things how to pay for them. will the bundle break apart? and i mean you still rely on the bundle 14 million people paying you every month for the bundle. >> i would say it a different way. you -- if you have two, three kids and you and your watch watch different things the bundle's best deal for your family. you're that college student or getting your first job, you're moving into your first apartment, you're going to probably go after skinny down package because you can't afford $100 a month and maybe you don't have kids you don't want to pay for children's programming or don't want to pay for sports. in the future this l.there's offering that appeal to your taste. for the majority of people for a long time the big bundle's a better deal when you bun it'll together you get a better price on everything. >> that will stay with us. >> i think it will stay with us. >> while we have other offering. if you spend more money in the

next auction you need to raise money through equity offering? >> we certainly like to participate in the incentive auction. we have to wait to see what the rules are. i think any time you get more people in an auction and make it more competitive, it's better. obs we need the amount of money for the auction needed to raise capital or partner with somebody to do it but we'll have to wait and see. >> you're never going to selling the company, are you? >> look i think when you -- when you start a company, you hope it survives. i think there's one company in the original you know the original dow 30 i think one company, ge's left. at&t replaced by somebody. >> right. by apple. >> by apple. you know you hope you -- when you start a company it lives beyond me and other people we hope that happens. but again, you know we're going to do the right thing for our employees and shareholders at

the end of the day. >> charlie, we got to leave it there. for the first time thank you for joining us. i look for future appearances that don't have that much time between them. charlie ergen, soon to be ceo of dish. >> fantastic interview. we'll get more on those comments from dish chairman and ceo charlie ergen. up next on "squawk alley." more on the kraft and heinz merger, 3g's management team coming in for more on that team harvard's jeff sonnen fell will join us. check out oil. we just got inventory data from the eia. crude oil inventory up more than expected more than 8.2 million. we are off some of the highs earlier this morning. "squawk on the street" will be back in a minute.

now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with

so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. i'm sue herera. french president hollande and chancellor merkel visited near the site wir anhere an airbus crashed in the alps. the prime minister also joined them at the scene. ted cruz could be buying health

care coverage through the health care act. his wife heidi took an unpaid leave of absence at goldman sachs. durable goods orders fell 1.4% in february, the latest data to suggest economic growth stalled early in theier. business investment spanning plans fell for the sixth straight month as well. italy's highest court delayed until friday whether to uphold the convict of amanda knox for the 2007 murder. the two found guilty in 2009 and freed if 2011 after an appellate court overtufrnedrned the convictions. two were sentenced to 25 28 years, respectively in prison. back to you guys on squawk. the news of the morning, warren buffett teaming up with 3g again, to finance a merger between heinz and kraft. kraft shares are surging, above

$80 per share. becky quick joins us with more on the highlights speaking to warren buffett fresh off the deal. >> buffett says the deal came together quickly, in four weeks' time because he's bn been eyeing companies for decades. he is buying for keeps. >> i first went in to general foods on behalf of berkshire hathaway in the early 1980s, maybe we were the largest shareholder of general foods. these bran as the kraft a lot come out of the general foods holding. these are brans that i liked 30 plus years ago and i like them today and i think i'll like them 30 years from now. >> whether consumers will like brands 30 years from now, a big question in the marketplace as krafts brands lost market share. buffett points out 7 billion consumers around the world and thinks plenty of them will continue to enjoy products like

kraft macaroni and cheese. he thinks it will evolve its brand. the deal itself is complicated. the late nest a number of partnerships that buffett made with 3g. buffett sings the praises of 3g and its founder, he has never been particularly high on private equity firms in general. check out what he said about private equity. he said in truth, equity is a dirty word for many private equity buyers. what they love is debt because debt is inexpensive, these buyers can pay top dollar. later the business will be resole to a leveraged buyer. in effect the business become as piece of merchandise. buffett says 3g is very different from other private equity firms. >> they're not buying things to sell. i mean the other private equity firms have term limits a time when they're going to sell something. they buy companies with the idea

of either selling them to competitors or selling them to another private equity firm. that is not 3g's strategy. i don't think it's proper to call them a private equity firm because they're buying to keep just like we're buying to keep. >> berkshire was only going to be part of the new company but buffett says he's buying kraft as a business, not as a stock. >> great interview. great to get shares of kraft on the move in the premarket. let's bring in cnbc contributor and senior associate dean jeffrey sonnenfeld. what do you think of the combination, warren buffetting 3g, this is a new structure. clearly they see a future in this package food business. >> i think you're exactly right. i appreciate you asking my perspective. usually cynical, and i've raised a lot of issues about private equity, perhaps not with as much

credibility as warren buffett but with the equal emotion. and in this in case i of course agree with buffett. a fantastic deal on -- for many reasons. 3g, and i have seen the triumphs of george what he's done before he created ambev, which became inbev with the great rollup in the beer beverage. it's not hit-and-run. this guy now runs ab inbev but has half of the world's breweries. kraft, it's a business rollup since its founding. if anybody in the food business or analyst tells you their nostalgia for something about kraft, they're not a food industry analyst. this company's changed identities leadership every couple of hours. certainly every couple of years. part of a large industrial con

conglomerate. the whole philadelphia cream cheese bit and everything else came in from another company but a big rollup of businesses in and out of these. and they have been a little bit lost for a period of time in fact, we didn't know who their ceo was for a year. guy was very, very sick when altria philip morris owned them, we didn't know who was in charge. co-ceo pushed out the co-ceo. roger was sick in the hospital with no news. >> john cahill to your point, only been the ceo since january, i think. tony -- >> that's the issue. you hit. it's the personalities here and the company histories and people histories. cahill, he's not here for the long term. cahill is a brilliant, responsible leader. he had a great history in the beverage business but he's a deal maker. he was at goldman for a long period of time. he was on the board the the time

of the divestiture of the business. he hasn't even relocated. i believe his primary residence still in the south. yeah. >> it's david. i just -- i want to get your sense on one other thing from this deal, which is the idea that 3g is able to do all of these other companies can't seem to do cut costs that make sense. account for every paperclip. is it these guys have the special sauce that nobody else can do zero basing every year? if so isn't that an indictment of all of the companies. >> there are on tunists here synergies. a company called bird's eye, split and a, but bird's eye was able to address itself with fresher foods, upgrade themselves. but in this case you wonder where are the synergies? as you were pointing out and courageously, if nelson peltz had a big stake, where were the improved margins?

there were no improved margins in heinz when he was running that business and of course kraft, obviously, big stake there, where is it? they feel they'll squeeze it out. nelson peltz comes in, there's a pop on the speculation something excite's going to happen but not a big change in the operational side of the business. kraft needs that. and heinz is frankly ready for than byrd's eye, maybe they to bring that back into the mix. many wonder why not general mills? they don't want to be sold. that's the difference. cahill wants to sell this then have a ceo and a management team and a board that general mills is not outshopping themselves but they in a lot of ways would make sense, these guys are ready to do the deal. >> jeff sonnenfeld from yale university school of management and cnbc contributor.

is there a bubble in silicon valley? some heavyweight investors weighing in over night. hear why sam altman and twitter investor x on forbes' midas list. in my world, wall isn't a street. return on investment isn't the only return i'm looking forward to. for some every dollar is earned with sweat, sacrifice, courage. which is why usaa is honored to help our members with everything from investing for retirement to saving for college. our commitment to current and former military members and their families is without equal. start investing with as little as fifty dollars.

into if you feel the need to protect your portfolio from a greek meltdown. stocks using options 2:00 on cnbc and trading nation.cnbc.com. more "squawk on the street" right after this. if you get a trade idea about, say organic food stocks schwab can help. with a trading specialist just a tap away. what's on your mind lisa? i'd like to talk about a trade idea. let's hear it. [ male announcer ] see how schwab can help light a way forward. so you can make your move wherever you are. and start working on your next

big idea. ♪ ♪ a look at shares of kraft trading up 35% at this hour after announcing what is the biggest deal of 2015. kraft and heinz getting together together combining under 3g and warren buffett to create a food

giant. number three in america in terms of food and beverage companies. we'll talk about that when we come back as well as this. nasdaq technology meeting. exchange with a brand new partnership with nasdaq will be joining us live.

institutional investors can now get in on bitcoin if they dare. the nasdaq agreed this week to provide new york-based start-up noble markets with a trading system aimed at allowing institutional investors to trade bitcoin and other digital currencies. talking to cnbc is the founder and ceo of noble markets, john bets. good to see you this morning. >> good morning. thanks for having me on. >> bitcoin as an asset has value roughly $3 billion. there's been a liquidity problem does this change that. >> absolutely. bitcoin today has not really been connected to the capital marks. noble allows that and as we see the bigger institutions getting involved corporations and financial firms, that it should both smooth out the volatility and help increase the market cap. >> it's really not just institutions. i mean you mentioned financial companies. the new york stock exchange is

investing in bitcoin companies and the nasdaq is joining in. what's the opportunity for them for the big exchanges in the united states? >> well, i think really bitcoin sets the standard for how the capital markets are going to evolve and that innovation is starting today. i think certainly our deal with nasdaq really sets the tone that 2015 is the year that major financial institutions start taking advantage of bitcoin and securities. >> it does seem there's this sense from the exchange of we don't want to miss the wave if, in fact, it does become transformational, but it doesn't really feel like bitcoin is a mainstream phenomenon or close to it yet. i'm wondering what this deal with the increased liquidity and what potentially lower volatility would do for the uptake of bitcoin? >> the best way i describe that is a year ago when i speak to financial institutions the question what is bitcoin? now today, every major financial institution from investment banks, exchanges and the big

market makers and all the participants have active teams of the most senior members of the organizations looking at how they can embrace and adopt. >> are you regulated and if so how does the regulation work? is there really infrastructure in place to be regulated in multiple states? >> see, i think one of the misnomers around regulation in bitcoin today, particularly if we talk about in exchange is the -- a lot of regulation is around the money handling side of this. what we're bringing to bear and my relationship with nasdaq is so exciting we can bring a focus on market structure, market rules and participants and bring, you know, fair and orderly market to the actual trading of bitcoin. >> i imagine you'll need to work, john with regulators to prepare that market structure before this product actually launches. when is that by the way? >> we'll be launching later this year and, you know, engaging and working with the regulators and markets is very important to

us. as i said there's nothing that you know manages or determines the rules about trading on the markets. we are being proactive working with nasdaq on how we can create rules that will be meaningful in the bitcoin world, fragmented and distributed around the world and look after the interest of all the participants. >> john bets we appreciate you joins and congratulations on a deal for noble markets and the nasdaq. >> thank you very much. >> by the way, bitcoin 250, so not quite at the peak of 1200 where it was. >> not quite. >> but it's come back a little bit. thanks for joining us on this hour. >> it's fun? >> what do you have on "squawk alley"? >> we have a big hour. we will talk about facebook's developers conference a few leaks on potential products that we could see today. also reports about gmail working on a payment system to live within that so you can pay your electric bills. we'll get jon steinberg's and nick billton's thoughts. chris sack ka one of the main investors in twitter been vocal

about the move in the stock and projects in the pipeline at that company. you will not want to miss that. number three on the forbes list of the top tech investors. we will hear from him on "squawk alley" coming up next.

♪ at mfs, we believe in the power of active management.

every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. which leads to better decisions for our clients. it's a uniquely collaborative approach you won't find anywhere else. put our global active management expertise to work for you. mfs. there is no expertise without collaboration.

. good morning. it's 8:00 a.m. at the facebook developers conference in san francisco, california. 11:00 a.m. here on wall street. and "squawk alley" is live. ♪ ♪ welcome to "squawk alley." and what a show we've got for you this morning. why sam altman one of the top names in the start-up world is with us in a first on cnbc interview. chris sacca named number 3